Weak institutions, bane to business growth – Ambode

Ambode

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Chuks Udo Okonta

Weak institutions make it difficult for businesses in Nigeria to operate up to 50 years, Governor, Akinwunmi Ambode, has said.

He spoke at the Symposium organised by the Rotary International, District 9110, Nigeria on the topic, ‘Business and Professional Ethics on the Economic Growth in Nigeria’ at the Rotary Centre, Lagos, stressing that in Nigeria, the municipal laws operate within very weak institutions, which can hardly carry the capacity of reforms.
Ambode, who was represented by the Commissioner, Lagos State Ministry of Establishments, Training and Pensions, Dr. Benson Oke, said when a nation is bereft of corporate governance culture, her tax regime will be weak; there will be high level corruption, corporate impunity will ride roughshod, law enforcers will become law breakers; reforms will be unworkable, inflation and unemployment will run amok.
He stated that such nation’s tangentially miss out on industrialization and national growth.
He maintained that this is the malaise that has characterized Nigeria for over four decades.
He said this implies that whereas businessmen should maximize profits, they should maintain a good reputation and ethical standards that will not conflict with the goal of profit maximization.

“As has been severally noted, the Nigerian society seems to have some negative practices, habits, and tendencies peculiar to it, this, however, is to the detriment of the country and has given it a bad name in international circles.
In these modern times when societies are in search of sustainable development, we may not be able to go far, or putting it mildly, we may be considerably slowed down in our bid to develop. The rest of the world may not be able to wait for us, even if we are ready to wait for ourselves.

“For instance, there is a sense of entitlement which promotes awards and free handouts ahead of earned benefits. The quota system is an example of this. At the core of it, any system that promotes awards and free handouts ahead of earned benefits is symptomatic of a weak or non-existent ethical code. Thus, the quota system has become a bane of our society and its effect on economic growth is that the occupants of strategic and influential positions and offices will be people who were not appointed or selected under a merit-based system.
“Tax evasion is another prevalent practice that is symptomatic of weak business and professional ethics. One would be surprised at the large number of so-called influential members of the society and top businessmen who are not paying taxes or are not paying the correct amount of taxes in Nigeria. The effect of this on the revenue of the government and the ability of the government to meet its basic obligations is evident and apparent. Thankfully, many governments, and especially, the Lagos State Government under the current administration, is convincing many by sheer display of prudent management of resources that this attitude towards paying taxes must end. There is also the problem of so-called ‘The African Time Syndrome’ has eaten deep into the fabric of our society. The abuse of religion in Nigeria could also be seen as symptomatic of a weak code of ethics in the business and professional circles. And there are so many other examples.

“At St. James Gate in Dublin, Ireland, Guinness was manufactured in 1759. The Company has lived for more than two and a half centuries. The underpinning philosophy is business ethics. The longevity and efficiency of companies like UAC, PZ, etc is attributable to business ethics. In any corporation, what happens when top management colludes with suppliers and rigs the invoice regime without following due process of advertising, tendering and bidding? In a manufacturing firm, what happens when workers engage in pilferage, under-declare sales, bribe auditors, manipulate suppliers just for their personal gains?”

“The result is simple; the Company will incur losses in profitability, efficiency and reputation; its customers diminish because of distrust, there could be layoffs or rightsizing; its operating licenses may be withdrawn if managers circumvent corporate governance, and ultimately, the Company is liquidated. In Nigeria, there is no indigenous company that has a life span of 50 years. The reason is that In Nigeria the municipal laws operate within very weak institutions, which can hardly carry the capacity of reforms. When a nation is bereft of corporate governance culture, her tax regime will be weak; there will be high level corruption, corporate impunity will ride roughshod, law enforcers will become law breakers; reforms will be unworkable, inflation and unemployment will run amok and such nation’s tangentially miss out on industrialization. This is the malaise that has characterized Nigeria for over four decades.”

He pointed out that although the business environment in Nigeria can modestly be described as turbulent, uncertain and rigorous.
“It is constantly changing and in most cases not dynamic enough to adjust to the environment. I agree that business and professional require of everyone the standards businesses should observe in their dealings over and above compliance with the law. Thus, ethical players will be concerned with areas such as fair dealing with customers, suppliers, their labour force and competitors. Good business ethics helps to gain and retain business, customers and other clients.
“Organisations should have a Code of Business Conduct and Ethics which applies to everyone. It must have a fully resourced compliance and ethics office with main responsibilities as inculcating its values, Code of Business Conduct and Global Policies in the organization. It is clear that any business or professional code on ethical conduct must provide trust, integrity, open mindedness, meet obligations, fairness among others”, he added.

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