The Lagos Chamber of Commerce and Industry has called on the Federal Government to ensure transparency and accountability in the deployment of its proposed $2.2bn external loan.
The LCCI made the appeal in a statement on Thursday as the Federal Government seeks the National Assembly’s approval for the borrowing plan, raising concerns within the business community.
LCCI Director-General, Dr Chinyere Almona, warned of potential debt sustainability issues and the risk of weakening Nigeria’s critical infrastructure, saying “The intention of the Federal Government to borrow a fresh external loan of $2.2 billion and presently seeking the approval of the National Assembly has caused some stirs in the business community.
“The concerns are driven by the weak economic fundamentals we see in the economy today and the lack of understanding of how we intend to navigate through these challenges to a better economy in the near term.”
The Chamber highlighted Nigeria’s debt-to-gross Domestic Product ratio, which has exceeded 50 per cent, and noted that debt servicing could overshadow capital expenditure in the 2025 federal budget.
It also expressed concern about Nigeria’s position as the third-highest debtor to the International Development Agency, owing approximately $17bn.
The LCCI emphasised that the Federal Government must shift from relying solely on debt financing for budget deficits.
Almona asserted, “With an estimated debt-to-GDP ratio of above 50 per cent, our debt servicing expenses set to swallow our capital expenditure, and Nigeria owing about $17bn and the 3rd highest debtor to the International Development Agency.
“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 pointed out the dangers of external currency shocks due to the naira depreciation and the Central Bank of Nigeria’s struggles to stabilise the foreign exchange market.
To address these issues, the Chamber recommended several measures, including Transparency in Loan Deployment, noting “The funding of critical business-supporting infrastructure like electricity supply, security for food production and logistics, and enablers for manufacturing should be of utmost importance.”
Further, Almona recommended non-oil revenue expansion, stating “The government should explore tax reforms, enhance compliance, and promote export-driven sectors such as agriculture and manufacturing.
She added that ensuring forex stability meant the Federal Government needed to take urgent steps to resolve structural issues in the foreign exchange market.
The LCCI DG urged the Federal Government to encourage public-private partnerships for infrastructure development could reduce public borrowing pressures while enhancing efficiency.
“Greater reliance on PPPs for infrastructure development can reduce the pressure on public borrowing while encouraging private sector participation and efficiency,” she remarked.
The LCCI DG also urged the National Assembly to critically evaluate the long-term implications of the loan and ensure fiscal prudence.
“Careful monitoring and evaluation of capital projects to guarantee the delivery of funded projects are essential”, Almona advised.
