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Nigeria’s Corporate Governance Remuneration Structure Weak – Report

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corporate-governance
  • Nigeria’s Corporate Governance Remuneration Structure Weak

The corporate governance principles of Nigeria have not provided a remuneration structure for directors of companies, a recent report has shown.

A study by the Association of Chartered Certified Accountants and KPMG on the corporate governance of 15 African countries showed that there was no linkage between the performance and remuneration of company directors.

Speaking at a press conference to unveil the report in Lagos, the Partner and Head of Board Advisory Services, KPMG in Nigeria, Tomi Adepoju, said it was discovered that the standards of corporate governance code across several African countries were aligned with the Organisation for Economic Co-operation and Development Principles of Corporate Governance.

However, findings from the report showed the ability of companies to recoup directors’ remuneration in the event of negligence or fraud was one of the common elements of the OECD-related principles that were not found in Nigeria and other African countries.

Nigeria was also found among the markets that specifically disallowed performance-related payments for non-executive directors together with Mauritius, South Africa, Egypt and Ghana in the report entitled: ‘Balancing rules and flexibility for growth’.

Adepoju said, “We also noted that certain elements of the OECD principles were not featured in a number of markets, including Nigeria. This relates to requirements to allow shareholders to consult each other on issues on their basic rights.

“We all know that in Nigeria, there were instances where companies went under or there were large frauds. In other markets, they go after the director involved and the director has to pay back all the fees he or she has collected. This is not really embedded in a number of codes from Africa. We didn’t see much in terms of allowing performance enhancing mechanisms for employee participation.”

Speaking about the findings in relation to Africa’s development, the Head of Policy, Sub-Saharan Africa, ACCA, Jane Ohadike, said more awareness and efforts would be needed to strengthen remaining critical areas of corporate governance, particularly for remuneration structures, performance evaluation, risk governance, and board composition and diversity.

According to her, most markets mandate the basic corporate governance requirements such as financial disclosure, shareholders’ rights and the role of the board, supplementing these with non-mandatory guidelines for good practice.

Ohadike explained, “Achieving the right balance between rules and flexibility is a tricky task for any country, but of fundamental importance for those where corporate governance is critical to support robust economic growth.

“Although decisions about how to shape a corporate governance framework and how fast to do so may be unique to each market, and there is no ‘one-size-fits-all’, there is value in continuing to compare and incorporate internationally accepted standards of corporate governance.”

“We hope this study can contribute to raising the standard of corporate governance requirements across Africa,” Adepoju stressed.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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