COMMUNIQUÉ ISSUED AT THE END OF THE 2020 PUBLIC LECTURE OF THE INSTITUTE OF CHARTERED SECRETARIES AND ADMINISTRATORS OF NIGERIA (ICSAN) HELD ON WEDNESDAY JULY 22, 2020.
The Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN), held her 2020 Annual Public Lecture on Wednesday July 22, 2020 via hybrid meeting method (physically and virtually on ZOOM platform) with the theme “Survival of MSMEs During Uncertain Times: Is Corporate Governance a Luxury or Necessity”
The Chairman of the Occasion was Professor. Chris Ogbechie, of Lagos Business School (LBS) while the Guest Speaker was a Co-Founder of AACE Food Processing & Distribution Limited, Mrs. Ndidi Nwuneli.
The seasoned Discussants who added valuable perspectives to the discourse were the Founder and CEO of Black House Media (BHM), Mr. Ayeni Adekunle and Assistant Chief Enterprise Officer, SMEDAN, Mr. Sola Dawodu.
Also, in attendance were the President of the Institute (ICSAN), Mr. Bode Ayeku FCIS who was the chief host; Vice-President, Mr. Taiwo Owokalade, FCIS; several members of the ICSAN Governing Council as well as members and non-members of the Institute.
The President of the Institute delivered the welcome address that preceded the discourse while the Chairman of the Public Lecture Committee Mr. Sesan Sobowale, FCIS, gave the vote of thanks that formally ended the Lecture.
2.0 OBJECTIVE OF THE ICSAN PUBLIC LECTURE
As a leading professional body dedicated to the promotion and practice of Corporate Governance and Public Administration, ICSAN organizes annual Public Lecture as a platform for beaming searchlight on trending issues of public interest with a view to identify challenges and proffer workable solutions.
through this medium, the Institute has contributed positively over the years to the policy direction of Nigeria by availing the authorities of policy guidance while the private sector has also benefited from pragmatic ideas and initiatives generated from this and other programmes of the Institute.
From the various presentations, speeches and comments at the Public Lecture, the following observations and resolutions were made:
i. The Forum observed, inter-alia, THAT:There are at least four key dimensions to the challenges foisted by the COVID-19 crisis, viz; health, economic social and emotional dimensions, thus making the crisis pervasive and all-embracing and causing very debilitating effects on virtually all aspects of human life.
ii. Ninety per cent of all businesses in Nigeria are in the Micro and Small Medium Enterprises (MSMEs) Sector which translates into the fact that 90 per cent of employees of profit-oriented concerns are in that sector.
iii. MSMEs, by virtue of their scale and usually limited resources, are more vulnerable than other sectors, being under more extreme pressure of fashioning out survival strategies through lateral thinking and initiatives to overcome the negative effects of the pandemic.
v. COVD-19 has exposed the fact that Nigeria has a plethora of weak MSMEs with business models that are not resilient enough to withstand shocks. The negative impact of COVID-19 on MSMEs may be better understood from the following grim statistics:
a. 94% of the MSMEs reported being impacted by the pandemic; 82% reported decreased sales while 49% lamented difficulty accessing inputs.
b. 84% of firms reported reducing their production volumes while 44% reported difficulties in paying staff as a result of the pandemic.
c. 50% of MSMEs in food and agriculture businesses have closed their operations temporarily with significant sustainability fears. A good number of businesses, especially in this sector have closed down as a result of debilitating challenges foisted by the rampaging COVID-19 pandemic.
d. It is apparent that most of the businesses did not put systems in place to curtail sudden crisis like COVID-19.
v. Furthermore, these shocks have exposed a few critical truths about the fragility of our food ecosystem as evinced by poor grain reserves and national emergency response mechanisms, limited support for vulnerable populations and weak engagement mechanisms of social safety nets. Other illustrations of this poor state of our food sufficiency are absence of credible data on food markets, areas of over-abundance /shortages and vulnerable populations etc.
vi. In the light of the fact that global experts have projected that this pandemic will last for 12-18 months, our country, businesses and communities will require significant changes during and post-COVID-19 to ensure their survival.
