corporate governance in nigeria
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Corporate Governance in NigeriaAuthor(s): Boniface AhunwanReviewed work(s):Source: Journal of Business Ethics, Vol. 37, No. 3, Corporate Governance Reforms inDeveloping Countries (May, 2002), pp. 269-287Published by: SpringerStable URL: http://www.jstor.org/stable/25074754 .Accessed: 18/11/2011 04:00
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Corporate Governance
in Nigeria Boniface Ahunwan
ABSTRACT. In recent years, international economic
pressures have induced Nigeria to adopt a program of economic liberalization and deregulation.
Advocates of the reforms tout their potential not only for generating greater economic growth, but also for
contributing to more
responsible corporate gover
nance. Sceptics abound. This paper provides
an
account of the nature of corporate governance in
Nigeria and investigates the prospects for recent
reforms contributing to more responsible governance
and development.
KEY WORDS: corporate governance, economic
development, Nigeria
In the post-colonial period Nigeria, like many
developing countries, adopted an interventionist
development strategy that involved restrictions on
foreign ownership and an active role for gov ernment in key economic sectors, especially infrastructure and oil and gas. This development
strategy, operating in a context of weak market
institutions and a lack of robust political democ
racy, did not result in responsible corporate
Boniface Ahunwan is a Harley D. Hallet Doctorate scholar at Osgoode Hall Law School, York University, Toronto, Canada. Called to the Nigerian Bar in 1991, he has
functioned as a
legal practitioner and later, in-house
attorney with Zenith International Bank, Lagos,
Nigeria, one of Nigeria's leading commercial banks. His areas
of research include comparative corporate gover
nance, securities regulation, globalisation and corporate
governance in developing countries and legal theory. He
has published several papers on these subjects, including his latest, (<Contextualising Legal Theory: Economic
Analysis of Law and Jurisprudence from the African
Perspective" in the African Journal of International
& Comparative Law.
governance. In recent years, international
economic pressures have induced the country to
adopt a program of economic liberalization and
deregulation. Advocates of the reforms tout their
potential not only for generating greater economic growth, but also for contributing to
more responsible corporate governance. Sceptics abound.
This paper provides an account of the nature
of corporate governance in Nigeria and investi
gates the prospects for recent reforms con
tributing to more responsible governance. In
taking up these tasks, I adopt a broad under
standing of corporate governance which includes
not only the functioning of corporate boards, but
also other key factors (e.g., the financial and
banking systems, macro economic policy, the
legal system) which comprise the context in
which boards make decisions. Underlying the
investigation of this issue, of course, is concern
about whether the reforms will have any signif icant impact in terms of fulfilling the aspirations of the Nigerian people for economic, political and social development.
The paper proceeds in the following manner.
The first section provides a short account of the
context in which corporate governance occurs
in Nigeria. The second section examines the
ownership structure of the corporate sector.
Next, an account of the problems of ownership and control, especially as they relate to minority
shareholders, is provided. The following section
investigates the role of company law and the legal
system in corporate governance. The role of
markets is then taken up. Finally, the nature of
recent reforms in Nigeria are examined,
including their prospects for contributing to
more responsible governance.
-^g- Journal of Business Ethics 37: 269-287, 2002. r ? 2002 Kluwer Academic Publishers. Printed in the Netherlands.
270 Boniface Ahunwan
I. The context of governance
The concept of the corporation is foreign to the
indigenous customary business practices of pre colonial Nigeria. The first corporations to
operate in Nigeria, British companies chartered
in England, arrived in the second half of the 19th
century. One of first and most influential of these
was the National African Company (later renamed the Royal Niger Company), which was
chartered in 1886 (Ukpabi, 1987, p. 3). Between
1862 (when colonial rule was formally estab
lished in Nigeria) and 1912, all of the corpora tions that operated in Nigeria were foreign
companies registered in England and subject to
the law and ideology of the British corporate
governance system (Orojo, 1992). The first
corporate statute in Nigeria was enacted in 1912.
However, corporate governance in Nigeria
during the period of colonial rule remained a
part of the British system of corporate gover nance. It is only in the post-colonial period that
we can begin to speak of "Nigerian" corporate
governance.
The post-independence development strategy
Following independence in 1960, several factors
affected the direction of corporate governance in
Nigeria. Perhaps, most important among these
were the dominant ideological convictions of the
post-colonial period, which stressed economic
self-dependence. Economic self-dependence was
primarily understood in terms of indigenous
ownership and control of the means of produc tion and was operationalized into two basic broad
areas.
First, the government imposed absolute
control over public utilities, infrastructure and
social service provision by establishing state
owned corporations. While there was significant interest among foreign investors, especially
British corporations, in many of these areas, the
state prohibited foreign ownership. In many
instances, the state did not even permit partici
pation by private, domestic corporations. Activities in such areas as electricity generation and distribution, telecommunications, postal and
telegraphic services, shipping and ports, and air
travel, among others, were restricted to wholly owned state corporations.
Second, the government promoted indigenous
ownership in other sectors of the economy. Two
pieces of legislation were key to this strategy,
viz., the Foreign Exchange Control Act of 1962
(hereinafter "the FX Act") and the Nigerian
Enterprises Promotion Decree, No. 4 of 1972, often
referred to as the "Indigenisation Decree" (here inafter "NEPD"). The FX Act prohibited the
creation or transfer of any security or interest in
a security in favour of a person resident outside
Nigeria except with the permission of the
Minister of Finance. For its part, the NEPD
Decree restricted foreign ownership by creating three schedules of enterprises: (i) enterprises
exclusively reserved for Nigerians; (ii) enterprises in respect of which foreigners cannot hold more
than 40% of the shares, and (iii) enterprises in
respect of which foreigners cannot hold more
than 60%.1 This classification was based on the
perceived financial and managerial needs of the
country at the time. The second schedule was
comprised of manufacturing companies where
foreign participation was expected to bring
foreign capital and managerial expertise. The
third schedule included capital-intensive enter
prises (Kachikwu, 1988; Orojo, 1992; Yerokun,
1992).
