LAGOS, Nigeria ( VOICE OF NAIJA)–The Lagos Chamber of Commerce and Industry (LCCI) has raised alarm over the array of economic challenges facing the Nigerian economy.
LCCI President Gabriel Idahosa also expressed concern over the multitude of challenges facing Nigerian businesses.
These challenges include rising borrowing expenses, diminished investment incentives, elevated uncertainties, and a strained foreign exchange market which he said
have resulted in the closure of hundreds of businesses, with others still facing imminent risk.
Addressing the current economic state for the first quarter of the year, he highlighted that the recent increase in the Monetary Policy Rate (MPR) has led to elevated interest rates.
This, he noted, has made it expensive for businesses to secure credit for essential needs such as working capital, expansion, and sustainability.
Emphasizing that addressing inflation requires more than just rate hikes, he underscored the importance of resolving challenges within the real sector.
READ ALSO: N3.2trn Needed To Reverse Electricity Tariff Hike – NERC
He noted that the sector has proven its ability to generate employment, produce goods and services for consumption and export, and contribute to GDP growth.
Expressing concern over the diversion of funds from the private sector to government treasuries, he advised the government to explore alternative strategies to attract direct investments.
Idahosa expressed concern about the rapid increase in inflation, particularly its impact on essential commodities such as food, housing, electricity, gas, and transportation.
He highlighted insecurity as a key driver of inflation, affecting agricultural productivity and leading to significant post-harvest losses due to inadequate investment in storage and processing facilities.
Additionally, he emphasized the role of the exchange rate in exacerbating inflationary pressures.
“Government must address insecurity, promote investment in infrastructure for agriculture storage and processing as well as boost FX supply. While the Naira recently appreciated, the Central Bank of Nigeria (CBN) needs to sustain its policy and regulatory reforms in the FX market, adopt policies that would attract FX inflow and build market confidence in the performance of the FX market.”
READ ALSO: Electricity Tariff Hike: FG Plans To Increase Other Bands— Falana
On the hiked electricity tariff, he said it is worrisome seeing businesses pay heavily for darkness.
“It is a grave concern that with a higher cost of power, companies are still not having access to the service at the promised levels and quality.
While we acknowledge that the removal of subsidy on electricity may have been in line with attracting more investors into the sector with a cost-reflective tariff, we have also advocated that we subsidise production instead of consumption.”
Chairperson of the Chamber’s Trade Promotions Board, Abimbola Olashore, expressed concern that the increase in electricity tariffs does not match the quality of services delivered “We have always known the tariff would increase but our problem is, it is not cost-reflective with what customers get.
How did they arrive at Band A when the customers under that band say there is no improvement in supply? Very soon, more people would be moved to Band A so they could charge more, all without improved supply.
The national grid keeps failing, another just happened last week, who then gets 20 hours and above daily? They should have shown that they could deliver before increasing the tariff.
The cost of doing business in Nigeria is already astronomical, this is just another hurdle thrown at businesses,” he said.
Idahosa called on the Federal Government to provide better support for strategic industries, emphasizing that it could stimulate economic growth, foster job creation, and promote inclusive development across various economic sectors within the target enterprise’s value chain.
READ ALSO: LCCI Urges CBN To Reconsider Monetary Policy Decisions
He also commended the proposed National Single Window Project, stressing the importance of involving exporters and importers in both the planning and implementation stages to fully explore its benefits.
Director-General of the chamber, Dr. Chinyere Almona, voiced concern about struggling businesses, citing foreign exchange (FX) fluctuations and inadequate power supply as two major challenges they encounter.
“Others are insecurity, poor infrastructure and rising input costs. People are saying the price of goods should drop but how will that happen when other production costs remain high? Citizens are poorer and cannot purchase more which is affecting businesses in turn leading to reduced or even stopped production,” she said.