Dike Onwuamaeze
The immediate past President of Nigeria Employers' Consultative Association (NECA), Mr. Taiwo Adeniyi, has lamented that private businesses in Nigeria are besetted with innumerable challenges that have pushed many of them to mere subsistence.
Adeniyi, who expressed these views at the 67th annual general meeting of NECA, added that 2023 turned out to be a rather difficult year for businesses due to multidimensional challenges carried over from 2022
He said: "It is no longer a secret that private businesses in the economy are beset with innumerable challenges, pushing many to the realm of mere subsistence.
"A good number of these private businesses continue to exist due to sheer determination and doggedness of the owners and investors, who are committed to supporting the economy."
Although he commended the federal government for its various policies aimed at improving the operating environment, Adeniji observed that "hastily implemented government policies without corresponding plan to mitigate the policies' negative effects at the beginning of this sdministration also contributed to the struggles that businesses faced in 2023.
"We are all aware of the major policy shifts undertaken by the government in 2023 and the adverse impacts they have had across various sectors.
"The combination of fuel subsidy removal, (which we had, in fact, clamoured for the past 10 years) and exchange rate liberalisation has significantly created market distortions and increased the cost of doing business, leading to a contraction in business activities since mid-2023."
He added that unfortunately, economic indicators reported for 2024 have not shown any improvement from what obtained in 2023.
He said, "Among the triadic rates, inflation rate indicates a worrisome rate of 33.69 per cent; maximum lending rate stands at 29.49 per cent; and foreign exchange rate hovering around N1,400 - N1,500 per United States' Dollars.
"With these triadic rates, in conjunction with other challenges facing businesses in the country, the last one year has been nothing but challenging."
According to him, it is worthy of note that most of the policies of the ex-President Muhammadu Buhari's administration laid the foundation for the challenges we currently face as business community.
"We were faced with a difficult choice of either introducing urgent reforms or continue in the path of unsustainability. Thus, we commend the recent national policies and measures, which resonated with the long-standing advocacy thrusts of our association.
"However, we believe that the success of the policies would be better achieved through adequate consultation with relevant stakeholders in the economy, complemented with robust and focused implementation.
"While we commend the removal of the fuel subsidy, we, however, believed that serious measures should have been put in place to mitigate the immediate negative impacts on household income, the economy and businesses in general.
"Even today, businesses continue to suffer the effects of fuel subsidy removal, despite the various Government palliatives, which have not been entirely effective."
Commenting on the unification of the foreign exchange rates, which aimed to consolidating various exchange rates into single rate, Adeniyi pointed out that exchange rate unification is distinct from exchange rate liberalisation.
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"The forex liberalisation policy implemented by the government, while it is necessary, is one of the reasons for the current economic challenges in the country, particularly affecting businesses.
"This policy has severely impacted businesses by causing a dramatic increase in the cost of importing raw materials and machinery not available domestically.
"It created a reverse multiplier effect that has permeated almost all sectors of the economy, eroding previous gains. Many companies have lost their balance sheets, investments, profits, and savings due to this policy.
"A significant number of multinationals and large manufacturing businesses have either moved some of their production to other countries, exited the country entirely, or closed operations. Small and Medium Scale enterprises have simply faded into obscurity, following this abrasive exchange rate liberalisation policy, "he said.
