Lagos — A business environment report of the Lagos Chamber of Commerce and Industry has said that many firms in the country have lost 30 percent of their sales because of insecurity in the North, which denied them access to the region.
The report, which was prepared in the second quarter of the year, also said manufacturing firms sourcing raw materials from the North are now facing serious challenges, while projects funded by banks in the affected states are at risk.
According to the report, the hospitality industry in the affected states has been paralyzed just as many investors, especially small and medium enterprises are relocating to other states.
The report said: "Many bank branches have been closed, while the working hours for others have been drastically reduced. Sales representatives of many companies have fled the affected states. Many projects under construction in the North have been abandoned while ecurity budgets have been scaled up by many firms."
The report also said during the second quarter of the year, investors across sectors expressed concern over the increasing difficulty in accessing credit from the banks.
The problem is more profound for investors in the real sector of the economy which, it said, was amplified by growing intolerance of banks for the manufacturing sector.
It said the monetary policy tightening of the Central Bank of Nigeria has pushed up cost of fund.
It further said: "The summary is that the economy is in a quandary as far as credit conditions for investors are concerned. It will be difficult to stimulate job creating growth if this situation persists. This condition was compounded by the fact that government treasury bills and bonds have returns of between 13-16 percent.
The consequence is that available funds have been mopped up by government. It is clearly more attractive now to invest in government securities than invest in ventures that would create jobs. Even banks now would rather buy treasury bills and government bonds than give loans to investors."