Economy
LCCI Explains Reason For Nigeria’s Economic Woes
By Dipo Olowookere
The Lagos Chamber of Commerce and Industry (LCCI) has stated why Nigeria is presently going through economic challenges, saying it is due to lack of investors’ confidence.
Director General of LCCI, Muda Lawal, said at the weekend in Lagos that the inability of the Federal Government to regain the confidence of investors, both local and foreign, has resulted in the uncertainty in foreign exchange market.
“Regrettably, the instability and inconsistency in the foreign exchange management policy have been complicating matters.
“The economy has a major structural defect of being heavily import-dependent. This cannot be fixed in the short term.
“Therefore, the shocks arising from the collapse of oil price and the corresponding depreciation in exchange rate of the naira were inevitable. But the policy responses could make a whole lot of difference in the profundity of the impacts of these shocks on the economy and the citizens,” Mr Lawal said.
According to him, historically, autonomous supply of foreign exchange had been higher than the Central Bank of Nigeria (CBN) supply, adding that, “This has virtually dried up because of the collapse of investors’ confidence. Of course, the plunge in crude oil price was a major causal factor. But perhaps the bigger issue is the unstable and inconsistent foreign exchange policy which has continued to create uncertainty in the forex market, thus deepening the liquidity problems.
“For an economy that is in fragile mode and for an economy that is highly exchange rate sensitive, policy actions and pronouncements that could impact the market should be done with utmost caution and care.
“This is imperative to avoid unintended consequences which may hurt the economy in very profound ways. Such is the recent suspension of nine banks from the forex market. These are shocks that the economy can ill afford at this time.
“It is right to penalize banks for proven infractions, but this should be done in a way to minimize collateral effects on investors and the larger economy, given the high sensitivity of the economy to developments in the foreign exchange market.
“This is even more so at a time when the economy is grappling with a major confidence issue in the forex market. There should be more creative and less disruptive ways of imposing such sanctions.
“Many innocent investors and citizens are already bearing the brunt of this action given the unprecedented hike in naira exchange rate.
“Ongoing forex transactions in the affected banks have been stalled with serious consequences for investors,” he emphasized.
Mr Lawal stated further that, “The second major policy development that could pose a risk to the stability and transparency of the foreign exchange market is the recent policy on sectoral allocation of foreign exchange.
“The CBN circular did not indicate any Code to properly define what would qualify as raw materials and machineries. The first concern will be that of definition. The result of this will be discretionary interpretation by the banks as what qualifies as raw materials and machineries.
“The second major concern is the potential crowding out of other sectors in the forex market. Sectors outside the manufacturing sector account for over 85 per cent of the country’s GDP and jobs in the economy. They all have varying import contents in their operations.
“Therefore, if a minimum of 60 per cent of all forex allocation goes to manufacturing for raw materials and machineries; what happens to other sectors? Currently petroleum products imports are priority and could take another 25 per cent of foreign exchange.
“This implies that the rest of the sectors would settle for the balance of 15 per cent. This is clearly not a sustainable framework.”
Such policy tools, he said, include import tariffs, taxation and other incentives.
He said further that, “Above all, there is need to upscale infrastructure investments very urgently. These are the more effective ways to fix the structural problems of the economy than monetary policy.
“What is key for monetary authorities is to ensure that financial markets are efficient and transparent; and to ensure that there is discipline among players.
“This is the time to seek quick wins. One of the quick wins is to review current trade policy measures in order to reduce the pressure of cost on investors and citizens. The exchange rate depreciation has an inherent structural correction effects on the economy.
“It naturally rewards inward looking initiatives and resource based enterprises. It is too much of a shock on the economy to combine high import duty regimes with a weak and rapidly depreciating currency.
“Conversion of import values at current exchange rates for purposes of computation of import duty and other port charges have escalated costs beyond measure and had paralyzed many businesses. Ensuring a balance between the interests of investors, producers, consumers and the welfare of citizens is a strategic imperative at this time.”
By Adedapo Adesanya
Crude production under the collective Organisation of the Petroleum Exporting Countries (OPEC ) fell in May to its lowest level in at least 37 years as the blockade of Iran by the United States and disruptions in the Persian Gulf, continued to limit output.
According to a Bloomberg survey released on Friday, output from the organisation’s 11 current members, including Nigeria, dropped by 1.22 million barrels per day to 16.33 million barrels per day last month.
Iran accounted for more than half of the decline. The data excludes the United Arab Emirates (UAE), which departed the cartel last month after six decades of membership.
