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The CBN Code of Corporate Governance For Bureaux De Change in Nigeria

By
Emmanuel Ifeanyi Ogbuka
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0

The CBN Code of Corporate Governance For Bureaux De Change in Nigeria  – Objectives, Appointment & Tenures, Meetings and Remunerations.

Bureaux de Change (BDCs) are financial institutions licensed to carry on small scale foreign exchange business services on a stand-alone basis in Nigeria, serve as tools for the management of exchange rate and provide economic data for monetary policy decisions. Their activities impact on exchange rates; hence BDCs are important players in the money market.

In 2014, the Central Bank of Nigeria observed some deficiencies in the operational effectiveness of BDCs which militate against the achievement of their objectives. To address this challenge, the CBN commenced the reform of the sub-sector and issued revised guidelines in 2015 which, among others, reviewed upwards the minimum capital requirement for BDCs.

To further strengthen the institutions and reposition them to perform their statutory roles, the CBN issued the Code of Corporate Governance for BDCs in Nigeria to complement extant operational guidelines and regulations on BDC business. The provisions of this code will constitute the focus of this article.

What is the application scope of the code? 

The code shall apply to BDCs in Nigeria.

What does the code say about the responsibilities of boards of directors and management teams of bureaux de change in Nigeria?

The code states that :-

– A BDC board shall be accountable and responsible for the performance and affairs of the BDC. 

– Specifically, and in line with the provisions in the Companies and Allied Matters Act (CAMA) 2020 (as amended), directors owe the BDC the duty of care and loyalty to act in the interest of the BDC’s shareholders and other stakeholders.

– Members of the Board are severally and jointly liable for the activities of the BDC.

– The Board shall define the institution’s strategic goals, approve its long and short-term business strategies and monitor their implementation by management.

– The Board shall determine the skills, knowledge and experience that members require which shall, at the minimum, be in line with the requirements of the approved persons Regime.

– The Board shall ensure that its human, material and financial resources are effectively deployed towards the attainment of set goals of the BDC.

– The Board shall appoint the MD/CEO as well as top management staff and establish a framework for the delegation of authority in the BDC, which shall comply with extant regulations issued by the CBN from time to time.

– The Board shall establish and monitor agreed performance targets for the management.

– The Board shall ensure that a succession plan is in place for the MD/CEO and other management staff.

– The Board shall consider, approve and monitor the implementation of the BDC’s budget, including setting expenditure limits for management.

2.1.10 The Board shall ensure strict adherence to the Code of Conduct for BDC Directors.

What is the composition and size of the board of directors as provided by the code?

– The size of the Board of any BDC shall be limited to a minimum of three (3) and a maximum of five (5).

– The MD/CEO shall be the only Executive Director of a BDC.

 – Members of the Board shall be persons of proven integrity and shall meet the requirements of the Revised Assessment Criteria of approved persons Regime.

What does the code say about separation of powers regarding BDCs?

The code in this aspect provides that :-

– The positions of the Board Chairman and the MD/CEO shall be separate. No one person shall combine the two positions in any BDC at the same time. For the avoidance of doubt, no executive Vice Chairman shall be allowed in the Board structure.

– Not more than two members of a family shall be on the board of a BDC at the same time. The expression ‘family’ includes the director’s spouse, parents, children, siblings, cousins, uncles, aunts, nephews, nieces and in-laws.

-Where the BDC is a member of a holding company, not more than two family members shall be allowed to serve on the Boards of the BDC and the holding company. 

-No two members of a family shall occupy the positions of Chairman and MD/CEO of a BDC.

What are the provisions of the code regarding the appointment and tenure of members of the board/directors of BDCs?

The code provides that:-

– Members of the Board of Directors shall be appointed by the shareholders and approved by the CBN.

-To qualify for the position of a Non-Executive Director, it is required that the nominee shall not be an employee of a bank or other financial institution, except where the BDC is promoted by the bank or Other Financial Institution(OFI) and the proposed director is representing the interest of such an institution.

-The procedure for appointment to the Board shall be formal, transparent and documented in the Board charter.

– The appointment to the Board of BDCs shall be in accordance with extant regulations issued by the CBN from time to time.

– The track record of appointees shall be an additional eligibility requirement. Such records shall cover both integrity and past performance, in accordance with extant CBN guidelines.

– To ensure continuity and injection of fresh ideas, Non-Executive Directors of BDCs shall serve for a maximum of three (3) terms of four (4) years each.

