By Chioma Obinagwam
To boost its capital formation, Nigeria must adopt financial reporting standards that guarantee credible corporate reports.
That was the submission of the former Coordinating Director (Accounting Standards Directorates- Private and Public Sector) at the Financial Reporting Council of Nigeria (FRC), Dr. Iheanyi Anyahara, during an exclusive interview with Confiance News at the weekend.
He noted that the slowness in adopting the International Accounting Standards (IAS) and the International Sustainability Standards (ISS) is not the single reason for the paucity of investments in the country.
Reacting, Anyahara, who is also the Chair of the Adoption Readiness Working Group (ARWG) for sustainability reporting in Nigeria, noted that having credible corporate reports alongside a good business climate, is critical for attracting sustainable investment to the country.
“The slowness or unwillingness of some organisations and subnationals to adopt ISS and IAS according to your words, could be attributed to contributing to the dearth of investors/investments in the country but not solely responsible,” he said.
Confiance News gathered that Capital Formation represents the accumulation of capital resources over time, typically through savings and investments, which are then channeled into productive activities to drive economic growth and development.
Data mined from the National Bureau of Statistics (NBS), showed that in the second quarter of 2024 (Q2 2024), total capital importation into Nigeria declined by $771.51 or approximately 22.85% million to USD$2,604.50 million from the US$3,376.01 million recorded in first quarter, 2024 (Q1 2024).
This underscores the need for the enforcement of IAS and ISS as well as fostering a friendlier investment climate.
It is noteworthy that Capital importation, which typically means bringing in foreign capital (e.g., through foreign direct investment, loans, or portfolio investments), which acts as a catalyst for Capital Formation by providing resources, can be deterred in an unstable business environment.
More so, countries that fully embrace International Financial Reporting Standards (IFRS) and ISS gain a competitive edge in attracting FDI. Nigeria’s peers, like Ghana (which adopted IFRS earlier and more consistently) or Morocco (advancing sustainability reporting), may appear more investor-friendly.
Again, a study conducted by ResearchGate in 2024, titled: Nigeria’s Business Environment: Issues, Challenges, and Prospects, argues that an unstable environment, coupled with poor corporate governance, leads to business closures and relocations, such as the relocation of Michelin, GSK and Unilever to Ghana.
“Once we have credible corporate reports coupled with a stable business environment, I can assure you that capital formation will be a lot much easier,” he affirmed.
Confiance News reports that Anyahara’s stint at FRC is dotted with impressive portfolios. His unwavering commitment to work, in addition to integrity and diligence earned him the Acting Executive Secretary/CEO at FRC.
He also served as the technical advisor to members of the International Public Sector Accounting Standards Board (IPSASB).
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