The Need For Corporate Governance In Fashion Enterprises In Nigeria

Introduction

The African fashion industry is experiencing a historic shift. Our designs are now gracing international runways, celebrities are proudly wearing African brands, and Nigerian fashion is being celebrated around the world. This is a proud moment for us. However, while the spotlight is shining on African fashion, especially in Nigeria, many of our fashion businesses are still operating without proper structure or long-term business planning.

Most Nigerian fashion brands are still in their formative years, some not even up to ten years old. Yet, they've achieved impressive recognition. The question now is: how can they sustain this growth and eventually become household names like Hermès, Chanel, or Louis Vuitton, which have lasted for decades and even centuries?

One important answer lies in corporate governance.

Corporate Governance Explained

Corporate governance simply refers to the systems, rules, and processes that direct a company's operation. It is about how decisions are made in a business, who makes those decisions, how the business is managed, and how it stays accountable to stakeholders be it customers, investors, employees, or regulators.

In Nigeria, the principal sources of corporate governance requirements for companies include:

• The Companies and Allied Matters Act 2020 (CAMA)¹
• The Nigerian Code of Corporate Governance 2018 (NCCG)²; and
• The Code of Corporate Governance for Public Companies in Nigeria 2011.³

Fashion businesses might think these laws only apply to large corporations but the truth is: every serious brand that hopes to stand the test of time needs to start thinking like a corporation, not just a hustle or creative project.

CAMA 2020⁴ now allows for single-member companies, but once a fashion business begins to grow, starts employing staff, making millions in sales, and gaining national or international attention, your risk and responsibilities grow too. This is where corporate governance ensures the business builds a structure that supports the brand's growth and protects it from collapse or internal chaos.

Comparison with Global Luxury Fashion Brands

Take Hermès as an example. Founded in 1837, it is still controlled by members of the Hermès family but is operated like a proper corporation with a board of directors, executive leadership, family succession planning, and strict internal controls.

Chanel, Dior, Gucci, and other top brands all have strong governance structures. They have legal teams, marketing departments, internal audits, risk management systems, and documented procedures for how the business is operated—even though their origins were built around creative expression.

What sets these global brands apart is not just the quality of their products, but also the way the companies are managed behind the scenes. This level of structure is what allows them to outlive their founders, scale globally, and remain relevant.

In contrast, many Nigerian fashion businesses still revolve solely around the founder or creative director. Decisions are made informally, financial records are not well-kept, and there is no clear plan for sustainability if the founder steps back or something goes wrong. This is risky.

Recommendations: How Fashion Brands in Nigeria Can Set Up Corporate Governance

Building a governance structure doesn't have to be overwhelming. Here are some practical steps fashion brand owners in Nigeria can take:

1. Register Your Business Properly: Start by ensuring your fashion brand is a registered company under CAMA with the Corporate Affairs Commission (CAC). This is the foundation. Consider moving from a Business Name to a Limited Liability Company to protect the personal assets of the founder/partners.
2. Set Up a Board or Advisory Team: Create a board of directors or an advisory board even if it's just 2 people. These should be individuals who understand fashion, business, law, and finance. The board helps provide direction, hold the business accountable, and plan long-term.
3. Separate the Founder from the Business: Learn to separate your personal life from your brand. You are the creative engine, but the business must have its own systems. Avoid mixing business finances with personal funds.
4. Document Your Processes: There should be clear contracts for employees, interns, tailors, designers, and collaborators. In addition to the above, the business should have policies on issues like intellectual property, customer service, refunds, vendor relations, and digital marketing.
5. Think About Succession Planning: If something happens to you, what happens to the brand? Will it shut down? This is where succession planning comes in. Create a long-term vision and plan for sustainability.
6. Engage Professional Advisors: A fashion lawyer can help with structuring, contracts, intellectual property, and compliance. An accountant or financial advisor can help you organise your books, file taxes, and track your business performance.
7. Comply With Regulatory Obligations: File your annual returns with the Corporate Affairs Commission. Pay your taxes. Register your trademarks to protect your brand name and logo.

Conclusion

The Nigerian fashion industry is at a turning point. It is gaining recognition globally, but this is just the beginning. For Nigerian fashion brands to last, grow, and become transgenerational, we must move beyond the hustle mentality.

Corporate governance is not just for big multinationals, it is for any serious business that wants to succeed in the long run. It is vital to build fashion businesses with structure, vision, and accountability. That's how fashion legacies and not just fashion brands, are established.

To fashion founders in Africa, now is the time to start treating your brand as a business with a future. Let's build African fashion brands that transcend time.

Footnotes

1. CAMA 2020 amended by the business Facilitation Act 2023

2. issued pursuant to the Financial Reporting Council of Nigeria Act 2011

3. issued by the Securities and Exchange Commission (SEC)

4. Section 18(2) CAMA 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.