– The tenure of the MD/CEO of the BDC shall be in accordance with the terms of engagement for a tenure of five (5) years renewable every five (5) years subject to CBN approval. 

-Where the BDC is a member of a Group or is owned by another financial institution, a director in the BDC may be allowed to serve on the Boards of the BDC and its holding company at the same time, provided the aggregate number of directors from the subsidiaries and associates at any point in time shall not exceed 30 per cent of the membership of the Board of Directors of the holding company.

-To enhance effectiveness, all Directors shall have access to corporate information under conditions of confidentiality; undergo training and continuing education and have access to independent professional advice.

What are the provisions of the code regarding BDC board meetings?

– To effectively perform its oversight functions and monitor management’s performance, the Board shall meet at least once every quarter.

– Minutes of meetings of the Board shall be properly written in English language, adopted and signed off by the Board Chairman and Secretary, pasted in the minutes book and domiciled at the BDC’s Head Office.

– Every Director shall attend all meetings of the Board. In order to qualify for re-election, a Director must have attended at least two-thirds of all Board meetings in each financial year.

– Board meetings shall be deemed to be duly constituted where two-thirds of members are present, provided that a majority of directors at the meeting are Non-Executive Directors’ (NEDs).

–  The Board shall disclose, in the Corporate Governance Section of the Annual Report, the total number of Board meetings held in the financial year and attendance by each Director.

What are the provisions of the code Remuneration of BDC directors/members of the board?

– BDCs shall align executive and Board remuneration with the long term interests of their institutions and their shareholders.

– Levels of remuneration should not be excessive but sufficient to attract, retain and motivate management and members of staff of the BDC.

-Where remuneration is linked to performance, it shall be designed in such a way as to prevent excessive risk taking.

-Every BDC shall have a remuneration policy put in place by the Board of Directors, which shall be disclosed to the shareholders in the annual report.

-The MD/CEO shall not receive sitting allowances and Directors’ fees.

-Non-Executive Directors’ (NEDs) remuneration shall be limited to Directors’ fees, sitting allowances for Board meetings and reimbursable travel and hotel expenses. NEDs shall not receive salaries and benefits whether in cash or in kind, other than those mentioned above.

– BDCs shall disclose in their annual reports, details of the shares held by Directors and their related parties.

The CBN Code of Corporate Governance For Bureaux De Change in Nigeria (Other Stakeholder Rights, Whistleblowing, Disclosure/Transparency and Compliance)

What are the provisions of the code on the rights of other stakeholders?

The code provides that :-

– Employees, customers and other stakeholders of BDCs shall be able to freely communicate their concerns about illegal or unethical practices to the Board. Where such concerns bother on the activities of the Board, such individuals shall have recourse to the CBN in accordance with Section 3.4 of the Guidelines for Whistle Blowing for Banks and Other Financial Institutions in Nigeria.

-Where stakeholders’ interests are protected by law, stakeholders shall have the opportunity to obtain effective redress for violation of their rights.

– BDCs shall demonstrate good Corporate Social Responsibility (CSR) to their stakeholders such as customers, employees, host communities, and the general public.

What are the provisions of the code on disclosure and transparency?

On Disclosure, the code provides that :- 

– In order to foster good corporate governance, BDCs are required to make timely, quality and robust disclosure beyond the statutory requirements in BOFIA 1991 as amended, CAMA 1990, monetary policy guidelines, all rules and regulations as well as circulars issued by the CBN on foreign exchange activities/business from time to time.

– Disclosure in the annual and periodic financial reports or by any other appropriate means shall include, but not limited to, material information on:- 

  • Exchange Rates applied in the preparation of the accounts.
  • Rationale for all material estimates; 
  • Details on Directors:

(i)Total NEDs’ remuneration, including fees and allowances;

(ii)Total Executive compensation, including bonuses paid/payable;

(iii)Organizational Structure.

  • Governance structure;
  • Risk Management;
  • All regulatory/supervisory contraventions during the year under review and infractions uncovered through whistle blowing, including regulatory sanctions and penalties;
  • Capital Structure/Adequacy;
  • Opening and closure of branches;
  • Any service contracts and other contractual relationships with related parties;
  • Frauds and Forgeries;
  • Sources and application of funds during the period of reporting.
  • Details of all domiciliary accounts owned and maintained by the BDC.
  • All customers’ complaints during the reporting period and actions taken thereon.
  • Any matter not specifically mentioned in this code but which is capable of affecting in a significant form, the financial condition of the BDC or its status as a going concern.

