“Good corporate governance is key to accessing funding” – Austin Avuru, C.E.O Seplat Petroleum

Austin Avuru has advised companies to pursue good corporate governance and institutional framework as a means to accessing funds for growth and development.

The Chief Executive Officer of Seplat Petroleum, Nigeria’s leading indigenous oil and gas Company was speaking at the tenth edition of the US-Africa Business Summit which held in Addis Ababa, Ethiopia last week.

In his comments, Avuru noted that there are various sources of funding for companies which present a good governance structure in the country.

Avuru, who was a panelist at a session on ‘ Financing Africa’s Private Sector Growth’ noted, “that there are funds actually sitting and waiting for investable opportunities, for example from the Pension funds and Insurance companies” and that African businesses should take advantage of these opportunities to develop their businesses and grow the country’s economy.

He noted that unlike in the past when “the Nigerian banking sector did not lend up to $20m to any sector for over 20 years, the oil and gas sector in the country alone has accessed credit facilities to the tune of $5.7b within the past five years” while insisting that “indigenous entrepreneurs  must work towards attaining international standards of operation as a way to attracting more fund injection be it through the banks or public offerings.”

Sharing the experience of Seplat which is the first upstream company to be dual listed on the Nigeria and London Stock Exchanges, Avuru told the audience that while going public remains one of the most veritable ways of raising funds for a business entity, any company aiming at being listed on the stock exchange must be prepared to open itself up to public scrutiny.

His words: “A company must have world class governance requirements to be able to list and attract funds.  To achieve its listing on the London Stock Exchange, it took Seplat seven and half months against the usually eight or less weeks before the company received the UK Listing Authority  approval after due diligence. The company put itself up for this scrutiny because it knew that it desired a long term world class governance and institutional framework, high quality of board and management of the company ensuring that they and the company can be trusted. Seplat put itself through these laborious and stringent rules because the company knows that its long term survival as a company depends on these qualities that fund managers require. And since going public, Seplat has adhered to this checklist of world class governance structure keeping to a good track record. Companies who do not toe this high level of governance and proper framework will not survive in the long haul.”

The oil and gas executive noted that the current economic crunch in the country which has led to a devaluation in the value of the Naira is a disincentive for a lot of investors and that a lot of portfolio investors could move out their investments thus leaving gaps in the Nigerian Stock Exchange.  This, according to him however presents a very useful window for indigenous entrepreneurs and capital to move in and save the stock exchange. Hence he stressed the need for a very viable indigenous private sector.

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