Weak Financial Practices Hinder SME Growth, FRC and NESLAI Warn
The Financial Reporting Council of Nigeria (FRC) and the New Era for Sustainable Leadership and Accountability Initiative (NESLAI) have expressed serious concerns over weak financial management practices among small and medium enterprises (SMEs) in Nigeria. The organizations issued a warning that this trend continues to restrict access to funding and impede business expansion across the country.
Event Highlights Financial Literacy Challenges
This warning was delivered during the SME Financial Awareness Campaign, themed "Benefits for Trades and the National Economy," which took place in Kano. Stakeholders gathered at the event to enhance financial literacy and accountability among entrepreneurs, addressing critical issues facing the SME sector.
FRC Executive Secretary Emphasizes Strategic Advantage
Speaking at the event, the Executive Secretary of the Financial Reporting Council of Nigeria, Rabiu Olowo, highlighted that SMEs serve as the backbone of Nigeria's economy, making significant contributions to job creation, innovation, and wealth generation. Represented by Musa Kabiru, Olowo noted that many businesses struggle due to poor financial awareness and inadequate reporting structures, which hinder growth and reduce competitiveness in an increasingly formalized economic environment.
According to Olowo, financial literacy extends beyond basic bookkeeping. He stressed that it involves a comprehensive understanding of business performance, enabling informed decision-making and positioning enterprises to seize investment and credit opportunities. He explained that the FRC is actively working to promote transparency, accountability, and credibility in financial reporting across various sectors through frameworks aligned with international standards, such as the International Financial Reporting Standards (IFRS).
"Financial discipline is not a burden—it is a strategic advantage," Olowo stated, urging SMEs to adopt proper record-keeping as a pathway to sustainability and growth.
NESLAI Executive Director Addresses Funding Barriers
Also speaking at the event, the Executive Director of NESLAI, Edwin Olorunfemi, pointed out that the primary challenge facing SMEs and cooperative societies is not merely a lack of capital but poor financial documentation. He observed that many viable businesses remain excluded from funding opportunities because they cannot present credible financial records to banks, investors, and government intervention programs.
Olorunfemi emphasized that the campaign aims to bridge this gap by equipping entrepreneurs with practical skills to maintain proper records, enhance transparency, and position themselves effectively for financing. "Our goal is simple: to strengthen the foundation of small businesses in Kano State so they can grow sustainably, create jobs, and contribute meaningfully to the economy. When SMEs get it right, the economy gets stronger," he said.
Call to Action for SMEs
The joint message from FRC and NESLAI underscores the urgent need for SMEs to improve their financial management practices. By fostering better financial literacy and accountability, businesses can unlock funding, drive expansion, and bolster Nigeria's economic resilience. This initiative in Kano represents a critical step toward empowering entrepreneurs and supporting the broader national economy through enhanced SME performance.
