Resolving The NGX Group Crisis

By Victor Ogiemwonyi

In the past week, I received a flood of messages on the NGX Group crisis. Some were anxious that the NGX might be plunged into another crisis like we saw in 2008. There were, however, also some who insist that the rot is even deeper than we know.

To the group of those that are anxious, I assure you that we are not in the same place as we were in 2008.

This time, the NGX Exchange Limited that does the Exchange Business, is the institution that matters, it has a competent CEO, who is new and very well trained, in addition to the requisite market experience. With some help he can pilot the company to a safe landing.

To the others who want to dig up more dirt, I believe we should leave that for now. Our interest is to strengthen the NGX as an institution, and not to destroy same.

I have seen sponsored TV interviews, among others that end up building castles in the sky, about buying up Exchanges throughout the African continent. Please take a look at value of those Exchanges, and what they trade, it is a fraction of what we trade here. There is no value to be gained. Unless they are planning to buy South Africa’s Jo’burg Exchange.

Let us be realistic, the problem as I have stressed previously is the unnecessary cost overheads. I hear they are planning to down size at the lower levels. But that amounts to a mere window dressing, or a mere smokescreen, because the biggest part of the cost is at the top levels.

If they are now going to be very profitable suddenly, that will mean they have heard our message. If they say the half year results have doubled, what has happened to the economy in the last six months? Has it turned stronger, where is the trade on the exchange that has brought on this new profit levels?

Make no mistakes at all, the problem of the NGX Group are solvable. The super structure imposed on the NGX, making it a group company, is the problem. The group structure is not appropriate for it. This super structure imposes too much cost, with no commensurate benefits.

Simply put, there are too many boards. There is the board at the group level- NGX Group. There is another board for the NGX Exchange, one for the NGX Regulation Limited; and for the property arm/NGX Relco Limited.

In all, this means there are nearly 30 people who are directors in the NGX Group. Make your findings, even the biggest company in Nigeria does not have 30 Directors.

All these directors must be paid and given allowances. The NGX Group is a case of too many cooks…

These boards are not even effective, given some of the things that have happened. A vigilant Board would have stopped it, much quicker.

For a Group that claim, to operate with the highest corporate governance standards. The issue of the Group CEO serving at NGX group level, and also serving at the NGX Company level, as a director, is awkward. Yet no one saw anything wrong, or any conflict of interest in it.

This awkwardness was not noticed at the NGX Group Board, the NGX Exchange Board, and not even at the NGX Regulation Board.

It took a challenge of some vigilant stakeholders, before he was forced to step down from the Board of the Nigeria Exchange.

The Group Board is totally unnecessary, and many of those on some the boards, need to voluntarily exit on their own, and let new people with new ideas come in. Some of them have been there, since I was on the Board/ National Council, 12 years ago. I left after my tenor ended, 7 years ago.

It is unfair however, to generalize and include some of the people there now, who have very credible and impeccable standing.

Some have just joined, people like Professor Enase Okonedo. I have very strong confidence in her. Her Lagos Business school leadership, stands her out. These are the kinds of people needed there.

I will suggest her for the chairmanship of the Board of Nigeria Exchange Company, to lead a Board of other credible people and avoid a crisis.

At the risk of repeating myself, the super structure of the NGX group company needs to go. The property company too should go, being a business that is inappropriate to run with the Exchange Business. Every Estate Agent in Nigeria can do what NGX RELCO is doing.

The immediate solution, to head off the crisis, is to propose a single resolution to be placed before the coming AGM, requesting the Board to reverse the group structure and unbundle the NGX Group, and let the Nigeria Exchange Company, focus on the Exchange Business alone for now.

Again, the burdens of multiple Boards and the huge cost of running the NGX Group, is the problem.

The resolution at the AGM should also authorize the board to appoint one of the Big four audits firms to carry out a forensic audit of the N6.52bm used in running the company in 2021, as long the selected one is not the present firm of External Auditor. The audit exercise will seek to find out where the money went. They should report their findings to an Extra Ordinary AGM within 90 days. Shareholders can then decide whether, there is need for new Capital Raise or not.

As the Good Book says, we must at this time “look beneath the surface, so as to judge correctly. “

This will be the best way, for the Board to exonerate itself of complacency.

If the Board will not voluntarily do this, those who are heading to the courts already, can include this in the claims before the trial judge.