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Additionally, “International Finance Corporation” and “IFC” are registered trade- marks of IFC and are protected under international law. Disclaimer This Report was prepared by DCSL Corporate Services Limited for the exclusive use of the Africa Corporate Governance Program (International Finance Corporation, World Bank Group), the Institute of Directors Centre for Corporate Governance (IODCCG), and the Women in Management, Business & Public Service Initiative (WimBiz)—collectively referred to as the Client. The contents of this Report should not be reproduced or referred to in whole or in part without prior written consent. ii Women on Boards in Nigeria Contents Introduction ................................................................................................ 1 Global Trends and Country Comparisons .....................................3 Female Board Representation and Corporate Performance—Key Findings........................................ 5 Recommendations............................................................................... 15 Conclusion................................................................................................. 19 Appendixes............................................................................................... 20 References..................................................................................................26 Figures used to illustrate this Report were produced by the authors. Women on Boards in Nigeria iii iv Women on Boards in Nigeria Introduction “Bridging the gender divide in the workforce is not only a matter of fairness, but also of effective governance and inclusive economic growth.” - (Deloitte Global 2017) The board is the most influential decision-making unit of an organization, with responsibilities ranging from making key financial and strategic decisions to choosing the company’s top executive leadership. Given the level of expertise and the amount of information needed to understand and govern today’s complex businesses, it is unrealistic to expect an individual director to be knowl- edgeable and informed about all phases of business (Conger, Lawler, and Finegold 2001). This is where the concept of board diversity comes into play. Corporations are increasingly under pressure to ensure diversity within their boardrooms, and many academic research works have reported findings consistent with the view that boards perform better when they include a diverse range of people (Lincoln and Adedoyin 2012). Some scholars have described board diversity as a demographic phenomenon entailing age, gender, and ethnicity. For this paper, we focus on gender diversity—more specifically, the dearth of female representation in Nigerian boardrooms. There are no specific legal requirements for gender diversity in the Nigerian legal system except for regulations issued by the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC) Code of Corporate Governance, and the 2018 Nigerian Code of Corporate Governance (CCG). CBN regulations mandate a minimum of 30 percent female representation on boards of Nigerian commercial banks, the SEC Code recommends that publicly listed companies consider gender when selecting board members, and the CCG encourages the board to set diversity goals and to be mindful of them when filling board vacancies. However, the SEC and CCG codes do not prescribe gender quotas. This Report seeks to answer three questions: the why, the what, and the how. In other words, why the low level of female representation on Nigerian corporate boards, what initiatives can be recommended to improve the situation, and how can these initiatives be realistically implemented? To address these questions, the research for this Report used a two-phased strategy, which consisted of questionnaires to 250 directors (male and female) drawn from diverse business sectors in Nigeria and face-to-face interviews with 75 of those respondents. Participants unanimously agreed that there was indeed a gender imbalance on Nigerian boards. Of the survey respondents, 63 percent agreed that there are as many qualified women as men with the right skill set and experience to serve on corporate boards, but that women need to work harder than men to prove themselves. Extensive engagement with the participants interviewed and results from the survey suggest that experience and relevant networks are critical factors in considering board appointments. Participants consider women to already be at a disadvantage because of cultural constraints, notions regarding “the place of the female,” family obligations, and lack of support. Women on Boards in Nigeria 1 According to Lincoln and Adedoyin (2012), “the practical [Nigerian] situation is [characterized by] sexual stereotyping of social roles, discriminatory traditions and cultural prejudices. . . .” This circumstance could also be attributed to the perspective that places “men as the leaders of the society” and is one of the crucial factors limiting female participation in top leadership positions (Sener and Karaye 2014). Yet the value that females bring to a board (over and beyond financial performance) is not in question. There is a plethora of literature, with conflicting results, on the relationship between gender diversity on the board and financial performance. The research for this Report included a correlation analysis of this issue in the banking, manufacturing, and insurance sectors. Although the findings do not establish a clear correlation, it was evident that there are other indexes for assessing value, such as ethical con- duct, risk management, attention to detail, general trustworthiness, and empathy. According to Croson and Buchan (1999), women are more trustworthy and collaborative than men, and this can improve board dynamics. While initiatives to encourage gender diversity are laudable, the staggering imbalance of the male-to- female ratio of directors illustrates that much more must be done to close or at least reduce the gap. Having identified the challenges, the study then asked participants for their recommendations for improving gender diversity. Flowing from their responses and from research on initiatives adopted in jurisdictions that have made significant progress in achieving gender diversity, recommendations in this Report target the board itself, the employer, the regulator, and the aspiring female director. • For the board: It would be useful to develop formal policies on board appointments, define term limits for directors, recruit beyond traditional networks, and integrate gender diversity into the company’s succession-planning policy, among other actions. • For the employer: Useful steps include implementing internal goal-setting and career-progression programs for staff. Employer support is key, and employers are encour- aged to create an enabling environment in which women are not discriminated against because of their status as wives and mothers, and which fosters adequate work/life balance. • For the regulator: Recommendations include mandatory gender quotas and inclusion of a “comply or explain” philosophy in the provisions of the codes of corporate governance. • For the aspiring female director: Practical tips include adequate preparation, ownership, networking, education, and establishing a support system that improves efficiency. Further details are contained in this Report. 