Olugbemiro JegedeOlugbemiro Jegede

Value Creation and National Economic

Development: Lessons For Nigeria

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Pleased to be Here Thank ANAN for the invitation as Guest

Speaker Not sure am the right person for the task My involvement with the topic is

rudimentary and limited Gave a Keynote to the 2nd Conference of

the African Accounting & Finance Association on 5th Sept 2012

Paper is only to set the tone

Olugbemiro JegedeOlugbemiro Jegede

Ahmadu Bello UniversityUniversity of Southern Queensland

University of Abuja

Curtin University of Technology, Australia

Open University of Hong Kong

Collateral Learning and the Eco-Cultural Paradigm in Science and Mathematics Education in Africa

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FocusIntroductionValues, Value CreationFive Parts of Every BusinessEconomically Viable Skills and

Economic ValuesCorporate Governance in Public SectorValue Creation and The ConstitutionWay Forward

Values Different meanings to different people

Simply put, values refer to the usefulness or importance of an issue, idea, product or situation.

A very comprehensive definition sees values as important and lasting beliefs or ideals shared by the members of a culture about what is good or bad and desirable or undesirable. Values have major influence on a person's behaviour, choice and attitude and serve as broad guidelines and guide decisions in all situations. 5

Value Creation  Value creation is the performance of actions that

increase the worth of goods, services or even a business. Many business operators now focus on value creation both in the context of creating better value for customers purchasing its products and services, as well as for shareholders in the business who want to see their stake appreciate in value.

According to The Economist, ‘value creation is a corporation's raison d'être, the ultimate measure by which it is judged’.

It is common knowledge that value creation is the bedrock of any business. 6

Process of Value CreationValue is created through an organization’s

business model, which takes inputs from the capitals and transforms them through business activities and interactions to produce outputs and outcomes that, over the short, medium and long term, create or destroy value for the organization, its stakeholders, society and the environment’.

‘A successful business is either loved or needed’ (Ted Leonsis, former Executive of AOL)

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5 Parts of Every Business Laying a foundation using Business Principles 101 for

later parts of our conversation

As it is normally defined in management of business textbooks, a business is a repeatable process that: Creates and delivers something of value... That other people want or need...At a price they’re willing to pay... In a way that satisfies the customer’s needs and expectations...So that the business brings in sufficient profit to make it

worthwhile for the owners to continue operation.

 Most businesses that succeed do so through innovation.

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Value Creation Funnel

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All value-creating innovation regardless of what type of business or service must go through three stages of Value Creation Funnel

Interdependent Processes of an Excellent Business Plan

Value-Creation

Discovering what people need, want, or could be encouraged to want, then creating it.

Marketing Attracting attention and building demand for what you’ve created.

Sales Turning prospective customers into paying customers by completing a transaction.

Value-Delivery

Giving your customers what you’ve promised and ensuring they’re satisfied with the transaction.

Finance Bringing in enough money to keep going and make your effort worthwhile. 10

No Business:Any One minus 5 A venture that doesn’t create value for others is a

hobby.

A venture that doesn’t attract attention is a flop.

A venture that doesn’t sell the value it creates is a non-profit.

A venture that doesn’t deliver what it promises is a scam.

A venture that doesn’t bring in enough money to keep operating will inevitably close.

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Economically Viable Skills Economically Valuable Skills are skills that are

directly related to the 5 Parts of Every Business briefly discussed above.

Note that not every skill or area or knowledge is economically valuable. Some skills are primarily valuable for enjoyment or personal interest, but won’t help you improve your business.

In order to increase your value in the market, focus on improving skills that are economically valuable.

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Economic Values

Cost — how much do I have to give up to get this? convenience

Speed — how quickly does it work? convenience

Reliability — can I depend on it to do what I want? convenience

Ease of Use — how much effort does it require? convenience

Flexibility — how many things does it do? convenience

Status — how does this affect the way others perceive me? fidelity

Aesthetic Appeal — how attractive or otherwise aesthetically pleasing is it?

fidelity

Emotion — how does it make me feel? fidelity

Efficacy — how well does it work? fidelity 13

9 common Economic Values that people consider when evaluating a potential purchase. Whenever a customer wants to buy your product, s/he is declaring that they value your product or service more than anything else his/her money could buy at that time.

