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NIGERIA- The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has voiced significant discontent with the economic performance of 2024, particularly concerning the private sector, and is calling for urgent reforms to rectify the increasing imbalances that jeopardize its stability.
In a comprehensive statement, NACCIMA’s National President, Dele Kelvin Oye, stressed that all available data, metrics, and statistics indicate that the Nigerian private sector has suffered the most from the nation’s economic reforms, enduring severe challenges such as high inflation, rising borrowing costs, and a depreciating currency.
“It is clear that the economic performance of 2024 was disappointing for the private sector. All data, metrics, and subsequent statistics confirm that the Nigerian private sector has fully shouldered the negative impacts of the current economic reforms,” Oye remarked.
He pointed out that while the private sector has struggled, the public sector has thrived, benefiting from substantial capital transfers and revenue increases.
Conversely, the private sector has contended with soaring inflation, escalating loan repayment costs, the 2.4 billion USD unpaid forwards from the Central Bank of Nigeria (CBN), currency devaluation, and rising costs across all sectors.
“This ongoing imbalance, driven by increased public sector spending, has eroded value in the private sector due to excessive fiscal deficits, which are financed through government borrowing at very high, unsustainable interest rates. We are therefore proposing recommendations and suggestions that could be considered in the short to medium term,” Oye elaborated.
He further explained that fiscal deficits occur when public sector spending surpasses income.
To address the high interest rates and inflation, he urged the public sector to cut spending and become a more efficient and productive entity.
“The remedy for high interest rates and inflation is for the public sector to reduce its spending and to evolve into a more efficient productive unit,” he asserted.
Oye also emphasised that revenues from customs duties and taxes do not stem from enhanced productivity but rather signify wealth transfers from the productive private sector to the ever-growing unproductive public sector.
He criticised the government’s dependence on revenue generation through taxation and regulatory fees, highlighting that the public sector does not produce goods or services but instead extracts value from citizens via regulatory mandates.
Looking ahead to 2025, Oye cautioned that the expenditure framework seems to prioritize capital transfers to sectors unlikely to contribute to national wealth.
He described the payment of high interest rates on loans as financial “hara-kiri,” noting that public sector loans should be secured by real assets or be short-term to prevent burdening the economy with debt.
He added, “If these assets are sold off to the capital markets, it would be feasible to transfer many unproductive public sector loans off balance sheet, thereby relieving the government of excessive borrowing.
It is important to clarify that we do not support transferring public monopolies to private monopolies or creating uncompetitive private markets.”
Regarding financing costs, Oye advised the government to aggressively lower borrowing expenses.
He stressed that reliance on foreign borrowing could expose Nigeria to external shocks and currency fluctuations, undermining long-term economic stability.
In terms of foreign reserves, local industry support, and private sector growth, NACCIMA proposed the implementation of public sector expenditure guidelines, advocating for increased use of locally produced goods and services. They believe this would alleviate pressure on foreign exchange demand.
“Investment in public infrastructure should lead to the utilization of more locally sourced inputs, increased investment in local infrastructure, and enhancement of local productive capacity,” Oye suggested.
Additionally, NACCIMA called for reforms in critical sectors such as transportation, power, and technology, which are essential for manufacturing and services.
They urged government policies to attract and retain private sector investment, particularly in digital education and technical skills development.
Oye highlighted that many employers face challenges in finding adequately skilled workers and that the Abuja Free Trade Zone’s Industrial Park and Skills Centre should receive more support from both the government and the organized private sector.
Addressing concerns regarding the 2024 Tax Bill, Oye criticized the insufficient engagement between federal and state governments.
He advocated for a reduction in corporate tax to 19% and VAT to 7.5% to stimulate growth and enhance government revenue.
He also recommended deeper engagement with the private sector, including industries like telecommunications, to ensure that policies align with business realities.
“Governments at all levels must recognize their role as referees, intermediaries, and facilitators. They are not industry players or capital owners. Taxpayers and citizens have the right to demand essential services such as security, utility infrastructure, social services, education, and health,” Oye emphasized.
NACCIMA also urged the government to prioritize investment in infrastructure rather than merely awarding contracts. “Focusing on investment instead of contract awards in areas such as road infrastructure, industrial and residential estates, power infrastructure, and other critical infrastructure like airports and seaports is vital for a sustainable economy,” they stated.
Oye also called for a thorough review of government expenditure, suggesting that countries like Argentina have made political decisions to eliminate recurrent budget deficits, a strategy that could benefit Nigeria.
He advocated for reducing the size of government-funded agencies and taxes to attract greater private sector investment.
“Nigeria is a nation with immense potential, innovative private sector minds, capital, and opportunities. We deserve an attentive economic team and collaborators who recognize the private sector as stakeholders,” Oye concluded.
He criticized the current approach of unveiling government economic policies through press releases, calling for more stakeholder engagement before policies are enacted in 2025.
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