Financial Reporting Council of Nigeria (FRC), in partnership with Integrity Organization, United Nations Global Compact Network Nigeria (UNGC NN) and the support of the MacArthur Foundation has launched the SMEs Corporate Guidelines.
The new, non-mandatory guidelines will not only help formalise SMEs, but also help them develop structures and corporate governance that can sustain their businesses long past their founder’s demise.
Research indicates that SMEs constitute 96 per cent of businesses, whilst creating about 84 per cent of employment opportunities in the private sector. However, the SMEDAN National MSME Survey report 2017 – 2021, shows Nigeria lost over 2 million MSMEs. The issues range from absence of proper record keeping, business plan, etc.
Contrary to popular opinion that funding is a major challenge of small and medium scale businesses, stakeholders believe lack of corporate governance ranks higher.
Absence of corporate governance not only disenfranchises SMEs from access to capital, but hinder growth and expansion of businesses, particularly family businesses that barely outlive their founders.
Micro, small and medium enterprises (SMEs) compliant with the newly launched corporate guidelines belong to the UNGC NN which consists of over 200 businesses, have access to free and subsidised technical and funding opportunities for SMEs, which makes cost of governance easier and their businesses more sustainable.
“Working with Integrity Organization, UNGC NN and FRC, a multistakeholder approach to come up with some guidelines that encourage small businesses to formalise themselves. It is good for the country all round.
“It came out of desire to improve the country economically because SMEs are the building blocks of the private sector, which is a huge contributor to the economy.
“Beyond these many benefits, the fact that SMEs know that your foundation is strong such that when opportunities present themselves you already know what you need and have. The corporate guidelines are educational, awareness building, and reduces cost of governance,” said Board Member and Co-Thematic Lead, Anti-Corruption and Governance, UNGC NN, Ayotola Jagun.
On his part, chair, Financial Services Cluster, Lagos Chamber of Commerce and Industry (LCCI), Mr Osita Ede, said beyond the launch, stakeholders must ensure “some form of training to explain some of these principles in languages that SMEs will understand. SMEs on the other hand, must learn to embrace sound governance practices and regulatory compliances for them to be successful.
In addition to partnering with LCCI to create awareness for the guidelines, Ede said Fidelity Bank will further incorporate the SMEs corporate guidelines into their capacity building SME Hub – which is a one-stop shop for SME solutions.
Highlighting, the key component of the SME corporate guidelines, which include, board structure and responsibilities, transparency and disclosure, risk management, stakeholder engagement, ethical conduct and compliance, corporate governance policies and procedures and succession planning, CEO FRC, Dr Rabiu Olowo said the principles can provide the much-needed sustainability for family-owned businesses to survive long after the founder’s demise.
“SME corporate governance guidelines will safeguard the decision-making process in family-owned enterprises to ensure that even among those owned by multiple generations of a family that there is a focus on long-term sustainability and a blend of family and business values.”
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