The social context
Although there was a great deal of optimism in
1960 about the development prospects of the
newly independent country, forty years on
Nigeria is still largely underdeveloped. The
country still lacks an efficient infrastructure (e.g., communications and transportation systems,
electricity, water, etc.), unemployment rates are
high and social needs far outstrip social programs. In addition, the country is rife with corruption and divided by ethnic and tribal tensions (Federal
Office of Statistics, 1996). These features of Nigeria socio-economic
development have major repercussions for
business, both in the private and public sectors
(Akanki, 1994). In commenting on the problems
Corporate Governance in Nigeria 271
of the Nigerian economy, a former Governor of
Central Bank of Nigeria expresses a frustration
felt by many:
[t]here appears to be a certain built-in stubborn ness in the attitude of the typical Nigerian economic agent
... It manifests itself in a strong
propensity to circumvent laid-down rules of
economic behaviour and to resist control and
regulation ... it tends to encourage a kind of
softness and lukewarmness in the application and
implementation of legitimate rules of economic
conduct. Hence it provides a fertile ground for
bribery, corruption, idleness and the contrivance
of get-rich quick attitude which are antithetical to hard work and discipline (Ahmed, 1996, p. 14).
Of course, the nature of Nigeria's problems are
not only rooted in the attitudes on individual
Nigerians, but are also related to larger political and economic structures and practices. In what
follows, one of these key structures, the owner
ship pattern in the corporate sector, is examined.
II. The ownership structure of Nigerian
corporations
In Nigeria, as in many former colonies, the
government of the newly independent country
perceived a need for greater local control over
productive resources, which during the colonial
period were largely dominated by foreign owners. It was in this context, that the govern
ment enacted the FX Act and the NEPD with
the intention of effecting a change in the own
ership structure of Nigerian corporations. Some
Nigerian scholars have expressed doubts as to
whether the NEPD had any significant impact on
corporate governance and, in particular,
whether there were any effects on the owner
ship structure of Nigerian corporations (Yerokun,
1992, pp. 228-230). Such skepticism about
changes in ownership is not completely unfounded as there have been many reported cases of Nigerian citizens fronting for foreign
entrepreneurs to satisfy the ownership require ments of the NEPD (Achebe, 1989, p. 663).2 It
would appear to most commentators, however -
the various efforts to circumvent the provisions
of both the FX Act and the NEPD notwith
standing ? that the enactments did have signifi
cant effects on the ownership structure of
Nigerian corporations and corporate governance. The major way in which ownership structure
was affected was through the provision that
prohibited 100% foreign ownership in a variety of sectors. Many foreign corporations had to
divest their shareholding to satisfy the new
requirements. It was the Nigerian government that ended up buying a majority of the divested
shares, as there was not sufficient domestic invest
ment funds available (Yerokun, 1992). This
further entrenched government participation with foreign partners in industrial and commer
cial ventures. Most of the divested shares that
were not purchased by the government, were
bought up by a small number of very wealthy
Nigerians (Akinsanya, 1983, p. 169). The combined effect of the government's
macro-economic policy objectives and its legis lation on foreign ownership are easy to imagine. In many instances, the government became
proactively involved in productive activities,
owning industrial, commercial and service
provision corporations, either solely or in joint ventures with other foreign or local investors. In
other cases, foreign investors continued to
operate as majority (or controlling) partners with
the government and other local investors. Other
local investors operated either as (minority)
partners with foreign investors or through small
family-owned corporations. The ownership structure resulting from government policy can
be best classified under four categories.
Category "A" can be conceived as composed of corporations wholly-owned by government. Both the federal government and state govern ments operate wholly-owned corporations,
including four major petroleum refineries (owned
by the Federal Government), petrochemical
plants, insurance companies, banks, hotels and a
range of other enterprises.
Category "B" comprises joint venture
arrangements between the federal government and foreign crude oil producing corporations.
Although the government operates joint venture
arrangements in other sectors, it makes sense to
include this sector as a separate category due to
272 Boniface Ahunwan
its immense importance to the national economy. A key indicator of the importance of this sector
is the fact that the government of Nigeria derives
about 97 percent of its total revenue from joint ventures in oil and gas (Federal Office of
Statistics, 1997). Table I, below, indicates the
shareholding structure of the major Group "B"
corporations.
Group "C" consists of publicly listed corpo rations. Here foreign investors operate with local
investors in the industrial and commercial sector.
The foreign investors are mostly subsidiaries of
multinational enterprises. Table II below shows
the shareholding structure of the nine most
capitalized corporations in the Nigerian Stock
Exchange. As indicated by the shareholding structure, foreign investors hold a majority or
controlling interest in many of the corporations.
Finally, Group "D" consists of privately owned
corporations that are not listed in the stock
market. Most of the corporations are family owned. A majority of them are small companies, owned and operated by families and friends and
lacking business sophistication. Some of these
enterprises, however, are quite large, with a
capital base comparable to many listed corpora tions. Banks, insurance and various industrial
corporations corne under this category. Both
foreign and local entrepreneurs operate in this
category.
As the discussion above indicates, a prominent feature of the ownership structure of Nigerian
corporations is majority (or substantial minority)
ownership. Even apart from the 100% govern ment-owned corporations in group "A," in
groups "B," "C" and "D" majority (or strong
minority) ownership is the norm. In group B,
majority ownership is exercised by government. In the publicly listed corporations in Group "C,"
majority ownership may be vested in govern
ment, foreign investors (especially TNCs) or local
entrepreneurs. In group "D" corporations,
family-control is the norm for local firms.
Some corporate law scholarship suggests that
the corporate ownership structure is a feature of
the availability of protection to minority share
holders. La Porta et al. (1996; 1997) argue that
a widely dispersed shareholding structure, such
as obtains in the United States, is due to the
availability of good protection to minority share
holders. Conversely, they argue, countries with
poor investor protection have more highly concentrated ownership of shares. La Porta
(1998) has recently sought to demonstrate this
TABLE I
Group "B" companies
Name of company Percentage of
foreign holding
Percentage of
govt. holding
Type of company
Shell Petroleum Co. Nig. Ltd.
Chevron Nig. Ltd.
Mobil Producing Nig. Ltd.
Nigeria Agip Oil Ltd.
Texaco Overseas Nig. Ltd.
Elf. Nigeria Ltd.
Pan Ocean
Shell
Elf:
Agip
30% 10% 5%
Chevron 40%
Mobil Int. 40%
Agip Phillip
Texaco
Chevron
Elf.
20% 20%
20% 20%
40%
Pan Ocean 40%
55%
60%
60%
60%
60%
60%
60%
Private company
Private company
Private unlimited company
Private company
Private company
Private company
Private company
Source: Nigeria Economy, http://www.Mbendi.com.energysector.html.
