Business

Nigeria’s debt of N31tn unsustainable, says LCCI

Published

6 years ago

October 7, 2020

Toki Mabogunje

Backs increase in electricity tariff, fuel price
Seeks more mass transit buses, rail system
Urges reopening of borders

The Lagos Chamber of Commerce and Industry has expressed worry about the nation’s state of economy, particularly the rising debt profile, currently put at N31tn, without corresponding output growth and economic development.

According to the LCCI, the growing level of the country’s debt is fast becoming unsustainable in the light of dwindling oil prices and production.

President of the LCCI, Toki Mabogunje, gave this position at a press conference on the state of the economy on Tuesday in Lagos.

She said the high level of debt servicing had continued to hinder robust investment in hard and soft infrastructure, described as key to stimulating productivity and improving living standards.

She said, “We note the increase in public debt stock was fueled by fresh domestic and external borrowing required to plug the wider fiscal deficit in the revised 2020 budget, given the impact of the pandemic on oil and non-oil sources of revenue.

“We also note the impact of recent exchange rate depreciation on the country’s level of external indebtedness.

“At the peak of the pandemic in the second quarter, the Federal Government received financial support worth $3.4 billion and $288.5 million from the International Monetary Fund (IMF) and African Development Bank (AfDB) respectively, while negotiations are also on-going for a cumulative $1.8 billion credit support from the World Bank, African Development Bank (second tranche) and Islamic Development Bank.

“Adding this to prospective domestic issuances could possibly push the country’s public debt stock to around N34 trillion by year-end, equivalent to 23 per cent of the GDP.”

On the nation’s accelerated inflation rate, Mabogunje said the persistent pressure on consumer prices stemmed largely from the sustained uptrend in food inflation.

She said the recent incidents of flooding in key food-producing states in the North had wiped off food and cash crops on a large scale and disrupted output projections in agriculture.

Mabogunje said that the situation, if not urgently addressed, would escalate the pressure on food prices, thereby putting the country on the verge of a food crisis.

She noted, “According to local media reports, over two million tons of rice were lost to flood; other crops such as sorghum, corn and millet were also affected.

“Rising inflation trajectory has serious implications for businesses regarding production cost, investment real return rate, and overall economic performance.

“Looking forward, the Chamber expects inflation to sustain its upward trajectory for the rest of the year.

“The Lagos Chamber calls on the fiscal and monetary authorities on the need to synergise to moderate domestic prices to a level conducive for sustainable and inclusive economic growth.

“The Federal Government might need to reopen the land borders to give succour to food prices in the light of lower domestic food supply amid huge demand for food.

“Similarly, both the federal and state governments also need to promptly address the issue of food wastage, majorly responsible for the food supply gap being experienced in the country.”

The LCCI president also advised policymakers on the formulation and implementation of policies to facilitate sustainability as business operators grapple with the devastating impact of the COVID-19 pandemic.

Mabogunje said such policies must support businesses, protect jobs, preserve investment and foster economic competitiveness at both national and subnational levels.

She said the chamber endorsed the adoption of the cost-reflective tariff regime in the power sector.

The LCCI president said the new tariff would attract investment and improve power supply, even as she noted that safeguards were needed to protect consumers from exploitation.

She said, “If the economics of the investment is not right, investors will not inject capital into the sector. However, there should be safeguards to protect consumers from exploitation.

“There should comprehensive metering of consumers and there should be value for money. We believe that policy should be given a chance.”

The LCCI president said the Solar Home Initiative, aimed at expanding energy access to 25 million individuals through the provision of solar home systems or connection to a mini grid was a step in the right direction.

She said the initiative would stimulate growth and productivity in the country’s rural economy.

Mabogunje also commended government on the recent reforms implemented in the downstream segment of the oil sector.

She said the removal of petrol subsidy and the proposal by the Nigerian National Petroleum Corporation to give up majority stakes in the four local refineries were laudable.