What are the provisions of the code on transparency and integrity in reporting?

The CBN code provides that regarding transparency, :-

– BDCs shall have a structure to independently verify and safeguard the integrity of their financial reporting, which shall enhance the independence and competence of the BDC’s internal and external auditors.

-Appointment of external auditors shall be approved by the CBN.

– External auditors shall render reports to the CBN on BDC’s risk management practices, internal controls and level of compliance with regulatory directives. 

– The MD/CEO of a BDC shall certify in the statutory returns submitted to the CBN that he/she has reviewed the reports, and that based on his/her knowledge:

i. The report does not contain any untrue statement of a material fact.

ii. The financial statements and other financial information in the report, fairly represent, in all material respects the financial condition and results of operations of the BDC as of, and for the periods presented in the report.

– Rendition of false information to the CBN shall attract appropriate sanctions including monetary penalties and suspension of the MD/CEO for six (6) months in the first instance and possible removal. 

-There shall be due process in all the procedures of BDCs.

– Each BDC should have an Internal Auditor who shall report directly to the Board. The Internal Audit and Compliance functions may be merged and headed by one individual. 

What are the provisions of the code on Whistle Blowing?

The code provides that :-

– A BDC shall have a whistle-blowing policy made known to employees, customers and other stakeholders.

– The policy shall contain mechanisms, including assurance of confidentiality, that encourage all stakeholders to report any unethical activity to the BDC and/or the CBN.

– BDCs are required to submit returns on the compliance with the whistleblowing policy on a semi-annual basis to the Director, Other Financial Institutions Supervision Department, CBN, not later than 7 days after the end of the relevant period.

What does the code provide regarding risk management?

The code provides that every board of BDCs shall put in place adequate systems, policies and procedures for the identification, measurement, monitoring and control of the risks inherent in its operations.

What are the requirements of the board on Regulatory compliance?

The code requires that :-

– All BDCs shall comply with the provisions of this Code. External auditors of BDCs shall report annually to the CBN, the extent of the BDC’s compliance with the provisions of this Code.

– Returns on the status of each institution’s compliance with this code shall be rendered to the CBN semi-annually (30th June and 31st December every year) or as may be specified by the CBN from time to time. The returns shall be addressed and submitted to the Director, Other Financial Institutions Supervision Department not later than 2 weeks after the end of the relevant reporting period.

What are the consequences of failing to comply with the provisions of the code?

Failure to comply with the Code will attract appropriate sanctions in accordance with section 64 BOFIA or as may be specified in any applicable legislation or regulation. The effective date for compliance shall be from December 1, 2018.

Yoruba Monsters in Cohen’s Seven Theses

By
Mutiu Iyanda
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Monsters are philosophical beings that human beings want to relate to either consciously or unconsciously, much like immortality, which human beings cannot really exist without in terms of relating to both known and unknown people as well as objects. In this piece, our analyst discusses monsters using seven theses proposed by Cohen and relate them to some of the existing scholarly views and specific examples of an African ethnic group. From Cohen to Mittman and Nirta and Pavoni, different perspectives have been explored in the quest to find an appropriate definition for what monster really means. However, while searching for the true meaning of the concept, arguments have been predominantly made about whether monsters really exist or not.

All in all, existence has been examined through binary and non-binary options. Aligning with binary options suggests that one needs to see existence as ‘real’ and ‘unreal’, whereas non-binary options expect monsters to be viewed as non-existing or not existing at all. Suffice to say that the binary option is more problematic because what is monster and monstrous in a particular culture might be the same in another culture. On the other hand, what a person experienced and mainly tagged ‘monster’ and ‘monstrous’ might not be for another person. In other words, monsters are situated within the localized beliefs of individual societies.

Historically driven and culturally constructed

In two of his theses, Cohen further notes that monsters are not just physical entities but are culturally constructed, persist, and reemerge in different forms throughout history. Thus, one can say monsters are culturally constructed and maintained historically by people and society through specific discourses. Cohen’s physically bonded and culturally inclined monsters’ description suggests that they are products of cultural representations and processes of any society that cannot be separated from people’s total way of life, especially when some of them are considered myths for warning people against committing sinful acts or encouraging them towards doing good. It could be further argued that monsters can represent more than just cultural symbols and also have a material existence in stories.

