The Lagos Chamber of Commerce and Industry (LCCI) has warned that the $2.2 billion fresh loan sought by the federal government has potential to weaken the state of critical infrastructure amid looming debt sustainability issues.
LCCI’s director-general, Chinyere Almona, in a statement, cautioned that continued borrowing without adequate safeguards risks debt servicing costs surpassing capital expenditure allocations in the 2025 federal budget.
Almona said the concerns were driven by the weak economic fundamentals we see in the economy today and the lack of understanding of how we intend to navigate through these challenges to a better economy in the near term.
“With an estimated debt-to-GDP ratio of above 50%, our debt servicing expenses set to swallow our capital expenditure, and Nigeria owing about $17billion and the 3rd highest debtor to the International Development Agency (IDA).
“The LCCI is taking the responsibility to once again warn about imminent debt sustainability issues and how that may further weaken the state of critical infrastructure in the country.
“The Chamber has always advised against solely using debt financing without considering other options to fund budget deficits.
“A critical perspective of further borrowing is the risk to losing steam on infrastructure financing as debt servicing alone may rise above what is set aside for capital expenditure in the 2025 federal budget,” the statement read.
Almona expressed concern over the potential impact of external currency shocks stemming from the depreciation of the naira against the dollar during the servicing of accumulated debts, noting that the Central Bank of Nigeria (CBN) has been struggling to boost foreign exchange supply to strengthen the naira but to no avail.
The director-general added that, given the challenges, the government’s borrowing appetite must be carefully controlled.
To address the issues, the LCCI boss advised the government to prioritise transparency and accountability in the use of borrowed funds.