Mabogunje, however, appealed for the provision of mass transit buses, development of rail system for intra city and intercity transportation, and the acceleration of the auto gas programme so that more vehicles could be powered by gas.

She said, “We believe these measures are steps in the right direction in rescuing the economy from deepening fiscal crisis.

“We note that the subsidy regime had for long constituted a huge burden on public finances, encouraged corruption, inefficiencies, deterred investment flows, and weakened the earnings performance of oil refining and marketing companies.

“We acknowledge the effect of the price hike on the vulnerable segments of the society. Accordingly, we request that palliatives be provided in form of mass transit buses among other initiatives to ease the burden on consumers.”

Mabogunje also called for the expeditious passage of the Petroleum Industry Bill to consolidate recent reforms in the sector.

On the various fiscal and monetary interventions by the government, Mabogunje said the schemes would help with fulfilling payroll obligations and protect the jobs within the SMEs sector.

She said, “The Lagos Chamber acknowledges the various interventions of the fiscal and monetary sides of authorities in mitigating the adverse impact of the pandemic on economic and business environment.

“The federal and state governments need to expeditiously redirect attention to these sectors, including aviation, hospitality, entertainment, and manufacturing.

“This has become necessary to protect jobs, preserve investments and provide the much-needed liquidity required to revive these sectors.”

The LCCI president said the chamber noted the weak performance of the economy at the sectoral level, particularly among key sectors with potential to drive economic diversification.

Mabogunje said the 6.1 per cent contraction of the Gross Domestic Product in the second quarter reflected the profound impact of the pandemic on the economy.

She said the Chamber anticipated a marginal improvement in the GDP growth performance by the third quarter.

She attributed the anticipated improvement to the declining trend in the rate of confirmed cases of COVID-19, relaxation of various containment measures and the increasing tempo of economic activities.

On foreign exchange, the LCCI President said inappropriate forex policies could discourage fresh capital inflows on foreign direct investment, portfolio investment, remittances, and non-oil export proceeds into the economy.

Mabogunje said this was evidenced by the sharp plunge in the level of capital imported into Nigeria from $5.9 billion in the first quarter to $1.2 billion in the second quarter, partly caused by the capital control policy of the Central Bank of Nigeria.

She said, “The Chamber notes the various policy measures taken by the Central Bank of Nigeria to conserve the country’s foreign exchange resources in the light of weakening dollar inflows precipitated by the global pandemic.

“While the Lagos Chamber appreciates the efforts of the apex bank in preserving the scarce foreign exchange resources at a time the economy is confronted with the twin challenge of lower oil price and production, we believe demand management strategies alone are not sustainable solutions to the recurring foreign exchange crises.”

Related Topics:debt Featured LCCI Nigeria

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Railway

Opeifa Seeks EU Investment to Fast-track Nigeria’s Low-Carbon Rail Revolution

Published

17 hours ago

June 26, 2026

Trends Admin

Opeifa Seeks EU Investment to Fast-track Nigeria’s Low-Carbon Rail Revolution

The Managing Director of the Nigerian Railway Corporation (NRC), Dr. Kayode Opeifa, has called on the European Union, international investors and development finance institutions to channel sustainable investments into Nigeria’s railway sector to accelerate the country’s transition to a low-carbon transport system and drive economic growth.

Opeifa said expanding and modernising Nigeria’s rail network would not only help reduce carbon emissions but also lower logistics costs, improve passenger mobility, create jobs and strengthen regional connectivity, positioning rail as a catalyst for national development.

Speaking at the 10th Nigeria–EU Business Forum on Sustainable Transportation and Global Gateway Opportunities for Partnerships held on Thursday, Opeifa described rail transportation as a strategic national asset capable of advancing Nigeria’s economic transformation while supporting its climate change commitments.

According to him, rail remains one of the cleanest and most energy-efficient modes of transportation, making sustained investment in the sector critical to reducing pressure on the nation’s highways and promoting environmentally friendly mobility.