For instance, some monsters can represent actual phobias and anxieties that are not just products of culture but may also result from personal encounters. Monsters challenge established boundaries and reveal the fragility of cultural categories. This thesis contends that monsters question and obfuscate preconceived notions, revealing the frailty of cultural categories. This idea is consistent with the theory that normative structures are disrupted and societal norms are challenged by monsters. But it is important to understand that not all monsters equally represent this category of crisis. Monsters can have a variety of effects on category crises, including reinforcing preexisting categories or acting as cautionary tales.

For instance, in Yoruba mythology, Ìjìnl?? is a terrifying monster or spirit that guards sacred places and can inflict harm on those who disrespect them. Àbíkú is a malevolent spirit associated with child mortality, and rituals and charms are performed to prevent their return. Àjé is a powerful female witch or sorceress known for her ability to shape-shift into animals, possess supernatural powers, and manipulate forces of nature. Ègúngún is an ancestral masquerade tradition in Yoruba culture, where participants wear costumes that embody the spirits of deceased ancestors. These costumes represent a bridge between the living and the spirit realms. Ìbejì, also known as ‘the divine twins,’ are revered in Yoruba culture as the spirits of deceased twins who bring good fortune and protection to their families. Although not monsters, Ìbejì are often depicted as small, mischievous beings with supernatural abilities.

“Monster” as a figure posing a threat to a social group or “pure culture”

Monsters often represent marginalized and oppressed groups at the fringes of society. According to Cohen, monsters frequently stand in for oppressed and marginalised groups that are on the periphery of society. While highlighting the potential subversive power of monsters, this thesis runs the risk of oversimplifying and reinforcing stereotypes. Not all monsters are representative of marginalised groups, and drawing a straight line between monstrosity and marginalisation can obscure the intricate and nuanced relationship between the two. In another thesis, Cohen states that monsters can enforce societal boundaries by defining what is considered “normal” or acceptable, claiming that by defining what is deemed “normal” or acceptable, monsters enforce societal boundaries. Monsters can indeed serve as cultural markers that outline the boundaries of what is regarded as acceptable, but it is crucial to understand that they can also push these limits and encourage alternative viewpoints. The transformative potential of monsters may be overlooked if they are viewed as merely norm enforcers.

Monsters as ‘strangers’ and the elimination of their negativity

Monsters are fascinating because they challenge our fears and provide a way to confront and engage with them. However, fear and desire are complex emotions that can vary across cultures. Monsters can embody transformative potential and act as agents of change, challenging preexisting social norms and opening new possibilities. However, not all monsters are progressives or change agents, and it is crucial to critically examine their role and intention. Popular culture has framed the presence of monsters through biological taxonomies, legal discourses, and moral panics. The monstrous category signals a transgression of social, cultural, or moral law, leading to the demystification of insidious characterisations of the other as monstrous. This reduces monstrosity to a socio-cultural construction, depriving it of any reality. The monstrous is not something we can join, endorse, or celebrate, nor is it something that empowers or emancipates us.

Therefore, monsters are not human beings. They exist in their own ways, as God wants them to. Claiming that they are part of us through the ‘pure culture’ concept is uncalled for and unnecessary because they were created to perform specific tasks God assigned to them. Furthermore, technologically, creating techno-monsters to establish a sense of real natural monstrosity is tantamount to challenging God’s power regarding the essence of natural monsters on Earth and possibly invoking apprehension associated with their lifestyle upon ourselves.

Make and limit kin with monsters

Forming social relations and caring for monsters depends on a person’s perspective and understanding of their role in their life and society. For example, not all Yoruba people believe in cases like Ìjìnl??, Àbíkú, Ègúngún, and Àjé, which are rooted in cultural values and norms. However, those who have Ìbejì as children celebrate their deity, indicating their readiness to have strong bonds with the deity and their children. Individual differences and religious orientations may be the main determinants of making kin or not with monsters among Yoruba people in Nigeria.

Access Bank Launches the First American Express Cards in Nigeria

By
Samuel Nwite
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Access Bank, Nigeria’s leading innovative bank, has introduced two new consumer credit cards: the Access Bank American Express Gold Card and the Metal Platinum Card. These cards mark the first issuance of American Express cards in Nigeria and West Africa, the companies announced in a press statement.

The launch of these cards enhances Access Bank’s offerings to its retail and private banking customers, who can now enjoy the Membership Rewards loyalty program and a wide range of travel and lifestyle benefits.

