On May 30, 2024, the Financial Reporting Council of Nigeria (FRCN) unveiled the SME Corporate Governance Guidelines 2023 (“The Guidelines”), a significant milestone aimed at bolstering the governance framework for Micro, Small, and Medium Enterprises (MSMEs) in Nigeria.
Given that MSMEs constitute 96% of all businesses in Nigeria, account for 84% of national employment, and represent 48% of Nigeria’s GDP, the Guidelines are poised to make a substantial impact on the country’s economic landscape.
This review delves into the key provisions within the Guidelines, examining their implications and offering practical steps for Nigerian SMEs to implement them.
The Objectives and Benefits of the Guidelines
The primary aim of the Guidelines is to enhance Nigeria’s business environment, improve the longevity and sustainability of SMEs, and increase business confidence and access to capital. By adopting robust corporate governance practices, SMEs can reap several key benefits:
The Guidelines consist of seven sections and outline ten core principles applicable to all SMEs operating in Nigeria. Here are the highlights:
Conclusion
The Corporate Governance Guidelines for SMEs 2023 provide a valuable framework for Nigerian SMEs to strengthen their corporate governance practices. By embracing these recommendations, SMEs can achieve greater transparency, accountability, and overall business success, thereby attracting investment, improving stakeholder relationships, and contributing to long-term sustainability.
To further drive the importance of corporate governance for SMEs, the Society for Corporate Governance Nigeria is organizing a stakeholder engagement for Startups and SMEs on Thursday, July 11, 2024 themed “Building Reputation and Trust for Sustainable Growth: The Role of Corporate Governance”. To Par participate in this crucial engagement. Register here.