Corporate Governance in Nigeria 273
TABLE II
Group "C" companiesa
Name of company Shareholding structure (%) Market capitalisation
Nigerian Breweries Pic
First Bank of Nig. Pic
Union Bank of Nigeria Pic
Guiness Nig. Pic
West African Portland Cement
United Bank for Africa Pic
Nestle Foods Nig. Pic
Mobil Oil Nigeria Pic
Total Nigerian Pic
Foreign: Heineken BV - 41.67
Others: 58.33
Widely dispersed
Widely dispersed
Foreign: Guiness Oversea - 42.21
Otalataf-7.77
Others: 50
Foreign: Ass. Int. Cement - 39.48
Domestic: Odua - 26.85
Federal. Govt. -
16.58
Widespread
Foreign: Nestle S.A. - 56.90
Others:
Foreign: Others:
Foreign: Others:
43
Exxon Mobil - 60
40
Total Fina Elf Soc. An. - 60
40
NG. 32b
NG. 18b
NG. 14b
NG. 13b
NG.12b
NG. 12b
NG. 10b
NG. 10b
NG. 10b
a This is based on Nigerian Stock Exchange corporate profile as at January, 2000. The capitalization in Nigerian
currency with exchange rate of Nil0 to US$ (S.B.A. Research Ltd.).
thesis by empirical studies, on the basis of which
it is affirmed:
In countries with good shareholder protection, where expropriation of minority shareholders is
limited by law, investors pay higher prices for their
shares, and hence controlling shareholders are
willing to reduce their stakes or even give up
control. As a consequence . . .
ownership is less
concentrated. In contrast, poor shareholder pro
tection countries have both more concentrated
ownership of firms and narrower and smaller stock
markets.
La Porta 's proposition about shareholder pro tection may help to account for some of the
behaviour of foreign corporations with respect to
their ownership strategies, but it probably plays a secondary role, especially when one considers
the entire economy. Macro-economic policy and
political development, such as regulation of
foreign investment noted above, would seem to
be much more important explanatory variables
in the Nigerian case than considerations of
shareholders' protection.
III. Problems of ownership and control
Historically the study of corporate governance has been closely linked with the abuse of share
holder rights. Initially, this problem was con
ceived of in terms of a principal-agent problem in which the management (agents) of widely
held firms were increasingly able and predisposed to maximize its own interest rather than those
of shareholders (principals). It has also been
argued, especially in relationship to the analysis of developing countries, that a similar problem exists between majority and minority owners in
which the former are largely able to ignore the
interests and rights of the latter. A variation of
this problem involves government participation in the economy, where government, as an owner
(or regulator) is able to adversely affect the
274 Boniface Ahunwan
interests of shareholders. In what follows we will
examine the nature of these three problems as
they arise in the Nigerian context, characterized
as it is by the concentrated ownership structure
discussed above.
Management vs. Shareholders
Although the recent literature correctly suggests that the predominant problem in most devel
oping countries is a conflict between majority and minority shareholders, this does not mean
that the classical principal-agent problem (Jensen and Meckling, 1976) does not arise. In Nigeria, the problem occurs in and is exacerbated by the
context of a political culture of corruption and
bribery, ethnic tensions and rivalries, poorly
functioning markets (e.g., information asymme
tries) and a lack of adequate infrastructure. In this
context, many managers and directors have been
able to use corporate opportunities and resources
for their own personal benefit at the expense of
the corporation and its shareholders.
The agency problem as it arises in the
Nigerian context is exemplified by the case of
Lever Brothers Nigeria Pic. (hereinafter "LBN"). LBN is a public listed company in Nigeria. The
Unilever Group U.K. has a 52% stake in the
company. Between 1996 and 1998, there were
reports of abuse by senior management, including insider dealings, shares racketeering and the
awarding of supply contracts to companies in
which senior management had interests (Ogbu,
1998). Sources also disclosed that one of the key officers of the company had up to 18 official cars,
while almost all of the company's major contracts
were handled by a company registered in his
wife's name. The reports further revealed that
employment and other management decisions
were based more on ethnic solidarity than effi
ciency considerations (Ogbu, 1998).
Corporate abuse in Lever Brothers culminated
in serious financial irregularities. The Nigerian Stock Exchange suspended the company in 1998
for submitting an annual return with irregulari ties. The company's turnover in the first quarter of 1997 before adjustment stood at N4 billion,
with a profit before and after tax at N791.3
million and N554.7 million respectively. After
adjustment, there was a N5.8 billion turnover, while profits before and after taxes were N351
million and N244.95 respectively (Ekanem,
1998, Moyela, 1998). The Lever Brothers case raises several issues,
but most important for our concerns here is the
inability of majority shareholders to monitor
management in the Nigerian context. While the
Unilever Group, U.K. exercised majority own
ership, this did not ensure efficient monitoring of local management. Schleifer and Vishny
(1997) have argued that the effectiveness of large shareholders' control of management is intimately tied to their ability to enforce voting rights to
remove management. In the Nigerian context,
this factor is of minimal importance. The
majority shareholders have the votes to remove
local management without much resistance. The
problem is that they are not able to effectively monitor management as a situation of endemic
corruption, ethnic loyalty, and infrastructural
problems make corporate abuses difficult to
detect.
Many Nigerian commentators have argued that the Lever Brothers situation was further
compromised by the inability of regulatory bodies to monitor the activities of listed com
panies. It is noted for instance, that for more than
one year after the discovery of the financial
irregularities, the Nigerian Securities Com
mission still had not commented on the case
(Ekanem, 1998).
Majority vs. Minority shareholders
As highlighted above, ownership in Nigerian
corporations is highly concentrated. La Porta et
al. (1996) have suggested on the basis of
empirical studies that, in countries with con
centrated ownership, exploitation of minority shareholders tends to be the basic problem.
Therefore, the major challenge of corporate
governance in such countries is restricting such
exploitation. La Porta et al.'s studies accords with
the earlier work on the problems of majority share ownership (Morck et al., 1988).
Clearly, in Nigeria concentrated ownership
Corporate Governance in Nigeria 275
entails problems for minority shareholders. It is
important to investigate, however, the nature of
these problems and examine whether they arise
from majority ownership itself or other causes.
