Too Big to Govern? Exploring the Challenges of corporate governance in Large Multinationals.

 Corporate governance is a critical aspect of modern business that encompasses the mechanisms, processes, and relationships by which corporations are directed and controlled. It plays a vital role in ensuring that companies operate ethically, transparently, and with accountability. While the principles of corporate governance apply to all organisations, the challenges can become particularly complex in the case of large multinationals. This blog delves into the evolving landscape of corporate governance in Nigeria's multinational business sector, traces past efforts and their limitations, and offers contemporary solutions for policy reassessment.

The Rise of Multinational Corporations in Nigeria

Nigeria's recent economic growth has attracted multinational corporations (MNCs) eager to capitalise on its expansive market and abundant resources. While these MNCs have been instrumental in driving economic development, job creation, and contributing to the nation's GDP, their vast size and global influence have sparked concerns about effective governance.

Nigeria's emergence as an economic powerhouse in Africa can be attributed to several key factors, notably substantial economic growth. The nation's vast market, rich natural resources, and strategic location have collectively made it an attractive destination for MNCs. As these corporations have integrated into Nigeria's business landscape, they have brought about a range of contributions to the nation's development. Prominent MNCs such as telecommunications giant MTN and oil conglomerates like Shell and Chevron have emerged as significant employers in Nigeria.

For example, MTN Nigeria, boasting over 60 million subscribers, not only employs thousands of Nigerians directly but also creates numerous indirect job opportunities through its extensive distribution network. Moreover, MNCs have played a pivotal role in diversifying Nigeria's economy. Companies like Nestlé Nigeria, through investments in the local food and beverage industry, have significantly reduced the nation's reliance on oil revenues. Additionally, these corporations have facilitated the transfer of advanced technologies and best practices to Nigeria. For instance, General Electric (GE) has been involved in projects such as power generation and healthcare, introducing modern infrastructure and expertise to the country.

The impact of MNCs on Nigeria's Gross Domestic Product (GDP) is substantial. Their investments and operations have led to significant economic growth, contributing significantly to the nation's overall prosperity. Historically, the oil sector, dominated by MNCs such as ExxonMobil, Total, and Chevron, has been a primary contributor to Nigeria's GDP. These corporations have played pivotal roles in the nation's oil industry. Additionally, the telecommunications sector has experienced remarkable growth, driven by MNCs like MTN and Airtel. Their investments in network infrastructure and services have stimulated economic activity.

However, alongside these benefits, the immense size and global reach of MNCs have raised complex questions about corporate governance. Ensuring transparency and accountability in MNC operations presents a formidable challenge. For instance, allegations of tax avoidance by some MNCs in Nigeria have highlighted the difficulties in monitoring and regulating their financial practices. Furthermore, effective regulation of MNCs necessitates robust frameworks. Nigeria's regulatory bodies have faced challenges in crafting and enforcing policies that adequately govern these corporate giants, at times resulting in governance gaps.

Achieving a delicate balance between MNCs' global objectives and their responsibilities to local communities and stakeholders becomes paramount. For example, addressing the environmental impact of oil corporations operating in Nigeria has become a contentious issue, demanding comprehensive governance solutions.

Historical Corporate Governance Efforts

Corporate governance concerns have been a prominent issue in Nigeria since the early 2000s. In response to growing complexities in the business landscape, various measures and guidelines were introduced to foster transparency, accountability, and the protection of stakeholders. One notable episode in the history of corporate governance reform in Nigeria was the heightened emphasis on the banking sector following the global financial crisis of 2008. The global financial crisis of 2008 had significant repercussions on Nigeria's financial sector. The crisis exposed vulnerabilities in the governance structures of Nigerian banks, leading to a comprehensive overhaul of the regulatory framework. Several notable measures introduced were

i.             Asset Management Corporation of Nigeria (AMCON): In 2010, the Asset Management Corporation of Nigeria (AMCON) was established as a critical response to the crisis. It was tasked with the responsibility of acquiring non-performing loans from banks, thereby stabilising the financial system.

ii.            Central Bank of Nigeria's (CBN) Reforms: The CBN implemented a series of reforms aimed at strengthening governance and risk management in banks. These reforms included stricter capital adequacy requirements, enhanced supervision, and the introduction of the Risk-Based Supervision (RBS) framework.

iii.           Nigerian Code of Corporate Governance (2011): To address governance deficiencies, the Nigerian Code of Corporate Governance was introduced in 2011. It emphasised the importance of boards of directors, audit committees, and shareholders' rights, setting standards for corporate conduct and ethical behaviour.

The impact of these measures was profound with the the Nigerian banking sector being the most hit. The introduction of AMCON helped stabilise the banking sector by absorbing non-performing loans, allowing banks to focus on their core functions and rebuild their financial health. The CBN's reforms, including the RBS framework, led to improved oversight and risk management within banks. It encouraged a more proactive approach to identifying and mitigating risks. The Nigerian Code of Corporate Governance sets a higher bar for governance standards. It emphasized the importance of independent directors, risk management, and financial reporting transparency.

Limitations of Past Efforts

While these initiatives were commendable, they faced several limitations, especially when dealing with large MNCs.

i.             Enforcement Challenges: Regulatory frameworks often lacked effective enforcement mechanisms, allowing non-compliance to persist.

ii.            Global Complexity: MNCs operate across borders, making it challenging for domestic regulators to oversee their activities effectively.

iii.           Shareholder Activism: Shareholders, especially minority shareholders, faced difficulties in exerting influence on MNCs due to corporate structures that concentrated power in the hands of a few.

iv.           Sustainability Concerns: Past efforts sometimes fell short in addressing emerging corporate governance concerns related to sustainability, environmental impact, and social responsibility.

Contemporary Solutions for Policy Reassessment

In light of these challenges, it is essential to revisit and revamp corporate governance policies for MNCs operating in Nigeria:

i.             Enhanced Regulation: Stricter regulatory frameworks should be put in place with clearly defined penalties for non-compliance. Independent regulatory bodies should be empowered to monitor and enforce these regulations effectively.

ii.            Cross-Border Collaboration: Collaboration with international regulatory bodies can help ensure that MNCs are held to the same governance standards globally. This requires harmonising local regulations with international best practices.

iii.           Stakeholder Engagement: Encourage increased engagement and participation of stakeholders, including minority shareholders, in the governance process. This can be facilitated through shareholder activism, transparency, and disclosure.

iv.           Sustainability Integration: Include sustainability and responsible business practices as integral components of corporate governance codes. MNCs should be accountable for their environmental and social impacts.

v.            Ethical Leadership: Promote ethical leadership and corporate culture within MNCs. Emphasise values and ethics at the highest levels of management.

vi.           Regular Review: Corporate governance policies should be subject to periodic review and adjustment to adapt to changing business landscapes and emerging risks.


Large multinational corporations are not "too big to govern," but they do require specialised and robust corporate governance frameworks. Nigeria's experience offers valuable lessons for countries seeking to strike a balance between encouraging foreign investment and ensuring effective corporate governance. By learning from past efforts and embracing contemporary solutions, Nigeria and other nations can create an environment where large multinationals operate ethically, transparently, and in the best interests of all stakeholders.


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Chartered Institute of Directors (CIoD),
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