In 2019, Access Bank signed an agreement with American Express to enable businesses across Nigeria to accept payments from international American Express Cards. Now, the bank is ready to issue the first American Express credit cards in West Africa.

Roosevelt Ogbonna, Managing Director and CEO of Access Bank noted that the launch of American Express Cards in Nigeria is a milestone in the growth of the payments industry. He added that customers seek more than just transactions; they desire real value.

“The launch of American Express Cards in Nigeria is another milestone in the continued development of a vibrant and fast-growing payments industry. Customers want more than transactions – they want real value,” he said.
“With American Express, we can provide valuable card benefits, strong loyalty rewards, and a real reason to use electronic payments instead of cash. By diversifying our services to facilitate payments, we can connect more consumers to the SMEs and retail businesses across the country who we know are the engine of economic growth.”

The Gold and Platinum Cards feature the renowned American Express card design, including the iconic ‘Centurion’ icon.

Similar products are issued outside Nigeria by American Express or its licensed third parties, providing card members with extensive rewards and benefits. Access Bank now brings this credit card experience to Nigeria.

Herbert Wigwe, Group Managing Director of Access Holdings, mentioned that the cards will be available upon request and invitation, and interested customers will begin using them from Tuesday, June 13, 2023.

Chizoma Okoli, Deputy Managing Director, Retail South, expressed pride in Access Bank’s leadership role in the country and highlighted the bank’s commitment to innovation.

“We are always at the forefront in the banking sector here in Nigeria and this is our newest innovation as we lead others. You can see these AMEX cards anywhere in Nigeria except here at Access. I know our customers who are going to reap the benefits will be proud of us”.

Victor Etiokwu, Deputy Managing Director, Retail North, emphasized the importance of providing a variety of payment options and expressed the bank’s delight in collaborating with American Express.

“In the payment world, it is important to have varieties and as a financial sector supermarket, we have varieties of lovely items for the benefit of our customers. AMEX is a unique brand and we have always wanted to have them on our portfolio and we are glad this has become a reality. We will continue to collaborate with AMEX,” he said.

Mohammed Badi, President, Global Network Services at American Express, stated that the partnership with Access Bank further strengthens American Express’ presence in Africa. The Access Bank American Express Gold Card and Metal Platinum Card offer special benefits, access, and service to card members both in and outside Nigeria.

“By granting Access Bank a license to launch the first-ever American Express Cards in Nigeria, American Express’ presence in Africa is becoming even more vibrant. The Access Bank American Express Gold Card and the metal Platinum Card enhance the credit card experience in Nigeria with special benefits, access, and service – for Cardmembers both in Nigeria and when traveling overseas,” he said.

The American Express cards, in addition to dual-currency functionality (NGN/USD) and international acceptance, provide features such as airport lounge access, car rental perks, membership rewards, loyalty points, insurance, and protections.

The Platinum Card offers expanded airport lounge benefits, including access to over 1,400 lounges through the American Express Global Lounge Collection. It also provides hotel perks and upgrades through The Hotel Collection and Fine Hotels + Resorts, as well as special status access in Hilton Honours, Radisson Rewards, and Marriott Bonvoy rewards programs. Cardmembers can enjoy complimentary access to hotel membership programs, Tablet Plus membership, Mr & Mrs. Smith Gold status, and 24/7 travel and lifestyle concierge services.

At the launch event, Briana Wisley, Vice President and General Manager, Network Partnerships EMEA, American Express expressed excitement about the partnership with Access Bank, highlighting the bank’s expertise and innovations in the payment space. She emphasized American Express’ commitment to providing products, insights, and experiences that improve lives and drive business growth.

Access Bank customers can now enjoy the benefits of American Express cards, as the partnership expands access to millions of merchants globally. American Express, with its extensive global network, aims to continue expanding its scale and relevance worldwide.

The number of places you can use your AMEX cards globally has more than tripled since 2017, she said.

The launch of the Amex cards is expected to ease the bottlenecks encountered in carrying out international transactions using bank-issued debit cards, owing to Nigeria’s forex crisis.

Fintech Company GoCardless to Downsize Workforce by 15% in A Bid to Cut Costs

By
Ojukwu Emmanuel
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0

Fintech company that specializes in recurring payments, Direct Debit processing, and Open Banking, GoCardless, has revealed plans to downsize its workforce by 15%, which is about 135 roles, in a bid to cut costs.

