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By Pita Ochai
The Nigerian Communications Commission (NCC) recently launched a Corporate Governance Code for the telecoms industry with a view to consolidating the gains of liberation of the sector. The Executive Vice Chairman and CEO of NCC, Dr Eugene Juwah said that the move became necessary in order to reposition the sector towards contributing more to the country’s rebased Gross Domestic Product(GDP).
The telecommunications sector corporate governance code is targeted at safeguarding the over $25 billion investments in the industry. According to Juwah, all telcos in the country are to be guided by the code. He said the corporate governance principles of accountability, responsibility, transparency, integrity and ethical conduct, among others, are important for all types of companies operating in the telecommunications industry whether public or private, large or small, as the requirement for good corporate governance does not wane on account of size or type of business affiliations. “Shareholders and other stakeholders are now placing higher demand on companies to demonstrate these principles. Thus, NCC is determined to promote corporate governance for the telecommunications industry,” he said.
Although, corporate governance codes globally could take several forms, Juwah explained that some are generic or national in scope while others are drawn up for specific groups of firms or designed to address a specific aspect of corporate governance such as board practices, transparency and disclosure standards.
He recalled that the journey to getting the code began in June last year when the NCC organized the second stakeholders’ consultation on Corporate Governance with the theme: “Enhancing Stakeholders Responsibility,” adding that the first was consultation in April 2012 with “Corporate Governance on the Telecommunications Industry-Compliance with Standards, Processes and Procedures” as its theme.
The forum highlighted the absence of a common code for all telcoms in the country. To address this gap, the NCC inaugurated the Corporate Governance Working Group (CCWG) in October 2012 with members drawn from the operators and the commission. Juwah said that the CCWG focused its activities on providing input for the code in the areas of identifying the corporate governance priorities for the telecommunications sector; considering and agreeing on the target and scope of applicability of the code, that is, which firms the code should apply; considering implementation mechanism of the code’s provisions; conducting stakeholder mapping for the purpose of the proposed code (building on existing frameworks provided by the Stakeholder Management Division of NCC; determining the broad outline of the code; and reviewing the draft of provisions as they were developed.
He said while national codes of corporate governance are typically focused on country-specific issues and are aimed at improving and guiding governance practices within a country’s specific legal environment and business context, sector-specific corporate governance codes address the peculiarities of the affected sector (in Nigeria’s case, telecommunications) that are not typically dealt with under national or broadly-aimed codes. “With the growing relevance of corporate governance beyond capital markets where compliance with best practice is enforced through listing rules, sector-specific codes have become increasingly more beneficial in those sectors where private unlisted firms operate.Furthermore, the telecommunications sector is of strategic and high impact significance to the economy at a macro level. It is made up of a whole range of operators with diversity in size, scope of operations, asymmetry qualifications, legal and regulatory requirements, capital market activities as well as local and cross border relationships,” he said.
Juwah said that the combined factors of the strategic importance of telecommunications and unprecedented growth of the sector with extensive reach across all social and demographic groups in the economy makes it imperative that operators in this critical sector align to uphold a code of corporate governance which is specific to their industry.
The Minister of Communications Technology, Dr. Omobola Johnson noted that the main challenge for corporate governance, however, is to create a system that holds decision makers accountable while according proper respect to their position in the company. She explained that the key considerations for a successful corporate governance regime typically would consist in elements of voluntary commitments and good business practices by the regulated entities. “The code should be backed up through effective monitoring and enforcement processes, and continuosly assessing compliance with the basic principles of this Code in line with the best international practices”, she stated.
Dr Johnson explained that with the code, “NCC has put in place a strong and reliable structure that will drive good governance in the telecommunications sector, and attract investment to the telecoms sector that will boost the national broadband plan of the country.”
The Chairman of the CGWG, Dr. Fabian Ajogwu said the Code became necessary to consolidate on the gains of the telecoms sector. Ajogwu said the Code would help resolve challenges of weak internal controls in organisations; help passive shareholders; avoid conflict of interest; enable effective management information system among others.