The Lagos Chamber of Commerce and Industry (LCCI) has warned businesses in Nigeria to prepare for higher interest rate challenges in 2025 as the Central Bank of Nigeria (CBN’s) policies failed to tame inflation.
The Director-General of the LCCI, Dr. Chinyere Almona, said this in a statement issued on Tuesday in reaction to the latest inflation figures released by the National Bureau of Statistics (NBS).
Almona said that the persistent rise in inflation, reaching a 26-year record high of 34.60% in November, is fuelling a tense business environment as elevated prices constrained various business operations.
More stress for business
While expressing concerns about the implications of the rising inflation on businesses, the D-G said Nigerian businesses will experience more stress in the new year.
“With the raging inflation rate, the unsuccessful attempt of the Central Bank to reduce the currency in circulation, and approaching a high-spending festive period, we are set to contend with even higher interest rates.
“The high inflation rate has far-reaching implications; one of its primary effects is reduced consumer spending.
“High food and core inflation erode disposable income, reducing demand for non-essential goods and services and businesses also face increased business costs and shrinking profit margins,” she stated.
Government reform
The LCCI DG, however, urged the Federal Government to sustain its reforms, adding that it has the potentials to pull through critical deliverables for the economy to return to a growth path.
- Almona said that while the country witnessed a weak impact of interest rates curbing inflation, a better performance of the reform measures implemented is expected to boost production.
“While we are all confronted with a weak impact of interest rates on curbing inflation, we see a better performance of the reform measures implemented to boost production,” Almona said.
- The LCCI D-G said that there is hope that the country would witness more impact of the reforms on fundamental indicators like inflation, interest rates, and exchange rates.
- She also said that a coordinated effort was required to drive oil production to earn more foreign exchange needed to defend naira in the short term.
Almona further advised that the new investments recently entering the oil fields should be well supported with a sound regulatory environment to sustain and attract more.
“The renewed fight against terrorism, kidnapping, and all other vices that make our farms unsafe must be sustained with more funding.
“Nigeria must engage the use of intelligence and surveillance technology, and the constitutional amendment to enable multi-level policing,” she said.
What you should know
Data released by the NBS on Monday revealed that Nigeria’s headline inflation rose to 34.60% in November 2024 reflecting a further surge in the costs of goods and services across the country.
- This shows that the headline inflation rose by 0.72% from 33.88% in October.
- Food inflation rate in November 2024 rose by 7.08% to 39.93% from 32.84% in November 2023, on a year-on-year basis.
- The year-on-year rise in Food inflation was caused by increases in the prices of various food items such as Yam, potatoes, Maize Grains, Rice, Palm Oil, and Vegetable Oil, among others.
The core inflation, which excludes the prices of volatile agricultural produce and energy stood at 28.75% in November 2024 on a year-on-year basis, rising by 6.36% from 22.38% recorded in November 2023.
