The Financial Reporting Council of Nigeria (FRC), in collaboration with the Lagos Chamber of Commerce and Industry (LCCI) and the Centre for Business Integrity (CBi), has launched a strategic partnership to address the high failure rate of Micro, Small and Medium Enterprises (MSMEs) in Nigeria.
The initiative, unveiled during a public presentation of the Small and Medium Enterprises Corporate Governance Guidelines (SME-CGG) 2024 in Lagos, aims to instill robust governance practices that will ensure sustainability, investor confidence, and economic growth.
According to FRC data, Nigeria boasts over 40 million MSMEs, accounting for 96% of businesses, 84% of employment, and contributing 48% to the country’s GDP annually. However, the sector suffers alarming failure rates, with over 50% of MSMEs collapsing in their first year and 95% shutting down within five years.
Speaking at the event, FRC’s Executive Secretary, Dr. Rabiu Olowo, stressed that poor governance structures are at the core of these failures.
“Many MSMEs collapse due to lack of governance practices, weak succession planning, poor financial management, and over-dependence on founders. Good governance builds trust with stakeholders, improves performance, and enhances risk management,” Olowo said.
He emphasised that adopting the SME-CGG 2024 would transform the MSME sector by promoting transparency, accountability, and long-term sustainability.
Olowo noted that governance is not just about compliance but about creating enduring institutions.
“By adopting governance best practices, MSMEs will attract more investors, access capital, and compete globally,” he said, adding that investor protection remains a key mandate of the FRC.
The guidelines will also help MSMEs access finance, improve internal controls, and develop clear succession plans, which are crucial for business longevity.
The partnership with LCCI, according to Olowo, is developmental and forward-looking.
“Today’s MSMEs are the conglomerates of tomorrow. By working with the LCCI, we are promoting governance among member businesses, ensuring they adopt the SME-CGG 2024 as a standard,” he stated.
LCCI President, represented at the event, commended the initiative, noting that good governance is crucial for businesses seeking loans, partnerships, and international trade opportunities.
The partnership will also provide capacity-building programmes, networking opportunities, and access to financial intelligence for MSMEs under the LCCI umbrella.
Experts believe that the adoption of SME-CGG 2024 will reduce Nigeria’s MSME mortality rate and position the sector as a major driver of economic diversification.
The Centre for Business Integrity also pledged support, stating that good governance practices will encourage ethical business conduct, reduce corruption risks, and improve Nigeria’s ease of doing business ranking.
Olowo urged all MSME operators to embrace the guidelines, saying:
“Governance is not about ticking boxes; it is about building a business that can outlive its founder and contribute meaningfully to the economy.”
With this move, stakeholders expect that MSMEs will transition from survival-based operations to structured, competitive businesses, boosting job creation and industrial growth.