The Financial Reporting Council of Nigeria (FRC), in partnership with the Lagos Chamber of Commerce and Industry (LCCI) and the Centre for Business Integrity (CBI), has launched a new initiative to promote good governance across Nigeria’s 40 million Micro, Small, and Medium Enterprises (MSMEs).
Speaking at a stakeholder event in Lagos to drive the adoption of the Small and Medium Enterprises Corporate Governance Guidelines 2024 (SME-CGG 2024), FRC’s Executive Secretary, Dr. Rabiu Olowo, emphasised that implementing sound governance practices is crucial for the long-term survival and economic contribution of MSMEs.
Dr. Olowo noted that although MSMEs constitute about 96 percent of businesses in Nigeria, account for 84 percent of employment, and contribute 48 percent to the national GDP annually, they continue to face high failure rates. Statistics show that over half fail within their first year, while more than 95 percent do not survive beyond five years.
He attributed these failures to a variety of issues including limited access to finance, weak infrastructure, low product demand, inadequate succession planning, and poor regulatory clarity. However, he pointed to the absence of good governance structures as the most critical and foundational challenge.
“New MSMEs are birthed every year, so why the early extinction?” he asked. “Most of the challenges faced could have been mitigated with strong governance practices.”
According to him, governance plays a vital role in helping MSMEs build trust with stakeholders, make informed decisions, manage risks, enhance accountability, and improve performance. He stressed that better governance will also bolster investor confidence, ultimately attracting more investment into the MSME sector.
The adoption of the SME-CGG 2024 is seen as a transformative step, with Dr. Olowo describing it as a framework that will enable MSMEs to evolve from small businesses into large enterprises and industry leaders.
Highlighting the significance of the FRC-LCCI collaboration, he said, “The FRC’s approach to MSMEs is developmental. We believe the business giants of tomorrow will emerge from today’s MSMEs. Our partnership with LCCI is designed to instill governance principles in LCCI’s member businesses and, by extension, MSMEs across the country.”
The collaboration aims to improve MSMEs’ access to capital, facilitate capacity building, and provide broader networking platforms. It will also ensure MSMEs aligned with LCCI have a structured framework to guide corporate reporting and governance practices.
“The partnership between FRC and LCCI is not just symbolic. It has the potential to significantly boost MSMEs’ sustainability and competitiveness,” Dr. Olowo said. “Governance is not about ticking boxes; it’s about building lasting institutions. I urge all stakeholders to support this movement and champion good governance among MSMEs.”
The event marks a new chapter in the effort to professionalise and empower Nigeria’s MSME sector through strategic partnerships, credible governance structures, and a shared vision for sustainable economic development.
