LCCI: We Operate Environment Too Tense for Businesses to Thrive

Dike Onwuamaeze

The Lagos Chamber of Commerce and Industry (LCCI) has declared that Nigeria is running an environment that makes it tense for businesses to thrive.

This was declared yesterday by the President of LCCI, Mr. Gabriel Idahosa, in a statement titled, ‘LCCI Statement on New Petrol Pump Price by NNPC Limited’, in which the chamber expressed concerns that businesses are at a crossroads with policy directions and needed a positive national orientation to navigate the stormy waters they have found themselves today.
Therefore, the chamber tasked the federal government to come plain to Nigerians and businesses on the direction of their policies and what near-term achievements are possible to build some level of certainty to support business planning and decisions.

Idahosa said: “With the CBN’s monetary policy rate at 27.25 percent (with allowance up to about 34 per cent), inflation elevated at 32.15 percent (August 2024), an exchange rate above N1620 per  Dollar, and an unemployment rate at 5.3 per cent, we run a business environment that is too tense for businesses to thrive. Since the inception of this administration, petrol prices have risen by about 430 percent to date.

“These indicators may worsen in the coming months due to a thriving speculative environment, harsh regulatory ecosystem, unguided controversies, persistent insecurity challenges, and weakening purchasing power that restrain demand for goods and services.”
According to him, businesses are trying “to understand that the recent fuel price hikes could be government’s intention to fully deregulate the oil and gas sector and implement a complete fuel subsidy removal policy.
“However, the dynamics and controversies around these steps create most of the distortions we experience in the business environment, making businesses operate under dark clouds of uncertainties.

“It has become difficult to understand the plans and moves taken by the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation Limited, and the various oil and gas sector regulators in the face of recent happenings. The controversies surrounding the working relationship between NNPCL and the Dangote Refinery are equally confusing.”
He bemoaned that businesses have continued to suffer from increasing burdens of rising operating costs incurred on logistics, power supply, scarcity of FOREX for critical input, and inflated costs on third-party sourced services.
Idahosa stated that addressing the challenges businesses are faced with would require a multi-pronged approach, involving social, political, and economic considerations.

He urged the government to come out clean on whether fuel subsidies have been removed entirely or partially, adding that the regulatory agencies in the oil and gas sector should let Nigerians know what quantity of fuel is consumed locally in Nigeria.
He said: “We should implement the Petroleum Industry Act (PIA) to support a fully deregulated oil and gas sector. This will reduce the uncertainties and irregularities in the sector, enhance the sanctity of contracts, and attract foreign investments.
“We have always recommended that saved subsidy funds should be invested in building infrastructure that can cushion the impact of a tightening economy.”
Idahosa recalled that in most of the recent LCCI’s press statements, the chamber has consistently recommended the need for fiscal stimulus and non-cash interventions to cushion the burdens unleashed through the tight monetary stance of the government in the past 18 months.

“In the situation we find ourselves, we urge the government to stay focused and more vigorous regarding the ongoing interventions like the removal of some taxes, the transition to Compressed Natural Gas (CNG) mobility, the Crude for Naira scheme, and the suspension of some import duties. The CNG mobility initiative must be supported with CNG refuelling stations nationwide and credit facilities to support quick conversion and usage,”Idahosa said.
He also recommended pegging import duties at an exchange rate of N1000 per Dollar to provide much-needed fiscal stimulus.
He argued that this would stabilise costs for manufacturers who rely on imports, boost productivity and enable long-term planning.

Idahosa said: “A fixed rate would lower production costs, leading to increased output and job creation. It would also benefit the broader economy by fostering growth in related sectors like logistics and retail, ultimately supporting Nigeria’s economic stability and expansion.
“Further, LCCI proposes that crude oil supplied to refineries in Naira be pegged at an exchange rate of N1000 to Dollar. This would significantly lower the cost of petrol for end users, thereby reducing logistics and transportation expenses.

“The ripple effect would stimulate economic activity and help alleviate the current financial hardships faced by Nigerians. It will also significantly contribute to the reduction in food inflation since transport costs are a major component of food production and delivery costs.”