2 Women on Boards in Nigeria Global Trends and Country Comparisons Globally, discussions about gender diversity con- Companies in markets with gender-diversity tinue to gather momentum, with slow but notable quotas for corporate boards (either hard quotas or progress in a few countries. In 2016, women held “comply or explain”) generally have a higher pro- nearly 19 percent of seats on the boards of some portion of female directors than those in markets of the largest companies globally—a marginal with no quotas. As Figure 2 shows, countries with increase from about 14 percent in 2012. (See Figure mandatory quotas (hard and soft laws) requiring 1.) This slow growth is characterized by positive a specified minimum percentage of female board stories in countries pioneering and supporting representation are effective in causing companies gender diversity as well as by cases of diversity to appoint women at such a rate as to satisfy those stagnation in countries where economic or polit- legal requirements. ical limitations make it difficult to achieve gender diversity generally and more so in the boardroom. It is also clear that countries without regulation tend to lag behind those with both hard and soft Figure 1: Fortune 500 Board Seats, by Gender laws. The ISS QuickScore data on selection of global markets with quotas in place suggest that 5000 quotas are largely fulfilling their objectives of in- Men creasing representation by women on the boards 4000 Women of publicly traded firms. Companies in markets 3000 where gender-diversity quotas have existed for several years have almost 40 percent female 2000 representation in the boardroom. Similarly, firms 1000 in countries with promising gender quotas are 0 already showing an upward trend in the proportion 2012 2016 of women on boards (ISS 2015). Figure 2: Gender Diversity—Quota versus Non-Quota Markets (2016) MANDAT ATE NO MANDATE SOFT LA LAW W LAW HARD LAW 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% SOUTH KOREA KOREA JAPAN JAPAN RUSSIA GREECE CHINA PORTUGAL PORTUGAL G LUXEMBOURG STATES TATES IRELAND BRAZIL SINGAPORE HONG KONG KONG CANADA A SWITZERLAND AUSTRIA SPAIN SPAIN SOUTH AFRICA UNITED KINGDOM AUSTRAILA DENMARK NEW ZEALAND FINLAND D SWEDEN INDIA GERMANY NETHERLANDS BELGIUM ALY ITALY FRANCE NORWAY NORWAY GLOBAL GLOBAL ITAL CANAD LUXEMBOUR FINLAN UNITED STA Women on Boards in Nigeria 3 Country Review have a nondiscrimination policy that covers its Norway senior governance positions, including disability, In 2003, the Norwegian government introduced gender, sexual orientation, gender alignment, legislation on mandatory gender quotas for female race, religion, belief, and age. representation on boards. The Norwegian Public Limited Liability Companies Act requires at least In 2015, women represented only 7 percent of 40 percent representation of each sex on boards. the boards of directors of the top 50 companies (ranked by profits) in Mauritius. As of 2017, the Since then, Norwegian corporate boards have percentage of female parliamentarians was 11.6 complied with this directive and have at least 40 percent, ranking 150 out of 190 countries. Also, percent female representation. This phenome- Mauritius ranked 113 out of 144 countries in the non has been the subject of a series of debates in 2016 Global Gender Gap Report by the World various regions on the need for a legally mandated Economic Forum. quota to increase the number of women in super- visory roles, on boards, and in leading positions in Rwanda general. A document of the Gender Monitoring Office in Rwanda, Key Gender Indicators and Baseline in Four Kenya Sectors, covered governance, agriculture, infra- Similar to the Norwegian model, the Kenyan Con- structure, and private sector; it reported that stitution requires all businesses to have no more women were 12.5 percent of private sector compa- than two-thirds of their board members of one ny board members (GMO 2011). gender. In addition, the Capital Markets Act of 2015, which outlines the Code of Corporate Rwanda became the second African nation to Governance Practices for Listed Companies in announce a gender-balanced cabinet, with 50 Kenya, requires companies to consider gender percent of its members women. The country has when appointing board members. Although these received international recognition for female rep- provisions are contained in the laws of Kenya, resentation in government, with women making there are no penalties for failure to comply with up 61 percent of parliament members. the relevant laws. Therefore, companies that implemented gender diversity on their boards California, United States adopted a voluntary approach. In the United States, California enacted a law mandating that companies incorporated in Kenya encourages gender equality, with firms California—as well as out-of-state corporations listed on the Nairobi Securities Exchange hav- (such as Delaware corporations) headquartered in ing allocated an average 19.8 supervisory board California and listed on major U.S. stock exchang- positions to women. However, it is important to es—have at least one female director at the close point out that this is below the constitutional re- of calendar 2019 or pay a fine. This makes California quirement of one-third and compares poorly with the first state in the United States to mandate the best-practice markets such as Norway, which is appointment of women to public company boards. close to achieving 50-50 gender representation. Nearly one-quarter of the nearly 400 California- Mauritius headquartered companies in the Russell 3000 The 2016 Code of Corporate Governance of Mau- stock index have no female directors. As of Sep- ritius provides that all organizations should have tember 30, 2018, 94 California companies had no directors from both genders as members of the women on their boards and will need to add at board. It also provides that all organizations shall least one (Equilar 2019). 