The Lagos Chamber of Commerce and Industry (LCCI), has said that a reversal of the current reforms on subsidy of Premium Motor Spirit (PMS) would exacerbate the challenges of the already faltering Nigerian economy.
Director-General, LCCI, Dr Muda Yusuf made the assertion in a statement to newsmen on Sunday in Lagos.
Yusuf said the current reality was that the fiscal space to sustain the humongous, corruption-prone and opaque subsidies no longer existed. He said it was not in the best interest of the citizens, the economy and future generations to encourage the perpetuation of corruption-ridden subsidy regimes.
He noted with concern the proposal by the Nigeria Labour Congress (NLC) and the Trade Union Congress [TUC] to proceed on strike from Sept.28 due to the removal of subsidy on PMS.
“The LCCI appreciates the perspective of the labour unions with regards to the pains and hardship that the recent price hikes in petrol and electricity will inflict on the citizens.
“But the chamber also recognises that the government is faced with very difficult choices at this time.
“The Nigerian economy is currently stumbling, having suffered a significant contraction of 6.1 per cent in the second quarter of this year.
“The economy is yet to recover from the devasting shocks wreaked by COVID-19 and now on the verge of a recession.
“As a result, the economy needs to be urgently pulled back from the brink through the adoption of appropriate policy reform measures,” he said.
Yusuf added that the capacity to fund critical economic and social infrastructures had waned considerably.
He referred to the mounting public debt with an increase of 146 per cent which had grown from N12.6 trillion in December 2015 to N31 trillion as at June 2020.
“Nigeria became an oil-producing country over six decades ago, yet there are no significant private sector investments in practically the entire value chain of the downstream petroleum sector.
“The entire space has been dominated by public enterprises with the attendant inefficiencies and fiscal leakages which had done enormous damage to the Nigerian economy.
“The economy had been denied the benefits of the vast investment opportunities which the oil and gas sector offers. If the country continues with the current trend of monstrous and opaque subsidies, it could slip into bankruptcy.
“The economy should be managed in a way to bequeath a good economic legacy to future generations,” he said.
The LCCI DG appealed to labour leaders to engage the government on poverty or hardship mitigating measures to cushion the effects of the price and tariff hike.
He urged the labour unions and the government to scale up the dialogue and negotiations to avoid another round of disruption of economic activities in the country. He urged the government to urgently put palliatives in place to cushion the effect of the fuel price and electricity tariff hike on the vulnerable segments of the society.
“This should be the bigger agenda for conversation at this time as the level of poverty is high and worrisome. Therefore, the intervention to mitigate the pains of reforms needs to be urgently activated.
“More importantly, effective targeting of such palliatives is crucial to ensure that the vulnerable groups are effectively impacted.
“It is equally paramount to ensure an effective regulatory framework in the electricity and petroleum downstream sectors to protect citizens from the exploitation,” he said.
Yusuf advised the government to unlock the huge private investment potentials in the downstream oil sector especially in petroleum product refining.
According to him, it would ultimately reduce the importation of petroleum products and ease the pressure on the foreign exchange market as well as the burden on our foreign reserves.