The importance of this question is highlighted
by the fact that ownership (and, particularly,
control) is also concentrated in economic powers such as Germany and Japan. In Germany, one
study estimates that in over 80% of large German
public corporations there are large (non-bank) shareholders (Gorton and Schmid, 1996;
Mulbert, 1998). For their part, large commer
cial banks in Germany control over a quarter of
the votes of major public companies through
proxy voting arrangements. In Japan, although concentration levels are not as high, banks are
able to exert similar influence through a high level of cross-holding between major banks
(Berglof and Perotti, 1994). Advocates of the German and Japanese model
frequently argue that their ownership and control
patterns have advantages over a more dispersed
ownership system. Some of the imputed benefits
are that majority shareholders, such as the
German banks, have better access to corporate information and can act as owners and exert
control over managers (Myers and Majluf, 1984,
Diamond, 1991, Nuti, 1992). Research also
demonstrates that in countries such as Japan, dominant shareholders, like the Japanese banks, facilitate long-term relationship (Hoshi et al.,
1990). What these studies seem to indicate is that
more important than the fact of majority own
ership is the nature of majority ownership.
Important aspects of the nature of majority
ownership are the social and institutional context
in which ownership is exercised. Concentrated
ownership in Nigeria is different from the
German or Japanese model. In the Group C
corporations in Nigeria - where the majority
shareholders can be government, foreign investors or local investors - the social context
(e.g., corruption, an uneducated investing public,
etc.) and weak institutional arrangements (an inefficient judicial system, weak capital markets,
etc.) facilitate (rather than prevent) the exploita tion of minority shareholders by majority shareholders. The dispersed minority share
holders are unsophisticated, with little knowledge
of or concern about the internal management of
their corporations and few options for redress
once problems arise. The net result is that
majority shareholders are effectively able to
expropriate the benefits of control without regard to the interests of minority shareholders.
Government ownership
Another problem associated with majority
ownership in Nigeria is government ownership
(and influence). In corporations wholly-owned
by the government, corporate governance and
partisan political considerations merge. Several
years of military rule and unimaginable levels of
corruption have adversely affected the manage ment of public sector corporations. Appointment
to the board, senior management positions and
even lower cadres is often based on political
connections, ethnic loyalty and/or religious faith
as opposed to considerations of efficiency and
professional qualifications (Akanki, 1994;
Yerokun, 1992). Furthermore, coming under the
authority of government ministries, these cor
porations are also subject to the rent-seeking behaviour (Bhagwati, 1982) of politicians and
bureaucrats, which further reduces level of pro fessionalism and productivity in these enterprises. These problems are also reflected in the Group B (and some group C) corporations where the
government operates in joint venture with
foreign multinational corporations. Whether the
extent of the problem is significantly mollified by the presence of private sector actors is unclear.
IV. Company law and the legal system
A key role is played in corporate governance by
company law and the legal system. Company law
lays down the "rules of the game" for the
internal operation of the corporation including such key issues as the nature of shareholder rights, the organizational structure of the corporation, etc. The legal system is important for corporate
governance not only insofar as it plays a role in
the enforcement of company law, but also to the
extent that it is charged with enforcing a wide
276 Boniface Ahunwan
range of contracts that corporations make with
various external actors (e.g., suppliers, distribu
tors, partners in joint ventures, etc.). In Nigeria company law has historically been
strongly influenced by the example of the U.K.
As a result of this, shareholders have in principle
enjoyed many of the same legal rights as
shareholders in the dominant Anglo-American economies. What has been lacking in Nigeria,
however, is an effective judicial system capable of
enforcing formal rights. In addition to a weak
judicial system, the Nigerian economy has also
been characterized by undeveloped market insti
tutions, a high level of information asymmetries,
deep rooted corruption and a general disregard for the rule of law (Ahunwan, 1998). These
defects dramatically increase the costs of con
tracting and make business activities much more
risky ventures (La Porta, 1998). To address these practical problems, Kraakman
et al. (1995; 1996) have suggested certain basic
features that should be implemented in corpo rate governance rules in developing countries
such as Nigeria. Basically, the overall purpose is
to make corporate governance rules "self
enforcing," that is, to rely for their success on
actions and decisions by direct participants in the
corporate enterprise (shareholders, directors,
managers), rather than by indirect participants
(judges, regulators, legal and accounting profes
sionals, financial press.) These features include:
1. direct participation of the parties in the
corporation by: shareholders approval, cumulative voting for directors, require
ment of one share, one vote, and unitary
ballot; 2. a high degree of protection for minority
shareholders and provision of appraisal
rights for dissenting shareholders to major
decisions; 3. the use of procedural protections such as
approval of certain decisions by indepen dent directors and shareholders;
4. board powers to set dividends and estab
lish company policies; 5. takeover rules requiring notice to the
company of any acquisition of shares above
15% ownership and a requirement that
shareholders who acquire more than 30%
acquire all the shares; 6. a requirement that shares be issued only at
market value with pre-emptive rights to
shareholders; 7. provision of safeguards for employee share
holders against voting control by managers; 8. strong legal remedies; 9. use of clear language in legislation that
defines proper and improper behavior.
Many of these rules are also endorsed by La
Porta as measures to regulate the problems of
majority ownership. Thus, among the measures
that La Porta (1998) suggests are: one share one
vote, proxy voting, shares not to be blocked
before voting, cumulating voting system/
proportional representation, oppression remedy,
pre-emptive rights, mandatory dividends and
notice to company after a percentage threshold
of ownership.
Berglof and von Thadden (1999), however, have criticized these studies. They argue that, even though protection of minority shareholders
is necessary for developing countries, there are
still significant problems of enforcement. They also argue that these measures are unlikely to
solve one of the major problems of corporate
governance in developing countries, that of
"crony capitalism" (Krugeman, 1998). According to this perspective, problems associated with
government participation require measures other
than investor protection. Specifically, they require a dismantling of government intervention in the
economy, including the privatization of state
owned enterprises. In Nigeria, many of the measures advocated
to protect minority shareholders were already
incorporated into Nigerian law in 1990 through the Companies and Allied Matters Act (1990), even
before Kraakman's paper was published (see Table
III). Highlighted in the new Act is the right of shareholders to participate in the management of
the corporation. Thus, for example, in addition
to the director-called shareholders' meetings, shareholders holding a required percentage of the
shares can also requisition meetings (as can the
Corporate Affairs Commission, the body established to administer the Act). Voting rights
Corporate Governance in Nigeria 277
TABLE III Procedural protections in Nigerian Company Law
Type of protection Section of Act
One share, one vote ss. 116, 224?226
Cumulative votinga S226
Removal of directors by shareholders without cause s. 262
Requirement of shareholder votes on fundamental transactions *b
Requirement of shareholders' approval of director's self dealings ss. 277, 284 and 287
Appraisal rights in mergers, takeovers and reconstructions involving transfer of shares0 ss. 593 and 608
a The Kraakman features required proportional representation of directors.
b Several fundamental changes on the corporation require shareholders votes. They include alteration of objects
and articles of the company, CAMA 2. 46 and 48, alteration of the share capital by increase, consolidation, convert ion, subdivision or cancellation, CAMA s. 100 and 101, declaration of dividend, s. 379 etc. c
There are some debates however on the protective strength of the appraisal remedy. Frank Easterbrook and
Daniel Fischel argue that appraisal remedy protects shareholders from value decreasing transactions and that
"[AJppraisal's principal effects occur ex ante and increase the welfare of all shareholders, not just those who
happen to be in a minority ex post." (1991, p. 145). Bayless Manning (1962, pp. 223-234) sees the appraisal
remedy as a drain on a
company's liquidity and could deter other value-enhancing transactions. See also V.
