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The Lagos Chamber of Commerce and Industry has declared that the concerns being displayed in the business community on the Federal Government’s plan to borrow a fresh external loan of $2.2 billion are driven by the apparent weak economic fundamentals and lack of understanding on how to navigate through the current challenges to a better economy in the near term.
To this end, the Chamber advised the government to ensure transparency and accountability in deploying the borrowed funds.
The Federal Government is seeking the approval of the National Assembly to access the loan.
Almona noted that with an estimated debt-to-GDP ratio of above 50 percent, the country’s debt servicing expenses are set to swallow “our capital expenditure, and Nigeria owes about $17billion and the 3rd highest debtor to the International Development Agency (IDA).
“The LCCI is taking the responsibility to once again warn about imminent debt sustainability issues and how that may further weaken the state of critical infrastructure in the country.
“The Chamber has always advised against solely using debt financing without considering other options to fund budget deficits.
“A critical perspective of further borrowing is the risk of losing steam on infrastructure financing as debt servicing alone may rise above what is set aside for capital expenditure in the 2025 federal budget. Another concern is the exposure to the external currency shocks that may result from the depreciation of the Naira against the Dollar in the course of servicing these accumulated debts.
“The Central Bank has continued to struggle with boosting supply in the FOREX market to strengthen the naira but to no avail yet. With all of these concerns, the government’s borrowing appetite needs to be keenly managed.”
Following the concerns, LCCI recommended that the funding of critical business-supporting infrastructure like electricity supply, security for food production and logistics, and enablers manufacturing should be of utmost importance.
The statement reads in part: “Beyond borrowing, the Federal Government should intensify efforts to expand the non-oil revenue base through tax reforms, improved compliance, and the promotion of export-driven sectors like agriculture and manufacturing.
“Urgent steps are required to stabilise the naira and address the structural issues in the foreign exchange market to reduce the negative impact of external borrowing.
“Greater reliance on PPPs for infrastructure development can reduce the pressure on public borrowing while encouraging private sector participation and efficiency.”
The Chamber therefore urged the Federal Government and National Assembly to carefully evaluate the long-term implications of the country’s current debt status and tread cautiously on the path of fiscal prudence, project accountability, monitoring and evaluating capital projects to ensure the delivery of funded projects.
