Poor Governance in Nigeria Hinders Access to Funds
Poor governance structure of majority of the indigenous oil and gas companies has over the years made it impossible for the companies to access funds from banks in the Nigeria, says Managing Director, Access Bank Plc, Mr. Herbert Wigwe.
Wigwe, who disclosed this in an interview said, “They are several problems that have to do with the companies themselves. The first and most important one is governance. Most of them lack the corporate governance structure to support that kind of debt and even when they do have the structure, there are issues around capacity and how much equity they have built in.
There are also issues of those that are growing a bit too rapidly and the capacity to manage their growth. ”If a company is growing very fast and does not have the appropriate framework; it does not have the right Board structure; it does not have people with the right skills on the Board. You will find out that over time, it will either not be competitive or it will diminish and die over time.”
He noted that the issue about governance is about the appropriate systems, processes, procedures, and controls to ensure that the business remain sustainably and can benefit or optimise value to all its stakeholders. Wigwe further disclosed that Access Bank is working with indigenous independent and small (marginal) producers in the Nigeria oil sector to improve on their governance structure, to enable them attract the much needed financing to drive their operations and develop the sector.
He maintained that the bank, apart from helping in building the indigenous companies’ governance structure, is also helping to address the issue of infrastructure in the sector.
”There are also issues that have to do with infrastructure around the sector. If you want to support somebody, what is the nature of the infrastructure for the evacuation of the products? This is a topical issue.
Even of you chose to support them and everything is in place, there are also other risks you will look out for and how to mitigate it,” he noted.
He expressed confidence on the viability and bankability of indigenous oil companies, stating that some of the companies have put in place the right structures from the governance standpoint, while a number of them have also built up enough equity which they are deploying into the business.
He maintained that the bankable oil companies will stand the test of time, while the weaker ones will fizzle out overtime.
He explained that despite the several problems and challenges on the part of the oil companies, Nigerian banks have built capacity over the last 15 years, and are working together with international institutions to support the sector.
According to Wigwe, local banks working together with international institutions have been able to support much larger projects, so the capacity is building.
Wigwe noted that Access Bank will support the gas sector the same way it supported the oil sector, saying, “It is often said that Nigeria has oil, when in actual fact, we have much more gas than oil.”