LCCI flags Nigeria’s rising debt profile, poor metering by DisCos
The Lagos Chamber of Commerce and Industry (LCCI) has said that Nigeria’s rising debt profile is a source for worry, urging the Federal Government to apply caution on the continued use of debt to meet fiscal obligations.
At a virtual press conference held on Tuesday, Toki Mabogunje, president of the chamber, said Nigeria should explore the option of equity financing as it was a better and more sustainable strategy at this time the country was struggling to generate adequate revenue.
Nigerian states and the Federal Government recorded a total debt stock of N28.63 trillion in the first quarter of 2020, representing a 4.44 percent increase from N27.40 trillion in Q4 of 2019, according to data from the National Bureau of Statistics (NBS).
The cash-strapped Federal Government has secured $3.4 billion and $288.5 million from the International Monetary Fund (IMF) and African Development Bank (AfDB) respectively, and it could secure another $1.5 billion from the World Bank.
Mabogunje said Nigeria’s quest for borrowing could push the country’s debt stock to N33 trillion by year-end (22 percent of GDP), a situation that would hurt the economy more.
She acknowledged the postponement of the planned hike in electricity tariff by the power distribution companies (DisCos) to the first quarter of 2021, considering the impact of COVID-19 on households and businesses which were yet to recover from its shock.
She said electricity supply was being challenged by inappropriate tariffs which undermined the economics of investment in the power sector and consequently inhibited investment in the sector, thereby impacting adversely on liquidity in the sector.
She said, however, that equitable billing would demand that electricity consumers were metered.
“This is the only way to engender the confidence of consumers in the billing process. Metering should therefore be accorded a high priority,” Mabogunje said.
She commended the government for removing fuel subsidy, saying that it was a step in the right direction in rescuing the economy from further fiscal quandary.
Mabogunje said the LCCI was, however, deeply concerned that despite various reviews of the Petroleum Industry Bill (PIB) in the last decade, the bill was yet to be signed into law.
“The non-passage of the bill has deprived the oil sector and the broader economy of enormous private investment inflows into the sector, among other benefits. The Lagos Chamber calls for an expeditious consideration and passage of the revised bill by the National Assembly.”
She enjoined the government to pursue the implementation of the Economic Sustainability Plan with utmost commitment and strong political will devoid of sentiments or political affiliations, so that proposed initiatives in the plan could produce the desired outcomes.