Oluchi Chibuzor

The recent decision to pause the implementation of certain provisions in the Financial Reporting Council (FRC) Amendment Act 2023, following concerns raised by private sector stakeholders, has reignited debate over the balance between regulatory independence and stakeholder engagement.

While dialogue with the private sector is vital in a democratic setting, undermining a duly enacted legislation sets a dangerous precedent for regulatory governance in Nigeria.

The FRC, like its counterparts in the UK, Mauritius, and the U.S, was established to serve as an impartial arbiter of corporate reporting and governance standards. Its independence, enshrined by law, is crucial in shielding the Nigerian economy from financial misreporting, corporate abuse, and systemic risks. Any move that weakens this independence — whether through administrative fiat or external pressure — risks reducing the Council to a symbolic institution incapable of fulfilling its oversight mandate.

The federal government had suspended the implementation of contentious provisions in the FRC (Amendment) Act 2023, following extensive consultations with industry stakeholders.

The FRC is tasked with developing, publishing, monitoring, and enforcing accounting, auditing, actuarial, valuation, corporate governance, and sustainability standards for Public Interest Entities (PIEs) in Nigeria through its seven specialised directorates.

Minister of Industry, Trade, and Investment Dr. Jumoke Oduwole recently announced the suspension after high-level engagements with key industry groups, including the Nigeria Employers’ Consultative Association (NECA), the Association of Licensed Telecommunications Operators of Nigeria (ALTON), and the Oil Producers Trade Section (OPTS).

One of the contentious issues is the reclassification of large private companies as PIEs, requiring them to remit annual dues of between 0.02 and 0.05 per cent of turnover without a ceiling. Some had argued that this contrasts sharply with the N25 million cap applied to publicly listed companies, raising fears that such provisions could escalate compliance costs and dampen investor confidence.

But in comparison with the same fee charged in Kenya, Ghana, South Africa, and the UK, the FRC maintains a fee structure that falls within the global standard. For instance, while in Kenya, it is within 0.03 and 0.05; Ghana – 0.1 and 0.5; South Africa – 0.02 and 0.1; UK -£1,500 -£50,000, and the U.S.A – 0.00015310%. 

Oduwole had stressed that the pause reflects President Bola Ahmed Tinubu’s pro-business stance under his administration’s 8-Point Agenda. She noted that a stakeholder consultation was held on March 26, 2025, leading to the administrative pause and the creation of a Technical Working Group to review the contentious provisions and propose workable reforms.

In a joint statement, however, the Nigeria Employers’ Consultative Association (NECA) and other members of the OPSN had commended Tinubu for suspending contentious provisions of the FRC (Amendment) Act 2023.

Signed by the heads of MAN, NACCIMA, NECA, NASSI, NASME, and endorsed by ALTON, OPTS, and over 30 sectoral associations, the statement welcomed the cap on annual dues for private-sector PIEs at N25 million, matching the limit for listed companies.

The OPSN called it a clear signal of the administration’s pro-investment and Ease of Doing Business commitment.

However, analysts in defense of the FRC, noted that the regulator underwent the full legislative process before its passage. They note that the amendment did not occur during the tenure of its current Executive Secretary, Dr. Rabiu Olowo.

According to them, the provisions of Section 33 were carefully crafted to distinguish between listed and non-listed entities. Listed companies, they argue, are already subject to rigorous oversight by multiple sectoral regulators, including the Securities and Exchange Commission (SEC) and the Nigerian Exchange (NGX). In contrast, non-listed entities, which operate with fewer external checks, require an additional layer of scrutiny to ensure transparency and accountability.

“The practice is the same in other jurisdictions. The use of turnover is used in other jurisdictions. It is even higher in Kenya. The organised private sector has forced the government to go against the separation of powers, with a presidential directive being used to amend a law rather than going through the legislative process.  Now they want to go further to dictate how the presidential directive is to be enforced,” a financial analyst said.

The stakeholders further explained that attempts are being made to push for selective amendments to the law without due recourse to the National Assembly. They cautioned that such moves send the wrong signal, especially as the international and business communities are closely observing developments. In their view, it is inappropriate to interfere with a legislative process or to direct and instruct a statutory agency on how to carry out its mandate.