4 Women on Boards in Nigeria Female Board Representation and Corporate Performance—Key Findings Gender diversity is a global hot topic, and sig- elicit participants’ perspectives on factors that nificant strides have been made in actualizing influence the appointment of female directors a gender-diverse workforce at the senior-man- on boards, the level of gender profiling on their agement and board levels in some jurisdictions. boards, what cultural perceptions come into play As quoted by Hamad Buamim, chairman of the regarding female appointments, and the general board of Hawkamah, The Institute for Corporate disposition toward initiatives that can enhance Governance, “Businesses led by diverse boards that the appointment of women to boards. The reflect the whole breadth of their stakeholders and interviews pursued these questions in greater their business environment will be more success- detail. ful businesses. They are more in touch with their customers’ demands, their investors’ expectations, It was interesting that 67 percent of the partici- and their staff ’s concerns, and they have a forum in pants were male—understandable, considering the boardroom where these different perspectives the ratio of male-to-female directors. (See Figure come together and successful business strategies 3.) However, a specific objective of the interview can be devised” (Marcus 2012). sessions was to get the views of current and aspiring female directors as well as women in Gender Diversity in the Nigerian senior management. In total, 52 women and 23 Boardroom men were interviewed. In Nigeria, however, progress in achieving gen- der balance has been slow, because it is a highly Key Findings patriarchal society. Due to the male dominance, Eighty percent of the survey respondents and 100 influenced by culture, women are mostly under- percent of the interviewees agreed that, in theory, represented at the managerial and board levels, the criteria (academic qualifications, industry and for reasons discussed in this Report. Figure 3: A 2016 survey conducted by DCSL Corporate Breakdown of Participants, by Gender Services Limited indicates that during 2013–2015 women accounted for only 14 percent of the 915 directors on the boards of the 132 companies quoted on the Nigerian Stock Exchange. To deter- mine the reasons for this dismal ratio, research for this Report sought the views of directors (male 32.6% and female) in Nigeria, asking them to share their experiences related to the abysmal level of female Female representation on corporate boards in Nigeria. Male 67.4% The approach was two-phased: first, distributing questionnaires to 250 directors (male and female) in diverse business sectors in Nigeria; then conducting face-to-face interviews with 75 participants. Questions were structured to Women on Boards in Nigeria 5 senior-management experience) for the appoint- Figure 6: Inadequate Gender Balance on Nigerian ment of women to boards are the same as for men. Corporate Boards (See Figure 4.) Ninety percent of sitting directors surveyed agreed that their experience, rather than Interviewees educational background, was the most significant 100% factor in their appointment. Survey Participants Figure 4: No Unique Requirements for Female 82% 8% 10% Appointments to Boards 0% 20% 40% 60% 80% 100% 100% 100% AGREE DISAGREE UNDECIDED 80% 80% 60% Despite the majority agreement that the require- ments for appointment to boards are the same 40% for both male and female directors, the inter- 20% viewees were unanimous in their opinion that 15% 5% 0 there is no gender balance on Nigerian boards. Survey Participants Interviewees (See Figure 6.) Agree Disagree Undecided Seventy-seven percent of survey respondents confirmed that fewer than 30 percent of their Of the survey participants, 63 percent agreed that senior-management staff are female (See Figure 7), there are as many qualified women as men with and 55 percent of respondents agreed that women the right skill set and experience to serve on cor- are less likely to advance to top management porate boards. (See Figure 5.) However, 62 percent roles because they face more barriers. agreed that women need to work harder than men to prove themselves. “Because of our patriarchal system, opportunities at senior levels are slimmer Figure 5: As Many Qualified Women As Men for women.”1 70% 60% 63% Figure 7: What Percentage of Your Company’s Top 50% Management Is Female? 40% 60% 30% 20% 20% 17% 40% 10% 39% 38% 0% Agree Disagree Undecided 20% 10% 4% 8% 0% Less 20%-30% 40%-50% More I don’t than 20% than 50% know 1 Quotes appearing throughout this Report are from comments by participants during the interview sessions. 6 Women on Boards in Nigeria “Women generally lack the ruthless nature When asked to rate the importance of diversity to company performance, 68 percent of survey required to operate at senior levels.” respondents rated it high or very high. (See Figure 9.) Participants discussed this point extensively during the interview phase. The interviewees Overall, 82 percent of the male and 100 percent of noted that the primary reason for this gap was the female survey and interview participants rated the family obligations traditionally imposed the importance of diversity to company perfor- 37% on women—obligations that typically slow or mance either high or very high. (See Figure 10.) completely stall career progress and thus pre- vent women from being considered for board Figure 9: Importance of Diversity to Company appointments because of their lack of experience. 63% Performance—Survey Participants A few male participants expressed skepticism as to the ability of women to handle high-powered 50% positions. 40% 41% “Women are not typically considered for 30% 27% 28% promotion in the same year they embark on 20% maternity leave. This makes the pace of 10% progression signi cantly slower than their male counterparts.” 0% Survey Participants Very High High Low Only 37 percent of participants confirmed an increase in female representation over the previ- ous two years. (See Figure 8.) The non-executive Figure 10: Rate the Importance of Diversity to directors interviewed confirmed that their nomi- Company Performance nation was facilitated by their networks. 100% 100% Figure 8: Increase in Female Participation Over 80% 82% The Preceding Two Years 60% 40% 20% 18% 0% Male Female 37% High Low Yes When asked if women have a positive impact No 63% on the dynamics and chemistry of the board, 82 percent of the participants said yes. Participants unanimously agreed that the impact of women on the board extends beyond financial performance and includes soft skills such as intuitiveness, diplomacy, empathy, and a different point of view from the male directors. Women on Boards in Nigeria 7 “Women tend to have soft skills, are less likely Figure 12: Cultural Bias against Female to play zero-sum games on a board, and are Representation therefore more likely to build bridges or mediate 80% in con ict than their male counterparts.” 