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The recent suspension of certain provisions within the Financial Reporting Council (FRC) Amendment Act 2023—following pushback from private sector stakeholders—has reignited debate around regulatory independence and the role of stakeholder consultation in governance.
While engagement with the private sector remains a vital tenet of democratic governance, overriding an enacted legislation through administrative intervention raises concerns about the sanctity of Nigeria’s regulatory framework.
The Financial Reporting Council of Nigeria—modeled after globally recognised institutions such as the UK’s FRC, Mauritius’ FRC, and the U.S. PCAOB—was established as an independent authority to set and enforce standards in financial reporting, corporate governance, auditing, valuation, and sustainability. Its legal autonomy is designed to insulate the economy from financial misreporting, systemic risk, and corporate malpractice.
The suspension, announced by Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, followed consultations with key business groups including the Nigeria Employers’ Consultative Association (NECA), the Association of Licensed Telecommunications Operators of Nigeria (ALTON), and the Oil Producers Trade Section (OPTS). A major point of contention was the reclassification of large private companies as Public Interest Entities (PIEs), and a proposed fee structure pegged at 0.02–0.05% of turnover—without a cap.
Critics argued this was inconsistent with the N25 million ceiling placed on publicly listed companies, warning it could raise compliance costs and deter investment. However, comparative analysis shows Nigeria’s proposed structure aligns with international practice: Kenya (0.03–0.05%), Ghana (0.1–0.5%), South Africa (0.02–0.1%), and the UK (£1,500–£50,000).
To de-escalate tensions, the government imposed an administrative pause and constituted a Technical Working Group to propose reforms. The Organised Private Sector of Nigeria (OPSN), through a joint statement signed by NECA, MAN, NACCIMA, NASME, NASSI, and others, applauded the move and welcomed the harmonisation of the cap for PIEs at N25 million.
Yet, concerns persist among regulatory analysts who argue that such administrative reversals, especially on laws passed through the National Assembly, risk weakening regulatory integrity. They maintain that Section 33 of the Act was designed to differentiate between listed and non-listed PIEs—acknowledging that listed firms are already subject to oversight by regulators such as the Securities and Exchange Commission (SEC) and the Nigerian Exchange Limited (NGX). By contrast, large private entities lack external scrutiny and thus require stricter oversight to enhance transparency and accountability.
“Regulatory independence is fundamental. In other countries, regulators are shielded from external influence to prevent regulatory capture. In Nigeria, that principle must be defended if we are serious about corporate accountability,” a financial analyst noted.
There are also concerns that allowing regulated entities to dictate how they are governed undermines the rule of law and fosters conditions for corporate abuse and opacity. While stakeholder dialogue is essential, bypassing legislative procedures to amend a law via executive directive creates a troubling precedent.
The FRC under Dr. Rabiu Olowo has initiated sweeping reforms: launching a national repository for financial statements, resuming audit inspections, establishing actuarial and valuation directorates, and implementing new regulatory rules (including ICFR, Rule 13, and Rule 14). The Council has also promoted actuarial education, released a governance code for SMEs, and inaugurated the Adoption Readiness Working Group (ARWG) to support sustainability reporting. Additional efforts include IFRS sustainability training, the creation of an Islamic Finance Division, and training collaborations with UNCTAD ISAR.
These efforts reflect a transformation agenda grounded in transparency, digitisation, and global alignment. Sustaining such momentum requires strong political will, legal clarity, and public support—not policy reversals driven by pressure.
Rather than bypass due process, stakeholders like the OPSN should work with the National Assembly to amend provisions through constitutional channels. A legislative solution ensures both reform and legal continuity.
Supporting the FRC is not merely about defending a statutory agency—it is about protecting the rule of law and reinforcing Nigeria’s institutional capacity to ensure accountability and corporate integrity.
As other jurisdictions grant their financial oversight bodies autonomy to preserve market stability and investor confidence, Nigeria must do the same. Regulatory capture—where regulated entities exert undue influence over regulators—must be resisted.
The government, for its part, must avoid weakening institutions through administrative overreach. Upholding the independence of bodies like the FRC strengthens economic governance and sends a signal that Nigeria is serious about building a transparent, rules-based business environment.
In the long run, defending regulatory authority is a necessary step toward building trust in Nigeria’s economic system and aligning with global best practices.
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