Corporate Governance in Public Sector

Corporate Governance in Public Sector

Until very recently, people have always argued that the corporate world is quite different from the public sector and hence they should not intermingle.

The only way some interaction is seen as valid is when the public sector employee purchases for use the products or services that are outputs of the excellent processes and procedures of value creation in the corporate world.

A number of factors has worked together to force the public sector to be interested in the use of those activities and events which guarantee efficiency, innovativeness and creativity

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Some of these factors include:

Interconnections between corporate activity, society and the environment

Create an entrepreneurial venture Globalisation.

Accountability within the public sectorDemand for transparency, placing everyone under scrutiny like

never before. The boundaries of social responsibility are rapidly expandingIn light of the global financial crisis, much commentary in

corporate governance is being directed towards corporate governance in the public sector organizations

Understanding choices of Government Ministries, Departments and Agencies (MDA).

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Corporate Governance in Public Sector Promotes

Accountability – being answerable for decisions and having meaningful mechanisms in place to ensure adherence to all applicable laws, regulations and standards.

Transparency / openness – having clear roles, responsibilities and procedures for making decisions and exercising power, and act with integrity.

Stewardship – enhancing the value of entrusted public assets.

Efficiency – applying the best use of resources to further the aims of the organization.

Leadership – promoting an entity-wide commitment to good governance starting from the top.

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Advantages of Using CG in PSG Allows the transfer of the established template for

transparency and accountability.

 Stewardship and accountability for the use of funds and assets is particularly important in the public sector.  

Growth is positively related not only to the size of the investment but also to the efficiency and transparency of its allocation.

 Ensures that directors and managers of public enterprises carry out their duties within a framework of accountability and transparency.

 

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Value Creation and Economic Development

Value Creation and The Constitution1

Section 15 which talks about the Political objectives of Nigeria. It says that

15 (1) The motto of the Federal Republic of Nigeria shall be Unity and faith, Peace and Progress.

(2) Accordingly, national integration shall be actively encouraged, whilst discrimination on the grounds of place of origin, sex, religion, status, ethnic or linguistic association or ties shall be prohibited.

(3) For the purpose of promoting national integration, it shall be the duty of the State to –

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Value Creation and The Constitution2

(3) For the purpose of promoting national integration, it shall be the duty of the State to –

(a) provide adequate facilities for and encourage free mobility of people, goods and services throughout the Federation;

(b) secure full residence rights for every citizen in all parts of the Federation;

(c) encourage inter-marriage among persons from different places of origin, or of different religious, ethnic or linguistic association or ties; and ……

 (5) The State shall abolish all corrupt practices and abuse of power. 21

Section 16 is concerned with the economic objectives of Nigeria. It states that,

(1) The State shall

Harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self-reliant economy every citizen on the basis of social justice and equality of status and opportunity;

Control the national economy in such a manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity;……

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Value Creation and The Constitution3

(2) The State shall direct its policy towards ensuring – (a) the promotion of a planned and balanced economic

development; (b) that the material resources of the nation are harnessed

and distributed as best as possible to serve he common good;

(c) that the economic system is not operated in such a manner as to permit the concentration of wealth or the means of production and exchange in the hands of few individuals or a group; and

that suitable and adequate shelter, suitable and adequate food, reasonable national minimum living wage, old age care and pensions, and unemployment, sick benefits and welfare of the disabled are provided for all citizens.’

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Value Creation and The Constitution4

Constitution is Silent Nothing done to constitutionally declare that the nation would from

now on use the value creation strategies of the business world to enhance national economic development.

No single line or paragraph of the Constitution or any related document it can refer to, that attempts to relate value creation with national economic development.

Yet our economy has been said to have over taken that of South Africa and we are now number one in Africa. As if that is not enough exposure to our self-deception, some have declared us as the 20th best economy in the world.

Corporate governance within public sector firms has recently begun to receive increased attention. This is particularly the case when countries are attempting to curb widespread corruption within the public sector, or when they are preparing public enterprises for privatization

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Way forward for Nigeria

Issues to Be ReviewedFor Nigeria to claim any iota of

success in integrating corporate governance in its public sector with especial attention to value creation a number of issues must be reviewed as a matter of urgency.

Given the time at our disposal, let me mention just four of them.

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Sustainability Culture Developing a culture of sustainability

underlines the importance of balancing economic efficiency, social equity, and environmental accountability.