60% It is interesting to note that only 24 percent of 40% 45% survey respondents confirmed that discussions on gender diversity occurred frequently at the board 20% 21% level. Only 12 percent of interviewees reported 16% 14% 3% 0% frequent discussion of gender diversity on their Strongly Agree Not Sure Disagree Strongly boards, despite the over 70 percent concurrence Agree Disagree of its importance to corporate performance. (See Figure 11.) All the females interviewed agreed that, although the present-day career-oriented women had risen “While gender diversity is important and above cultural issues, there are still certain gender discussed intermittently, there is no value stereotypes constraining women, and these con- proposition for appointing a female director stitute significant barriers to achieving gender to the board at this time.” balance on boards. Seventy percent of the survey participants agreed that the most significant fac- “The primary aim of the board is to discuss tors hindering the appointment of women to cor- strategic matters related to the company and not porate boards are gender and social stereotypes. necessarily gender diversity.” “Most women are not able to network Figure 11: Frequency of Board Discussions on adequately because of the cultural restrictions.” Board Diversity “We (women) are taught to be good wives 80% and mothers and are not encouraged to take up 70% 60% leadership roles.” 50% 40% “We live in a male-oriented society, with a 20% 24% 28% submissive culture. Regardless of our level of 18% 12% achievement, women are expected to be 0% Discussed Discussed Hardly submissive, even in the workplace.” Often Intermittently Discussed Survey Participants Interviewees “Women are not as ambitious as men. Even though many women may aspire to these positions, they typically do not believe that it is Sixty-one percent of survey respondents (of which an option available or accessible to them.” 79 percent are female) agreed that culture is a factor mitigating against female representation A common thread running through all the inter- on corporate boards in Nigeria. (See Figure 12.) views was the need for a prospective director to have relevant social and professional networks. Many participants noted that these networks were not necessarily built in the boardroom or corporate 8 Women on Boards in Nigeria environment, but rather at other informal forums, Figure 14: Women Do Not Have Supportive Networks such as clubs, social events, and so on. 50% 40% The consensus among some of the male partici- 26% 11% 19% 3% pants was that women do not socialize or net- 0% Strongly Agree Not Sure Disagree Strongly work sufficiently: when informal conversations Agree Disagree about board appointments occur, “the women are absent.” Other participants disagreed, saying that networking of that sort was not particularly “A successful career and thriving personal life necessary and would be even more irrelevant in are not mutually exclusive concepts and could circumstances where the selection process is more structured. Some participants noted that women coexist, provided there is adequate support from had their own peculiar networks that could also be the family and the workplace.” an advantage. (See Figure 13.) “A woman who plans properly and has a good support system—especially suf cient spousal Figure 13: Modes of Board Appointments— Women and Networking support—should excel in the workplace, provided she has the relevant competence.” 50% “Raising children while working is a daunting 40% 39% task, and organizations don’t take cognizance of 36% 30% female roles on the home front.” 20% “Home support is absolutely important.” 14% 10% 9% “Women can hold their own, provided they have 0% Shareholders the required support from the home and the Head Appointment Promotion Hunted by Networking employer.” “Unfortunately, some men might be intimidated “Some women don’t network properly. There by a successful woman and are thus unwilling to is only so much your competence and expertise provide the required support.” can achieve.” Figure 15: Female Leadership Style Is Different Fifty-one percent of participants agreed that women do not have sufficient networks to facili- 80% tate their appointment to corporate boards. (See 70% Figure 14.) 68% 60% 50% Sixty-eight percent of participants agreed that 40% female leadership styles differ from those of men 30% (Figure 15), and 50 percent said that those differ- 20% ences are positive. 17% 14% 10% 0% Agree Disagree No Material Difference Women on Boards in Nigeria 9 Figure 16: Popular Beliefs about Gender Differences Women are insecure in heterogenous groups Women believe that men are better suited to be directors Women feel that they lack qualification, skills, and experience Women are unwilling to take up additional responsibilities 0% 20% 40% 60% 80% 100% Strongly Agree Agree Not Sure Disagree Strongly Disagree Some popular beliefs were among the topics Although 68 percent of participants supported discussed during the interviews. (See Figure 16.) a quota system, 26 percent believed that setting For instance, the women interviewed were of gender quotas would encourage “box ticking” and the opinion that women tend to be stricter and “tokenism” and would create a niche or “exclusive display more integrity and candor. However, they pool” of female directors—akin to the “golden observed that, while these traits may be lauded in skirts” in Denmark. A majority of interviewees men, women tend to be chastised for them. believed board membership should be a merit- driven system, and that a quota system would Eighty-four percent of participants believed there breed mediocrity. are practical ways to increase female participa- tion on boards. Initiatives recommended included “Unless there is a deliberate policy on board governance policies, performance evaluation, membership composition, transparency may not quotas, and term limits. But responses varied on preferences for each initiative, with governance signi cantly improve female representation, as policies being the most popular at 78 percent. the pipeline for women that are eligible is still (See Figure 17.) signi cantly smaller than the pool for men for historical reasons.” Figure 17: Are There Practical Ways to Increase Female Participation on Board? Other Initiatives Identifying Gender Stereotypes: Fifty-four percent of directors agreed that there will be a significant difference if the board identifies gen- der stereotypes in the recruitment of women on corporate boards. Yes Diversity Policy: Seventy percent of respondents No agreed that a diversity policy is useful in achiev- ing gender diversity on the board. According to respondents, employers need to do more to support diversity. Suggestions included, among others, offering flexible working hours, providing a creche, and establishing equal opportunities for all roles. 