“By strengthening our railway network, we can significantly reduce carbon emissions, ease congestion on our highways, lower logistics costs, improve passenger mobility, and stimulate industrial and commercial activities across Nigeria,” he said.

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The NRC boss reaffirmed the corporation’s commitment to building a modern, efficient, safe and environmentally sustainable railway system through ongoing reforms aimed at strengthening rail infrastructure, improving operational efficiency and expanding freight services.

He added that the corporation is also creating opportunities for greater private sector participation through sustainable investment models that would unlock long-term value in the railway industry.

Opeifa identified the European Union’s Global Gateway initiative as a major platform for deepening cooperation between Nigeria and international partners in the development of critical rail infrastructure.

He said the corporation is seeking partnerships that would support railway modernisation, deployment of green technologies, renewable energy integration, digital rail systems, capacity building and innovative financing solutions.

According to him, sustainable transportation has become an economic and environmental necessity rather than a policy choice, stressing that investment in rail infrastructure would deliver lasting benefits for future generations.

He urged investors, technology providers, development finance institutions and strategic partners to collaborate with the NRC in transforming Nigeria’s railway network into a resilient, competitive and environmentally sustainable transportation system.

Such investments, he noted, would accelerate Nigeria’s rail decarbonisation journey, facilitate trade, strengthen regional integration and promote inclusive economic development.

Opeifa expressed optimism that stronger collaboration between Nigeria and the European Union would unlock new opportunities for sustainable infrastructure financing and technological advancement in the railway sector.

He also commended the European Union and organisers of the Nigeria–EU Business Forum for providing a platform to promote dialogue, partnerships and investments that support sustainable transportation across Nigeria.

The NRC managing director reiterated that with the right investments and strategic partnerships, Nigeria’s railway sector can become a major driver of economic competitiveness, environmental sustainability and national prosperity.

Opeifa Seeks EU Investment to Fast-track Nigeria’s Low-Carbon Rail Revolution

Auto

NAJA Holds 3rd Auto Industry Summit July 30 on Nigeria’s EV, CNG Future

Published

2 days ago

June 25, 2026

Trends Admin

NAJA Holds 3rd Auto Industry Summit July 30 on Nigeria’s EV, CNG Future

As Nigeria navigates the high-cost reality of post-subsidy transportation, the path toward a more affordable and sustainable future is coming into focus. On July 30, 2026, industry titans and top policymakers will converge at the Radisson Hotel, Ikeja, for the 3rd Nigeria Auto Industry Summit, aiming to turn the promise of electric vehicles and CNG into a practical, everyday reality for Nigerians.

The summit, scheduled for the Radisson Hotel, Ikeja, Lagos, is themed: “Nigeria’s Clean Mobility Future: The EV and CNG Journey Under the Bola Tinubu Administration”, according to a press release by the summit organising committee.

It specifically stated that the high-level forum would bring together policymakers, regulators, vehicle manufacturers, energy providers, transport operators, financiers and industry experts to assess the progress, opportunities and challenges associated with the adoption of Electric Vehicles (EVs) and Compressed Natural Gas (CNG) vehicles in Nigeria.

Chairman of NAJA, Theodore Opara, said the summit is designed to provide practical solutions for reducing transportation costs, strengthening energy security and accelerating economic growth through clean mobility initiatives.

“Nigeria possesses one of Africa’s largest gas reserves. Expanding CNG infrastructure can provide a practical bridge towards a cleaner mobility future while supporting energy security and reducing pressure on foreign exchange used for fuel imports,” he said.

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He noted that collaboration among government agencies, vehicle manufacturers, financial institutions and transport operators would be essential if Nigeria is to achieve affordable, environmentally friendly and sustainable transportation.

Among key speakers expected at the event are the Chairman, Presidential Initiative on Compressed Natural Gas and Electric Vehicles (Pi – CNG and EV); Barrister Ismael Ahmed; Director-General of the National Automotive Design and Development Council (NADDC), Joseph Osanipin, and the Corps Marshal of the Federal Road Safety Corps (FRSC), Shehu Mohammed, with other leading stakeholders from the public and private sectors.