The concepts of democracy and sustainability are ‘both absolutely indispensable, and further that one cannot be realized without the other’.

To make excellent progress in our race to institutionalise corporate governance in our public sector matters, we must examine the way to incorporate sustainable value.

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Sustainable Value Creation

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Emergence of SDGThe emergence of the Sustainable Development

Goals (SDGs) agreed upon by member states at the United Nations Conference on Sustainable Development, which held from 20-22 June, 2012 in Rio de Janeiro, Brazil (popularly known as Rio+20) replaces MDGs

It was decided in the Rio+20 document, The Future We Want, to establish an "inclusive and transparent intergovernmental process open to all stakeholders, with a view to developing global sustainable development goals to be agreed by the General Assembly".

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Common Africa Position (CAP)

The Common African Position has as its pillars the follow:

Structural economic transformation and inclusive growth

Science, technology and innovation People-centred development Environmental sustainability, natural resources

management and disaster risk management Peace and security Finance and partnerships

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Education and Value Creation

What Vision?“Where there is no vision, the people

perish..” Prov 29:18

Hence we are in trouble with Governance and education

Must do something drastic to avoid disaster

….and so we are off to the optometrist for a quick fix ….

Goals of the C21st

sustainable development

highly educated, mobile and adaptable workforce

multi-skilled and multi-tasked

a knowledge and a learning society

use of ecological and geographical conditions to a nation’s advantage

In the Beginning…

Things Fell Apart Govts, especially the military detested academic

freedom, university autonomy, demonstrations. Brutal clamp down on campus riots. Military

raped and killed students in Zaire (1992), Burkina Faso (1987) Niger (1989) Cote D’Ivoire (1992) Kenya (1992), Nigeria (1973).

Damaging effects of the 1988 World Bank report on the Education in Sub-Saharan Africa.

Jomtien WCE for All (1990) and Dakar WEF (2000) on Basic education.

Civil wars – Liberia, Ethiopia, Somalia, Eriteria, Rwanda, Burundi, Namibia, South Africa and Nigeria

Effects on Higher Education

Establishment of universities stopped abruptly.

Sharp diminishing financial resources.Physical, managerial and intellectual

dilapidation.No more production of human

resources to develop Africa.Flight of the best brains to safe and

greener pastures.

Effects on Higher Education2Dwindling provision of funds to HEUncontrolled proliferation of for-profit

universitiesHuge unmet demand in HEObsolete curricula Inability to meet the skills demanded by the

private sector Inability to address balance between

enrolment and quality of educationUncertainty about what HE means to Africa in

the 21st C

State of Education in Africa

The continent is heavily threatened by economic strangulation; political instability; conflicts and terrorism; fragility of some of our nations; endemic corruption; geopolitical imbalances and hatred; huge capacity development needs; extreme poverty; a preponderance of unemployed, underemployed and unemployable youths.

The data available indicate that as at January 2015: over 10 million seek employment annually and that 60 per

cent of the unemployed are youths. at least half of the 1 billion people are still illiterate. Africa

has the world’s highest illiteracy rates. Sub-Saharan Africa is home to at least 30 per cent of the

world’s poorest people.

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Surviving the 21st Century Sub- Saharan Africa must engage in:

 Building of very strong economic foundation;

Economic integration regionally and continently;

Massive job creation;

Embarking on effective food security measures;

Health and environmental provisions;

Innovations and creativity buoyed by education;

Energy reforms and directing attention to combating climate change; and

Massive investment in education, especially tertiary education.

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The Africa We Want 2063

There should be

‘created an Africa of our dreams that is prosperous, healthy, vigorous, creative and exciting’ (Versi, 2015).

To achieve this, as has been done in other parts of the world, Africa must re-focus on using education as the fundamental and virile instrument for continental, regional and national development.

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Value Creation and Human Capital Development

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One Too Many!Bastardisation

of education, especially higher education Entrenching

Corruption as a fixed member of the Board

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Addressing the MismatchCapitalised on knowledge economy as power of

the futureAbolished tenure system: no permanent seat or

office for lifeEncouraged job change for personal

development and to broaden career choices and being futuristic

Work force becoming multi-skilled and multi-tasked

Became a learning society as response to change from Industrial to post-industrial society

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Challenges of African Academics

To strive to raise our game in and out of the lecture hall to assist HE in Africa achieve excellence again.

