The Lagos Chamber of Commerce & Industry (LCCI), has decried the high cost of doing business in the country, including the hike in the Monetary Policy Rate (MPR) and increase in electricity tariff.
The director-general of LCCI, Dr. Chinyere Almona stated this in a release sent to LEADERSHIP.
Aloma said the Chamber expressed grave concerns over the recent decision by the Central Bank of Nigeria (CBN) to hike the MPR from 22.75 percent to 24.75 per cent, saying “in the same vein, we view the recent hike in electricity tariff as making the cost of living and doing business in Nigeria unbearable.”
She noted that “the two decisions are compounded by the difficulty in the importation and clearing of goods at our ports. The use of frequently fluctuating import duty exchange rates makes planning difficult for businesses. Feedback from businesses and analysts suggests that these moves will inflict severe pain on the private sector, further exacerbating the already challenging economic environment.”
She pointed out that “the private sector, which is the primary driver of growth and employment generation in Nigeria, is currently plagued with increased borrowing costs, reduced investment incentives, heightened uncertainties in our policy environment, and a pressured foreign exchange market.
“The recent hikes in the MPR have directly translated into higher interest rates, making it more expensive for businesses to access credit for working capital, expansion, and sustainability.”
Almona acknowledged that the removal of the subsidy on electricity supply may have been in line with attracting foreign investors into the sector with a cost-reflective tariff, saying “we have also advocated that we subsidise production instead of consumption.
“We call for an aggressive metering programme that leads to a 100 percent coverage of electricity consumers. Beyond the provision of infrastructure, we need to have a sound regulatory and policy environment to attract more foreign investment into the power sector.”
She noted that “Small and medium-sized enterprises (SMEs), in particular, are disproportionately affected by the CBN rate hike policy. Many SMEs operate on thin profit margins and rely heavily on affordable credit to sustain their operations and drive growth.
“The surge in borrowing costs stifles their ability to invest in productivity-enhancing measures, hire new employees, and contribute to economic growth.”
The Chamber urged the CBN to reconsider its monetary policy stance and avoid further increases in interest rates, adding that “while the CBN’s objective of containing inflation and stabilising the exchange rate is commendable, it must be pursued in a manner that does not unduly hamper private sector activities and economic growth.”
LCCI DG also recommended that the CBN explore alternative policy measures that promote credit access, stimulate investment, and support entrepreneurship, saying “on metering, the government should create the needed environment where local meter manufacturing can thrive to bridge the current gap in meter deployment.”