10 Women on Boards in Nigeria Value-Add in Female Representation: Eighty- Case Study: The Nigerian Banking Sector four percent of respondents agreed that female As with almost every other business sector board members add significant value to an organi- in Nigeria, the banking sector is male-domi- zation. (See Figure 18.) nated. However, it has experienced significant improvement in the number of women holding Figure 18: Do Female Board Members Add key positions and successfully driving growth. Significant Value? Bola Kuforiji-Olubi was the first woman to be appointed to chair the board of a bank, United Bank for Africa (UBA), in 1984. 15% In 2012, under the leadership of the then-Governor of the Central Bank of Nigeria (CBN) HRH Sanusi .6% Lamido Sanusi, now Emir of Kano, the CBN issued the Sustainable Banking Principles, requiring 39% banks to ensure that at least 40 percent of the management team are women, and the banks must disclose—in their annual reports—statistics on female representation. This is the administra- 45% tion’s bid to institutionalize corporate govern- ance principles and best practices in the banking industry. On September 7, 2015, First Bank of Nigeria Limited announced the appointment of Ibukun Awosika as Strongly Agree Agree Not Sure chairman of the bank. This appointment made her Disagree Strongly Disagree the first woman to assume that position since the establishment of First Bank of Nigeria in 1894. Female In 2015, Mosunmola Belo-Olusoga replaced 54% 40% Gbenga Oyebode as chairman of Access Bank Plc. Under her leadership, Access Bank recorded Male impressive earnings in 2015, as revenues grew by 32% 47% 38 percent (to 337 billion Nigerian naira from 245 0% 20% 40% 60% 80% 100% billion naira in 2014). Profits also rose to 75 billion naira in 2015 from 52 billion naira in 2014. The trend continued in 2016, as the group delivered total rev- Female Executives and Gender enue of 381.3 billion naira and profit before tax of Diversity 90 billion naira, representing growth of 13 percent Globally, companies with a female chair have and 20 percent, respectively, over the same period almost doubled the number of women serving on in 2015. boards, as compared with boards led by a male chair (29 percent versus 16 percent). The numbers Also in 2015, Osaretin Demuren was appointed are nearly identical when looking at the percent- chairman of Guaranty Trust Bank. She is the first age of women serving on boards with female CEOs woman to hold that position. compared with those led by male CEOs (29 percent versus 15 percent). Women on Boards in Nigeria 11 Research for this Report examined the board results are mixed: some find evidence of improved composition of each of those three banks over performance, and others report no effects or nega- a three-year period to determine whether there tive effects. was any notable change in diversity of the board following the appointment of a female board chair. Research for this Report included a review and (See Figure 19.) analysis of the annual reports and accounts of selected companies operating in the manufactur- Figure 19: Increase in Female Participation on ing, banking, and insurance sectors (with empha- Boards with Female Chairs sis on returns on shareholders’ funds and profit before and after tax), juxtaposing the financial 7 performance year-on-year with the level of female 6 6 representation between 2013 and 2017. 5 5 5 4 However, the recent effect of recession on the 4 4 4 3 macro economy is a noteworthy factor. In the 3 3 2 second quarter of 2016, for example, the gross 2 domestic product (GDP) declined by 2.06 percent, 1 annual inflation rose to 17.1 percent in July from 16.5 0 First Bank Access Bank GTB percent in June, and food inflation rose from 15.3 2015 2016 2017 percent to 15.8 percent. Nigeria’s economy tech- nically went into recession in August 2016, which clearly had an impact on growth and corporate First Bank experienced a marginal change in the performance across sectors, irrespective of board composition of women on the board between 2015 composition during that period. and 2016, and the position remained the same in 2017. The current ratio of men to women is 10:3. Manufacturing Sector Research for this Report reviewed the level of In Access Bank the status remained the same in female representation on the boards of nine 2015 and 2016, but there was a marginal change in companies operating in the manufacturing sector. 2017. The current ratio of men to women is 9:6. (See Appendix A for a detailed breakdown of the figures used in this Report.) However, female Guaranty Trust Bank exhibited no notable change representation was generally very low, and none in the composition of the board, but one of the of the companies recorded an increase on a year- female directors resigned in 2017 and was replaced on-year basis. (See Figure 20.) with a female independent director in the same year. The current ratio of men to women on the The correlation analysis indicated that the compa- board of the bank is 14:4. nies with the highest level of female representa- tion on their boards did not achieve a higher finan- Gender Diversity and Financial cial performance relative to their peers, as there Performance was a weak negative linear relationship between Several empirical studies have examined the the presence of women on boards and profit business case for gender diversity by focusing on after tax. However, there was a positive effect on the relationship between the presence of female returns on shareholders’ funds. (See Figure 21.) directors and financial performance. However, the 12 Women on Boards in Nigeria Banking Sector Research included a review of the level of female The increase in female representation, however, representation on the boards of nine commercial did not translate into growth, as there was a banks. (See Appendix B for a detailed breakdown weak negative linear relationship between the of the figures used in this Report.) Most of the presence of women on boards and the banks’ banks recorded an increase on a year-on-year profit after tax and return on shareholders’ funds. basis. (See Figure 22.) (See Figure 23.) Figure 20: Status of Women on Boards— Figure 22: Status of Women on Boards— Manufacturing Sector Banking Sector 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 No % No % No % No % No % No % No % No % No % No % 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Access Bank Plc Fidelity Bank Plc Aluminium Extrusion Nigerian Breweries Plc Industries Plc Guaranty Trust Bank Plc United Bank of Africa Plc GlaxoSmithKline Consumer Dangote Cement Plc Nigeria Plc Union Bank of Nigeria Plc Wema Bank Plc Sterling Bank Plc Zenith Bank Plc Flour Mills of Nigeria Plc Fidson Diamond Bank Plc Guinness Nigeria Plc Healthcare Plc Figure 21: Correlation of Women on Boards and Figure 23: Correlation of Women on Boards and Financial Performance—Manufacturing Sector Financial Performance—Banking Sector 1.2 1.2 1 1 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 0 1 2 3 4 5 0 1 2 3 4 5 -0.2 -0.2 -0.4 -0.4 -0.6 % of Female Directors (5-Year Average) % of Female Directors (5-Year Average) Profit/Loss Before Tax (5 -Year Average) N’000 Profit/Loss Before