The layoffs will affect its offices in the U.K., U.S., and New Zealand, which will see senior leadership roles reduced by 25%, taking the company’s total workforce to 800 employees.

In addition to the layoffs, the fintech startup will move 15 roles from the UK to Riga Latvia, bringing the total number of impacted roles to 150, which is 17% headcount.

Speaking on the company’s proposed layoff plans, GoCardless CEO Hiroki Takeuchi said,

“In the light of the current economic environment, we have decided to focus our efforts on the core areas of our business and reduce our investment initiatives with longer-term payback.

“We can see that our revenue will continue to grow strongly, and the changes we are announcing today will get us within touching distance of profitability in the near future. This will make us one of the very few technology companies that is generating hundreds of millions of dollars in revenue, growing fast, and being profitable. We need to be disciplined, we need to be careful and be more cautious about how we are deploying our investments and make sure that we are really driving that growth in a more profitable way”.

Laid-off employees will receive two months’ worth of pay, pay for the notice period, unused time off, and any bonuses. Also, employees who take up voluntary exit will receive an additional month’s pay on top.

Founded in 2011, GoCardless processes direct debit payments and recurring transactions withdrawn from a customer’s bank account for things like subscriptions and invoices for its business clients.

The company offers an API that enables businesses to integrate GoCardless into their websites or applications, as well as pre-built integrations with accounting and billing software such as Zuora, Xero, and QuickBooks.

GoCardless eliminates the pain point of getting paid for businesses that regularly invoice customers, or offer subscription, membership, or installment plans to customers. Through a world-class API and integrations with major billing and subscription software, GoCardless allows businesses to collect payments with ease, using authorized bank debit schemes around the world.

The startup processes about US$10 billion worth of payments in a year for around 40,000 businesses. As of 2022, it reportedly processed $30 billion worth of transactions across its operations in the UK, Europe, Australia, New Zealand, and the United States. It also raised $312 million in the same year and was valued at $2.1 billion.

Personal and Social values of Effective Leadership

By
Tiamiyu Ismail
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0

Leadership is popularly defined as the process of managing and directing the affairs or activities of people towards actualizing a common goal. It is the mobilization, deployment and direction of resources_ human and capital_ to achieve a specific objective.

Gould and Kolb (1964) defined leadership as the occupancy of a position of authority and the active performance of the associated role of mobilizing more or less organised, concerted and voluntary efforts to achieve a common goal.

Leadership is often imagined in the context of politics whereby a person or a few individuals have the power or authority to influence the decisions or the actions of the greater number of people. However, effective leadership goes beyond this; it includes the ability to allow the people to also influence policy decision for the collective or common good.

Leadership rest on some specific values. Leadership character entails those qualities or features expected to be seen in a leader which if absent often result in leadership crisis. These values are categorized herein as the personal and the social values of effective leadership.

First, the personal values of effective leadership include important moral values like honesty, selflessness, simplicity, diligence and self control. The leader must be diligent, honest, disciplined and sincere in dispensing his/her duties. The leader cannot afford to do otherwise as he’s setting examples and patterns for the followers. Also, his style of leading must include the consciousness that he’s constantly under scrutiny and people often see and know more than they are assumed to see or know.

Failure to uphold sound moral values invariably exposes the leader to distractions and can cause him to lose his credibility or respect with the people. In other words, absence of good personal values in the leader inspires an air of distrust and lack of confidence in the followers.

Another personal value of an effective leader is proactiveness. As against moral values discussed earlier, being proactive is about strategic competence. Effective leadership is about making things happen, contingent upon the context. Therefore, the leader must be able to quickly recognise and utilize opportunities even amidst chaos or threats. Also, the leader must be willing and able to create a conducive and enabling environment for others to path.

On the other hand, the social values of effective leadership include virtues such as empathy, care, tolerance, equality and fairness towards the followers. The leader must understand the emotional state of his followers and must be concerned about their welfare or needs. The leader must be able to keep good rapport with his followers and must respect their rights and opinions. In this case, the leader’s communication skills which include both speaking and listening skills are very instrumental to organising the followers.

Effective communication enhances an inspiring or motivated atmosphere. When the leader is able to clearly communicate rewards and responsibilities with regard to the common goal, the followers are inspired to work hand-in-hand with the leader to achieve the common goal.

In summary, leadership is about managing people, directing their activities and utilizing the available resources to achieve the greatest happiness of the people. This requires the leader to be a person of unquestionable character and sound judgement.

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