1st term: LCCI scores PMB low in policy drives, debt service percentage to revenue
Ahead of May 29 inauguration of President Muhammadu Buhari’s second term in office, several industry stakeholders have continued to present their views on his performance in the ending first tenure.
Firing its shot recently, the Lagos Chamber of Commerce and Industry (LCCI), agreed that whereas last four years good levels of foreign exchange management, intervention in the agricultural sector and business select environment policies, “It underscores the high opportunity cost of debt servicing to the Nigerian economy. Besides, the debt profile has the profound crowding-out effect on the private sector. While the banking sector credit to government has been increasing over the past few years, banking credit to the private sector has been on the decline.”
The review document signed by the Director General of the LCCI, Mr Muda Yusuf, observed President Buhari’s government’s weak debt management and its excessive borrowing remains suspects as it further expressed serious concerns that 30.7 per cent debt service as a percentage of revenue and 73.8 per cent debt service as a percentage of the capital budget made the current debt profile unsustainable.
Besides, LCCI argued that the scenario further “Underscores the high opportunity cost of debt servicing to the Nigerian economy. Besides, the debt profile has the profound crowding-out effect on the private sector. While the banking sector credit to government has been increasing over the past few years, banking credit to the private sector has been on the decline”.
“Investments in Treasury bills and Federal Government bonds have become more attractive than investments in the real economy such as manufacturing, agriculture and solid minerals. Even the financial institutions would rather invest in Treasury bills and bonds than lend money to entrepreneurs,” LCCI submitted.
However, the Chamber traced the general lull in every aspect of the economy throughout the entire first term to what it described as wobbling takeoff as manifested in six months delay before appointment of ministers and cabinet inauguration, warning that a repeat this year will may return economy to recession. Recall that the latest GDP statistics showed serious recessionary trend by creeping back to 2.01 per cent.
