Business leaders, once again, are making calls about the structural flaws that are keeping the largest economy in Africa, back. The Lagos Chamber of Commerce and Industry (LCCI) has urged the Federal Government of Nigeria to undertake some urgent reforms to unlock growth in the manufacturing sector of the country.
In a speech to the quarterly economic briefing held by the Chamber, LCCI President Leye Kupoluyi cautioned that systemic fiscal inefficiencies were still taking a toll on the productivity of industry.
His concerns are against the backdrop of increasing criticism of the Nigerian system of public finance, especially regarding the failure to implement its budgets and its implications on the provision of infrastructure.
One of the greatest problems as Kupoluyi puts it is that Nigeria has a problem with its budget implementation. Stagnation in the release of funds and red tape have left trillions of naira in planned capital projects in the stagnation phase- a repeat of previous concerns that the number of abandoned or unfinished government projects nationwide was increasing.
Irrespective of these failures, the manufacturing industry is beginning to indicate a sense of strength. The LCCI has shown that manufacturers will contribute ₦1.17 trillion in Value Added Tax (VAT) in 2025, and 881.29 billion in Company Income Tax (CIT).
This is indicative of a greater transition towards non-oil revenue in line with the current trends in terms of Nigeria becoming more dependent on tax revenue as oil revenues vary.
Nonetheless, the increase in production costs is undermining growth.
Energy is one of the most topical problems. The unreliable electricity supply has also forced manufacturers to rely on heavy use of diesel-powered generators forcing the cost of operation to shoot up, a situation that has been widely attributed to continued reports of how power shortage continues to cripple the Nigerian industries.
The problem is being further exacerbated by inefficiencies in trade and logistics. Elevated port charges on industrial imports and the high levels of chronic delays at the ports in Nigeria and their effects on business operations continue to shake supply chains.
Kupoluyi cautioned that it is not only that these systemic challenges are slowing growth, but that it is threatening employment and long-term investment.
He singled out the ripple effects of unpaid government obligations with the large sums owed to contractors being forced to cut back on operations, withhold salaries, or shut down altogether, reflecting the concerns over the growing debt owed to contractors and its impact on the construction industry.
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In the case of the LCCI the solution is in an organized reform agenda. The Chamber is also pushing towards greater fiscal discipline, quicker implementation of capital budget, middle-level tariffs on industry inputs and simplified operations of the ports.
It also emphasized the need to make long-term investments into energy infrastructure, in particular, renewable energy solutions that would help decrease the reliance on the expensive generation based on fuels.
There is a lot at stake. Nigeria will find its ability to compete heavily dependent on how fast it can correct these structural gaps, particularly in the context of which African economies are best placed to be able to benefit through the trade pact.
So far, the message of the private sector of Nigeria is simple: the manufacturing sector is increasingly contributing, but unless there are decisive reforms, that contribution may never translate into a real industrial transformation.