Brudney and M. Chirelstein (1974) arguing that free-rider problems limit the efficiency of appraisal remedies.
I subscribe to Kraakman et al.'s view. In a country where the problem of minority oppression is serious, like
the company's welfare is so intertwined with the majority interest that an equally profitable exit must be provided for the minority shareholder.
have also been strictly defined and the Act has
abolished the issuance of non-voting shares. It
also upholds the principle of one vote for one
share (except in certain defined circumstances
involving the interests of preference share
holders). Strict rules on disclosure requirements are also provided for in the Act, such as the
requirement for the filing of annual returns, an
audit report, and provisions for accounting
reports. In addition, the new Act also provides
strong legal remedies, including the statutory derivative action, the oppression and unfair
prejudice suit, and other personal remedies for
shareholders (see Table IV). As seen above, the Nigerian statute employed
many of the substantive, procedural and remedial
strategies of Kraakman's "self-enforcing model."3
The case of Nigeria, as well as those of many other developing countries, raises some obvious
questions for this model, however. How effec
TABLE IV Shareholders' remedies in Nigerian Company Law
Type of Shareholders' Remedies Section
Shareholders' action for oppressive and unfairly prejudicial act ss. 310-313
Shareholders' derivative action ss. 303-309 Shareholders' personal action under the common law minority protection actions ss. 299-301 Shareholders' rights to apply to the Corporate Affairs Commission for investigation
of company's management/ ss. 314-330
a Only shareholders holding not les than one quarter of the issued shares may make this application. CAMA ss.
314 (2) (a). The merit of such administrative remedy in a country with deficient resources, non-functioning but corrupt administrative system is questionable. See Ahunwan (1998, pp. 158-163).
278 Boniface Ahunwan
tive, for example, is the principle of self-enforce
ment in emerging countries with uniquely weak
judicial systems, inactive capital and product
markets, and a pernicious management and
business culture? How effective are strong legal remedies in isolation from a supportive macro
economic, social and political context for
responsible corporate governance? In trying to answer such questions, it may be
appropriate to refer to the experience of Russia
where the new corporate law, drawn up from
scratch, included even more of the features of the
self-enforcing model than Nigerian law does
(Kraakman et al., 1995). Five years after its
implementation, the architects of the Russian
statute, and indeed, the authors of the self
enforcement "hypothesis" have accepted that
their faith in the self-enforcing model was
misplaced (Black et al., 2000). Kraakman et al. identified three major factors
for the failure of the Russian system. These are
the flaws in the privatization exercise, self-dealing
by managers and majority shareholders and more
general economic conditions. Specific to corpo rate governance, they identify major social, economic and political factors that thwarted the
effectiveness of the self-enforcing model. These
include the absence of an institutional infra
structure to control self-dealing (such as prose
cutors, experienced business lawyers, judges, effective capital and commercial law), a business
culture of law avoidance, corruption, judicial
corruption, and poor management (Black et al.,
2000). But are these not the problems that the
self-enforcing model is supposed to curb? The
authors seem to agree, albeit regrettably.
According to them,
writing good laws can take years and building good institutions takes decades. . . . The laws did indeed
follow. . . . But the privatizers hoped for more than
just decent laws. They hoped that broad private
ownership would create a constituency for
strengthening and enforcing those laws. That didn't
happen (Black et al., 2000, pp. 1750-1769).
The Russian experience is not unique however. Nigeria implemented the self-enforce
ment strategy in 1990. In spite of the strong legal remedies and the ample procedural and structural
protection afforded to shareholders, the Nigerian
corporate governance system still remains largely inefficient.
V. Market control
In addition to legal rules, market forces also act
to discipline corporations and promote more
responsible behaviour. Three types of market are
most important in this regard, product markets, the market for managerial talent and capital
markets. The ways in which markets are supposed to contribute to responsible governance have
been well articulated in the literature on the
Anglo-American model of corporate governance,
perhaps most notably by scholars in the field of
the economics analysis of law. In what follows, we examine the role of each of the three markets
as they function in the Nigerian context.
Product markets
The basic role of the product market in disci
plining management flows from standard
understandings of neo-classical economics. In
competitive markets, corporations are forced to
minimize cost in order to ensure that their
products are competitive. If their prices are not
competitive, then their products will be driven
out of the market by other similar products and
render the company insolvent. As a result of this
market pressure, managers are restrained from
pursuing their self-interests for this would
increase costs, make the firms products uncom
petitive and result in the removal of management
(Butler, 1989, p. 114).
Despite the mathematical elegance of neo
classical accounts of general equilibrium, there
is good reason to question the role of product markets in imposing discipline upon management
in the real world. One obvious problem is that
many product markets are oligopolistic in nature
and therefore do not effectively subject manage ment to pressure. A related argument offered by
Jensen and Meckling (1976) states that since all
of the firms competitors (assuming a separation of ownership and control) are also subject to
Corporate Governance in Nigeria 279
agency costs, these costs are effectively passed on
to consumers rather than eliminated.
A final consideration that further serves to
downplay the importance of the product market
as a disciplinary device relates to the role of
marketing and advertising. In Nigeria, there is an
obsession among consumers with foreign goods. Researches have established that Nigerian
consumers harbour a very negative image of
"made-in-Nigeria" labels, and rate them lower
than labels from other more developed countries
(Okechukwu and Onyemah, 1999). While con
sumers' preferences for foreign goods correlates
to some degree with superior reliability and
technological sophistication, such objective factors alone cannot entirely account for this
obsession. The implications of this with respect to the disciplinary role of the product market,
then, are that the market does not necessarily reward management according to performance in
terms of productive efficiency, innovation, etc.
and, to the degree this is so, does not serve as a
disciplinary device.
