Governance structures critical for MSMEs’ survival amid tax reforms—CEG

Centre for Enterprise Governance (CEG) has urged Micro, Small and Medium Enterprises (MSMEs) to adopt basic governance structures to remain compliant, competitive and financially viable amid implementation of Nigeria’s new tax reforms.

CEG Founder, Dr Adeyinka Hassan, gave the advice on Thursday in Lagos in an interview with the News Agency of Nigeria (NAN) on implications of ongoing tax reforms for MSMEs. He stated that without basic governance structures, MSMEs faced serious risks as the Nigerian business environment becomes more compliance-driven.

Hassan said that governance was no longer optional for small businesses, noting that Nigeria was moving steadily toward systematic accountability, formalisation and enforcement-based sustainability.
According to him, CEG’s strategic plan identifies governance as the foundation for enterprise resilience, access to finance and socioeconomic value creation.

“As tax reforms expand compliance expectations and enforcement capacity, MSMEs without governance structures face existential risks, while those with governance are better positioned to adapt and grow,” he said.
The governance expert identified recurring weaknesses among MSMEs to include informal decision-making, weak financial management, poor record keeping, absence of internal controls and limited understanding of tax and regulatory obligations.

He said that these gaps often resulted in incorrect tax filings, disallowed expenses, penalties, interest charges and disruptive audits. Hassan said that many MSMEs still viewed governance as an issue meant for large corporations, describing such thinking as risky in today’s operating environment.

According to him, without governance, small businesses lose credibility, access to funding and partnership opportunities needed for growth. “Poor governance creates incomplete records, unclear financial trails and weak controls, which increase exposure to enforcement actions. Scale no longer shields businesses from scrutiny as MSMEs are increasingly integrated into regulated value chains, financial systems and government programmes,” he said.

Hassan outlined basic governance structures that every MSME should have to include clear roles and authority, basic financial controls, proper documentation, compliance ownership and periodic advisory support. He said that good records and controls enable MSMEs to respond confidently to tax reforms, provide accurate filings, avoid disputes and demonstrate credibility to regulators and financiers.

The CEG founder said that the new tax reforms also presented opportunities for well-governed MSMEs to improved access to finance, eligibility for government and donor programmes, stronger partnerships and long-term sustainability.

He added that banks, investors and public agencies prioritise transparency, accountability and compliance discipline, adding that CEG’s governance and credit-readiness clinics were designed to help MSMEs meet these expectations.

Hassan advised MSMEs to prioritise formalising records, separating personal and business finances, establishing compliance routines and seeking structured governance education in the new year.
He said governance could be strengthened without significant cost through shared infrastructure, collective training, mentorship and standardised tools.

The governance expert also cautioned MSMEs against treating compliance as an annual exercise, ignoring documentation until enforcement arises or operating without advisory support. “Governance is no longer optional; it is the operating system of sustainable enterprise as governance turns compliance into competitive advantage,” Hassan said.

He also stated CEG’s commitment to supporting MSMEs through governance education, partnerships and structured membership to strengthen resilience, credibility and long-term success.(NAN)