Businesses barely surviving, dying slowly, LCCI warns

President of the Lagos Chamber of Commerce and Industry, (LCCI), Gabriel Idahosa, has warned that the organised private sector (OPS) is dying slowly.

He lamented that businesses are currently plagued with increased borrowing costs, reduced investment incentives, heightened uncertainties in the policy environment and rising pressure on the foreign exchange market.

Speaking on the state of the economy in Lagos, yesterday, he said the recent interest rate hikes have caused higher borrowing cost, making it more expensive for businesses to access credit for working capital, expansion and sustainability.

He added that LCCI has consistently stressed that interest rate hikes alone would not curb inflation and that the government would need to resolve the challenges of the real sector.

The real sector, he said, has demonstrated the capacity to create more jobs, manufacture products for consumption and export and form the economy’s industrial base.

“The manufacturing sector remains weak as growth slowed to 1.28 per cent in Q2 from 1.49 per cent in Q1 to 2.2 per cent in the corresponding quarter of 2023. Recent manufacturing indicators reflect a burdened production sector bedevilled with the extremely high cost of production driven by cut-throat interest rates, weak currency, weak consumer demand and costly logistics due to high energy costs,” he said.

Urging the government to address the insecurity crisis, he recommended increased funding and investment in the agriculture sector to boost productivity. He also urged the government to, as a matter of urgency, give attention to the real sector.

“High lending rates make it challenging for businesses to access credit, especially for SMEs that are the backbone of the economy. The increase in production costs could lead to higher prices for goods and services, potentially affecting the competitiveness of our products in global markets,” he said.

Lamenting rising food inflation, he said it is driven by poor crop production by farmers who are constrained by security challenges and transport costs.