The Lagos Chamber of Commerce and Industry (LCCI) has urged the federal government to borrow from cheaper sources to reduce the burden of debt servicing and take a decisive step toward removing fuel subsidies.
This was contained in a statement by its Director-General, Dr Chinyere Almona, titled The Nigerian Economy at 62: The Need for Big Decisions, on Saturday to commemorate the country’s independence day celebration.
This is as it decried the progressive decline in Nigeria’s oil revenue and called on the federal government to tackle the menace of oil theft and pipeline vandalism with a sterner approach.
It said a decisive action against the challenge would enable the country to earn more foreign exchange.
The chamber said the oil sector had consistently recorded negative growth for the ninth consecutive quarter, contracting again by -11.8 per cent year-on-year in Q2 2022, following a higher contraction of -26 per cent year-on-year in Q1.
“If oil revenue makes up more than 80 per cent of government revenue, we expect the government to tackle the menace of oil theft and pipeline vandalism with a sterner approach,” it said.
The LCCI explained that the non-oil sector grew by 4.8 per cent year-on-year in Q2 ‘22 against 6.1 per cent year-on-year in Q1 ‘22, noting that the growth of 1.2 per cent recorded for agriculture and the three per cent for manufacturing were comparatively low when compared with other sectors that grew at above five per cent.
“And with the excruciating burden from debt service, subsidy payments, and worsening insecurity, many more production activities may be constrained in the coming months. The federal government needs to sustain its targeted interventions in selected critical sectors like agriculture, manufacturing, export infrastructure, tackling insecurity, and free up more money from subsidy payments.
“We urge the government to tackle oil theft to earn more foreign exchange, borrow from cheaper sources to reduce the burden of debt servicing, and take a decisive step toward removing fuel subsidies,” the statement read in part.
The LCCI further described poor power supply and insecurity as major challenges in the Nigerian business environment and, therefore, urged the federal government to decentralise the national grid.
It said, “Poor power supply remains a major burden on businesses. It is one area in which the trend since independence has been that of progressive decline. This development negatively impacted investment over the past few years with increased expenditure on diesel and petrol by enterprises. With the frequent collapses recorded by the national grid, we can no longer rely on a centralised power source. The way to go is renewable energy and decentralising the national grid.
It warned that without effective and sustained protection and support for the real sector and a dramatic improvement in infrastructure, the outlook for the sector would remain gloomy, particularly for the small-scale industries struggling in the face of cheap imports into the country and high production and operating cost in the domestic economy.
It added, “The security situation in the country deteriorated in the last year, assuming a very worrisome dimension. Access to markets in the troubled parts of the country has been reduced for many enterprises, with negative consequences for investors’ confidence.
“Our nation is at a cross-road and in dire need of big decisions to drive the drastic transformation the economy requires to return to economic prosperity. Our nation, Nigeria, has come a long way and is too big to fail.”