Resolving The NGX Group Crisis

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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 plunge into another crisis like in 2008.

There were also some, who say, the rut is even deeper than we know.

To the group that is anxious, I say we are not in the same place as we were in 2008.

This time, the NGX company, that does the Exchange Business, is the institution that matters, it has a competent CEO, who is new and very well trained and has 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 say we should leave that for now. Our interest is in strengthening the NGX, as an institution, not destroying it.

I have seen sponsored TV interviews and the heavy media building castles in the sky, about buying up Exchanges throughout Africa.

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 the South African Exchange.

Let us be realistic, the problem is unnecessary cost overheads. I hear they are planning to down size at the lower levels, the cost is at the top level.

If they are now going to be very profitable suddenly, that will mean they have heard us.

If they say the half year results have doubled, what has happened to the economy in the last 6 months?

Has it turned stronger, where is the trade on the market that has brought on this new profits?

The problem of the NGX Group are solvable. The super structure imposed on NGX to become 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.

There are too many Boards.

There is the Board at the group level, NGX Group, Board at the NGX Company level, there is a Board for NGX Regulation Limited, there is a Board for the Property Company /NGX Relco Limited.

In all, there are nearly 30 people who are Directors in the NGX Group. Even the biggest Company in Nigeria does not have 30 Directors. They all Must be paid and given allowances.

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, was awkward. Yet no one saw anything wrong or any conflict of interest, that presents.

This awkwardness was not noticed at the NGX Group Board, not at the NGX company 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 NGX, the Nigeria Exchange company.

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.

The super structure of NGX group company needs to go. The property company should go.

That is 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.

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

The resolution should also ask the Board to appoint one of the 4 Big Audits firms, that is not the present Auditor, to carry out a forensic audit on the N6.52bm used in running the company in 2021, to find out where the money went.

They should report their findings to an Extra Ordinary AGM in 90 days. Shareholders can then decided whether, there is need for new Capital Raise or not.

As the Good Book says, “Look beneath the surface, so you can 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 judge.

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