Felix Adeoye; Prof Umar Dambatta and Communications Technology Minister Adebayo Shittu

By Kokumo Goodie, Lagos, Nigeria

After more than one year of voluntary adherence by telcos to the Corporate Governance Code for the industry, the Nigerian Communications Commission (NCC) yesterday started a journey that will lead to mandatory enforcement.

Speaking in Lagos at a stakeholders’ gathering with Corporate Governance Forum: Review of the Industry Code, as focus, the Executive Vice Chairman and CEO of the NCC, Prof Umar Dambatta, said the Code was largely “declaratory in nature and implementation was initially voluntary across the industry thus leading to violations.” He said enforcement of regulatory stipulation is a last resort, warning that once “you are operating in a market, the rule of engagement must be respected.”

He recalled that the liberalisation of the industry opened investment opportunities for both local and foreign companies, growing the country’s Gross Domestic Product (GDP), adding that in contrast to the performance of the economy as a whole which contracted to -0.36 per cent in the first quarter of 2016, the telecoms sector contributed, in progressive and real terms, about 8.83 per cent to the GDP in the same period, adding that this represents an increase of 0.5 per cent, relative to the growth in the last quarter of 2015.

Said Dambatta: “Similarly, apart from attracting Foreign Direct Investments (FDIs) in excess of $38 billion and reflating the economy, the telecoms value chain (formal and informal) continues to create a significant number of job opportunities for our teeming youths. Other positive spin-offs include increasing local content and rising income per capita/per head for employees in the sector.”

According to Dambatta, in recognition of the need to sustain the phenomenal success recorded in the industry and replicate the lessons learnt in other sectors that had gone through the “Boom and Bust” cycle, the Commission in 2012 set up a multi-stakeholder Corporate Governance Working Group (CGWG) with membership drawn from across the Nigerian telecoms industry, the Commission and Corporate Governance practitioners. The mandate of the Group, he said, was to determine the industry’s corporate governance needs and the best approach to be adopted in addressing them, adding that the CGWG developed the Code of Corporate Governance for the telecoms industry, which was published in 2014.

The Code consists of 12 principles and was developed to protect the interest of investors and stakeholders in the industry, as well as promote time-valued principles of accountability, responsibility, transparency, integrity and ethical conduct.

He said while compliance with the provisions of the industry Code was initially made voluntary for a period of one year, which has since lapsed, the Commission is moving towards a regime of stricter compliance because of obvious compliance issues which were detected.

NCC Secretary Felix Adeoye said an industry survey was conducted with samples taken from 265 valid licensee companies across 28 licence categories, adding that of the 265 firms, survey instruments were administered to only 106 firms that were successfully identified. “Some firms could not be located due either to change of address, while others had no web presence or active phone numbers, he said, lamenting that the report exposed low voluntary compliance level.

He said: “The outcome of the survey was quite revealing. For instance, some companies complied with the requirements for board size and composition while some boards had just three members, contrary to the provisions of the Code which stipulate a seven-member board; similarly, most boards were seen passive; we also had companies whose companies met only once in a year making it difficult for the board to discharge its primary oversight duties. Some other companies breached the chairman/CEO duality safeguard provided by the code by combining the chief executive officer’s position with that of board chairman.

“The Commission will discourage the perfunctory practice of ticking the box and filing reports to beat regulatory deadlines in this regard. We will expect strict compliance with the spirit of the code. Under the new regime, there will be consequences for breaches. The revised code will undoubtedly provide sanction for non-compliance.”

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