Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has declared that the organised private sector recorded unsatisfactory economic performance in 2024.
NACCIMA expressed the view on Sunday, in its New Year message, titled, “Statement on Options for Economic Reform and Consequences for The Medium-Term Expenditure Framework (MTEF) for 2025-2027,” which was signed by its national president, Hon. Dele Kelvin Oye.
Oye said, “We should agree that the 2024 economic performance was unsatisfactory for the private sector.
“All data, metrics and consequent statistics confirmed that the Nigerian private sector has borne fully the negative burdens of the current economic reforms while, in contrast, the Nigerian public sector has continued to thrive and expand.”
He stated that all economic benefits of the current economic reforms went to the government through high capital transfers and revenues, while the private sector was faced with higher inflation, higher cost of borrowing/repayment for existing loans, $2.4 billion unpaid forwards contracts with the Central Bank of Nigeria (CBN), currency devaluation, and higher costs in all areas of its business operations.
NACCIMA said the imbalance caused by increased public sector expenditure and consequent borrowings had destroyed value in the private sector’s investments due to government’s unsustainable high interest rates.
It also debunked the notion that government’s increasing revenue was due to public sector’s improved productivity.
According to NACCIMA, “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.”
Oye stated that the payment of high interest rates to local and overseas creditors, regardless of asset class, was close to financial “hara-kiri,” adding that financial assets should be created and counterbalanced by equivalent investment in productive assets, which are expected to repay the loans.
“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,” Oye said.
He cautioned that the suggestion should not be misconstrued as an advocacy for the transfer of public monopoly to private monopoly or creation of private uncompetitive markets.
The national president of NACCIMA also stated that the over-subscription that attended the recent Nigeria’s Eurobond issue only confirmed that the coupon was sold beyond market offers, and warned that relying heavily on foreign borrowing “may expose the country to external shocks and currency fluctuations”.
NACCIMA also declared that Nigeria needed a coordinated approach to delivering the latest technologies and digital infrastructure that would facilitate delivery of social services, public health, educational and digital infrastructure.
It stated that the federal government should undertake a rigorous review of its current size and expenditure to identify and eliminate wasteful spending because efficient allocation of existing resources could help to reduce excessive public borrowing.
NACCIMA stated, “The Nigerian budget for elected and unelected politicians can be adjusted. The size and number of government-funded agencies can be reduced and taxes should be further reduced, which will attract greater private sector investment.”
It tasked the government to create an environment where the private sector could take the lead in economic ventures through deregulation, and reduce bureaucratic red tape and enhance ease of doing business in Nigeria.
Commenting on the government’s current tax reform, the NACCIMA president said corporate taxes should be further reduced to 19 per cent and VAT pegged at 7.5 per cent.
He stated that the operators of the private sector were not a political opposition but investors who had significant invested capital at stake, saying they should be allowed to express themselves wherever possible.
Oye stated, “It is clear that government borrowing and deficits will be repaid by private sector taxes and levies. Therefore, unless there is a consistent effort to reduce the size of government through technology and policy efficiency, these economic vulnerabilities will drive us further away from a productive balanced resilient economy that can thrive independently without excessive borrowing.”
Dike Onwuamaeze
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