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NSE succession: Stakeholders, operators worry over delay, seek transparent criteria

By Peter Egwuatu and Michael Eboh
Stakeholders and operators in the Nigerian capital market have expressed concern and are disturbed  over delay in the appointment of Chief Executive Officer(CEO) designate of the Nigerian Stock Exchange (NSE), under the ongoing transformation and demutualisation process of the Exchange.

From Left The Deputy Governor of Akwa Ibom State, Engr. Patrick Ekpotu; Abia State Governor and Representative of the Acting President, Dr. Theodore Orji; the Honourable Minister of State for Finance, Mr. Remi Babalola; and the Accountant General of the Federation, Alhaji Ibrahim Dankwambo, at the opening ceremony of the 11th National Conference of the National Council on Finance and Economic Development in Uyo, Akwa Ibom on Thursday, April 15, 2010.

Demutualisation is a process where the NSE transforms into a Public Liability Company (PLC) and by implication a profit making organisation self-listed on the exchange and any other exchanges around the world.

The operators are also calling on the Securities and Exchange Commission (SEC) to pressurize the council of the NSE to come out with clear cut and transparent criteria for the selection of credible person for the top management position of the Exchange in view of the importance of the stock market to the nation’s economic development.

The NSE Council had at its last Annual General Meeting (AGM) approved  new organisational structure to run the operations of the Exchange

Under the new structure, the title of Director_General becomes Group CEO to be supported by four Executive Directors in charge of Information Technology and Market Operations; Listing/Quotations; Business Development and Regulation; and Risk Management directorates.

The NSE’s transformation programme which started some years ago is aimed at making the stock market the leading stock exchange in African region and the process is enabled by Accenture.

Meanwhile, the stakeholders and operators noted that the continuous delay in the appointment of a new helmsman for the NSE may spell doom for the stock market as this portends that the Exchange has no clear cut guideline or criteria  for selection of chief executive or even succession plan in place before now.

The stakeholders emphasized that after the end of first quarter of 2010 the management of the Exchange ought to have announced the CEO designate especially now that the stock market has started recovering in order to further boost investors’ confidence and sustain growth.

Speaking exclusively with Vanguard, Chairman Progressive Shareholders Association (PSAN) who bears the minds of his group said, “ The management of the NSE by now ought to have announced the CEO designate rather than keeping the stakeholders of the stock market in suspense. Remember investors’ confidence was eroded under the current management, but with the appointment of CEO Designate it will show both prospective and existing stakeholders of the Nigerian stock market that a re_engineering is in the process and has started working.”

Continuing, he said, “ As stakeholders in the stock market, we are interested in the growth of our investment quoted on the Exchange. We believe there are capable hands within the Exchange to lead the market if Professor Ndi Okereke leaves office as Director General (DG) of the NSE come November 2, 2010. Before then we expect her to commence on terminal leave to pave way for the new management team to emerge and introduce new ideas that is expected to move the market forward.

“ We cannot pre_empt who will be the next DG or CEO because we don’t have the guidelines or criteria for selection. But it is our believe that the person will be internally chosen because we have talented people on the Exchange even as the former Assistant Director General, Mr. Lance Musa Elakama who was expected to become the next DG has voluntarily retired. So let the management appoint credible and proactive person and recommend he or she to the Council of the NSE for ratification without delay to avoid the suspense that might ruin the market again and bring woes to investors” he added.

Mr. Adebayo Adeleke, National Secretary of Independent Shareholders Association of Nigeria(ISAN) who spoke for his group said transformation and re_engineering is a continuos process and is a  welcome development for growth.
In his remark, “ We want the Exchange to come up with experienced and knowledgeable person that can drive the market. We are not bothered whether the new helmsman for the NSE is internally or externally source, all we need is credible person that knows his or her onus to.

All the same, we think that the Exchange has people who can bring positive changes to the market. So NSE knows the capability of their managers and should pick somebody without delay.

They should be able to pick people who meet certain criteria. We don’t believe that the Securities and Exchange Commission (SEC) should intervene in the selection process. The Commission is not expected to show any interest in the selection as we strictly criticism the Central Bank of Nigeria (CBN) for the over regulation and excessive interference of banks’ internal activities.

Chief Aderemi Oyepeju, Chairman, Ibadan Zonal Shareholders Association of Nigeria, in his reaction
said, “ We cannot completely rule out politics in selection of a new DG or CEO for the NSE. Madam DG may have her own person, the President of the Council of the NSE and many other people on the top may have their own person in mind. So what we want is credible and experience person that can move the market forward.

