The Lagos Chamber of Commerce and Industry has expressed concerns over the Federal Government’s plan to borrow $2.2 billion, warning of potential debt sustainability issues and impacts on infrastructure.
In a statement on Friday, the chamber said there was a need to diversify funding sources beyond debt financing.
Its director-general, Chinyere Almona, said the federal government could intensify efforts to expand the non-oil revenue base through tax reforms and promote export-driven sectors like agriculture and manufacturing.
Ms Almona also suggested other options, such as boosting exports, tourism, agriculture, and solid mineral resources. She also advocated privatising certain state-owned enterprises and improving the efficiency of those remaining under government control.
According to her, this development has caused some stirs in the business community.
Ms Almona noted that the concerns were driven by weak economic fundamentals and a lack of understanding of navigating through these challenges to a better economy in the near term.
She added that the country had an estimated debt-to-gross domestic product ratio of above 50 per cent, debt servicing expenses set to swallow our capital expenditure, and already owed about $17 billion.
“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,” she said.
Ms Almona noted that the Central Bank of Nigeria had continued to struggle to boost supply in the foreign exchange market to strengthen the naira but to no avail.
She said with all of these concerns, the government’s borrowing appetite needed to be keenly managed.
The LCCI chief recommended that the government ensure transparency and accountability when deploying the borrowed funds.
She said funding critical business-supporting infrastructure like electricity supply, security for food production, logistics, and enabler manufacturing should be of utmost importance.
She added that urgent steps were required to stabilise the naira and address structural issues in the foreign exchange market to reduce the negative impact of external borrowing.
(NAN)
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