Corporate Governance in Nigeria: Ethical Considerations

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Ufuoma Eferha
Ufuoma Eferha






Corporate governance refers to the rules, practices, and processes by which companies are directed and controlled. Corporate governance and its ethical considerations are essential issues in the corporate sector of Nigeria, especially in the wake of corporate scandals that have affected the country’s economy. The government has taken steps to improve corporate governance with the enactment of the Companies and Allied Matters Act 2020 (“CAMA 2020”) which amended the thirty year old Companies and Allied Matters Act 1990. CAMA 2020 contains provisions promoting transparency, accountability, and responsible business practices. CAMA 2020 includes provisions for establishing a Corporate Affairs Commission (“CAC”) to regulate the activities of companies in Nigeria, provisions for protecting minority shareholders, and the disclosure of information to stakeholders.

There are other initiatives aimed at improving corporate governance in Nigeria, such as:

  • The Nigerian Code of Corporate Governance (“NCCG”) 2018 guides on best practices for corporate governance;
  • The Securities and Exchange Commission (“SEC”) Code of Corporate Governance for Public Companies in Nigeria provides guidance to public companies on corporate governance;
  • The Nigerian Stock Exchange (“NSE”) Corporate Governance Rating System rates listed companies based on their corporate governance practices;
  • The Central Bank of Nigeria (“CBN”) Code of Corporate Governance for Banks and Discount Houses in Nigeria promotes a transparent and effective banking system;
  • The Society for Corporate Governance Nigeria[1] promotes good corporate governance and ethics.

Despite these initiatives, ethics in corporate governance remains a significant challenge in Nigeria due to weak enforcement of regulations, lack of transparency, and limited resources for regulatory agencies. This article reviews some ethical considerations related to corporate governance in Nigeria.

    • Board Composition and Independence: The composition of a board of directors in Nigeria should be diverse and independent. The NCCG[2] provides that a Board is responsible for providing strategic leadership, therefore, it should maintain an appropriate balance of skills and diversity. The SEC Code[3] requires that publicly listed companies have a balanced, independent, and competent The CBN Code[4] also provides a guideline for the board and management of banks and discount houses. The Corporate Governance Rating System (“CGRS”)[5] is another regulatory framework in Nigeria that focuses on board independence and composition. The CGRS rates companies based on their compliance with corporate governance principles, including board independence, diversity, and qualifications. A balanced and independent board can provide adequate oversight, accountability, and strategic direction for a company.
    • Disclosure and Transparency: Disclosure takes place when a company provides financial information and details of its operations to stakeholders, while transparency occurs when this information is open and accessible to stakeholders. Publicly listed companies must disclose financial performance, board composition, executive compensation, and related-party transactions. In corporate governance, disclosure and transparency are crucial in building trust and confidence among investors, creditors, and other stakeholders. The company can achieve this through the timely and accurate reporting of financial and material information related to a company’s operations, risks, and performance. Disclosure and transparency can also help prevent fraudulent or unethical behaviour, providing greater visibility into a company’s operations and financial performance. The series of corporate scandals in the international sphere, such as Cadbury,[6] Enron[7] and WorldCom[8] increased the need for disclosure and transparency to prevent such events from happening again. In addition, the CBN Code provides a guideline on disclosure and transparency in banks and other financial institutions, which are considered systemically important to the economy. Banks are encouraged to disclose important information beyond the requirements of the Banks and Other Financial Institutions Act (“BOFIA”) 2020, CAMA 2020 and other relevant laws.[9] It also provides stakeholders with the information they need to make informed decisions and hold companies accountable for their actions.
    • Corruption and bribery: Nigeria has been ranked poorly in global corruption indices due to the country’s history of corruption. Corruption and bribery in corporate governance can take many forms, including embezzlement, money laundering, and kickbacks. These practices can have negative economic impacts, such as reduced investor confidence, decreased foreign investment, reputational damage, legal sanctions, and financial losses. To prevent corruption and bribery in corporate governance, the Nigerian government has enacted some laws, such as:
    • Economic and Financial Crimes Commission (“Establishment”) Act,[10] for the enforcement of all economic and financial crimes; and
    • Corrupt Practices and Other Related Offences Act,[11] which prohibits and prescribes punishment for corrupt practices and other related offence.

