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Corporate governance deficiencies can no longer be ignored in the Nigerian startup ecosystem - Hon.Tony Nwulu

 

Hon. Tony Nwulu, A Former Member of the Federal House of Representatives and

Chief Executive Officer of SilverThrone Consulting LTD, Nigeria’s leading Government Relations & Lobbying Firm in Abuja says that “The issues of corporate governance in

startups is a global headache. But the reason why it seems particularly serious in Africa, especially in Nigeria, is because employees, investors, and founders alike—have just begun to speak up”.

Corporate governance is the guidelines on how a company is to be directed and controlled. It’s an effective, entrepreneurial and prudent management system flowing from the board of directors to executive management in order to facilitate

and deliver the long-term success of a company.

Corporate governance does not only provide the framework for attaining a company’s objectives, it also guides practically every sphere of management, from

action plans like whom and when to hire, to internal controls, performance measurement, and corporate disclosure. But these frameworks are either flawed or

missing completely in Nigerian startups, especially those in their early stages where

the focus is mostly on building products and securing funding to take them to the market. For these early-stage startups—and, surprisingly, most of their investors, who have some authority to check and balance founders—corporate governance is an afterthought.

According to Nwulu “Besides the fact that early-stage companies rarely set up boards of directors, investors at seed, pre-seed and pre-series stages are mostly hedging their bets by writing smaller cheques to several startups and are not keen on sitting on boards. When you invest in more than 40 startups, for example, it will be

too tasking to keep tabs on all of them let alone cope with sitting on their boards.

This is, for instance, how some founders skip sending updates to investors and get

away with it.” This problem was highlighted in a statement to the press on Monday, Nwulu states that “The Nigerian startup ecosystem is maturing and getting bigger by the day. The

number of new startups currently seeking entry into the market have drastically increased.


 There are more startups looking for VC funding and more VCs looking for the next market leader. Setting up sound corporate governance across the ecosystem has become even more important. “

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