The Lagos Chamber of Commerce & Industry (LCCI) has warned against the insatiable appetite of Nigeria for loans and it’s poor use of the facilities.
Its Director-General, Dr Chinyere Almona in a statement raised concerns about the efficiency of fund allocation and utilization, given that only 16 per cent of previously approved World Bank loans under the current administration have been disbursed.
She stated that this raises questions about the absorptive capacity of relevant institutions and the risk of funds being underutilized or mismanaged.
Acknowledging the recent approval of a $500 million loan by the World Bank to Nigeria under the Community Action for Resilience and Economic Stimulus Program, she argued that the development comes at a crucial time as the nation grapples with mounting economic challenges, including inflationary pressures, declining purchasing power, and an increasingly burdensome debt profile.
She said: “While this intervention is aimed at supporting poor and vulnerable households and firms, it is imperative that its broader implications on businesses and the economy posed a concern to the business community.”
According to her, the loan’s direct impact on small businesses and vulnerable populations, through grants and livelihood support, presents a potential short-term stimulus to enhance food security and community resilience, mitigating the effects of economic hardship at the grassroots level. She however advised that the broader macroeconomic effects must be carefully considered.
Almona explained that Nigeria’s rising debt burden is a growing concern, particularly given the slow pace of disbursement and implementation of previously approved loans.
“With the World Bank’s share of Nigeria’s external debt reaching $17.32 billion, the question of debt sustainability becomes increasingly pressing. If not efficiently managed, additional borrowing could exacerbate fiscal vulnerabilities, weaken investor confidence, and limit the government’s ability to execute long-term economic reforms,” she said.
According to the LCCI boss, from a business perspective, while targeted stimulus programs can offer temporary relief, structural economic challenges such as inadequate infrastructure, multiple taxation, and forex volatility remain unaddressed. Businesses require a stable operating environment, and while social welfare programs are essential, they must be complemented by policies that foster productivity, investment, and job creation she posited.
To maximize the benefits of this loan while mitigating associated risks, she recommended a transparent and efficient disbursement mechanism that ensures funds reach the intended beneficiaries, particularly small businesses and vulnerable communities. She also called for a robust monitoring and evaluation framework to be established to track the impact of these funds and prevent misallocation.
Almona advised the Federal Government to adopt a prudent debt management strategy that prioritizes concessional financing and ensures that borrowed funds are tied to projects with clear economic returns. “Strengthening domestic revenue generation through tax reforms and expanding the productive base of the economy can reduce reliance on external borrowing. Beyond short-term palliatives, the government must implement structural reforms that create a conducive business environment,” she explained.
Policies should focus on improving infrastructure, ensuring policy consistency, and addressing forex challenges to support private sector growth and attract investment, she stressed.
She maintained that LCCI stands on the point that a more impactful stimulus for economic growth is that the government solves the perennial problem of poor power supply and high cost of energy and create an enabling business environment where small businesses can thrive, creating jobs and generating revenues for the government. According to her while the World Bank loan offers immediate relief, long-term economic resilience can only be achieved through a comprehensive strategy that fosters economic diversification, enhances productivity, and strengthens institutional frameworks for effective governance.
