By Providence Obuh
Experts have highlighted the cost and consequences associated with bad corporate governance for Microfinance Banks (MfBs) in operations within the country.

The experts, Director, Other Financial Institution Supervision Department (OFISD) Central Bank of Nigeria (CBN) Alhaji Ahmed Abdullahi, Managing Director/CEO, Stanbic IBTC Holding, Mrs. Sola David-Borha and Principal Partner, Kenna Partners and Founder/Fellow, Society for Corporate Governance Nigeria, Dr. Fabian Ajogwu, gave the highlights at a Microfinance Platform Symposium organised by Lapo Microfinance Bank in partnership with Accion Microfinance Bank Limited and AFOS, with the theme: “The Cost/Consequences of Bad Corporate Governance.”

David Borha, said “The microfinance sector occupies a pivotal role in our nations economy, plays an integral intermediary role in the economy and provides financial services to entrepreneurs and small businesses. Corporate governance is important to ensure its sustainability and that of the business it functions.

“Bad corporate governance impacts both the good guys and the bad guys, every corporate governance failure is an opportunity to strengthen corporate governance and governance is not an end itself it’s a means to an end.”

She listed: Disclosure, Integrity, Responsibility and Treatment of Stakeholders / Balance as elements of corporate governance, explaining that full disclosure in line with best practice even when there is bad news is pivotal to achieving corporate governance goals, she added Investor confidence, Capital, Price / Earnings, Sustainability and Longevity are the main benefits of corporate governance.

She said, “The Nigerian Stock Exchange recently launched a Corporate Governance Rating System (“CGRS”) designed to measure corporate governance of listed companies and provide incentive to companies that are committed to good corporate governance. The NSE felt the effect of the 2008 financial crisis with a negative return of 45.77 percent.

“Financial institutions are subjected to higher standards of integrity. Public trust and confidence are essential for a financial institution to operate. In corporate governance failures, there are far reaching implications for a wide range of stakeholders and the economy,” she said.

In the same vein, Ajogwu described corporate governance as a set of activities that entail ethics, stating, “The consequences of bad corporate governance brings about fusion of separate ownership with management; undermines the financial and operational performance of a corporation; is inimical to shareholders interest; weakens investors’ faith in a company; it promotes corruption and repels local and foreign investors.

“The consequences of bad corporate governance are far too high for the subject to remain a good to have. Corporate governance has become a must have and a sine qua non for meaningful growth and economic development,” he said.

Meanwhile, Ahmed who was represented by his Deputy, Mr. Adegbite, said that the theme was significant to the regulatory authority, saying, “We know what companies face when it comes to issues of corporate governance and so we insist that institutions follow corporate governance code.”