83% of Businesses May Not Survive COVID-19 Crisis—LCCI

By Adedapo Adesanya

The Lagos Chamber of Commerce and Industry (LCCI) has said that up to 83 percent of businesses are at risk and will need to slash salaries and layoff workers in order to stay afloat after the pandemic.

President of LCCI, Mrs Tobi Mabogunje, said this on Tuesday, adding that policymakers and the organized private sector need to implement an urgent rescue package for businesses in the formal and informal sector.

“Although government have rolled out raft of relief measures to support businesses, we observe that these packages are tilted more towards formal establishments while micro and small-scale enterprises as well as informal businesses have been largely left out,” Mrs Mabogunje said.

Suggesting policy actions to be taken by the government, she said companies in the healthcare, hospitality, aviation and agro-processing sectors should be granted tax break for one year.

“Temporary suspension of 50 percent increase in VAT rate till year end. Also, P.A.Y.E should be suspended for the next six months. This would help boost the purchasing power and aggregate demand, thereby stimulating the economy.

“Agro-processing companies should enjoy import waivers for the next one year; and commercial banks are implored to offer reprieve to businesses and corporates indebted to them.

“The reprieve could be in form of loan moratorium and restructuring. We urge the CBN to review the cash reserve ratio downwards to 20 percent from the current 27.5 percent, to enable commercial banks have more liquidity to support businesses,” she suggested.

Mrs Mabogunje also urged the government to support airlines to pay for operational cost including international lease rental for aircrafts and fully implement the executive order on removal of VAT from air transportation.

According to the LCCI President, the COVID-19 pandemic has presented some economic opportunities in some areas including import substitution, creativity and innovation, and the non-oil export.

She added that there are also opportunities for productivity and economic optimization abound in sectors like healthcare, agriculture and food, manufacturing, information communication technology (ICT), amongst others.