•Fingers inflation, high borrowing costs, currency devaluation •Urges swift economic reforms
By Chinelo Obogo
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has expressed deep dissatisfaction with the 2024 economic performance, especially regarding the private sector, urging for immediate reforms to address growing imbalances that threaten its stability.
In a detailed statement, NACCIMA’s National President, Dele Kelvin Oye, emphasised that all available data, metrics and statistics have demonstrated that the Nigerian private sector has borne the brunt of the nation’s economic reforms, enduring harsh conditions such as high inflation, increased borrowing costs, and a depreciating currency.
“We should agree that the 2024 economic performance was unsatisfactory for the private sector. All data, metrics, and consequent statistics confirm that the Nigerian private sector has borne fully, the negative burdens of the current economic reforms,” Oye stated. He highlighted that while the private sector has suffered, the public sector has flourished, with significant capital transfers and revenue increases benefiting it. The private sector, on the other hand, has faced rising inflation, escalating loan repayment costs, the 2.4 billion USD Central Bank of Nigeria (CBN) unpaid forwards, currency devaluation, and mounting costs in all sectors.
“This continued imbalance caused by increased public sector expenditure has destroyed value in the private sector due to excessive fiscal deficits, which are financed through government borrowing at very high, unsustainable interest rates. We are therefore making recommendations and suggestions that may be considered in the short to medium term,” Oye explained.
He further noted that fiscal deficits arise when public sector expenditure exceeds income. To remedy the high interest rates and inflation, he advocated for the public sector to reduce spending and become a more efficient and productive entity. “The solution to high interest rates and high inflation is for the public sector to spend less and to start becoming an efficient productive unit,” he asserted.
Oye also stressed that revenues such as customs duties and taxation are not a result of improved productivity but instead reflect wealth transfers from the productive private sector to the ever-expanding unproductive public sector. He criticized the government’s reliance on revenue generation from taxation and regulatory fees, pointing out that the public sector does not produce goods or services but instead extracts value from citizens through regulatory mandates.
For 2025, Oye warned that the expenditure framework appears focused on capital transfers to sectors unlikely to add value to the national wealth. He referred to the payment of high interest rates on loans as financial “hara-kiri,” noting that public sector loans should be backed by real assets or be short-term in nature, to avoid saddling the economy with debt.
He added, “If these assets are offloaded to the capital markets, it will be possible to transfer many unproductive public sector loans off balance sheet, thereby unburdening the government from excessive borrowing. Please note we do not advocate transferring public monopoly to private monopoly or the creation of private uncompetitive markets.”
On the matter of financing costs, Oye advised the government to aggressively reduce borrowing expenses. He emphasized that reliance on foreign borrowing could expose Nigeria to external shocks and currency fluctuations, undermining long-term economic stability.
Turning to foreign reserves, local industry support, and private sector growth, NACCIMA proposed the introduction of public sector expenditure guidance, advocating for greater use of locally produced goods and services. This, they believe, would ease pressure on foreign exchange demand. “Investment in public infrastructure should result in the utilization of more locally sourced inputs, higher investment in local infrastructure, and improving local productive capacity,” Oye suggested.
Additionally, NACCIMA called for reforms in sectors like transportation, power, and technology, which are crucial for manufacturing and services. They urged government policies to attract and retain private sector investment, particularly in digital education and technical skills development. Oye stressed that many employers struggle to find adequately skilled workers and that the Abuja Free Trade Zone’s Industrial Park and Skills Centre should receive greater support from both government and the organized private sector.
Addressing concerns about the 2024 Tax Bill, Oye criticized the lack of meaningful engagement between federal and state governments. He argued for a reduction in corporate tax to 19% and VAT to 7.5% to stimulate growth and increase government revenue. He also recommended a deeper engagement with the private sector, including industries like telecommunications, to ensure that policies align with business realities.
“Governments at all levels must understand their role as referees, intermediaries, and facilitators. Governments are not industry players or owners of capital. It is the right of taxpayers and citizens to demand basic facilities like security, utility infrastructure, social services, education, and health,” Oye emphasised.
NACCIMA also urged the government to focus on investment in infrastructure rather than simply awarding contracts. “A focus on investment instead of contract awards in areas like road infrastructure, industrial and residential estates, power infrastructure, and other key infrastructure like airports and seaports is key for a sustainable economy,” they stated.
Oye also called for a rigorous review of government expenditure, suggesting that countries like Argentina have made political choices to eliminate recurrent budget deficits, a move that could be beneficial for Nigeria. He advocated for reducing the size of government-funded agencies and taxes, with the goal of attracting greater private sector investment.
“Nigeria is a country with huge potential, innovative private sector minds, capital, and opportunities. We deserve a listening economic team and team players who must recognize the private sector as stakeholders,” Oye concluded. He criticized the current practice of discovering government economic policies through press releases, urging for more stakeholder engagement before policies are implemented in 2025.