Nigeria’s business community is under relentless pressure. In an already difficult economic climate characterized by rising costs, multiple taxation, policy inconsistencies, and dwindling investor confidence, the Financial Reporting Council of Nigeria (FRCN) has added another burden on struggling enterprises.
Under the Financial Reporting Council Amendment Act 2023, private firms—many of which are already grappling with high energy and operational costs—now face a drastic surge in regulatory fees, escalating from N1 million to potentially hundreds of millions of naira, depending on their turnover. Meanwhile, listed companies with deeper financial reserves have their fees capped at N25 million. This disparity is striking and places an undue financial strain on businesses that have long endured Nigeria’s harsh operating environment, while providing relief to those with greater financial capacity.
This move exemplifies regulatory overreach. Instead of fostering economic resilience, productivity, and employment, it threatens to stifle business growth. According to Taiwo Oyedele, chairman of the Presidential Tax Reforms Committee, Nigeria is burdened with over 200 unofficial taxes, exacerbating an already challenging business climate.
The consequences are severe. Businesses already contending with excessive levies, regulatory inefficiencies, and inadequate infrastructure will face even greater pressure, potentially leading to downsizing or outright closure. The Manufacturers Association of Nigeria (MAN) reported that 767 manufacturing firms shut down in 2023, while 335 others faced financial distress. Furthermore, unsold inventory in the manufacturing sector surged to N1.4 trillion in the second half of 2024, up from N1.24 trillion in the first half. In January, MAN’s Director-General, Segun Ajayi-Kadir, lamented the shutdown of 60% of manufacturing concerns in the North-East due to the increasingly hostile business environment.
The FRCN is responsible for ensuring compliance with financial reporting and corporate governance standards, not for generating revenue. As a government-funded agency, its justification for imposing such exorbitant levies remains unclear. The Nigeria Employers’ Consultative Association’s Director-General, Adewale Smatt-Oyerinde, pointed out that this policy directly contradicts the Federal Government’s “Ease of Doing Business” initiative and undermines the tax reform agenda aimed at eliminating multiple taxation.
“Many companies, particularly in manufacturing, trading, and essential services, operate on thin margins,” Smatt-Oyerinde stated. “Imposing arbitrary financial demands increases the risk of layoffs, business closures, and economic downturn.”
While Trade Minister Jumoke Oduwole has highlighted the government’s ambition to realize over $50 billion in foreign investment commitments secured by the Bola Tinubu administration, such efforts risk being undermined by policies that deter investment. Stability, predictability, and fairness are crucial for attracting and retaining investors. When regulatory agencies can unilaterally impose hefty levies without consulting industry stakeholders, Nigeria’s global competitiveness suffers.
This policy is not an isolated incident but part of a troubling pattern where businesses are penalized for operating in Nigeria. The government must prioritize business sustainability over short-term revenue generation. Thriving businesses create jobs, boost productivity, and contribute taxable income—key factors in driving long-term economic growth.
The new levies should be suspended immediately, and the previous N1 million fee structure reinstated pending a comprehensive review. Additionally, an urgent legislative amendment to the FRCN Act is necessary to remove ambiguities and prevent future regulatory excesses.
Nigeria cannot afford to keep making the same mistakes. If the Tinubu administration is truly pro-business, it must reverse this detrimental policy and focus on fostering an environment that encourages, rather than punishes, entrepreneurship. Instead of suffocating businesses with arbitrary levies, the government should introduce incentives to stimulate growth in the productive sector. Measures such as tariff reductions on essential industrial inputs, tax holidays for struggling enterprises, and streamlined regulatory processes would do far more to revitalize economic activity than this latest wave of financial burdens.
