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LCCI raises the alarm over FG’s $2.2bn borrowing plan

The Lagos Chamber of Commerce and Industry has expressed alarm over the Nigerian government's plans to get a $2.2 billion loan, warning that it could exacerbate debt sustainability challenges and impede infrastructure development.

The LCCI reported this in a statement issued on Friday.

Dr. Chinyere Almona, Director-General of the LCCI, emphasised the importance of Nigeria exploring alternate funding sources, such as increasing non-oil revenue through tax reforms and promoting industries such as agriculture and manufacturing.

She also emphasised the significance of diversifying Nigeria's economy by increasing exports, tourism, agriculture, and solid minerals to lessen reliance on borrowing.

Dr. Almona also suggested privatising some state-owned firms and improving the efficiency of others that remain under government control to increase revenue collection.

She emphasised that Nigeria's debt-to-GDP ratio exceeds 50%, and debt servicing expenses outweigh capital spending, which is a major problem.

She also mentioned that the country's external debt, which is currently approximately $17 billion, posed a risk to future economic stability.

"The LCCI warns of imminent debt sustainability issues that may further weaken critical infrastructure in the country," Almona told reporters.

She warned about the danger of foreign currency shocks as the naira depreciated versus the dollar, which might put further burden on the economy as debt servicing costs rise.

Dr. Almona asked the Federal Government to promote openness and accountability in the use of borrowed monies, emphasising that efficient management is critical to avoiding future economic crises.

"Funding critical infrastructure should take precedence, as it underpins economic growth and job creation," she told the crowd.

Almona proposed increasing reliance on Public-Private Partnerships (PPPs) for infrastructure development to alleviate borrowing pressures, emphasising the private sector's efficiency and innovation.

She also asked for immediate action to stabilise the naira and address structural difficulties in the foreign currency market, pointing out that the Central Bank of Nigeria's efforts to increase foreign exchange supply have failed to yield substantial effects.

"Reducing external borrowing is crucial, as the continuous depreciation of the naira amplifies the burden of debt servicing," she pointed out.

On Thursday, the Nigerian Senate accepted President Bola Tinubu's proposal for $2.2 billion in fresh external borrowing.

Sen. Aliyu Wammako (APC - Sokoto), chairman of the Senate Committee on Local and Foreign Debts, presented the report, which was then approved.

Wammako emphasised that the presidential request was critical and required for approval.

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