The market for managers
A second form of market control is the market
for managers. One dimension of the managerial
market, which sorts and compensates managers
according to performance, is that it should deter
managers from abusing their positions by pro
viding them prospects of promotion and instilling fear of dismissal (Fama, 1980). Many studies
support the fact that the fear of discharge and
internal competition do in fact, exert pressure on
managers especially, middle level managers.4 Another aspect of the market for managers is that
it is supposed to align the interests of managers with shareholders' interests through performance related compensation (Fischel, 1982, pp.
918-919).5 In the Nigerian context, the effects of the
market for managers in disciplining management are ambiguous. It would be expected that in
economies plagued with enduring unemploy ment problems, the fear of dismissal would serve
as an effective deterrent against corporate abuse.
In private sector corporation, such prospects do
serve as a deterrent, though more among middle
level management than senior executives (who
may be harder to monitor). In wholly-owned state corporations and joint ventures, however, the story is different. Here, due to bureaucratic
structures and political influence, it is frequently not standard measures of executive performance that ensure (senior) management security or
maximal compensation packages. Rather, loyalty to political and administrative patrons and not
challenging the status quo may be more effec
tive strategies (Chrite and Hudson, 1998). This
situation is further complicated and exacerbated
by the socio-economic conditions and religious and ethnic ties (Olukoshi, 1996, p. 8).
The capital market
Perhaps the most effective form of market control
potentially comes from the discipline of the
capital market. The role of capital markets in
disciplining management is twofold. On the one
hand, share prices provide shareholders with an
important measure by which to evaluate man
agement performance. On the other hand, capital markets present a direct threat to poorly per
forming management in the form of hostile
take-overs (in the aftermath of which incumbent
management is generally ousted). For capital markets to serve either of these functions, the
market must be relatively large and enjoy a
certain degree of liquidity. In Nigeria, the capital market has historically
been underdeveloped, even by the standards of
developing countries, and has played little role in
governance. Table V offers a comparison of the
Nigerian capital market with those of some other
developing countries.
As the table indicates, while countries such as
Malaysia, Israel and Egypt each have a GNP just under three times the size of Nigeria, the dis
parity in the market capitalization is significantly
greater - a market capitalization of US$98 557,
$39 628 and $24 381 respectively, against Nigeria's $2887. Comparisons with smaller
economies such as Zimbabwe, Ghana and Cote
d'Ivoire indicate a similar situation. While
Nigeria's GNP is more than triple that of these
280 Boniface Ahunwan
TABLE V
Capital markets of selected developing countries
Country GNP (1998) (US$ million)
No. of listed
companies
Market capitalization (US$ million)
Average corporation size
(US$ million)
South Africa
Israel
Malaysia
Egypt Pakistan
Nigeria Cote d'Ivoire
Ghana
Zimbabwe
136 868 96 483 81 311 79 185 61 451 36 373 10 196
7269 7214
668 650 708 861 781 182 50 21 67
170 252 39 628 98 557 24 381
5418 2887 1818 1384 1310
392.9
99.1
192.1
31.8
9.1
15.2
38.9
46.1
35.9
Based on IFC Report: Emerging Stock Market Factbook (2000).
smaller countries, its advantage in terms of
market capitalization is much smaller percentage wise.
The major reason for this situation should be
obvious from the discussion above. The biggest
Nigerian corporations are in the Group A and
B categories, which are not listed in the capital market. As many of these corporations are valued
at over US$2 billion each, their absence from the
capital market is a major factor in the market's
underdevelopment. Part of the problem here
clearly has to do with government ownership
(and regulation). It is not entirely clear, however, that privatisation and deregulation would alter
the situation significantly as large foreign corpo
rations, especially in the oil and gas sector
(which, as noted above, accounts for 97% of
government revenues in Nigeria), typically incor
porate their subsidiaries as private rather than
public companies when operating in developing countries.
An important corollary of the undeveloped
capital market is that a culture of equity finance
has not developed among Nigerian corporations.
Rather, corporate finance still largely relies on
personal or corporate savings and bank finance.
Bank finance, however, does not operate as it
does in the German and Japanese models, which
often involves banks holding equity. Bank finance
in Nigeria comes exclusively in the form of
short-term loans, typically secured by corporate assets. The short-term nature of bank finance
creates uncertainty and instability in interests rates
and inflation. Furthermore, with adequate
security, the banks do not really have the same
incentives as German banks to monitor corpo rate behaviour.
The small size and illiquidity of the capital market, combined with the ownership structure, means that the threat of takeover plays virtually no role in disciplining management and pro
tecting minority shareholder rights. This situa
tion can be illustrated by the case of Lever
Brothers Nigeria Pic. As noted above, a series
financial irregularities, misappropriations and
management inefficiencies in this firm were
reported. In line with the theory of market
control, market operators and investors reacted
to the mismanagement. The Nigerian Stock
Exchange slammed the stock price down.
Unfortunately however, there was no bid for the
shares or takeover. The minority shareholders lost
in two ways from the operation of the invisible
hand in the Nigerian context. They lost both
from the decline in corporate growth resulting from the mismanagement and from the reduction
in share prices. Thus, while the market protects
widely diversed minority shareholdings in the
American system, it does the opposite in Nigeria.
Majority shareholders, however, benefit from
market illiquidity in two ways -
they not only encounter reduced share prices, but are in a
better position to consolidate their holding (La
Porta, 1998).
Corporate Governance in Nigeria 281
VI. Recent developments and future
prospects
Nigeria, like other developing countries, is facing
pressures to become more integrated into the
global economy. What integration requires in
practical terms is adopting programs of economic
liberalization and deregulation. As a result of
these pressures, the government has introduced
reforms in several key areas related to corporate
governance. In what follows we examine these
recent changes in government policy as well as
other some other changes that may affect cor
porate governance practices.
Deregulation of foreign ownership
In 1995, the restrictions on foreign ownership of
shares were removed with the repeal of both the
FX Act and the NEPD. These enactments were
replaced by foreign investment friendly legisla tion in the form of the Nigerian Investment
Promotion Commission Decree. The new legislation
effectively abolished all restrictions on foreign
ownership, with a few key exceptions. Most
significantly, the oil and gas industry still operates in accord with the old joint venture arrangement
between the government and foreign corpora tions. In addition, the electricity and telecom
munication sectors are still limited to government
providers in the new Act. Restrictions have also
been placed upon foreign participation is in the
manufacture of arms and ammunition, as well as
upon the production and sale of narcotics and
psychotropic substances. Another investor
friendly provision of the legislation is that it
prohibits the nationalization or expropriation of
any foreign corporation operating in Nigeria.
