The Lagos Chamber of Commerce and Industry (LCCI) has urged the federal government to explore other avenues in the management of its debt, including the sale of underutilised assets.
Gabriel Idahosa, president of LCCILCCI said this at the chamber’s first quarter 2024 to address the state of the economy.
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The LCCI, in its quest for a stronger economy and better-enabling business environment, highlighted areas of opportunity and concern, making recommendations to the government on policy alternatives that can better empower the private sector to drive growth.
“There are a lot of assets that are either underutilised or not utilised at all which can generate cash and reduce the amount of borrowing,” Idahosa said, “and for quite some time now, the government has been called to look at assets,” he added.
“If we’re spending 80 percent of revenue just to service debts, then you wonder what’s left.”
Nigeria’s public debt profile is expected to increase to at least N95.2 trillion as of the end of December 2023.
The Debt Management Office puts Nigeria’s public debt at N87.91 trillion as of the end of September 2023. With the approval of the National Assembly for the securitisation of the outstanding debit balance of N7.3 trillion owed by the federal government to the CBN, its inclusion has put the country’s public debt stock to at least N95.2 trillion.
However, Nigeria’s high debt service-to-revenue ratio of 73.5 percent makes its debt situation unsustainable and a growing fiscal concern, higher than Kenya’s debt service-to-revenue ratio of 64.3 percent, Egypt’s ratio of 20.5 percent, and South Africa’s ratio of 20-25 percent.
“The chamber is concerned about the surge in the country’s debt profile.
“And we hope that government will begin to address that very important opportunity in our fiscal public finance space; looking at assets that we do have that are not being utilised or grossly underutilised and convert them into cash that we need to improve both services to the government and reduce the debt level that is constantly rising,” the Chamber’s president said.
Chineyere Almona, director general of LCCI, said the government owns a lot, and there’s a need to optimise the assets of the government.
“A lot of time, we talk about what the government owes, but we rarely talk about what the government owns,” she said.
Idahosa also spoke on diversifying into the solid minerals sector to reduce Nigeria’s dependency on oil revenues.
He said the development of the solid minerals sector is likely to create job opportunities across various stages of exploration, mining, processing, and marketing, and can contribute significantly to reducing unemployment rates and fostering economic growth.
However, the successful implementation of the policy may face various challenges, including regulatory hurdles, lack of infrastructure, and bureaucratic inefficiencies.
“Unregulated mining activities, even with a policy in place, may pose environmental risks such as deforestation, soil erosion, and water pollution,” Idahosa said.
He added, “The sector may also be susceptible to revenue leakages due to corruption, illegal mining practices and inadequate monitoring mechanisms which could undermine the government’s efforts to maximise revenue from the solid minerals sector.”
