The Centre for Enterprise Governance (CEG) has urged micro, small and medium enterprises (MSMEs in Nigeria to adopt basic governance structures, warning that failure to do so could threaten their survival under the country’s evolving tax reform regime.
In a statement, the founder of CEG, Dr Adeyinka Hassan, said Nigeria’s business environment is shifting towards stronger accountability, formalisation and compliance, making governance a necessity rather than a luxury for small businesses.
“Governance is becoming critical because Nigeria’s business environment is moving toward systematic accountability, formalisation and compliance-driven sustainability, which directly affects MSMEs,” Hassan said.
He noted that ongoing tax reforms are expanding compliance expectations and strengthening enforcement, leaving MSMEs without governance frameworks exposed to serious operational and financial risks.
“As tax reforms expand compliance expectations and enforcement capacity, MSMEs without basic governance structures face existential risks, while those with governance are better positioned to adapt and grow,” he added.
Hassan identified weak internal systems as a major constraint to MSMEs’ ability to meet tax obligations and access financing. According to him, a strategic diagnosis by CEG showed that many small businesses still operate informally, with limited documentation and controls.
“These include informal decision-making without documentation, weak financial management and record-keeping, absence of internal controls and accountability structures, limited understanding of regulatory and tax obligations, and lack of access to governance education or advisory support,” he said.
He explained that poor governance often results in incomplete records and unclear financial trails, exposing businesses to incorrect tax filings, disallowed expenses, penalties and disruptive audits.
“Poor governance leads to incomplete records, unclear financial trails and weak controls, which increase exposure to penalties, interest and disruptive audits,” Hassan said.
The CEG founder also warned that the belief that governance is only relevant to large corporations is increasingly risky, noting that MSMEs are now embedded in regulated value chains and formal financial systems.
“Scale no longer shields businesses from scrutiny. Without governance, MSMEs lose credibility, funding access and partnership opportunities, undermining the very growth they seek,” he stated.
Hassan called on MSMEs to adopt basic governance practices such as clearly defined roles and authority, financial controls, proper record-keeping, defined compliance responsibilities and periodic advisory support.
“These are the competencies CEG’s enterprise clinics, membership training and mentorship programmes are designed to deliver,” he said.
He added that strong internal controls and record-keeping would help MSMEs adapt to tax reforms by improving filing accuracy, reducing disputes and enhancing credibility with regulators and financiers.
“Governance is no longer optional; it is the operating system of sustainable enterprise,” Hassan said, adding that CEG’s shared training and advisory model makes governance affordable and accessible to small businesses.
Business stakeholders also said MSMEs stand to gain from the new tax laws if they reposition their internal processes, strengthen tax reporting and deepen engagement with government agencies.
The Director of Africa Retail Academy, Prof. Uchenna Uzo, urged SMEs—particularly retailers—to strengthen internal operations, noting that they would be among the most exposed under the new tax regime.
“A lot of businesses are going to need to change a lot of their internal processes. Some things they were not doing before, they will need to incorporate them to be able to harness the potential of this new policy,” Uzo said.
He encouraged retailers to review their tax reporting systems, invoicing practices, pricing strategies, and relationships with manufacturers and suppliers to remain compliant and competitive.