Foreign exchange control
Foreign exchange control in Nigeria has also
been deregulated recently. The new foreign investment rules are contained in the Foreign
Exchange (Monitoring & Miscellaneous Provision) Decree of 1995. The new legislation allows for
private foreign exchange dealers {bureau de
change). In addition, Nigerian companies can now
hold domiciliary accounts in private banks and
have unfettered use of their money. Foreign
companies may also bring foreign capital into the
country unhindered, provided they obtain a
certificate of capital importation from their
Nigerian banks. They may also freely service
loans and remit dividends.
Privatisation
Nigeria commenced a program of privatization of government corporations in 1988. The
Nigerian Privatization and Commercialization
Decree, 19886 sets out the principles of the
privatization program. The focus of the privati zation program is to afford core foreign
investors/strategic partners the opportunity to
hold up to 40% of the shares of privatized com
panies. The rationale for this policy is that such
investor will be able to provide a much needed
injection of capital as well as more professional
management. The guidelines define core/
strategic investors as:
formidable and experienced groups with the capac ities for adding value to an enterprise and making it operate profitably in the face of international
competition. . . .
They must have technical knowl
edge, . . .
posses the financial muscle not only to
pay for the enterprise but also to turn around the
fortune . . . have managerial know-how to run
the business . . .7
In line with its priority of encouraging greater
participation by core/strategic investors, the
government intends to sell 40% of its equity to
strategic investors in the following areas:
telecommunications, electricity, petroleum
refineries, petrochemicals, coal and bitumen
production and tourism. The government will
retain 40% of the equity, while the remaining 20% will be sold to the Nigerian public through the stock exchange. In some sectors, the gov ernment intends to sell all of its holding (Bureau of Public Enterprises, 2000). Table VI provides a representative sample of the ownership struc
ture of corporations already approved by the
Privatisation Commission.
282 Boniface Ahunwan
TABLE VI List of companies approved for privatisation*
Name of company Holdings before privatization Privatisation approved
capital structure
Cement Company of
Northern Nigeria
National Oil & Chemical
Marketing Co. Pic
Unipetrol Nigeria Pic.
West Africa Portland
Cement Nigeria Pic.
Federal Government 46%
Other State Govts 29%
Nigerian Public 25%
Fed. Govt. 40%
Shell petroleum 40%
Nigerian public 20%
Federal Government 40%
Nigerian public 60%
Blue Circle Ind. (U.K.) 39.48%
Odua 26.85%
Federal Government 16.58%
Scancem of Norway
State Govts
Nigerian Public
Core Investor
Nigerian Public
40% 29% 23%
60% 0%
Nigerian Public 70%
Ocean and Oil Services Ltd. 30%
Blue Circle Ind. (U.K.) *
Nigerian Public
* Exact information not available, but it is known the government has sold part of its shares to Blue Circle. a
See the press statements by Mallam Nasir Ahmed El-Rufai, Director General, Bureau of Public
Enterprises on privatisation from January 22, May 6, May 18, August 25 and September 5, 2000,
(http://www.bpeng.org.pressrelease.htm).
Progress with privatization has been slow, with
all the major corporations, such as the electricity and telecommunication commissions, yet to be
privatized. While the privatization exercise
picked up a bit following the installation of
democratic rule in 1997, economic and political controversies are still inhibiting rapid movement.
Between 1988 and 1999, about 57 government
corporations have been privatised. These were in
the agricultural, insurance, banking, brewery,
shipping, petroleum marketing and hotel and
food processing sectors.8
While privatisation of government owned
corporations may change the composition of
ownership of Nigerian corporation, it will not
alter the pattern of concentrated ownership. This
raises the question, then, of whether privatiza tion will benefit minority shareholders (or
whether majority owners continue to exploit
minority owners). One possible hope is that a
greater participation by institutional investors will
help protect the interests of minority share
holders. At this stage, however, there is little data
on which to make such an evaluation.
Capital market reforms
Originally known as the Lagos Stock Exchange, the Nigerian Stock Exchange was set up in 1960
and currently operates six branches in the country. As of December 2000, the total market capital ization was approximately US$4 billion. There
were 255 listed companies, an increase of 100
firms since 1988 (Nigerian Stock Exchange, 1998).
According to Hayford I. Alile (1995, pp. 257
260), then Director General of the Exchange, several reasons help to account for the rise in
listings. These include the ongoing deregulation and liberalisation policies of the Government, the
privatization of government corporations (22 of
which have been listed onthe exchange) and the
introduction of prudential guidelines for banks
and other financial institutions.
Several improvements have also been made in
terms of the services of the exchange. These
include an automated central security clearing
system in 1997, reduction in the costs of listing and the introduction of the Second Tier over the
Counter Exchange for the trading of securities
of small companies. It has also improved its
Corporate Governance in Nigeria 283
market oversight and information (SBA Research
Ltd., pp. 25-26). In addition to the above, a second Stock
Exchange, the Abuja Stock Exchange has also
been recently established. Incorporated in June
17, 1998, the Abuja Stock Exchange was estab
lished as a floor-less, technology driven exchange with facilities to provide electronic, screen-based
trading systems. This exchange, which started
trading in April 2001, is equipped to provide dealers from across the country with on-line
access to the trading system. In spite of these reforms, the Nigerian capital
market still falls short of the developments in
other countries. As noted above, it remains
relatively small and illiquid when compared not
only to developed countries, but also to other
developing countries. Additionally, the Nigerian Stock Exchange still suffers from problems of
poor and non-functioning infrastructure, which
haunts the country generally (Alile, 1997;
Akamiokor, 1995).
Shareholder and stakeholder activism
In addition to the policy reforms discussed above,
forces such as the internet and improvements in
other methods of communication have the
potential to affect corporate governance in
Nigeria by increasing shareholder and stakeholder
activism and making it more effective. Although the subscription to the internet is very low in
Nigeria compared to developed countries, the
impact it still very noticeable. Nigerian websites
(as well as websites located in a variety of other
African countries) provide an important forum
for the discussion of different social, economic
and political issues related to corporate gover nance in Nigeria and Africa more generally. Some of these websites provide free information
about corporate structures and activities in
Nigeria (and other African countries). Such
access to information is a radical departure in the
case of Nigeria, as there was strict control over
the press by the government (and large corpora
tions) during the past 10 years of military rule.
