50% of MSMEs die in first year – FRC

The Financial Reporting Council of Nigeria (FRC), the Lagos Chamber of Commerce and Industry (LCCI) and the Integrity Organisation, have partnered to institutionalise governance certification for micro, small and medium enterprises (MSMEs). Executive Secretary/ Chief Executive Officer of the FRC, Dr Rabiu Olowo, who spoke during the seminar called for good governance structures and practices […]

The Financial Reporting Council of Nigeria (FRC), the Lagos Chamber of Commerce and Industry (LCCI) and the Integrity Organisation, have partnered to institutionalise governance certification for micro, small and medium enterprises (MSMEs).

Executive Secretary/ Chief Executive Officer of the FRC, Dr Rabiu Olowo, who spoke during the seminar called for good governance structures and practices to stem the mortality rate of MSMEs, saying over 50 per cent of MSMEs die in their first year.

The seminar, themed ‘Corporate Governance Certification as a Key Strategy for MSME Success in Nigeria’, attracted stakeholders from public and private sectors.

Olowo disclosed that over 50% of MSMEs in Nigeria fail in their first year of operation, while more than 95% fail in their first five years of existence.

This, according to him, implies that new MSMEs are birthed every year.

He attributed the high mortality rate on lack of or limited access to funds, poor infrastructure,very low market demand for their products and services, Weak succession planning, among others.

He stated that governance was no longer a luxury for small businesses, but a competitive advantage essential for resilience, investor trust and scalability.

Olowo said, “Governance is foundational. It is the invisible infrastructure that drives continuity, inspires investor confidence and unlocks value beyond the present generation. With over 40 million MSMEs operating in Nigeria, the goal is not to increase the numbers but to build strength and sustainability among them.

“Available valuable statistics on Nigeria’s MSMEs reveals that there are approximately 40 million MSMEs operating in Nigeria, accounting for about 96% of businesses, 84% of employment, hence a critical sector for job creation, and contributes about 48% to our National GDP annually.”

He stressed that the new MSME Corporate Governance Guidelines (SME CGG 2024) issued by the Council provided a practical and adaptable framework designed to meet the realities of small businesses.

Voluntary certification under this scheme, he said, should become a developmental badge of honour, distinguishing credible MSMEs in a highly competitive market.

“There is no way we can dream of a $1 trillion economy without looking after the MSMEs,” the FRC boss said.

President of the LCCI, Gabriel Idahosa, pledged the Chamber’s full support and endorsement of the certification process.