They added that true independence for regulators like the FRC is critical. In many jurisdictions, similar bodies operate with a high degree of autonomy, safeguarded by the very laws that establish them. Granting the FRC the same independence, they argue, would enhance its credibility, strengthen regulatory oversight, and align Nigeria with global best practices.

According to them, the notion that regulated entities should influence how they are monitored introduces a structural flaw into the governance system—one that could embolden corruption and trigger avoidable corporate failures.

While the OPSN’s willingness to engage government on key economic issues is a welcome development, it must avoid actions that could be interpreted as undermining the law or pushing regulatory agencies to overstep their legal mandate.

Instead, OPSN should champion lawful governance and encourage strict adherence to established procedures.

The Olowo-led FRC deserves broad-based support to sustain and deepen the positive transformation it has ignited within the Council. In recent years, the FRC has modernised its operations through a bold digital transformation drive, culminating in the creation of a national repository for financial statements—an unprecedented step toward enhancing transparency, accountability, and regulatory oversight in Nigeria’s corporate sector.

The Council has significantly expanded its regulatory scope with the establishment of two new directorates—Actuarial and Valuation—backed by critical new rules such as ICFR, Rule 13, and Rule 14, alongside the resumption of audit firm inspections. It has also championed actuarial education, issued a pioneering Corporate Governance Code for SMEs, and launched the Adoption Readiness Working Group (ARWG) to facilitate the implementation of sustainability reporting frameworks.

Other notable initiatives include industry-focused IFRS sustainability training sessions, the creation of an Islamic Financial Services Division, and impactful collaborations like the “Train the Trainers” programme for MSME practitioners in partnership with UNCTAD ISAR. These reforms are supported by a structured staff capacity-building plan and the rollout of a globally benchmarked fee regime—all reinforcing the FRC’s commitment to strengthening Nigeria’s financial reporting architecture and fostering a world-class corporate governance environment.

Sustaining this momentum requires not just policy alignment but also the political will and stakeholder collaboration necessary to preserve the independence and integrity of the FRC. The Council is on the right path—what it needs now is the collective resolve to see its reforms through.

Rather than calling for shortcuts, stakeholders like the OPSN should channel their concerns through constitutional means — the National Assembly — to propose amendments or clarifications. What Nigeria needs now is not the dilution of regulatory power, but the strengthening of institutions that can enforce transparency, accountability, and good governance across sectors.

The government must in fact, rise up to prevent regulatory capture and weaknesses in oversight as this will render the powers of regulators useless. Since the process of establishing agencies like the FRC is transparent, having gone through the legislative process, and the independence of FRC is guaranteed by law, we need to start avoiding any collusion to frustrate or weaken these powers.

Other jurisdictions like FRC UK, FRC Mauritius, PCAOB and equivalent institutions all over the world enjoy enormous powers due to the need to strengthen their regulatory framework especially over corporate reporting. Hence, a situation where regulatees dictate how they want to be regulated will pose a fundamentally structural problem, especially if we are to stand against corruption and corporate failures in Nigeria.

Therefore, while it is a laudable idea for the OPSN to come together to engage the government on topical issues for the benefit of the Nigerian economy, OPSN should not be seen to be acting against the laws of Nigeria or prompting the government through its agencies, ministry or parastatals to violate any law.

Rather, OPSN should be the one encouraging the government to follow due process in executing and enforcing any law. While it may be convenient to just with a magic wand amend this law by administrative fiat with a magic wand, other times when the government does something similar in other areas that OPSN or civil society disagrees with, there might not be enough justification to fight then.

Consequently, we urge the OPSN to engage the National Assembly through the various committees that affect their operations to facilitate the change in this law in order to lay a proper foundation for the change and avoid setting a dangerous precedent. The civil society and well-meaning Nigerians are also encouraged to allow for legality to prevail by going through the legislative process for an amendment of the law without sacrificing regulatory oversight.

Finally, supporting the FRC is not just about defending a single agency; it is about reinforcing the rule of law and ensuring the long-term stability of the Nigerian economy.

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