Participate in the war against illiteracy on the continent

Enlist in the fight against corruption in our continent especially in the universities

Strive to be multi-tasked and multi-skilled - be a great academic and an excellent Accountants

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Education Bastardised Education is the best legacy to bequeath to younger

generations. We play politics with education No concerted effort to completely redraft from

scratch our national policies on education Using 19th century tools to solve 21st century issues

and concerns in nation building. youth driven into the hands of ‘militancy’ and ‘Boko

Haramism’ – two perfect examples of a rudderless nation ridden with bad governance, lack of incisive accountability and breading illiteracy and lawlessness faster than the rate maggots reproduce.

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Africa’s Answer to HE Reform

Effective implementation of the 2nd Decade of Education in Africa (2006-2015)

Encourage greater mobility of academic researchers, staff and students

Establish an African HE and Research Space: quality Assurance, harmonisation of academic programmes and recognition of qualifications

Use ICT effectively and appropriately to develop, produce, acquire and distribute knowledge, skills and competencies

Collaboration and partnership on equal and mutually beneficial platforms

Creating centres of excellence

Eradicating Corruption

Transparency International That Nigeria is one of the most corrupt countries in the

world is no more news. But that we seem to think that it has become part of our national and individual dressing code is what is most disturbing. The latest global corruption index from Transparency International says that for 2014, Nigeria is up eight places to 136 out of 175 countries ranked by the index.

As reported by Olaniyan, author of ‘Corruption and Human Rights Law in Africa’, and who is Legal Adviser, International Secretariat of Amnesty International, London, Nigeria shares 136th position with well-known corrupt countries like Cameroon, Kyrgyzstan, Iran, and Lebanon.

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All Have SinnedNo country is entirely free of corruption. But if

corruption is deep enough it can hinder economic growth and good governance, and decay the fabric of society. Corruption is an obstacle to sustainable development, with the potential to enlarge economic gaps and breed organized crime. Unchecked corruption leaves little room for democracy to flourish; little room for freedom to expand; little room for justice to prevail.”

Foreign Affairs and International Trade of Canada, 2010

Adamu on Corruption“But in reality, corruption is so pervasive in Nigeria

today that there is nothing and no area that has remained unaffected by it. To short change the nation, soldiers have colluded with technocrats; and civilians have colluded with bureaucrats; and businessmen have colluded with all of them. But the real tragedy of Nigeria is that everything is just so awfully wrong with every single issue in every place about everything without exception all over the country. It is as if corruption is the norm, accepted, encouraged and institutionalised.

Daily Trust, Sept 10, 2010

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Score card for NigeriaWhat Africa needs is not more strong

men, it needs more strong democratic institutions that will stand the test of time. Without good governance, no amount of oil or no amount of aid, no amount of effort can guarantee Nigeria’s success. But with good governance, nothing can stop Nigeria Hilary Clinton, August 12, 2009

Reviewing the Constitution

Obsolete Constitution I have in a section ‘Corporate Governance, Value Creation

and The Constitution of the Federal Republic of Nigeria’ discussed how our Constitution does not match the need of an emerging nation willing to use the corporate governance model of value generation to run its public sector.

What the examination of the Constitution tells me is that our Constitution is obsolete and does not really fit in with current needs of the nation let alone being reflective of developments in the global scene.

Alignthe Constitution with the dictates of value creation in corporate governance. It is only by doing this that we would align the nation with what the 21st century national economic development requires.

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Conclusion

Needed: Accounting manuals for

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Ro

ad S

ide

Trad

ing

Needed in AfricaA progressive accounting education that

lives on knowledge economyAccountants who enforce national and

continental regulatory frameworks including professional ethics

Accountants who frown at and expose fraud and corruptive tendencies in universities

Multi-skilled and multi-tasked accountants who subscribe to advancing their careers through research and other studies

Knowledge is the Word!Social thinkers from Confucius

through Buddha, Plato, Castro and Castells all allocate a special place in their theories of development to knowledge.

Manual Castells: “knowledge and networks”

Africa cannot leave out the contributions of accounting education in HE

Our rescue will be knowledge-intensive development directed at capacity building with cutting edge training and skills acquisition.

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Thank you