These laws prohibit companies and their employees from engaging in corrupt practices, such as offering or receiving bribes or                       other improper payments.

    • Social Responsibility: Companies in Nigeria should have a social responsibility towards the communities in which they operate. This responsibility includes initiatives that benefit the environment, employees, and local communities. Many companies have recognised the need to go beyond simply making a profit to considering their impact on the society and their immediate In Nigeria, social responsibility in corporate governance can take many forms, such as investing in community development projects, promoting environmental sustainability, and engaging in philanthropic activities. The NCCG[12] provides for Corporate Governance evaluation, an annual evaluation should be carried out by an independent external consultant at least once in three years. This evaluation will determine the extent to which a company has carried out its social responsibility, and if the practices and processes are effective and adequate. One example of initiatives to promote social responsibility in Nigeria is the Nigerian Content Development and Monitoring Board (“NCDMB”),[13] established to work with oil and gas companies to develop local content policies and initiatives that benefit Nigerian communities. Companies, such as Dangote Group, have invested in projects such as education, health, and poverty reduction as Corporate Social Responsibility (“CSR”) initiatives. In addition to these, various industry-specific initiatives in Nigeria promote social responsibility in corporate governance – such as the Global Reporting Initiative (“GRI”)[14] which provides guidelines for sustainability reporting, while the International Petroleum Industry Environmental Conservation Association (“IPIECA”) Sustainability Reporting Guidelines for the Oil and Gas Industry[15] offer guidance on reporting sustainability performance for oil and gas companies.

It is recommended that companies should implement strong internal controls and establish clear codes of conduct to improve the ethical aspect of corporate governance in Nigeria. It is also crucial for the government to enforce regulations in place to promote transparency and accountability and provide the necessary resources for regulatory agencies to carry out their duties effectively.

Companies should take proactive steps to prevent corruption and bribery in their operations. These steps include implementing strong internal controls, such as segregating duties and carrying out regular audits, implementing anti-bribery policies, and conducting due diligence on business partners and third-party service providers. These measures coupled with effective monitoring will promote a culture of transparency and accountability.


Ethical considerations in corporate governance are essential for promoting a company’s long-term success and sustainability in Nigeria. When a company prioritises ethical behaviour, it can improve its reputation, build trust with stakeholders, and minimise the risk of legal and financial repercussions. A company’s policies, culture, and decision-making processes ensure its operations are conducted responsibly and with accountability. Ultimately, companies prioritising ethical considerations in their corporate governance will likely thrive long-term and contribute to a more sustainable and just society.


For further information on this article and area of law, please contact Ufuoma Eferha at S.P. A. Ajibade & Co., Lagos by


[1]     See Society for Corporate Governance Nigeria, a non-profit organisation in Nigeria available at accessed on 2nd of March 2023.

[2]     See Principles 1 and 2 Nigerian Code of Corporate Governance 2018.

[3]     See Guideline 4.1 SEC Code of Corporate Governance for Public Companies in Nigeria.

[4]     See Guideline 2.0 CBN Code of Corporate Governance for Banks and Discount Houses in Nigeria.

[5]     Corporate Governance Rating System (CGRS) was established by the Nigerian Stock Exchange (NSE) jointly with the Convention on Business Integrity (CBI).

[6]     See “Nigeria fines Cadbury Unit for False Accounting”, Reuters (11 April 2008) available at, accessed on 14th February 2023.

[7]     See Troy Segal “Enron Scandal: The Fall of a Wall Street Darling” Investopedia (26 November 2021) available at accessed on 14th February 2023.

[8]     See Adam Hayes “The Rise and Fall of WorldCom: Story of a Scandal” Investopedia (26 December 2022) available at accessed on 14th February 2023.

[9]     See Guideline 5.1.1 CBN Code of Corporate Governance for Banks and Discount Houses in Nigeria.

[10]    See the Economic and Financial Crimes Commission (Establishment) Act available at accessed on 14th February 2023.

[11]    See the Corrupt Practices and Other Related Offences Act available at accessed on 14th February 2023.

[12]    See Principle 15.1 of the Nigerian Code of Corporate Governance 2018.

[13]    See accessed on 14th of February 2023.

[14]    See accessed on 14th of February 2023.

[15]    See

[16]    See Principle 19 of the Nigerian Code of Corporate Governance 2018.

[17]    See Accessed on 14th of February 2023.

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