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Nigerian businesses must strengthen their corporate governance structures to boost investor confidence and secure the much-needed capital, experts have said.
Policymakers and business leaders, who spoke at the 5th edition of the Doing Business in Nigeria Conference (DBNC) held in Lagos on Saturday, warned that poor governance practices are increasingly limiting companies’ ability to attract funding in a competitive market.
Jude Chiemaka, the CEO of the Nigerian Exchange Limited, stressed the importance of listing on the NGX as one of the ways to tap public capital, clarifying that accessing finance from the Exchange is not solely for multinationals.
Chiemaka however, noted that businesses must have ascertain some level of governance structure before getting capital. He said small and medium enterprises rarely get capital because they are “too informal”.
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According to Chiemaka, to allow more inclusion of small businesses to accessing needed financing, the Exchange has created a board that is focused on SMEs.
“So for as little as N50 million market cap, the company is ready to be able to come to the exchange to access capital.
“To access public capital, you have to make sure that the structure of your business, apart from its quality, aligns with the best international practice,” he said on the panel session dubbed, ‘Accessing finance in challenging times: opportunities for Nigerian businesses”, he said.
Adeniyi Adenubi, co-founder, VFD Group PLC, stated that while accessing capital in Nigeria may be ‘extremely difficult,’ opportunities abound if certain parameters are met.
Adenubi highlighted strategy, integrity of the people involved, identified market, the size of the market, the potential scale of the business, clarity and focus as what could drive in needed capital.
“When you have all of those things, then I think it’s easy to access capital,” he said.
Adesuwa Okunbo Rhodes, founder and CEO of Aruwa Capital Management, emphasised the need to have a strong ‘track record’ as no investor wants to put money in a ‘blind pool,’ especially institutional investors.
Okunbo-Rhodes stated that tapping capital requires adaptability and governance, noting that this will “provide comfort to institutional investors that you have strong internal controls within your business, you have a board that you’re accountable to, there’s transparency, there’s communication in bad times, but also in good times.
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“All of those things add up to make sure that institutional investors are confident that they’re investing in you and investing in your vision.”
According to her, female entrepreneurs are least funded across the continent, a situation which propelled her to establish her company to fill that gap in the market.
“It was quite obvious to me that if we are able to change the imbalance of capital allocators, the number of women that are earning and running their own funds, then there will be a natural trickle-down effect to funding women as entrepreneurs, but also funding products and services that cater to women, funding supply chains that advance female participation. That was the real onus of setting up Arua,” Okunbo Rhodes said.
The event, convened by Linda Uneze, managing partner, Maurice Xandra Solutions, had in attendance key players in the oil and gas sector, Fast Moving Consumer Goods (FMCG), Telecommunications and Fintech.
