No business model prepared us for COVID-19 crisis – IoD boss – Punch Newspapers

No business model prepared us for COVID-19 crisis – IoD boss – Punch Newspapers

The Director-General/Chief Executive Officer, Institute of Directors Nigeria, Mr Dele Alimi, speaks with ’FEMI ASU on the impact of the COVID-19 pandemic on organisations, the onerous duties directors face today and the need for businesses to be run ethically, among other issues

many companies in Nigeria have been hard hit by the COVID-19 pandemic; what do you consider as the major challenges facing your members, who are directors of various organisations?

The pandemic presents various challenges – political, social, and economic – and while there are some that are extraneous to organisations, some are directly affecting organisations. But as a director, you have quite a lot of challenges.

The first one is about business continuity. We are at a time when people who are even supposed to be very knowledgeable about the pandemic are not sure of how long it is going to last, and we are not sure about the next political action by the government. So, there are quite a lot of issues concerning the pandemic that are affecting organisations.

Now, as a director, you have the duty of ensuring that you continue to add value to your organisation and all stakeholders. A lot of people look up to the directors and expect them to make the right decisions that will sustain the organisation. So, that is the first major challenge – the challenge of being able to think outside the box.

If your organisation already has a business continuity model, look at it again and review it because no business continuity model prepared us for the kind of challenges that COVID-19 brought upon us.

It is a new thing entirely and what that meant is that directors needed to think outside the box and come up with solutions to ameliorate the situation. Now, everybody is looking up to you. Business must continue; staff members are looking up to you that their salaries will continue to be paid, and that can only happen when business is thriving. So, it is a challenge.

The good thing about it is that if you prepared yourself well before now, it is likely that you will be able to tackle the challenges presented by COVID-19. It is a tough situation but a director must be able to scan the environment now and look at how the business will thrive despite the situation. You need to change your marketing strategy; you need to review your human resource system and others. You need to even diversify your business.

Which sector of the economy do you think is the worst affected by the pandemic?

Every sector has claimed to be hit badly but in the last few months, one sector that I will say is really badly hit is the travel and tourism sector because it was almost completely closed down during the lockdown; no matter how good you are, as a director, if you cannot fly in the aviation sector, there is really little that you can do. And that was why we had a situation where most of them (airlines) downsized at that period and almost closed shop.

The same thing with hotels and event centres. Globally, that sector is the worst hit, and people are still talking about how to revive it.

What is the institute doing to support directors in that worst-hit sector to enable them to better cope with the current challenges?

What the institute has done over this period is to create what I will call capacity-building opportunities or alternative solution provision for players in this industry.

We engaged with top players in the sector and in the last three months, we have held about three sector-specific webinars for the travel and hospitality industry where we discussed business continuity issues, apart from the general webinars that we have held to help directors cope with the challenges.

We even brought public-sector regulators; before the airports were opened, we were the first organisation to engage the Nigerian Civil Aviation Authority. We had the DG of NCAA at one of our webinars where aviation directors engaged with him on the plans for the reopening of the airports.

They were able to also tell him how the pandemic was affecting the sector and requested that government should come in and provide some palliatives for that sector. So, what we have done as an advocate body is to support our members.

How would you describe the Nigerian organised private sector in the light of the challenges brought on by the pandemic?

I think the response from the OPS in Nigeria has been wonderful. Billions of naira, in cash and kind, have come from major players in the organised private sector to the government to support the fight against the pandemic. I think that is quite commendable.

We all know that without a conducive environment – social and political – business cannot thrive. I think the OPS has taken the bull by the horns and tried to do everything that they could to support the government and to ensure that at least our environment does not become too toxic for businesses to thrive.

Apart from that, we could see that even within the private sector itself, people have done their best to ensure that they kept companies going so that we don’t have a serious social problem in our hands in terms of employment of people.

My plea to the government is that it should ensure that the confidence reposed in it by the organised private sector is not betrayed by ensuring that economic policy decisions are ones that will create an environment where businesses can thrive.

How has IoD Nigeria helped in shaping the business environment in the country over the years?

There are two major ways that the institute has helped. One, building the capacity of directors to deliver value for organisations and to the economy as a whole.

I have looked at the feedback we have had from many of our participants when we held capacity development programmes, and what I have seen is the serious appreciation of the depth that IoD Nigeria goes to improve the knowledge and capacity of directors.

We are preaching sound corporate governance; we are preaching that people should take full responsibility for every position they find themselves, and not abdicate their responsibility, even when they delegate to executive management.

We find situations where people abdicate these functions and it has led to a lot of problems; look at the crash in the banking industry years ago. It was because people did not provide the necessary oversight to management and managements were just free to do anything they liked.

Now, what we do is to let directors know that they have liabilities – they have vicarious liability and fiduciary liability – and they must do everything within their power to ensure that those liabilities are executed with the best intentions.

We also have advocacy programmes. We support the government by letting it know what the challenges are for directors in various sectors of the economy. At the end of the day, when the private sector is thriving, it is a great source of revenue for the government.

The fact that IoD has created a body of directors has impacted positively on the profession of directorship. If you are a director of a company that is employing 300 to 500 people and the company collapses, imagine the effects on the economy.  So, it is a very serious position that nobody should take for granted.

Recently, the institute announced that it would launch its revamped Code of Ethics in August? What informed the decision to review the code?

Things are very challenging now. Before now, there have been quite a lot of developments in the economy and we found out that the code needed to be reviewed to be in consonance with various regulatory provisions by the many regulatory authorities in Nigeria, including the Securities and Exchange Commission, the Corporate Affairs Commission, the Nigeria Deposit Insurance Corporation and the Central Bank of Nigeria.

We have had a lot of changes in the extant provisions of some of the laws. We had a code of ethics that had been there for over 20 years. In reviewing it, we went all out and looked at what we call a futuristic code – a code that will stand the test of time and will continuously address whatever challenges that may come up.

What we are doing, as a matter of fact, is to make directors more responsible. Some people take some of the actions they take because of ignorance.

We also looked at the issue of conflict of interests, which is a major issue in industries today. A minister had gone to jail in this country before because of a gift of a wristwatch.

What is the right gift that a director can take that he would not have compromised his fiduciary function as a director of a company? At what point does a gift become corruption? At what point does a conflict of interests if not declared become corruption? And if it is declared, what are the actions that are supposed to be taken to ensure that the director is exonerated?

Our belief is that if we run our organisations ethically, the organisations will outlive you and your legacy will be there forever. Our intention is to create directors and to create in directors the best method to run organisations.

While we are giving the code directly to our members, we are hoping that the users will go beyond our membership, and other directors will look at it as something to guide them in any situation. That is why we are actually launching and making it a public document for everybody to take advantage of it.

What major ethical and corporate governance issues do you think corporate leaders in the private and public sectors need to pay more attention to?

The first one is the issue of conflict of interests; then we have the issue of corruption in all its ramifications. Corruption is an ethical issue; people sometimes explain away corruption in many ways. But in whatever way you look at it, corruption is corruption and that is a major challenge in the Nigerian setting.

Sometimes, you are even under severe pressure to be corrupt. As a director, you fall under severe pressure from friends and colleagues. The Nigerian people assume that when you are in a position, our time has come. If you are not careful, you may bend the rules to help them. When it is time for somebody to pay for that crime, you are alone. And if you are not careful, the people you bent the rules for are part of the people castigating you. So, it is also a major problem for directors.

The influence and the pressure that you come under when you are in positions is immense and directors have to be extremely careful about it.

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