Nigeria - Responsible Business Conduct Nigeria - Business Conduct
Large local and foreign enterprises generally follow Responsible Business Conduct (RBC) principles as a way to identify with the communities in which they operate and display support for GoN initiatives. Nigeria participates in the Extractive Industries Transparency Initiative (EITI) and is an EITI compliant country. Numerous large local and foreign firms have published policies and guidelines for responsible business conduct.
Major infrastructure projects require an Environmental Impact Assessment certification pursuant to the EIA Act. This law ensures that the significant environmental issues are identified and studied before public and private sector development projects or activities are commenced and that any potential negative effects can be prevented, reduced or mitigated.
The Department of Petroleum Resources (DPR), an arm of the Ministry of Petroleum Resources also ensures comprehensive standards and guidelines to direct the execution of projects with proper consideration for the environment. The DPR Environmental Guidelines and Standards (EGAS) of 1991 for the petroleum industry is a comprehensive working document with serious consideration for the preservation and protection of the Niger Delta.
Companies in Nigeria are expected to ensure that any activity on which they embark is socially friendly and is embedded in their Article and Memorandum of Understanding. In the past, societal expectations from business organizations did not go beyond efficient resource allocation and profit maximization. Today modern business must think beyond profit maximization toward being at least socially responsible to society.
There is no specific RBC law in Nigeria. Several legislative acts incorporate within their provisions certain expectations that directly or indirectly regulate the observance or practice of Corporate Social Responsibility. In order to reinforce responsible behavior, various laws have been put in place for the protection of the environment. These laws stipulate criminal sanctions for non-compliance. There are also regulating agencies which exist to protect the rights of consumers when breached by these entities.
While the GoN has no specific action plan regarding OECD RBC guidelines, most government procurements are done transparently and in line with the Public Procurement Act which stipulates advertisement and a transparent bidding process.
Regulators exist with oversight functions geared towards human, labor, consumers and environmental protections. The Consumer Protection Council (CPC), NAFDAC, SON etc. have the authority to impose fines, and ensure the destruction of harmful substances which otherwise may have sold to the general public. Environmental pollution by multinational oil companies have resulted in fines being imposed locally while some cases have been pursued in foreign jurisdictions resulting in judgment being granted in favor of the oil producing communities.
The main regulators and enforcers of corporate governance are the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (which register all incorporated Companies). Nigeria has adopted multiple reforms on corporate governance. Examples include Code of Corporate governance best practice in 2003 issued by Securities Exchange Commission (SEC). Similarly, in 2006, the Central Bank of Nigeria (CBN) issued a Code of Corporate Governance for banks’ post consolidation. In order to improve corporate governance, the SEC in September 2008 inaugurated a National Committee for the reviewing the Code of Corporate Governance for public companies in Nigeria. It is stipulated that the Board should report annually on the nature and extent of its social, ethical, safety, health and environmental policies and practices. The Securities Exchange Commission issued another Code of Corporate Governance in 2011.
The Companies Allied Matter Act 1990 (CAMA) and the Investment Securities Act provide basic guidelines on company listing. More detailed regulations are covered in the Nigeria Stock Exchange Listing rules. Publicly listed companies are expected to disclose such information in their Annual Financial Reports.
The Banks and other Financial Institution Act 1991 empowers the Central Bank of Nigeria (CBN) to register and regulate bank and other financial institutions. The Insurance Act of 2003 ensures the regulation of insurance companies through the National Insurance Commission (NAICOM).
The Institute of Chartered Accountant of Nigeria (ICAN), the Association of Accountant of Nigeria (ANAN), and Institute of Directors (IoD) also play various roles in promoting effective corporate governance systems in Nigeria. They promote their goals through conferences, seminars and symposiums on compliance with the code of corporate governance practices for listed firms.