The implementation of corporate governance in Nigerian businesses is often challenging due to several factors.

The implementation of corporate governance in Nigerian businesses is often challenging due to several factors. One of the main reasons is the presence of institutional voids, which refers to the absence or inadequacy of formal institutions that support effective corporate governance practices (Amaeshi et al., 2020). Nigeria has been characterized by a challenging and non-enabling institutional context, with endemic corruption being a significant issue (Okike, 2007). These institutional voids create a lack of trust and confidence in the business environment, making it difficult for businesses to implement and enforce corporate governance practices effectively.

Another factor hindering the implementation of corporate governance in Nigeria is the inadequate governance mechanisms and frameworks in place. The roles of various stakeholders, including the government, the Corporate Affairs Commission, the Securities and Exchange Commission, the Nigerian Stock Exchange, shareholders, directors, auditors, and the Audit Committee, are crucial in the governance process (Okike, 2007). However, there is a lack of clarity and effectiveness in these mechanisms, which undermines the implementation of corporate governance practices.

Furthermore, the lack of adherence to global corporate governance standards while considering the peculiar socio-political and economic environment of Nigeria is another challenge. While it is important to align with global standards, it is equally important to ensure that the corporate governance practices are suitable for the Nigerian context (Okike, 2007). This requires striking a balance between international best practices and local realities.

Additionally, the weak enforcement and monitoring systems, as well as the lack of transparency and disclosure, pose significant barriers to the implementation of corporate governance in Nigeria (Okpara, 2011). The study by Okpara (2011) highlights the constraints that hinder the promotion and implementation of corporate governance, including weak law enforcement mechanisms, abuse of shareholders' rights, lack of commitment from boards of directors, and non-adherence to the regulatory framework (Okpara, 2011).

The Nigerian banking sector, in particular, has been plagued by systemic governance problems and capacity constraints, further exacerbating the challenges of implementing corporate governance (Akinyomi & Adedayo, 2015). The study by Akinyomi & Adedayo (2015) emphasizes the association between organizational governance and the profitability of Nigerian banks, highlighting the need for effective governance practices in the banking sector (Akinyomi & Adedayo, 2015).

In conclusion, Nigerian businesses struggle with the implementation of corporate governance due to institutional voids, inadequate governance mechanisms, the need for a balance between global standards and local realities, weak enforcement and monitoring systems, and challenges specific to the banking sector. Addressing these challenges requires comprehensive reforms and improvements in the institutional framework, governance mechanisms, and enforcement systems to create an enabling environment for effective corporate governance practices.

Akinyomi, O., Adedayo, O. (2015). Corporate Governance and Profitability Of Nigerian Banks. AJFA, 1(7), 172. https://doi.org/10.5296/ajfa.v7i1.6543

Amaeshi, K., Adegbite, E., Rajwani, T. (2020). Corporate Social Responsibility In Challenging and Non-enabling Institutional Contexts: Do Institutional Voids Matter?. SSRN Journal. https://doi.org/10.2139/ssrn.3512774

Okike, E. (2007). Corporate Governance In Nigeria: the Status Quo. Corporate Governance, 2(15), 173-193. https://doi.org/10.1111/j.1467-8683.2007.00553.x

Okpara, J. (2011). Corporate Governance In a Developing Economy: Barriers, Issues, And Implications For Firms. Corporate Governance, 2(11), 184-199. https://doi.org/10.1108/14720701111121056