and transformation. The Nigerian economy is very uncompetitive. It is characterised by a large informal economy, high levels of unemployment, high costs of doing business and significant idle capacity, among other things. Despite its rich mineral resource base, Nigeria has the third-largest concentration of poor people in the world. 10 3.27 Nigeria has unequivocally declared its commitment to free enterprise capitalism. However, its reliance on distributing resources rather than on creating wealth undermines growth in the private sector. According to NEEDS, the private sector is dominated by a few large multinationals that depend heavily on imports. They operate largely as enclaves and have no relationship with the large number of small and medium enterprises (SMEs) or the very large informal sector in the country. The upshot of this is a rent-seeking and unproductive culture of overdependence on government patronage and contracts. Sustainable wealth creation will be difficult, and poverty alleviation impossible, unless corporate governance is improved. 3.28 There has been an increasing realisation that measures are needed to tackle weak governance in both the public and the private sectors in Nigeria, especially the economy. Specific actions have been directed towards improving public-sector management and fighting corruption. Efforts are also being made to improve the quality of the physical and economic infrastructure. As part of this initiative, the Committee on Corporate Governance of Public Companies in Nigeria (CCGPCN) was formed in 2003. Its mandate is to identify weaknesses in corporate governance practice in Nigeria, and to fashion necessary changes that will improve corporate governance practices in the country. 3.29 The CCGPCN developed the Nigeria Code of Corporate Governance. The code aims to inculcate the principles of corporate governance enshrined in international standards, especially the Organisation for Economic Cooperation and Development (OECD) guidelines, and the Cadbury and King reports. In addition, the Securities and Exchange Commission (SEC) has a code of conduct for capital market operators and employees. New codes of conduct were also developed to enhance and complement existing ones following the consolidation of the banking sector. Despite the progress made, corporate governance issues are not yet of regular concern in Nigeria – only 40 per cent of companies have adopted the corporate governance codes that are available. There is still much to be done to achieve strict adherence to international codes, standards and principles. 3.30 The primary constraints to sound corporate governance in Nigeria include incompatible legal regimes, outdated statutes, and the absence of sufficient application and the proper implementation of existing laws. Furthermore, implementation is generally ineffectual. The laws governing business operations in Nigeria reveal many legislative gaps. This suggests that most of them need to be updated. Notably, the penal code does not recognise corruption as a crime. The Companies and Allied Matters Act (CAMA) needs to be amended, particularly with regard to penalties for violation. Legislation with regard to whistle-blowing, freedom of