Participants will examine critical issues including policy implementation, infrastructure development, financing models, safety standards, local vehicle assembly, investment opportunities and consumer adoption strategies needed to drive Nigeria’s clean-energy transportation agenda.

The summit comes amid growing government support for alternative fuels following the removal of fuel subsidies and the rollout of initiatives by the PCNGI which have placed EV and CNG mobility at the forefront of national economic and environmental discussions.

According to Opara, deliberations will also focus on expanding charging and refuelling infrastructure, promoting environmental sustainability and leveraging the media to accelerate public awareness of cleaner transportation technologies.

Chairman of the Summit Planning Committee, Rasheed Bisiriyu, said industry leaders would present case studies from emerging EV and CNG projects while outlining strategies for overcoming challenges such as high vehicle acquisition costs, inadequate infrastructure and limited technical expertise.

He noted that the successful development of a robust EV and CNG ecosystem could significantly lower logistics and transportation costs, improve public mobility and reduce pressure on foreign exchange spent on fuel imports.

“Government incentives alone will not guarantee success. Investment in charging stations, CNG conversion centres, maintenance facilities and technical training will determine how quickly adoption can scale nationwide,” he explained.

With rising public interest in alternative-energy vehicles and increasing policy support from the Federal Government, the 3rd NAJA Auto Summit is expected to provide a roadmap for advancing Nigeria’s clean mobility transition and making transportation more affordable for citizens.

NAJA Holds 3rd Auto Industry Summit July 30 on Nigeria’s EV, CNG Future

Business

US-Iran Ceasefire: Why Petrol Still Costs N1,200/Litre Despite Crude Crash to $70

Published

2 days ago

June 25, 2026

Trends Admin

Motorists demand cheaper petrol as global crude oil prices fall

US-Iran Ceasefire: Why Petrol Still Costs N1,200/Litre Despite Crude Crash to $70

The sharp decline in global crude oil prices following the ceasefire agreement that ended months of hostilities between the United States and Iran has renewed questions over why petrol prices in Nigeria remain around N1,200 per litre despite the easing of pressures that had pushed up energy costs during the conflict. Brent crude, the international benchmark against which Nigeria’s Bonny Light is priced, has fallen to around $70 per barrel from a peak of about $126 recorded during the height of the conflict, representing a decline of more than 42 per cent. The latest oil price slump has effectively erased the war premium that had built into the market amid fears that hostilities could disrupt supplies passing through the Strait of Hormuz, a critical shipping route through which nearly one-fifth of the world’s crude and liquefied natural gas shipments transit. The three-month conflict, which began on February 28, 2026, sent shockwaves through global energy markets as traders feared a blockade of the strait and a possible escalation involving Gulf producers. The uncertainty pushed crude prices sharply higher, with Brent crude climbing from around $68 per barrel before the crisis to above $120 and peaking near $126 per barrel in April. The rise translated into higher prices for refined products worldwide and put upward pressure on petrol prices in importing countries, including Nigeria. Before the outbreak of the conflict, petrol sold for between N830 and N900 per litre across much of Nigeria. As crude prices surged by approximately 85 per cent, pump prices climbed to around N1,360 per litre, representing an increase of about 54 per cent. However, while crude oil has surrendered much of its war-induced gains, domestic petrol prices have been far slower to follow suit.

Analysts say the discrepancy highlights an asymmetry that has long characterized fuel markets globally—what experts describe as the “rockets and feathers” effect, where prices rise like rockets when crude increases but descend like feathers when oil prices retreat. The de-escalation of tensions and diplomatic efforts between Washington and Tehran have eased concerns over supply disruptions, leading to a broad sell-off in oil markets. Additional downward pressure came from expectations that Iranian exports could return more fully to international markets and that shipping through the Strait of Hormuz would normalize. Concerns about weaker global demand and rising output from non-OPEC producers have also contributed to the decline. Based on analysis of the price transmission mechanism, when crude prices climbed from $68 to $126 per barrel, petrol prices rose from roughly N850 to N1,300 per litre. Using the same mechanism, the current decline in crude prices of more than 41 per cent should ordinarily place petrol prices between N900 and N1,000 per litre. However, analysts caution that crude oil accounts for only part of the final cost of petrol. Exchange rates, shipping charges, storage costs, transportation expenses, dealer margins, and taxes all influence the retail price. Even after accounting for these variables, energy experts say Premium Motor Spirit should realistically retail around N1,000 per litre.

