LCCI Warns of Business Challenges Due to High Energy Costs, Interest Rates

The Lagos Chamber of Commerce and Industry (LCCI) has raised concerns over the impact of the recent Monetary Policy Rate (MPR) increase and rising electricity tariffs on businesses in Nigeria.

In a statement, the director-general of the LCCI, Dr. Chinyere Almona, highlighted the compounding effects of these decisions on the cost of living and doing business in the country.

The Central Bank of Nigeria (CBN) recently increased the MPR from 22.75 per cent to 24.75 per cent, a decision that has led to higher borrowing costs for businesses.

This, coupled with the increase in electricity tariffs, has made the business environment in Nigeria increasingly challenging.

According to Almona, the private sector is the primary driver of growth and employment generation in Nigeria, but it is currently facing increased borrowing costs, reduced investment incentives, and a pressured foreign exchange market.

She emphasized the need for the CBN to reconsider its monetary policy stance to avoid further interest rate hikes and to create an enabling environment for local meter manufacturing to address the shortage in meter deployment.

Small and medium-sized enterprises (SMEs) are particularly affected by the rate hike, as they operate on thin profit margins and rely heavily on affordable credit to sustain their operations and drive growth.

The Chamber advises the CBN to balance inflation containment and exchange rate stability with private sector growth and to explore alternative policy measures to enhance credit access, encourage investment, and support entrepreneurship.

The LCCI also recognizes the rationale behind removing the electricity subsidy to attract foreign investors but suggests a shift towards subsidizing production rather than consumption.

They advocate for the implementation of a comprehensive metering program and the creation of a conducive regulatory and policy framework to enhance foreign investment in the power sector.

As the challenges of doing business in Nigeria continue to mount, the LCCI’s warning highlights the need for policymakers to consider the impact of their decisions on the private sector and to take steps to create a more favorable business environment.