Therefore, the internet has become an important means for many people of monitoring and
influencing corporate activities in Nigeria.
Perhaps the potential of the internet has been
best realized by stakeholder groups who are
opposed to particular corporations and their
activities. The internet enables such groups not
only to engage in discussion about corporate
activities, but to organize opposition to ques tionable practices. In the case of Nigeria, oil
companies in particular have been the target of
attention. The Movement for the Survival of the
Ogoni people (MOSOP), for example, has been
very active and effective in using the internet not
only to publicize the activities of Shell, but to
organize opposition to the firm internationally
(http : //lists. essential, org/shell-nigeria-action). The internet may also help minority share
holders to protect their interests and check abuses
of majority shareholders in several ways. First, it
affords minority shareholders an avenue to pub licize corporate abuses, which they otherwise
would not have (due to the high costs involved
with the use of other media, e.g., newspaper
advertisements). Second, it can potentially facil
itate the development of minority shareholders'
organisations and activities. Third, it may also
assist in the spread of a more responsible corpo rate culture. A variety of websites hosted by individual academics, research institutes, inter
national organizations and activists provide a
wide range of information that may be impor tant in this regard.9
The potential of the internet, however, should
not be overstated. First, as noted above, only a
very small percentage of the population has
access. Second, while the internet facilitates the
spread of information, it does little to generate new information. Much of the abuse carried out
by management and majority owners is not easily
detected, either by outsiders or minority share
holders. Finally, the internet does not go very far
in overcoming the imbalance in power and
resources between majority owners and manage ment on the one hand and minority owners and
stakeholders on the other.
VII. Conclusion
In an age of globalization, governance reforms
are critical. Nigeria has been undertaking a
284 Boniface Ahunwan
program of reforms for more than a decade now.
The nature of the reforms has been largely determined by developments in the global
economy. As a result, the reform process does not
so much involve choosing the best form of
corporate governance, as it does adapting existing structures and practices to the exigencies of
competing in a global economy. To compete in
the global economy, developing countries are
increasingly being forced to introduce programs of economic liberalization and deregulation (e.g., tax cuts, privatizing state-run industries, cuts in
government spending, etc.). In addition, they have had to introduce other reforms that more
directly affect governance, e.g., strengthening
company law (to provide greater legal guaran tees to investors), reforming the legal system (so that shareholders' rights can be effectively
enforced) and liberalizing capital markets (to allow for a more efficient allocation of capital and
attract investment funds). We have shown in this paper how Nigeria has
introduced reforms in all of these areas. The
reforms have not been without some success.
Privatization and reforms in the capital market
have increased activities in the stock market.
Privatization of state enterprises and the liberal
ization of foreign investment laws are facilitating the inflow of foreign capital, which is likely to
monitor managers much more effectively than
government has in the past. In addition, com
petitive pressures from other African and western
countries seem to be inducing a change in the
"entitlement culture" of the indigenous man
agement in large corporations.
However, while there has been some progress, the governance problems that the reform process seeks to address are deeply rooted in a socio
economic and political context characterized by ethnic and religious tensions, poverty and a
history of military rule and human rights abuses.
As we noted above, passing formal laws in such
a context does little to actually ensure that share
holder rights are protected. Such reforms need
to address the deeper causes of the problem (e.g., an ineffective legal system, the ownership struc
ture, etc.). Similarly, reform efforts in other areas
(e.g., capital markets, the legal system) are
unlikely to be successful unless other fundamental
problems of Nigerian society are addressed (e.g., the lack of vibrant democratic political culture, ethnic and tribal tensions, poverty, etc.).
Ultimately, the success of corporate governance reforms are linked to broader governance reforms
of the Nigerian state and, one might argue, of
the international economic order which sets the
context in which states like Nigeria have to
compete in the global economy.
Acknowledgements
I am grateful to Prof. Mary Condon and Prof.
Obiora Okafor, both of Osgoode Hall Law
School, Prof. Ananya Mukhereej-Reed of the
Political Science Dept. at York University, Prof.
Solomon Ukhuegbe, Dr. Yosef Yacob, Bola Ige, Virtus Igbokwe and Shedrack Agbakwa for their
comments. I wish to also particularly thank Prof.
Darryl Reed whose comments and suggestions
guided me throughout the preparation of this
paper. However, as usual, all errors and omissions
remain mine.
Notes
1 See NEPD, ss. 4, 5 and 6.
2 Some of the reported cases on the issue include
Lasisivs. Registrar of Companies [1976] 7 S.C. 73 (S.C.
Nig.) and Kehinde vs. Registrar of Companies [1979] L.R.N. 213 (H.C.) where the Registrar refused to
approve their application for registration of compa
nies on the ground that the Nigerians were fronting for foreigners. These cases are discussed in detail by
Nnona (1995, pp. 595-602). 3
On a scale of 18 features, the Kraakman survey
rates Nigeria as having 7. This is an error as other
features are in the law as indicated above. 4
The effect of the prospect of promotion on the
chief executive is doubted but the fear of
discharge does serve as a check, although a weak and
uniformly low one. For a review of empirical studies on this issue see Eisenberg (1989, pp. 1495-1497). See also, Weibach (1988) on the dynamics of the
effect of the check on chief executives. The study
argues that a board dominated by outside directors is
more likely to remove a CEO for poor performance. 5 This again is controversial. Eisenberg argues that
executives often have a hand in setting their pay
Corporate Governance in Nigeria 285
through the various steps: personnel level, the com
pensation committee and the Board approval stages. Second, that even though empirical studies show that
executive compensation increases with shareholders
gain, the amount involved is insignificant and makes
the studies descriptively inaccurate. (Eisenberg, 1989,
pp. 1490-1491). 6 No. 25 of 1988 now Cap. 369, Laws of the
Federation of Nigeria, 1990. 7
See Bureau of Public enterprises, "Guidelines on
Privatisation and Commencialisation" http://
www.bpeng.org/Guidlines.htm. 8 The new Public Enterprises (Privatisation and
Commercialisation) Decree 1999 is now available at
www.bpeng.org/Enabling-Legislation.htm. 9 This trend has also been observed in other
emerging countries such as China (Hughes and Baeri,
1999).
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