Tax (5 -Year Average) N’000 Profit After Tax (5 -Year Average) N’000 Profit After Tax (5 -Year Average) N’000 Return on Shareholders’ Funds (5 -Year Average) Return on Shareholders’ Funds (5 -Year Average) Women on Boards in Nigeria 13 Insurance Sector There was a downward trend in the level of female Figure 24 shows the results of a review of the level representation on the boards of these companies of female representation on the boards of six insur- and a strong negative linear relationship between ance companies. (See Appendix C for a detailed the presence of women on boards and the com- breakdown of the figures used in this Report.) panies’ profit after tax and return on shareholders’ funds. (See Figure 25.) Figure 24: Status of Women on Boards— Insurance Sector Figure 25: Correlation of Women on Boards and Financial Performance—Insurance Sector 45 40 1.5 35 1 30 0.5 25 20 0 0 1 2 3 4 5 15 -0.5 10 -1 5 % of Female Directors (5-Year Average) 0 Profit/Loss Before Tax (5 -Year Average) N’000 No % No % No % No % No % 2013 2014 2015 2016 2017 Profit After Tax (5 -Year Average) N’000 Return on Shareholders’ Funds (5 -Year Average) AIICO Insurance Plc Axa Mansard Consolidated Hallmark Insurance Plc Insurance Plc Wapic Insurance Plc Lasaco Assurance Plc Law union & Rock Plc 14 Women on Boards in Nigeria Recommendations The survey and interview results clearly indicate • Implement board effectiveness assessments, that there is still a long way to go before reaching including gap analysis using skills metrics; and the ultimate goal of gender parity on boards, and • Leverage broad networks—not the usual indeed at all levels. The recommendations below suspects—to connect demand with supply. focus on how to build on the progress already achieved—and to accelerate it. Defined Term Limits Many organizations are now adopting term limits, Formal and Documented Policies on recognizing that regular board refreshment will Board Appointment help ensure that the board remains in tune with Corporate boards should adopt charters and other best practices as well as create opportunities to governance policies that clearly define criteria for improve female representation. director appointment and ensure that the process of appointment is formal and transparent. For companies operating in regulated industries (banking, insurance, pension fund operators, tele- It is in the best interest of the board to ensure communications) the board should ensure strict that only suitably qualified candidates, who bring compliance with term limits set by the applicable relevant experience and skills to the board, are codes of corporate governance. Private compa- appointed as directors. Diversity should be a crite- nies should also define and adopt term limits for rion for board composition, and the board should non-executive directors. actively seek to achieve gender balance. Recruiting Beyond Traditional Networks A diversity policy that defines the objectives of Findings for this Report indicate that most the board and provides a roadmap to achieving appointments to the board are based on recom- diversity goals is a useful and necessary tool for mendations made by other board members. To improving the level of gender diversity in the achieve gender diversity and bring on board Nigerian boardroom. Development and imple- qualified women, boards should seek female mentation of such a policy is highly recommended candidates from outside the networks of serving for all organizations. There is a need to ensure that directors. Engaging professional recruiters would selection of women to serve on boards is based on be useful. merit as well as the skills and experience necessary to perform effectively as directors. It is also recommended that women expand their personal, business, and social networks. One of Boards should periodically assess the relevant the biggest impediments to the advancement expertise, experience, and skills set required and of women in the workplace remains inadequate then seek out women with these qualifications. To socialization. be effective, a board charter or board recruitment policy should, at a minimum, include the follow- Unfortunately, the Nigerian society still expects ing requirements: women to be the primary caregivers and to be primar- • Ensure that the slate of board candidates ily responsible for household duties in addition to their under consideration at any given time consists day jobs. Changes in this mindset have been disap- of at least 50 percent women who possess the pointingly slow and will need to evolve over time. The necessary skills and experience; society itself needs to seek out ways to foster opportu- nities for more women to have a seat at the table. Women on Boards in Nigeria 15 As women move up the corporate ladder, they Corporate Culture need to be more politically astute in addition to Corporate boards should set the tone at the top acquiring necessary skills. by ensuring that the organizational culture encourages gender equality at all levels of the Integrating Gender Diversity into the organization. This includes review of the recruit- Succession-Planning Process ment, promotion, and talent-development Having gender diversity integrated into the suc- systems; investment in inclusive leadership; cession-planning framework is integral to advanc- evaluation; and addressing pay equity. ing the diversity agenda, at all levels. Internal Goal Setting It is important for the board to oversee the process Arguments have been advanced that measurable of identifying a talent pool within the organiza- goal setting is critical to organizational change. tion and then to ensure that there is a pipeline Not only does setting internal targets—and of executives feeding into the board as vacancies tracking progress—help keep diversity high on an occur. It is also the responsibility of the board to organization’s agenda, but it can also demonstrate create and update skills matrixes to determine to stakeholders that the issue of diversity is being required competencies and to evaluate gaps in addressed. This Report recommends that compa- board composition. nies set goals for the representation of women at both middle- and senior-management levels as Formal Mentorship Program well at the board level. Progress against set targets Mentorship is key to the process of increasing should be tracked and reported to the board female representation on corporate boards. Even periodically. It is important to note, however, though the process of gender diversity is focused that to bring about real and effective change, on the long term and is subject to individual there is a need for a culture change in many motivation, a structured mentorship program will corporations in Nigeria. promote the advancement of women to corporate boards. Providing women access to professional Career-Progression Programs coaches and dedicated mentors can