LCCI Emphasizes Tackling Poor Power Supply, High Energy Cost

The LCCI expressed this in a statement titled Balancing Relief and Responsibility: The $500 million World Bank Loan and Nigeria’s Economic Future, where it noted that taking this path would help create an enabling business environment where small businesses could thrive rather than majoring providing short-term cash disbursement to small enterprises and vulnerable population.

The chamber raised concerns that the recently approved $500 million World Bank’s loan for Nigeria might exasperate the country’s rising debt burden and expose Nigeria to fiscal vulnerabilities, weaker investors’ confidence and limited government’s ability to execute long-term economic reforms.

The chamber noted that although this intervention was aimed at supporting poor and vulnerable households and firms, it was imperative to state that its broader implications on businesses and the economy posed a concern to the business community.

The Director General of LCCI, Mrs Chinyere Almona, stated that: “The LCCI stands on the point that a more impactful stimulus for economic growth is that the government solves the perennial problem of poor power supply and high cost of energy and creates an enabling business environment where small businesses can thrive, creating jobs and generating revenues for the government.

“While the World Bank loan offers immediate relief, long-term economic resilience can only be achieved through a comprehensive strategy that fosters economic diversification, enhances productivity, and strengthens institutional frameworks for effective governance.”

She argued that from a business perspective, while targeted stimulus programs could offer temporary relief, structural economic challenges such as inadequate infrastructure, multiple taxations, and foreign exchange volatility remained unaddressed.

“Businesses require a stable operating environment, and while social welfare programs are essential, they must be complemented by policies that foster productivity, investment, and job creation.

“There is also concern about the efficiency of fund allocation and utilisation, given that only 16 per cent of previously approved World Bank’s loans under the current administration have been disbursed.

“This raises questions about the absorptive capacity of relevant institutions and the risk of funds being underutilised or mismanaged,” she expressed.

The LCCI noted that the loan’s direct impact on small businesses and vulnerable populations, through grants and livelihood support, presents a potential short-term stimulus that could enhance food security and community resilience, mitigating the effects of economic hardship at the grassroots level.

It, however, warned the government to consider carefully the broader macroeconomic effects of seeking external borrowing to provide short-tern economic stimulus in the face of Nigeria’s rising debt burden, particularly given the slow pace of disbursement and implementation of previously approved loans.

“With the World Bank’s share of Nigeria’s external debt reaching $17.32 billion, the question of debt sustainability becomes increasingly pressing.

“If not efficiently managed, additional borrowing could exacerbate fiscal vulnerabilities, weaken investor confidence, and limit the government’s ability to execute long-term economic reforms,” the chamber said.

The LCCI recommended the following strategic approaches to the government to maximise the benefits of this loan while mitigating its associated risks.

“There must be a transparent and efficient disbursement mechanism that ensures funds reach the intended beneficiaries, particularly small businesses and vulnerable communities.

“A robust monitoring and evaluation framework should be established to track the impact of these funds and prevent misallocation.

“The government should adopt a prudent debt management strategy that prioritises concessional financing and ensures that borrowed funds are tied to projects with clear economic returns.”

It also recommended the strengthening of domestic revenue generation through tax reforms and expanding the productive base of the economy in order to reduce reliance on external borrowing.

“Beyond short-term palliatives, the government must implement structural reforms that create a conducive business environment. Policies should focus on improving infrastructure, ensuring policy consistency, and addressing foreign exchange challenges to support private sector growth and attract investment,” LCCI added.