The Lagos Chamber of Commerce and Business has expressed issues over the Federal Authorities’s plan to borrow $2.2 billion, warning of potential debt sustainability points and impacts on infrastructure.
The chamber, in an announcement on Friday in Lagos, mentioned that there was want for diversifying funding sources past debt financing.
Its Director-Common, Dr Chinyere Almona, mentioned that the Federal Authorities may intensify efforts to develop the non-oil income base via tax reforms and promote export-driven sectors like agriculture and manufacturing.
Almona additionally advised different choices, equivalent to boosting exports, tourism, agriculture, and stable mineral sources.
She additionally advocated for privatising sure State-Owned Enterprises (SOEs) and enhancing the effectivity of these remaining below authorities management.
In line with her, this improvement has brought about some stirs within the enterprise group.
Almona famous that the issues had been pushed by the weak financial fundamentals and the lack of awareness of the way to navigate via these challenges to a greater economic system within the close to time period.
She added that the nation had an estimated Debt-to-Gross Home Product (GDP) ratio of above 50 per cent, debt servicing bills set to swallow our capital expenditure, and already owed about 17 billion {dollars}.
“The LCCI is taking the duty to, as soon as once more, warn about imminent debt sustainability points and the way that will additional weaken the state of vital infrastructure within the nation.
“The Chamber has at all times suggested towards solely utilizing debt financing with out contemplating different choices to fund funds deficits.
“A vital perspective of additional borrowing is the chance to dropping steam on infrastructure financing as debt servicing alone could rise above what’s put aside for capital expenditure within the 2025 federal funds.
“One other concern is the publicity to the exterior forex shocks that will consequence from the depreciation of the Naira towards the greenback in the middle of servicing these accrued money owed,” she mentioned.
Almona famous that the Central Financial institution of Nigeria had continued to wrestle with boosting provide within the overseas alternate market to strengthen the naira however to no avail but.
She mentioned that with all of those issues, the federal government’s borrowing urge for food wanted to be keenly managed.
The LCCI DG really useful that the federal government ought to guarantee transparency and accountability in deploying the borrowed funds.
She mentioned that funding vital business-supporting infrastructure like electrical energy provide, safety for meals manufacturing and logistics and enablers manufacturing must be of utmost significance.
She added that pressing steps had been required to stabilise the Naira and deal with structural points within the overseas alternate market to scale back the unfavourable influence of exterior borrowing.
“Larger reliance on Public Personal Partnerships (PPPs) for infrastructure improvement can scale back the strain on public borrowing whereas encouraging personal sector participation and effectivity.
“The LCCI urges the Federal Authorities and the Nationwide Meeting to rigorously consider the long-term implications of our present debt standing.
“Authorities should tread cautiously on the trail of fiscal prudence, undertaking accountability, monitoring and evaluating capital initiatives to make sure the supply of funded initiatives,” she mentioned.
(NAN)