“ We are also against the Exchange bringing a new person outside the country to be the new DG or CEO. If a new person who is not in the system comes in it will take the person not less than 3 years to learn what is on ground and from there begin to plan new strategy. But if you appoint somebody who is already in the system and knows the problem, he or she will just re_strategise and come up with ideas that would move the market. We are advising the Exchange to be very careful in selecting the new helmsman.

A good selection will promote and boost the market while a bad selection may mar the growth and development of the our market. It would have been better if the Exchange has pre determined criteria for selection rather than just nominating somebody base on one sentiment or the other.”

Mr. Seye Adetunmbi, Chief Responsibility Officer, Value Investing Nigeria, said “ Let me say that, how the next D_G of NSE emerges will either make or mar the credibility being rebuilt for the stock market. This is why how the new D_G emerges should be as transparent as possible.

The market in the days of Apostle Hayford Alile is different from what it is now. If the present NSE Council would not put into consideration the expectations of the wide range of stakeholders in market and discountenance due process, the repercussion can only be imagined in the short and long_run.

It is thus advisable, considering the credibility problem the market had suffered in the past two years, for the office to be advertised and allow people within and outside the Exchange to apply for the job. Let the recruitment be handled by professionals of repute or tested human capital recruitment firm of international standing. This will help the market a great deal if how the succeeding D_G is selected can not be faulted.

It is also strongly recommended that the Council should release the incumbent and let her go on a well deserved long leave so that we can all give her a befitting pull_out ceremony in November 2010 that she wishes to retire. If her last four years in office had not generated so much controversies, it would have been a different thing! With due respect to Madam D_G and acknowledgment so many beautiful things recorded during her tenure, it takes people who truly love her to actually let her know that the most honorable thing to do in a situation like this is to steer clear of anything that could drag her into any controversy of who succeeds her.

Dr. Martin Oluba, President/CEO, ValueFronteira Limited in his comment said, “ It has not yet been established that there is actually a succession crisis at the NSE. Succession in many systems can sometimes generate some unwanted currents for many reasons which can best be explained by the system itself. Global experience show that the Stock Exchange as a self regulatory institution has an independent structure for succession. If in the case of the Nigerian Stock Exchange, it is understanding on which the current DG is resigning, then it ought to provide the basis for replacement. That however does not mean that such replacement must come from within except where the fit is 100% correct. Any small room can provide sufficient opportunity to the Council for looking outside. So far, there is nothing to prove that this succession challenges have produced undesirable market effects.

It however can potentially cause such harm but it is doubtful at this point since many relevant stakeholders have either intervened or have shown substantial interest in knowing how the succession arrangement is made.

The Securities and Exchange Commission has a significant role here which is to pressure the Council of the Stock Exchange to open_up on the established procedures for the selection of the next DG. Not that the SEC can influence it but to ensure that the eventual selection is consistent with the documented procedure. Frankly speaking, if the succession process is hazy or non_existent altogether, the management has every right to capitalize on it to explore varieties of other ways to succeed the incumbents.

This is particularly true if the council is not convinced that the heir_apparent is worthy of the position. What should be of greater concern though is to see a procedure for selection which guarantees the stability of the market over time. It may as well be a ploy by the current DG to stay put but it is actually very doubtful and may spark open resistance.
It would be recalled that contrary to the denial by the management of the NSE  that there was no succession crisis over who becomes the next DG, the Assistant Director_General of NSE, Mr. Musa Elakamah, confirmed that there was crisis.
Addressing  market community during a ceremony on his retirement from the Exchange recently, Elakama said “I cannot pretend that there was no issue. I agree to earlier resign but later changed my mind, because I was eminently qualified to be a DG.”
The NSE had, in recent time, claimed that there was no succession crisis in the market, which would have saw Elakamah becoming the next DG.
As things stand now, the coast is now clear for either the General Manager, Market Control, Mr. Binus Yaro, or General Manager, Quotation and Listing, Mr Kene Okafor, to be appointed as the next DG, after the exit of Professor Ndi Okereke_Onyiuke in November 2010.
Responding on the issue of the  restructuring exercise, Professor Onyuike said as a result of the restructuring of the Exchange, it was agreed in 2008 that four top members of management would retire. This agreement, she said, was communicated to the Council and was approved.
Two former General Managers _ Mrs. Yinka Idowu and Mr. Henry Onyekuru _ have resigned in line with the agreement, remaining Okereke_Onyiuke and Elakama, who has since resigned also. She insisted that nobody was forced to resign his/her appointment, noting that the Exchange has a 10_year succession plan in place. “We decided that we should groom the young ones among us. The decision to restructure was not decided by one man, never, it was the management’s decision and we engaged Accenture, a world renowned management consulting firm, to carry out the restructuring.” she added.


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