vii. Thus, the mantra for survival of most business in this pandemic era is “Innovate or die” which underscores the imperative for businesses to keep exploring opportunities that lurk in the crisis through creative innovations.
viii. Greater responsibilities devolve on the board during crises than in normal period as the board now bears the burden to devise the means, innovations and creativity to soar above the unusual challenges borne by the pandemic.
ix. Discreet strategic planning and farsightedness by the board is indispensable particularly in these trying times as only resilient organizations will be able to successfully weather the storm.
x. Corporate Governance is not just a luxury for MSMEs but an absolute necessity especially during a time of crisis like this as governance principles have inherent solutions to most of the problems being encountered by the businesses in this sector.
xi. Corporate Governance essentially involves balancing the interests of a company’s many stakeholders and also involves the mechanisms by which the organization and its people are held accountable, thus, it is a useful tool for business profitability and sustainability.
xii. Only very few family businesses in Nigeria have gone beyond the generation of their founders with fewer operating for up to two or three generations. This additional fact underscores the relevance of Corporate Governance principles to MSMEs.
viii. Ethical compliance, which entails doing the right things the right way, is a panacea to diverse challenges militating against sustainability of MSMEs as well as big corporations.
xiv. The scale of every business depends on the vision of the founder and it is not compulsory that a particular business must grow to any particular size except as envisioned by its mission or objectives. Nonetheless, every business form or organization can profit from appropriate application of Corporate Governance principles.
xv. It is not enough to just have a board, but enterprises should strive to have a board that is functional, dynamic, effective and innovative.
xvi. One of the banes of the effective operations of MSMEs in Nigeria is the quest by the owners to be involved virtually in all aspects of control and management such as being the Chief Executive Officer, Chief Financial Officer, Chief Risk Officer and Manager etc. of their businesses when exigencies of such business require delegation of management and control.
xvii. Mastery of Human Capital Management is essential to drive the continued existence MSMEs as indiscreet implementation of this complicated discipline may grossly undermine survival of companies.
Against the backdrop of the above observations, the Forum recommended, THAT:
- All stakeholders must effect a paradigm shift from seeing crises only as negative developments, rather they must change their mindset to seeing crises as not only being useful but also “as terrible things to waste”
- The role of the board during challenging times should essentially include ensuring the safety and wellbeing of all stakeholders, engagement in stricter business continuity and resilience planning as well as supply chain contingency planning. They should also pay greater attention to financial risk management, strategic planning for the future and Information and Communication Technology governance.
- Entrepreneurs must respond by building agility and resilience to shocks into their DNA and actively shape their ecosystems through appropriate innovations They must urgently evolve new business models which may be demand driven with measurable value addition, adaptation to new normal, mitigation of risks and shocks and leverage on technology, among others.
- Everyone has a role to play in the present crisis-ridden corporate reality. The Board must embark on the journey of recovery from COVID-19 through formulated recovery plan which must shift focus
esfrom today to tomorrow and details how to manage uncertainties. This plan must be communicated to senior leadership and based on trust as catalyst of recovery, thus:
- Board Members and Management must exhibit the requisite qualities by showing empathy, communicating effectively, enhancing their relationships, and interpersonal skills, in addition to adapting and innovating to sustain the business.
- Employees, on their part, need to demonstrate ownership, hunger and commitment to excellence. They must develop requisite Emotional Intelligence to cope with the inevitable pressure and stress while imbibing strong values of ethics and integrity. They also need to expand their knowledge and skills to remain relevant in the new normal.
- In order to cope with the order of things in the emerging new normal, entrepreneurs and employees should be able to discern what is
arechanging about their roles and respond accordingly in terms of new skills acquisition, overhauling their competencies and expansion of their frontiers of knowledge.
- Entrepreneurs should endeavour to establish businesses that will outlive them by upholding the tenets of Corporate Governance that conduce to business sustainability. They can do this by anchoring their businesses on the philosophy of producing goods and services that add value and serve utilitarian purposes while running the business ethically.
- Principles of Corporate Governance should be adhered to by all corporate forms as these principles ought not to be limited to parochial application by any sector; they apply, albeit in different scale to MSMEs as well as large corporations.
