Introduction

The Financial Reporting Council of Nigeria (“FRCN”) as part of its responsibilities under the FRCN Act, 2011¹ , recently released an exposure draft on the Nigeria Public Sector Governance Code, 2023 (“Draft Code”).

Similar to the Nigerian Code of Corporate Governance 2018 released by the FRCN aimed at establishing a framework to promote corporate governance best practices in Nigerian Companies, the aim of the Draft Nigerian Public Sector Governance Code (the Draft Code)is to provide a framework for enhancing accountability, transparency and performance in the public sector. The Draft Code covers various aspects of public sector governance, such as leadership, ethics, risk management, internal control, audit, reporting, and stakeholder engagement. The Draft Code is expected to be finalized and implemented after a period of public consultation and review.

Scope of Application

The purpose of the Draft Code is to support and strengthen the already existing governance systems of public sector entities (PSEs)² , in addition to those provided by their enabling legislation.

The Draft Code recommends that PSEs adopt an “Apply and Explain” approach in the implementation of the Draft Code. This approach requires that PSEs explain how they have applied the public sector governance principles in the context of the uniqueness of the organization while still achieving the intended outcome of the principles.

Further to the above, where there is to be a deviation from the provisions of the Draft Code, such deviations will be justified if good governance can be achieved by other means; however, reasons for such deviation should be explained in a governance statement accompanying the PSE’s annual financial statements.

Where a PSE is unable to comply with any provision of the Draft Code, steps which such PSE plans to take in order to ensure compliance as well as the timeframe for achieving compliance should be contained in its governance statement.

The Draft Code supersedes all previous codes and guidelines, applicable to the public sector. Furthermore, all PSEs within the State Government and the Area Councils of the federal capital territory are expected to comply with the draft Code before 1st January 2026 while PSEs within the Local Governments are expected to comply before 1st January 2027.

Key Features and Principles of the Draft Code

The Draft Code is based on the principles of good governance, which include legitimacy, direction, performance, accountability, fairness, and integrity. The Draft Code also adopts a holistic approach to public sector governance, recognizing the interdependence and interrelatedness of the various elements and actors involved. Some of the key features of the Draft Code are:

• It emphasizes the importance of ethical conduct, values, and culture in the public sector. In addition, the Draft Code provides guidance on how to prevent and address conflicts of interest, corruption, fraud, and misconduct.³
• The Draft Code encourages PSEs to adopt a risk-based approach to governance, and to establish effective systems of internal control, audit, and assurance.
• The Draft Code promotes transparency⁴ and accountability in the public sector, and mandates the preparation and disclosure of timely, reliable, and relevant information to the public and other stakeholders.
• The Draft Code encourages PSEs to engage with their stakeholders, and to consider their needs, expectations, and interests in their decision-making and service delivery.
• The Draft Code is based on inclusiveness, sustainable development, an integrated approach, and a belief in the public sector as an integral part of society.
• The Draft Code advocates that the Governing Body considers the needs, interests, and expectations of all material stakeholders in the best interests of the public sector entity over time.
• The Code also emphasizes the importance of balancing and prioritizing the interests of different stakeholders in a dynamic and ongoing process.
• The Draft code also emphasizes sustainable development as a primary ethical and economic imperative for the Code.

Recommendations for Improvement

The Draft Code is a commendable initiative that can potentially improve the quality and efficiency of public sector governance, which is crucial for achieving the national development goals and aspirations; however, it faces some challenges and limitations that need to be addressed.

Some of the recommendations for improvement are:

Improved Implementation Plan, Timeline and Monitoring and Evaluation Mechanism

The implementation of the Draft Code requires a clear and realistic plan that specifies the roles and responsibilities of the different stakeholders, the resources and budget required, the expected outcomes and indicators, and the risks and mitigation measures. The plan should also include a timeline that sets the milestones and deadlines for the completion of the various activities and tasks. The plan should be aligned with the national strategic plan and the sectoral plans and should be coordinated with the relevant ministries and agencies.
The implementation of the Draft Code also requires a monitoring and evaluation mechanism that tracks the progress and impact of the Draft Code on the public sector governance. The mechanism should collect and analyze data and information on the compliance and performance of the public sector officials and staff, the satisfaction and feedback of the citizens and other stakeholders, and the outcomes and impacts of the public sector services and programs. The mechanism should also provide regular reports and recommendations for improvement and adjustment. The mechanism should involve the participation and consultation of the public sector officials and staff, the external auditors and oversight bodies, the civil society organizations, and the media.