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Following the de-escalation of tensions, the Dangote Petroleum Refinery cut its petrol gantry price by N75 per litre from N1,250 to N1,175, effective June 16, and also lowered diesel and aviation fuel prices. The refinery attributed the reduction to improved market fundamentals following the de-escalation of tensions in the Middle East. It also lowered its coastal supply price from N1,595,790 to N1,495,215 per metric tonne, reducing procurement costs for marketers. The move strengthened expectations that pump prices would decline further. However, many Nigerians argued that the reductions did not fully reflect the sharp decline in crude oil prices. A source within the Dangote Group noted that the refinery was still observing market developments while processing crude purchased during the crisis period, adding that prices could still drop to as low as N900 per litre, “but we still have the expensive crude in our tanks.”

The National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Chinedu Ukadike, explained that lower ex-depot prices are already easing pressure on marketers and improving their capacity to stock products. According to him, the decline in supply costs has reduced the amount of working capital required to sustain operations. Ukadike noted that marketers who previously struggled to finance product purchases would now be able to increase stock levels, thereby improving product availability across retail outlets. Ukadike also dismissed concerns that marketers could hoard products in anticipation of future price increases, noting that intense competition within the deregulated downstream sector would make such practices difficult to sustain. “Competition will force marketers to sell at prevailing market prices. Nobody can afford to hold products indefinitely because other operators will undercut them,” he said. He projected that petrol could sell for between N1,200 and N1,250 per litre in Lagos once new stock enters the market, while prices may remain slightly higher in other parts of the country due to transportation costs. Ukadike urged consumers to be patient, noting that immediate reductions would expose marketers to losses on existing stock.

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The issue is not peculiar to Nigeria. In the United States, President Donald Trump has ordered the Department of Justice to investigate major oil companies over allegations that they are failing to reduce pump prices in line with falling crude oil costs. In a post on Truth Social, Trump accused oil companies of exploiting consumers, writing: “The big Oil Companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil. Those prices are dropping like a rock! In other words, customers are being ‘gouged’.” The American Petroleum Institute rejected allegations of price manipulation, arguing that retail fuel prices do not instantly mirror changes in crude oil prices because refining costs, inventories and supply chain dynamics influence final prices. Analysts describe this phenomenon as the “rockets and feathers” effect.

Industry observers say increased liquidity among marketers could intensify competition and ultimately accelerate the transmission of lower crude prices to consumers. They note that the growing influence of Dangote Refinery, coupled with increasing rivalry among importers and independent marketers, is changing pricing dynamics in the downstream sector. Some analysts believe that if Brent crude remains below $75 per barrel and geopolitical stability is sustained, petrol prices could gradually decline below N1,000 per litre and possibly approach N900 per litre in the coming days. The expected decline could provide much-needed relief for households and businesses battling elevated transportation and energy costs. Since the removal of subsidy by President Bola Tinubu in May 2023, petrol prices have remained one of the major drivers of inflation, affecting food prices, manufacturing costs and the overall cost of living. The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has called on refiners, depot owners, and importers to reduce fuel prices following the decline in global crude prices, urging the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to continue issuing import licences to qualified marketers to encourage competition. However, experts caution that the ceasefire is not yet permanent—a 60-day extension has been agreed while negotiations continue over Iran’s nuclear programme. Market observers also note that the restoration of full oil flows through the Strait of Hormuz may take months, as vessel operators and insurers remain cautious, preferring to observe sustained safe transits before re-engaging the route.