The Financial Reporting Council of Nigeria (FRC) has joined forces with the Lagos Chamber of Commerce and Industry (LCCI) and the Centre for Business Integrity (CBi) to promote corporate governance among Nigeria’s estimated 40 million Micro, Small, and Medium Enterprises (MSMEs). This initiative, according to stakeholders, aims to improve the survival rate, sustainability, and economic contribution of small businesses across the country.
Speaking during an event held in Lagos on Thursday, the Executive Secretary of the FRC, Dr. Rabiu Olowo, explained that the adoption of the newly introduced Small and Medium Enterprises Corporate Governance Guidelines 2024 (SME-CGG 2024) will help address the many challenges MSMEs face and lay the foundation for long-term business success.
In his keynote address titled “Governance as a Tool for MSMEs Longevity: The Impact of Partnership between Regulators and Enterprises,” Dr. Olowo said that MSMEs form the backbone of the Nigerian economy. He noted that they account for around 96 percent of all businesses in the country, 84 percent of employment, and contribute about 48 percent to Nigeria’s Gross Domestic Product (GDP) every year.
Despite this strong presence, Dr. Olowo lamented that the failure rate among MSMEs is alarmingly high. He revealed that over 50 percent of Nigerian MSMEs shut down within their first year of operation, while more than 95 percent do not survive past their fifth year.
“This implies that new MSMEs are birthed every year, so why the early or premature death?” Olowo asked. He attributed these failures to a number of challenges including poor access to finance, inadequate infrastructure, low market demand, weak succession planning, regulatory instability, limited adoption of formal business practices, and excessive reliance on the founder’s involvement.
However, he said the most common and critical problem affecting small businesses in Nigeria is the lack of proper governance. “Good governance is essential for MSMEs to achieve longevity and sustainability. With good governance structures in place, MSMEs can build trust, make better decisions, and manage risks more effectively,” he said.
Dr. Olowo noted that the SME-CGG 2024 was designed to help MSMEs improve their performance, increase transparency, and strengthen accountability. He added that the guideline would also boost investor confidence and help MSMEs attract both local and foreign investment. “This aligns with one of the Council’s key objectives—investor protection,” he said.
The FRC boss further explained that the collaboration with LCCI is a strategic move aimed at encouraging business membership organisations to adopt and promote the new governance framework among their members. According to him, LCCI is already prepared to support the guidelines and direct its members to use SME-CGG 2024 as their corporate governance reporting standard.
“The intention of the FRC is largely developmental. From today’s MSMEs will emerge tomorrow’s business giants. That’s why this partnership with LCCI is so important. It will help drive real change in how businesses are structured and managed,” Olowo stated.
The event was attended by members of the private sector, business leaders, regulators, and representatives of development organisations. Many praised the FRC for introducing a framework that supports small business growth rather than overburdening them with compliance rules.
Stakeholders say the partnership is expected to yield several benefits for MSMEs, including better access to information, funding opportunities, capacity building, and more structured support networks. They also believe the framework will help MSMEs strengthen internal controls and plan for succession more effectively.
Dr. Olowo encouraged all stakeholders to support the adoption of the SME-CGG 2024. “Governance is not about ticking boxes; it is about building enduring institutions,” he said. “By promoting good governance practices, MSMEs can grow stronger, gain the trust of customers and investors, and compete more effectively. Let us work together to ensure that good governance becomes the standard for small businesses in Nigeria.”
The Centre for Business Integrity and LCCI also expressed their commitment to advancing the initiative and working closely with the FRC to train MSMEs and educate them on the benefits of adopting the new governance model.
With this push, Nigeria is taking a major step toward formalising and strengthening the informal sector, which has remained a vital but vulnerable part of the nation’s economy for decades.