also help them Employers have a significant role in improving thrive professionally and remain in the workplace female representation on boards. This process longer. starts with putting in place structures that support career progression and offer competent Serving directors also need to make a concerted women the same opportunities as their male effort to mentor talented and ambitious women. counterparts to progress to managerial and Women’s interest groups should be encouraged to senior-management positions. create a mentoring system to match experienced businesswomen with younger female professionals Employers can establish written policies describ - in search of mentoring and advice. ing how the company specifically plans to increase female representation at executive levels and to Also worth exploring is the concept of a board put in place a career-counselling support unit apprenticeship program, where women have the within the human resources function as well as to opportunity to serve limited terms as “apprentice provide training opportunities focused on equip- directors.” ping women for leadership at the board level. Employers can also introduce different measures to help retain women. Most of these measures will not have any impact on the bottom line. However, 16 Women on Boards in Nigeria such initiatives have to come from the senior For the National Gender Policy to be effective, a executive management, as the most significant constitutional amendment may be necessary. challenge is developing a culture that will wel- In the United Kingdom, nongovernmental come mothers back to renewed responsibilities organizations are encouraged to adopt some and facilitate a work/life balance to ensure that of the initiatives that are practiced in other the female employees are able to stay. Striving jurisdictions. 2 for a balanced workforce is an essential business practice that employers should promote. Comply or Explain Companies listed on the Nigerian Stock Exchange Mandatory Quotas should be required to annually disclose the num- There are arguments that the government ber of women on the quoted company’s board of (through the regulator) should be at the forefront directors and in executive office or management of the fight for gender equality. In Canada, for positions, as well as other mechanisms, policies, example, Prime Minister Justin Trudeau sent a or considerations relating to the representation strong signal of his commitment by creating a of women. Quoted companies that have not cabinet with an equal number of men and women. adopted such mechanisms or have not considered the representation of women should be required By contrast, Nigeria has only 16 percent female to explain their reasons for not doing so. A good representation on the federal cabinet. This is in starting point would be to set specific targets to contravention of the national gender policy, which be achieved within a three- to five-year period. requires a minimum of 35 percent female representa- tion on the executive cabinet. In addition, only 7 out An example of successful implementation of the of the 109 Senate seats and 14 out of the 360 House of “comply or explain” approach is in the United Representatives seats are occupied by women. Kingdom. In 2012, the United Kingdom amended its Corporate Governance Code to include a “com- Several European countries—led by Norway ply or explain” model for gender disclosure. The and followed by Belgium, France, Italy, the code requires companies to describe their board’s Netherlands, and Spain—have introduced quotas policy on diversity, including gender, as well as to achieve gender diversity on listed corporate measurable plans and progress in achieving these boards. California recently passed a state law man- objectives. dating that the boards of publicly traded California companies meet gender-diversity quotas (at least Work/Life Balance one woman per board), to go into effect in 2019. Women aspiring to senior-management and director roles need to develop effective support Given the significant value that women bring to structures. Distractions on the home front corporate boards—and in view of the fact that continue to be a major challenge for women in self-regulation or voluntary business-led strategies the corporate world, hindering their ability to may prove difficult to implement in Nigeria with progress in their careers at the same pace as their its weak and ineffective legal regulatory systems— male counterparts. Many talented women have it is recommended that the regulators prescribe stepped off the corporate ladder because they (and enforce) mandatory quota requirements. wanted to achieve better balance in their work However, to ensure that this does not become life, family, and other interests. Women should a box-ticking exercise, it is imperative that find ways to organize the home front so as to appointments are based on merit. reduce distractions and disruption at work. 2 An example is the 30% Club. Although a U.K. initiative, it has chapters in several countries, such as Canada, Gulf Cooperation Council countries, Ireland, and the United States, to name a few. Nigerian NGOs can team up with sister organizations in other African countries to set up a similar drive. Women on Boards in Nigeria 17 Education Research studies such as Engaging Men in Gender Career advancement through education is one Initiatives: What Change Agents Need to Know, spon- of the critical catalysts that can better position sored by Goldman Sachs Inc. and Ernst & Young LLP women for executive and board roles. Aspiring (Prime and Moss-Racusin 2009), highlight that female directors need to take their professional there are male proponents of the idea voiced by and personal development more seriously and Hillary Clinton that “human rights are women’s approach it strategically, with the expectation rights . . . and women’s rights are human rights” that boards that are focused on long-term sustain- (Clinton 1995). able growth will look beyond their traditional net- works and reach out to qualified and experienced There are male leaders with a keen sense of fair women to fill board positions. play and strong commitment to ideals of fairness who actively support gender equality at all levels, Aspiring female directors need to go outside their including in the corporate world. It is recom- comfort zones and take the initiative to educate mended that women’s interest groups identify and position themselves to reach higher in the such men and include them in their advocacy. corporate hierarchy. A well-educated and qualified woman is likely to stimulate and improve the qual- Shareholding as a Criterion for ity of the debate and the decision-making process Directorship on the board. In the surveys and interviews for this Report, over 60 percent of respondents agreed that a positive Advocacy via Male Champions correlation exists between share ownership and Men have a critical role in achieving diversity and board appointments. A female shareholder with inclusion, because the preponderance of men in controlling interest in the company has a greater leadership positions means that their efforts are likelihood of being appointed to the board. necessary to effect change in the workplace. Therefore, women should make conscious efforts to significantly invest in companies on whose boards they aspire to serve as directors.   