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The Financial Reporting Council (FRC) of Nigeria has entered into a strategic partnership with the Lagos Chamber of Commerce and Industry (LCCI) and the Centre for Business Integrity to enhance governance frameworks within Nigeria’s over 40 million Micro, Small, and Medium Enterprises (MSMEs).
Speaking at a stakeholder engagement session held in Lagos to promote the adoption of the 2024 Small and Medium Enterprises Corporate Governance Guidelines (SME-CGG), the Executive Secretary/CEO of the FRC, Dr. Rabiu Olowo, underscored the urgent need to address the high failure rate among MSMEs. He stressed that effective governance is key to enhancing the sustainability and resilience of these critical economic actors.
“While MSMEs represent approximately 96% of Nigerian businesses, contribute 84% to employment, and generate nearly 48% of GDP, over 50% fail within their first year, and more than 95% don’t survive beyond five years,” Olowo revealed. “This alarming trend is often rooted in inadequate governance structures, weak succession planning, limited market access, and overreliance on founders.”
Delivering a keynote titled ‘Governance as a Tool for MSME Longevity: The Impact of Partnership between Regulators and Enterprises’, Olowo noted that the Bola Tinubu administration recognises MSMEs as catalysts for innovation and economic transformation. However, their growth and survival remain impeded by systemic challenges that can be mitigated through the adoption of formal governance practices.
He stated, “With sound governance frameworks, MSMEs are better positioned to attract investments, manage risks, and establish long-term stakeholder trust. The adoption of the SME-CGG 2024 will be a game-changer, enabling transparency, accountability, and investor confidence, which aligns with the FRC’s core mandate of investor protection.”
On the significance of the collaboration with LCCI, Olowo described the move as a developmental strategy aimed at nurturing today’s MSMEs into tomorrow’s industry giants.
“Our alliance with LCCI is a deliberate step toward institutionalising good governance among MSMEs, particularly those within the LCCI ecosystem,” he explained. “We are confident that LCCI’s commitment to guiding its members toward the SME-CGG 2024 framework will catalyse broader adoption and impact.”
The partnership is also expected to facilitate improved access to capital, knowledge exchange, and expanded networking opportunities for MSMEs.
In conclusion, Olowo reiterated that governance should not be seen as a compliance formality but as a foundational pillar for building resilient institutions. “I call on all stakeholders to rally behind this initiative. Let us work collectively to embed sound governance in the DNA of Nigeria’s MSME sector and secure its role as a driver of inclusive economic growth.”
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