The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has expressed concern that ‘all data, metrics and statistics show that the Nigerian private sector has borne the negative burdens of the current economic reforms while the public sector continues to thrive and expand,’ stating that 2024 economic performance was unsatisfactory for the country’s private sector.
The organization raised the red flag in a statement signed by the National President of NACCIMA, Mr. Dele Kevin Oye, a copy of which was made available to our correspondent in Abuja, on Sunday.
Discussing options for economic reform and the consequences for the medium-term expenditure framework (MTEF) for 2025-2027, the body expressed optimism that Year ‘2025 will be a much better year.’
While saying that all economic benefits of the recent economic reforms have been translated to the public sector through high capital transfers and revenues, it noted that the private sector faced higher inflation, higher cost of borrowing and repayment for existing loans, citing the 2.4 billion USD CBN unpaid forwards, currency devaluation and higher costs in all sectors of the economy.
NACCIMA, which acts as a spokesman for the business and professional community and translates the group thinking of members into action, explained that the continued imbalance caused by increased public sector expenditure has destroyed value in the private sector due to excessive fiscal deficits which are financed through government borrowing at very high unsustainable interest rates.
NACCIMA therefore made recommendations and suggestions which it hopes will be considered in the short to medium term.
Discussing what policy direction should be in order to address fiscal deficits and debt servicing, NACCIMA explained that ‘fiscal deficits arise when public sector expenditure exceeds public sector income,’ noting that the funding of fiscal deficits through borrowing results into high interest rates and high inflation.
The professional business community stated: ‘The solution to high interest rates and high inflation, is for the public sector to spend less and to start becoming an efficient productive unit.’
Discussing the imperative of enhancing production in the country, the organization said: ‘We also need to debunk the myth of government earning more revenue under the pretext of improved productivity. For avoidance of doubt, payment of customs duties and taxation are not due to improved government productivity. These revenues are purely private sector revenues which constitute a transfer of wealth and capital from the productive private sector to an ever expanding unproductive public sector.’
‘The public sector does not own factories nor does it produce any goods and services sold to the customers. Rather it extracts value from the citizens through regulatory fiat. Awarding contracts is not the same as enhancing production.’
While calling on governments at all levels to deepen the Domestic Capital Market, NACCIMA stated: ‘For 2025, the expenditure framework is skewed towards huge capital transfers to certain sectors which will not add value to the national wealth,’ adding that the payment of high interest rates to local and overseas creditors regardless of asset class is close to financial “harakiri”. ‘Financial assets (loans) should be created and counterbalanced by equivalent investment in productive assets which are expected to repay the loans,’ the statement added.
According to NACCIMA, if these assets are offloaded to the capital markets, it will be possible to transfer many unproductive public sector loans off balance sheet, thereby unburdening the government from excessive borrowing.
NACCIMA does not advocate transferring public monopoly to private monopoly or creation of private uncompetitive markets.