18 Women on Boards in Nigeria Conclusion In an increasingly fast-paced and ever-changing findings from this survey indicate that women global market, companies need to sustain a com- are more analytical, ensure that the board avoids petitive advantage, and having a diverse corporate excessive risk, and ask more questions, which board definitely supports achievement of that leads to more robust discussion at board meet- objective. ings—and inevitably to better decision making. It cannot be overemphasized that board diversity is There is sufficient evidence of the value that critical for sustainability. women add to the boards they serve on. However, to move more women into leadership, there needs The survey identified strong financial performance to be a paradigm shift. Attitudes and behavior and improved board effectiveness as key benefits flow down from the top, and only with a commit- of women in the boardroom. Having women on ment to gender equity from those at the top can the board sends a strong message that a company there be real change. is progressive. Boards that mirror society can better understand the needs and preferences of The recommendations in this Report, such as a their clients, and this can lead to improved product mandatory quota and diversity policies, among development, more effective product marketing, others, would be useful in supporting the drive and better customer relations. toward a higher level of inclusion on Nigerian boards. Indeed, it is in the best interest of leaders Despite these benefits, the survey showed that and all stakeholders to ensure the inclusion of women are still underrepresented on corporate women for the greater success and profitability of boards in Nigeria. Survey respondents and inter- organizations and companies. However, all organi- viewees identified a number of reasons for this, zations are different, as are all women. Therefore, including cultural, sociopolitical, and organiza- there is no expectation that the recommendations tional factors. that resulted from the survey and interviews will One argument against actively seeking gender apply in full or in part to all organizations or to all parity on the board stems from a concern that women. As with policies and international best too much diversity and independence of thought practices, these recommendations may need to be can hurt board cohesion. This is clearly a fallacy; adapted to suit local requirements. Women on Boards in Nigeria 19 Appendixes Appendix A 2013 2014 2015 2016 2017 Manufacturing Sector S/N Company Name No. % No. % No. % No. % No. % 1. Aluminum Extrusion 0 0 0 0 0 0 0 0 0 0 Industries Plc 2. Dangote Cement Plc 0 0 0 0 0 1 1 0 1 7 3. Flour Mills of Nigeria Plc 0 0 0 0 0 0 0 7 1 7 4. Guinness Nigeria Plc 3 23 2 17 2 17 2 17 3 23 5. Nigerian Breweries Plc 1 8 2 14 2 13 1 7 2 13 6. GlaxoSmithKline Consumer 1 13 1 10 1 10 1 14 1 11 Nigeria Plc 7. Fidson Healthcare Plc 2 22 3 33 3 38 3 38 3 33 8. Nestlé Nigeria Plc 1 17 2 25 2 25 1 14 1 13 9. Unilever Nigeria Plc 0 0 0 0 2 22 2 22 2 20 10. Okomu Oil Plam 0 0 0 0 0 0 0 0 0 0 Company Plc 20 Women on Boards in Nigeria Appendix A: Manufacturing Sector (continued) Profit/Loss Return on S/N Company Name % of Female Before Tax Profit After Tax Shareholder Directors (5 -Year Average) (5 -Year Average) Funds (5-Year Average) N’000 N’000 (5- Year Average) 1. Aluminum Extrusion 0% 124,497 111,989 9% Industries Plc 2. Dangote Cement Plc 0% 206,852,000 185,379,000 29% 3. Flour Mills of Nigeria Plc 0% 41,715,744 8,209,657 9% 4. Guinness Nigeria Plc 19% 8,898,972 6,634,342 14% 5. Nigerian Breweries Plc 11% 52,904,337 37,024,449 24% 6. GlaxoSmithKline Consumer 12% 1,886,817 1,699,401 12% Nigeria Plc 7. Fidson Healthcare Plc 33% 796,155 581,747 9% 8. Nestlé Nigeria Plc 19% 29,638,627 21,975,879 56% 9. Unilever Nigeria Plc 13% 5,923,426 4,352,124 32% 10. Okomu Oil Plam 0% 4,950,967 3,739,255 13% Company Plc Women on Boards in Nigeria 21 Appendix B 2013 2014 2015 2016 2017 Banking Sector S/N Company Name No. % No. % No. % No. % No. % 11. Access Bank Plc 5 29 5 31 5 36 6 40 6 40 12. Fidelity Bank Plc 3 19 3 19 3 21 3 21 3 21 13. Guaranty Trust Bank 4 26 3 25 4 25 4 16 4 29 14. United Bank of Africa Plc 5 26 4 25 4 25 3 16 3 16 15. United Bank of Nigeria Plc 2 12 2 11 4 44 4 25 5 31 16. Wema Bank Plc 2 18 2 18 4 33 4 33 4 33 17. Sterling Bank Plc 2 15 5 31 4 27 4 27 4 27 18. Zenith Bank Plc 2 17 2 17 2 17 1 9 1 8 19. Diamond Bank Plc 3 18 2 14 2 15 3 27 5 38 22 Women on Boards in Nigeria Appendix B: Banking Sector (continued) Profit/Loss Return on S/N Company Name % of Female Before Tax Profit After Tax Shareholder Directors (5 -Year Average) (5- Year Average) Funds (5-Year Average) N’000 N’000 (5 -Year Average) 11. Access Bank Plc 35% 60,667,558 50,218,940 14% 12. Fidelity Bank Plc 20% 13,986,000 12,802,400 7% 13. Guaranty Trust Bank 24% 135,620,804 114,118,527 26% 14. United Bank of Africa Plc 22% 61,573,000 52,068,000 15% 15. United Bank of Nigeria Plc 21% 14,139,000 13,919,000 6% 16. Wema Bank Plc 27% 3,196,824 2,766,460 6% 17. Sterling Bank Plc 25% 9,135,073 8,251,156 10% 18. Zenith Bank Plc 14% 134,502,000 115,744,000 19% 19. Diamond Bank Plc 22% 16,771,007 14,439,303 28% Women on Boards in Nigeria 23 Appendix C 2013 2014 2015 2016 2017 Insurance Sector S/N Company Name No. % No. % No. % No. % No. % 20. AIICO Insurance Plc 1 10 1 10 0 0 0 0 0 0 21. Axa Mansard Insurance Plc 3 27 3 27 3 18 2 18 1 9 22. Consolidated Hallmark 1 11 1 13 1 13 4 40 4 36 Insurance Plc 23. Wapic Insurance Plc 2 18 2 20 3 33 3 33 3 27 24. Law Union & Rock Plc 4 44 3 33 3 33 2 25 2 20 25. Lasaco Assurance Plc 2 33 2 29 4 33 2 29 2 25 24 Women on Boards in Nigeria Appendix C: Insurance Sector (continued) Profit/Loss Return on S/N Company Name % of Female Before Tax Profit After Tax Shareholder Directors (5 -Year Average) (5 -Year Average) Funds (5 -Year Average) N’000 N’000 (5- Year Average) 20 AIICO Insurance Plc 4% 2,817,025 50,218,940 31% 21. Axa Mansard Insurance Plc 20% 1,415,958 12,802,400 9% 22. Consolidated Hallmark 23% 336,846 223,270 5% Insurance Plc 23. Wapic Insurance Plc 26% 782,649 688,583 5% 24. Law Union & Rock Plc 36% 561,221 472,869 9% 25. Lasaco Assurance Plc 30% 667,986 522,149 7% Women on Boards in Nigeria 25 References ACHPR. 2005. African Charter on Human and Peoples’ Erhardt, N. L., J. D. Werbel, and C. B. Shrader. 2003. 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