The consensus among Nigeria’s private sector is clear and damning: President Bola Tinubu’s economic policies are decimating businesses, causing widespread job losses, exacerbating poverty, and deepening national misery. The Nigeria Employers’ Consultative Association (NECA), Manufacturers Association of Nigeria (MAN), and the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) have all sounded the alarm. It is imperative that the government change course before it is too late.
The policy shifts enacted in 2023, particularly the removal of fuel subsidies and the liberalization of the exchange rate, have created market distortions and increased the cost of doing business. These changes, implemented without adequate measures to mitigate their negative impacts, have led to a contraction in business activities and left many private enterprises struggling for survival. Taiwo Adeniyi, President of NECA, has lamented that the economy's private businesses are now operating on sheer determination and doggedness, rather than any conducive policy environment.
The high cost of doing business in Nigeria has been exacerbated by the depreciation of the naira, which has skyrocketed from N460 to N1600 per US dollar in the official market. This has significantly raised import costs and depleted the working capital of businesses. The upward review of Customs rates for cargo clearance has further strained businesses, driving up production costs and commodity prices while reducing household purchasing power. These pressures are stifling private businesses and contributing to a general economic contraction.
Moreover, the proliferation of unjustifiable regulations and taxes is creating an even more hostile environment for businesses. NECA has pointed out that recent regulations, such as the temporary ban on small packs of alcoholic beverages by NAFDAC, have caused significant anxiety and disruption. These regulations often appear to be implemented without proper consultation with private sector stakeholders, adding to the unpredictability and instability that businesses must navigate.
The manufacturing sector, represented by MAN, has highlighted the additional challenges of foreign exchange volatility, inadequate power supply, and high inflation. These issues have driven up production and distribution costs by over 20 percent in the first quarter of 2024 alone. The government’s harsh economic reforms have compounded these longstanding problems, leading to a further decline in productivity and economic performance.
The NACCIMA has also raised concerns about the rising cost of doing business and the aggressive pursuit of tax policies. With interest rates soaring, many businesses, especially MSMEs, are unable to secure the financing they need to operate and grow. This, coupled with decreasing production and rising unemployment, creates a vicious cycle of economic decline and social instability.
The Nigeria Labour Congress (NLC) has joined the chorus of criticism, warning that the government's failure to address these issues could lead to widespread unrest. Joe Ajaero, President of the NLC, has emphasized the need for fair wages to boost worker productivity and stimulate economic growth. The call for a national minimum wage that can lift workers out of poverty is not just a matter of social justice but an economic necessity.
In light of these multifaceted crises, it is clear that the current economic policies are unsustainable. The government must embark on a more balanced approach that supports domestic production, ensures fair and stable exchange rates, and provides a conducive environment for businesses to thrive. Regulatory and tax policies must be crafted in close consultation with the private sector to avoid unnecessary disruptions and foster a climate of stability and growth.
Failure to act decisively and change course will only deepen Nigeria’s economic woes and exacerbate social tensions. It is time for President Bola Tinubu and his administration to listen to the voices of the private sector, labour organizations, and economic experts. The future of Nigeria’s economy, and the well-being of its citizens, depend on it.