Capacity Building, Training, and Awareness-Raising Programs

The implementation of the Draft Code requires the support of adequate capacity building, training, and awareness-raising programs for the public sector officials and staff, as well as the external auditors and oversight bodies. The programs should aim to enhance the knowledge and skills of the public sector officials and staff on the principles and standards of the Draft Code, and to foster a culture of ethics and professionalism in the public sector. The programs should also aim to strengthen the capacity and role of the external auditors and oversight bodies in monitoring and enforcing the Draft Code, and to promote a constructive and cooperative relationship between them and the public sector officials and staff.
The capacity building, training, and awareness-raising programs should be tailored to the specific needs and contexts of the different levels and sectors of the public sector, and should use various methods and tools, such as workshops, seminars, online courses, manuals, guidelines, case studies, simulations, and quizzes. The programs should also be integrated into the existing human resource management and development systems, such as recruitment, induction, performance appraisal, promotion, and career development. The programs should be delivered by qualified and experienced trainers and facilitators and should be evaluated and updated regularly.

Sanctions and Incentives, and Grievance and Complaint Mechanism

The implementation of the Draft Code requires the enforcement of appropriate sanctions and incentives, and the establishment of a robust mechanism for reporting and resolving grievances and complaints. The sanctions and incentives should aim to deter and prevent the violation of the Draft Code, and to reward and recognize the compliance and exemplary conduct of the public sector officials and staff. The sanctions and incentives should be proportionate, consistent, transparent, and fair, and should be applied in accordance with the due process and the rule of law. The sanctions and incentives should also be communicated and publicized widely and should be subject to review and appeal.

The grievance and complaint mechanism should aim to provide a safe and accessible channel for the public sector officials and staff, and the citizens and other stakeholders, to report and resolve any issues or concerns related to the Draft Code. The mechanism should ensure the confidentiality, anonymity, and protection of the complainants and whistleblowers, and should guarantee the impartiality, independence, and accountability of the investigators and adjudicators. The mechanism should also ensure the timeliness, efficiency, and effectiveness of the investigation and resolution process, and should provide feedback and follow-up to the complainants and whistleblowers.

Periodic Review and Update

The implementation of the Draft Code requires the review and update of the Draft Code periodically, based on the feedback and lessons learned from its implementation and practice. The review and update should aim to ensure the relevance, adequacy, and clarity of the Draft Code, and to address any gaps, challenges, or emerging issues that may arise. The review and update should also aim to incorporate e best practices and standards of the international and regional organizations and frameworks, and to harmonize the Draft Code with other codes of conduct and ethics that may exist in the public sector.

The review and update should be conducted by a competent and representative committee, that includes the public sector officials and staff, the external auditors and oversight bodies, the civil society organizations, and the media. The review and update should also involve the consultation and participation of the citizens and other stakeholders and should solicit their views and suggestions. The review and update should be transparent and inclusive and should be communicated and disseminated widely.

Conclusion

The Draft Code is a laudable initiative by the FRCN with the promise to significantly uplift the efficacy of the public sector governance thereby advancing national development objectives and aspirations. national development goals and aspirations. Nonetheless, its transformative potential hinges on effective and enduring implementation. Only through sustained efforts can the Draft Code be empowered to realize its maximum impact.

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1. Section 8 FRCN Act 2011.
2. PSEs include (i) all Ministries, Extra-ministerial Offices, Departments, and Agencies of Governments at the Federal, State, and Local Government levels in the Federation including those created by gazette, administrative fiats (pronouncements), and units whether backed by statute or created administratively (ii) all government-owned corporations, companies, entities, including parastatals, whether commercialised or not. (iii) all arms of Government (Executive, Legislature, and Judiciary).
3. Principle 2.4 of the Draft Code.
4. Principle 4.1.3 of the Draft Code.