Strong financial reporting to drive MSMEs growth in 2025 – FRC

… commits to training

The Financial Reporting Council of Nigeria (FRC) has linked the growth of small businesses to strong financial reporting as it has unveiled its plan to roll out comprehensive training programmes for micro, small, and medium enterprises (MSMEs) by 2025, aimed at enhancing financial reporting practices across the sector.

The initiative, in collaboration with the United Nations Conference on Trade and Development (UNCTAD), seeks to address the significant challenges MSMEs face in maintaining proper financial records, which are crucial for effective business planning.

While the task is daunting, the FRC has set an ambitious target to reach between 35 and 50 percent of MSMEs within the first phase of the program.

Iheanyi Anyahara, coordinating director for accounting standards and sustainability reporting at the FRC, who represented Rabiu Olowo, executive secretary/CEO of the FRC, disclosed this in an interview with journalists on the sideline of the UNCTAD-ISAR one-day train-the-trainers workshop, theme, ‘Accounting and Financial Reporting for Small and Medium-Sized Entities (SMEs)’, held in Lagos.

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He emphasised the importance of this initiative during a recent event. “Financial reporting is critical and fundamental for planning, yet most MSMEs lack even a single record of their financial transactions,” he stated. He noted that this gap in financial record-keeping significantly hampers the planning and operational efficiency of MSMEs, which represent a vital segment of Nigeria’s economy.

To tackle this issue, the FRC partnered with UNCTAD’s expert working group on international standards of accounting and reporting to develop tools and models designed to train professional accountants. These accountants will, in turn, equip MSMEs with the skills and knowledge required to maintain proper financial records. “With over 41 million MSMEs in Nigeria, we cannot reach them all directly. By training professionals, we can create a multiplier effect, ensuring that MSMEs across the country benefit from this initiative,” Anyahara explained.

The collaboration between FRC and UNCTAD has gained significant momentum this year, marked by the election of the FRC’s CEO, Rabi Olowo, as Chair of the 41st conference of UNCTAD’s International Standards of Accounting and Reporting. This milestone has expedited initiatives like the accounting development tool, which assesses and improves Nigeria’s accounting infrastructure by identifying gaps in legislative frameworks and capacity.

“Our goal is to align with the Sustainable Development Goals (SDGs) by 2030, ensuring that entities report their activities transparently and measure their progress effectively. What is not measured cannot be reported, and what is not reported cannot contribute to broader developmental goals,” Anyahara said. He highlighted the importance of including micro-enterprises in the initiative, which are often overlooked despite being more numerous than small and medium enterprises.

The comprehensive training program, scheduled for rollout in 2025, will focus on equipping MSMEs with practical tools and knowledge. For example, micro-entrepreneurs will be encouraged to use simple methods, such as mobile phones, to record daily transactions, track sales and purchases, and calculate profits. These seemingly basic steps can significantly enhance financial literacy and planning for millions of entrepreneurs.

Anyahara acknowledged the challenge but emphasised the council’s commitment to supporting MSMEs in adapting to the dynamic and evolving standards of financial reporting.

Speaking at the event Elena Botvina, division on investment and enterprise, UNCTAD, said this initiative represents a significant step forward in strengthening Nigeria’s economic backbone and ensuring that MSMEs are better equipped to contribute to national development goals.

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She said as the FRC continues to formalise and expand its training efforts, it remains committed to fostering a culture of accountability and transparency within the MSME sector.

“Our collaboration with the Financial Reporting Council (FRC) of Nigeria is designed to assess and enhance reporting capabilities from institutional, regulatory, and human capacity perspectives. This effort uses the Accounting Development Tool (ADT), a comprehensive methodology that evaluates a country’s ability to deliver high-quality financial and sustainability reporting. The project also aims to identify priorities, benchmark progress, and foster multi-stakeholder collaboration among regulators, government bodies, professional accounting organizations, and private sector players like stock exchanges, banks, and NGOs,” she said.