LCCI Raises Alarm On Impact Of High Energy Costs, Interest Rates On Businesses

The Lagos Chamber of Commerce and Industry (LCCI) has expressed concerns over the challenges of doing business in Nigeria caused by multiple factors.

Naija News understands that the increased Monetary Policy Rate (MPR) and the rising electricity tariffs were cited as contributing factors.

In a statement sent to LEADERSHIP, the director-general of LCCI, Dr. Chinyere Almona, emphasized this point.

Aloma expressed the Chamber’s grave concerns over the Central Bank of Nigeria’s (CBN) recent decision to increase the Monetary Policy Rate (MPR) from 22.75 per cent to 24.75 per cent.

Additionally, the Chamber views the recent increase in electricity tariffs as making the cost of living and doing business in Nigeria unbearable.

Almona noted that “the two decisions are compounded by the difficulty in the importation and clearing of goods at our ports.

“The Frequent fluctuating import duty exchange rates make 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.

“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 recognized the rationale behind removing the electricity subsidy to attract foreign investors, suggesting a shift towards subsidizing production rather than consumption.

She also emphasized the importance of implementing a comprehensive metering program and creating a conducive regulatory and policy framework to enhance foreign investment in the power sector.

“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,” she stated.

The Chamber advised the CBN to reconsider its monetary policy stance to avoid additional interest rate hikes, emphasizing the need to balance inflation containment and exchange rate stability with private sector growth.

Additionally, they suggested alternative policy measures to enhance credit access, encourage investment, and support entrepreneurship, while also advocating for the creation of an enabling environment for local meter manufacturing to address the shortage in meter deployment.