The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has expressed concerns over the unsatisfactory economic performance of the private sector in 2024, citing inflation, high borrowing costs, and currency devaluation as major challenges.
In a statement issued on Sunday, titled “Statement on Options for Economic Reform and Consequences for The Medium-Term Expenditure Framework (MTEF) for 2025-2027,” NACCIMA’s National President, Hon. Dele Kelvin Oye, emphasized the adverse effects of the current economic reforms on the private sector.
Oye remarked, “It is evident that the 2024 economic performance has been disappointing for the private sector. All available data, metrics, and statistics confirm that the Nigerian private sector has shouldered the negative burdens of the ongoing economic reforms, while the public sector continues to expand and thrive.”
He pointed out that the economic benefits of these reforms have largely flowed to the government, with significant increases in capital transfers and revenues. Meanwhile, the private sector faces escalating inflation, rising borrowing costs, $2.4 billion in unpaid forward contracts with the Central Bank of Nigeria (CBN), devaluation of the currency, and soaring operational costs.
NACCIMA criticized the disproportionate increase in public sector expenditure and borrowing, arguing that it has eroded the value of private sector investments due to the unsustainable high interest rates imposed by the government.
The association also refuted the claim that the government’s increasing revenue was a result of improved public sector productivity. According to NACCIMA, “The payment of customs duties and taxes is not a sign of enhanced government productivity. These revenues represent a transfer of wealth from the productive private sector to an expanding but largely unproductive public sector.”
Oye further emphasized that the public sector does not contribute to production and economic output. “The public sector does not own factories nor produce goods and services. It extracts value from citizens through regulatory measures, and awarding contracts is not the same as enhancing production,” he added.
He warned that the high interest rates on both local and foreign loans were nearing financial “hara-kiri,” stressing the need for financial assets to be balanced by investments in productive assets that can repay those loans. He also suggested that offloading these assets to capital markets could ease the government’s borrowing burden by reducing excessive debt.
Oye cautioned, however, that this suggestion should not be misunderstood as an endorsement for private monopolies or uncompetitive markets. He also noted that the recent over-subscription of Nigeria’s Eurobond issue indicated that the coupon was priced beyond market expectations and cautioned that heavy reliance on foreign borrowing could expose the country to external shocks and currency fluctuations.
In its statement, NACCIMA called for a coordinated effort to advance the delivery of new technologies and digital infrastructure, particularly in areas like public health, education, and social services. It urged the federal government to conduct a thorough review of its spending to eliminate waste and allocate resources more efficiently, which could help reduce excessive borrowing.
NACCIMA also suggested that the government should consider reducing its size, cutting unnecessary agencies, and lowering taxes to foster greater private sector investment. Specifically, Oye recommended that corporate taxes be reduced to 19% and the VAT rate be maintained at 7.5%.
He reiterated that the private sector is not a political opposition but rather a critical player with substantial investments at stake, advocating for more opportunities for the sector to voice its concerns. Oye concluded, “It is clear that government borrowing and deficits will ultimately be repaid through private sector taxes and levies. Unless there is a sustained effort to reduce the size of government through policy efficiency and technological innovation, these economic vulnerabilities will continue to hinder the creation of a resilient, productive economy capable of thriving without excessive borrowing.
