CBN hike in MPR, electricity tariff bad for business—LCCI

Lagos Chamber of Commerce & Industry (LCCI) has expressed grave concerns over the rising cost of doing business in Nigeria occasioned by the recent hike in electricity tariff and the increase the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN). In a statement made available to journalist, the Director General of LCCI, Dr. Chinyere Almona, said the actions will inflict more pains on the private sector, and further exacerbate the already challenging economic environment. She said “the two decisions are compounded by the difficulty in the importation and clearing of goods at our ports. The use of frequently fluctuating import duty exchange rates makes 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. “We have consistently advised that rate hikes alone will not curb inflation without resolving the challenges of the real sector of the economy.  The real sector has demonstrated the capacity to create more jobs, manufacture products for consumption and export, and sustain the industrial base of the economy. “While we understand that high-interest rates attract Foreign Portfolio Investments (FPIs) and local investors to treasury bills and bonds, we lament the drying up of funds away from the private sector to government treasuries.”

On the hike in electricity tariff, Almona stated: “We acknowledge that the removal of the subsidy on electricity supply may have been in line with attracting foreign investors into the sector with a cost-reflective tariff. We have also advocated that we subsidise production instead of consumption.  “However, our major concern is seeing businesses pay heavily for the services that they do not enjoy optimally. It is a grave concern that with a higher cost of power, companies are still not having access to the service.  We call for an aggressive metering programme that leads to a 100 percent coverage of electricity consumers. This guarantees liquidity for the distribution companies and gives more satisfaction to consumers with a feeling of paying for what they consume.  Beyond the provision of infrastructure, we need to have a sound regulatory and policy environment to attract more foreign investment into the power sector.”