- Similarly, application of sound principles of Corporate Governance should straddle both the Public and Private Sectors, since in spite of their apparently different objectives; they are convergent in the pursuit of similar qualities of productivity and sustainability.
- MSMEs should have in place a functioning board that will drive the success and sustainability endeavors of the organizations. Without an effective and functional board, successful business operations would be severely curtailed, thus endangering the sustainability dream.
- Stakeholders in the present generations including entrepreneurs and Corporate Governance professionals should endeavor to make a paradigm shift from the mindset of “Accepting what we cannot change” to “Changing what we cannot accept”, meaning, they should strive to be the agents of change rather than passively reconciling themselves with the inauspicious status quo.
- Every board member must strive to positively impact the organization they belong by devoting their energies and talent to add value to such organization while regularly subjecting themselves to self-examining interrogative –“Am I adding value?” as a soul-searching mechanism.
- As a corollary to the above, board members must endeavor to know everything about their roles and keep learning in order to be on top of their game at every point in time.
- Adherence to ethical standards should be the prevailing philosophy driving the operations of the MSMEs and as such, they must refrain from the temptation to sideline ethics to make short-term profit. This will eventually backfire to erode their credibility, long-term profitability and ipso facto, sustainability.
- Furthermore, MSMEs must ensure that the notion of Transparency and Disclosure must be entrenched as the normative policy guiding their organizational practices.
- In addition, MSMEs should ideally have Advisory Boards that provides strategic directive and insightful guidance to them. This will not only offer them the needed precise orientation and professional guidance, but also inspire the confidence of investors to put their resources into the business. It is trite that investors will be disinclined to invest in enterprises that only revolve around self-serving individuals or a small clique of vested interests.
- Likewise, every MSMEs should embrace the culture of compliance as evinced in issues like proper registration of business and regular payments of tax and fulfilling of all requisite statutory obligations. Aberrations of these do not only have
itstheir owndirect inherent risks they also drive awayrepel potential investors into the business.
- Companies must embrace technology in as many ramifications as possible as part of their innovations of seeking more efficient and productive ways of doing things.
- Business owners should learn to transfer some aspects of management to competent professionals when the realities of the business call for such delegation. This enables the enterprises to move to the next level.
- Entrepreneurs should have Enterprise Dispute Management mechanism embedded in the operational framework so as to eliminate rancour, foster diffusion of tension, manage discord and nip in the bud any potential stalemate that might prove detrimental to the interests of their enterprises.
- Every business must take time to reflect and strategize on what its focus should be in the post-COVID-19 era in terms of continued relevance of their goods and services, capacity to operate competitively and sustainaby against the background of the new normal foisted by the pandemic.
- Corporate Governance Practitioners and other stakeholders must strive to evolve a Nigerian brand that the rest of the continent will see as a shinning example, in terms of establishment of credible institutions, thriving business climate and globally respected conglomerates.
- Entrepreneurs should endeavor to master Human Capital Management in order to guide their human resources decision which is critical for effective business operations.
- MSMEs should desist from pernicious practices like engagement of human resources on sentimental grounds; recruiting family members without recourse to merit or sourcing of supplies from acquaintances in defiance of value-for-money consideration as such practices are antithetical to sustainability.
- As Corporate Governance professionals, Chartered Secretaries and Administrators must play a critical role as agents of change in these challenging times. Thus, their role during COVID-19 should include the following:
- Shaping the company leadership’s decision making and implementation to ensure all practices are consistent with the company’s values, policies and the rule of law.
- Serving personally as the standard of ethics, and promoting a culture of ethics and integrity.
- Recording everything in deference to the maxim If it is not recorded, it did not happen.
- Helping the company transition electronically, while maintaining standards and abiding by the industry rules and regulations.
- ICSAN should continue to be the guiding light by driving the conversation with all stakeholders, including the government, regulatory agencies, companies and other organizations with her advocacy and issuance of directives and guidelines on how the operators and regulators in the economy can navigate the troubled waters during present and post COVID-19 era.
Taiwo Ganiyat Olusesi, (Mrs.) FCIS