War between a US-Israeli alliance and Iran has reduced oil supplies from the Middle East, largely closing the Strait of Hormuz waterway. Saudi Arabia, Iraq, the UAE and Kuwait have been forced to cut crude production. Iranian shipments face additional pressure following a US blockade of its ports imposed in mid-April.
Iranian output fell by 710,000 barrels per day to a five-year low of 2.34 million barrels per day in May, the survey showed. Central Command reported that US forces have redirected 127 commercial vessels to enforce the blockade of all maritime traffic entering and exiting Iranian ports.
Kuwait recorded the second-largest decline last month, with production falling by 310,000 barrels per day to 490,000 barrels per day, less than one-fifth of pre-war levels. Saudi Arabia, the group’s leader, saw output decrease by 240,000 barrels per day to 6.57 million barrels per day.
The production reductions have not prevented OPEC and its allies from raising quotas over recent months, continuing a year-long process of restoring output halted several years ago.
This comes ahead of a meeting scheduled to be held on Sunday, June 7, where a sub-group of seven members is expected to increase targets by 188,000 barrels again in July. The session is one of four online meetings OPEC and its partners plan to hold that day.
Delegates indicated the alliance has plans for two additional monthly quota increases in August and September. UAE output rose by 300,000 barrels per day to 2.44 million barrels per day in May, according to the survey.
By Aduragbemi Omiyale
The 2025 third quarter Budget Implementation Report from the Budget Office of the Federation has shown that the federal government exceeded the funds allocation for repayment of debts for the first nine months of the fiscal year by about 18 per cent.
In a report by Punch, the sum of N10.74 trillion was budgeted for debt servicing between January and September 2025, but the government used N12.63 trillion for the purpose, N1.90 trillion or 17.65 per cent more than the allocation for the year.
The funds were spent on domestic debts, foreign debts and sinking fund by the central government in nine months.
Business Post reports that for the whole year, the amount approved by the National Assembly and signed by President Bola Tinubu for debt repayments was N14.31 trillion.
Looking at the nine-month figures, domestic debt service gulped N6.23 trillion, exceeding its N5.39 trillion provision, while foreign debt service was N6.30 trillion versus the budget provision of N5.06 trillion.
According to the report, the figures indicated that 67.2 per cent of the federal government’s retained revenue of N18.63 trillion was spent on debt service in the first nine months of 2025. When the sinking fund is included, debt-related payments consumed about 67.8 per cent of revenue.
It was also observed that aggregate federal government revenue underperformed the budget by N12.03 trillion or 39.24 per cent, as actual revenue of N18.63 trillion fell short of the N30.67 trillion projected for the first three quarters.
In the third quarter alone, the government generated N7.70 trillion versus the quarterly target of N10.22 trillion as a result of persistent oil revenue shortfalls, despite stronger non-oil collections.
The debt burden also crowded out capital spending, as total capital expenditure was N3.10 trillion in the first nine months compared with the N17.58 trillion budgeted for the period, indicating that actual debt-related payments were more than four times capital expenditure.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a loss of 1.13 per cent on Thursday, June 4, shrinking the market capitalisation by N30.03 billion to N2.630 trillion from N2.660 trillion on Wednesday.
Similarly, this brought down the NASD Unlisted Security Index (NSI) by 50.19 points to 4,396.08 points from the 4,446.27 points recorded a day earlier.
The loss was influenced by the overpowering of the bulls by the bears, after the bourse closed with two price gainers and three price losers, led by FrieslandCampina Wamco Nigeria Plc, which slumped by N20.03 to sell at N190.38 per unit compared with midweek’s N210.41 per unit. Food Concepts Plc declined by 25 Kobo to trade at N2.50 per share versus the previous day’s N3.00 per share, and Acorn Petroleum Plc crumbled by 2 Kobo to end at N1.32 per unit, in contrast to the preceding session’s N1.34 per unit.
For the gainers, Central Securities Clearing System (CSCS) Plc added N2.93 to close at N78.34 per share compared with the previous price of N75.41 per share, and Afriland Properties Plc gained 80 Kobo to settle at N16.80 per unit versus N16.00 per unit.
There was a slip in the volume of transactions yesterday by 46.8 per cent to 280,714 units from 527,221 units, as the value of trades dropped 66.5 per cent to N21.8 million from the preceding session’s N64.2 million, and the number of deals fell by 8.7 per cent to 42 deals from 46 deals.
Great Nigeria Insurance (GNI) Plc ended the session as the most traded stock by value on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 64.7 million units traded for N4.4 billion.
GNI Plc also finished the day as the most traded stock by volume on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
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