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Worried over the poor state of infrastructural facilities hindering local and foreign direct investment, the Lagos Chamber of Commerce and Industry (LCCI) has called on the federal government to develop a new funding model to address the inadequate infrastructure in Nigeria.
The president, LCCI, Babatunde Ruwase, said funding has remained a major constraints to infrastructural development in Nigeria, although acknowledging the efforts of the government to fix federal roads, but stated that more needs to be done.
The LCCI boss at its 2019 Presidential Policy Dialogue in Lagos, said at a time like this, the managers of the Nigerian economy must do all it can to attract private capital, both from the domestic economy and the global investing community.
“We are aware that there are huge financing gaps, especially in the infrastructure delivery. Challenges of funding the economy and the operations of government is a major cause for concern.
Investment climate issues and cost of doing business are very critical issues that need to be tackled as the ease of doing business remains a major challenge,” he said.
He pointed out that the key cost drivers are the high energy cost, depreciating exchange rate, high cost of fund, high transportation cost, high transaction cost at the ports, high import duty, among others.
“There is a limit to which these costs can be passed on to the consumers, especially in the context of weak and declining purchasing power,” he added.
According to him, these are surely not the best of times for the Nigerian economy, pointing out that the short term outlook of the key economic indicators is not looking bright.
He said the major trigger of the economic downturn was the decline in oil price, as the economy is still largely dependent on oil sector, both for revenue and foreign exchange earnings. “This time calls for reforms in the economy. However, we believe that the Nigerian economy has strong fundamentals. The resources are enormous, the domestic market is large and the people are resourceful and enterprising.
There are numerous potentials yet untapped. What is critical are the enablers. We need the right mix of policies to achieve the desired outcomes. I am aware that some policy choices have been made by the present administration to promote economic diversification, stabilize the foreign exchange market and promote small businesses,” he said.
He said evidently, there are still some work to be done, urging the need for regular engagements and communication on policy issues to ensure quality feedback and enrich the policy making process.
He recommended that the engagements should cover macroeconomic policies, sectoral policies. “These will include foreign exchange policy, Trade policy, Tax policy, Energy policy, transport policy, Industrial policy, Agricultural policy, ICT policy, among others. Some of these are cross cutting, while others are sector specific. The message is that regular engagement with relevant stakeholders in the various sectors will bring a lot of value,” he stressed.
The LCCI boss stated that multiple taxation remains an issue with many companies, saying that there are also issues of multiple levies and fees by government agencies at the federal, state and local government level.
He lamented over the announcement increase in VAT from 5 per cent to 7.5 perbcent, warning that it would no doubt put additional pressure on businesses because consumer purchasing power is already weak.
On the closure of the land borders, Ruwase said the move by the federal government has enormous implications for cross border economic activities around the country.
“The indications are now that the closure is indefinite. While we share the concern of government on issues of security and smuggling, we believe that the indefinite closure of land borders is not the solution to the problem,” he said.
BADEJO ADEMUYIWA has 23 years experience as a Finance Writer, specialising in Insurance and Investigative Reporting.
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