The Lagos Chamber of Commerce and Industry (LCCI) has expressed a cautiously optimistic outlook for the Nigerian economy in 2025, predicated on the government’s ability to effectively implement critical reforms and address persistent structural bottlenecks. The Chamber anticipates a potential easing of interest rates in the coming months due to projected declines in inflation. This projection stems from the belief that the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) will likely adopt a more accommodative monetary policy stance as inflationary pressures subside. However, the LCCI emphasizes the importance of sustained government focus on curbing inflation, cautioning against complacency even as positive trends emerge. The Chamber’s optimism is tempered by concerns about the impact of high interest rates on the private sector, the engine of economic growth.
The prevailing high interest rate environment, characterized by a 27.5% monetary policy rate, poses significant challenges to businesses. This restrictive monetary policy has led to increased borrowing costs, discouraged private investment, and diverted funds towards government treasuries. The LCCI argues that relying solely on interest rate hikes to combat inflation is insufficient and unsustainable. Instead, the Chamber advocates for a more comprehensive approach that addresses underlying issues in the real sector, particularly in agriculture and manufacturing. These sectors are crucial for boosting domestic production, enhancing food security, and creating jobs. Targeted government support for these sectors is seen as essential for achieving sustainable economic growth and mitigating inflationary pressures in the long term.
Inflation, a major concern for the Nigerian economy, reached a near 30-year high of 34.8% in December 2024. The LCCI attributes this surge to a confluence of factors, including persistent insecurity, escalating transport costs, and the adverse effects of climate change. These factors disrupt supply chains, increase production costs, and limit access to markets, ultimately contributing to rising prices. Despite these challenges, the LCCI remains optimistic about the potential impact of ongoing policy reforms. The Chamber believes that a harmonized approach, integrating fiscal and monetary policies, can effectively tackle agricultural production costs and address security concerns, paving the way for a decline in inflationary pressures. This integrated approach requires close coordination between the fiscal and monetary authorities to ensure policy coherence and maximize impact.
The LCCI also expresses concerns about the volatility of the naira under the floating exchange rate regime. The naira experienced a significant depreciation of 40.9% against the dollar in 2024, a development attributed to speculative activities and imbalances in the foreign exchange market. The mismatch between foreign exchange supply and demand creates pressure on the naira, leading to its decline. The Chamber urges the government to implement measures that boost forex inflows, promote transparency in the foreign exchange market, and ensure a level playing field for all market participants. These measures are crucial for stabilizing the naira and mitigating the negative impact of exchange rate volatility on businesses and the broader economy.
While commending the 2025 ‘Budget of Restoration,’ the LCCI stresses the importance of robust implementation to achieve its ambitious targets. The budget projects a revenue of N34.82 trillion, an ambitious target that requires comprehensive tax reforms, enhanced digital transparency, and the integration of the informal sector into the tax net. Expanding the tax base and improving tax collection efficiency are critical for generating the necessary resources to fund government programs and investments. Furthermore, the Chamber recommends targeted reforms in agriculture, manufacturing, and the Micro, Small, and Medium Enterprises (MSME) sector to enhance productivity and create jobs. MSMEs, considered the backbone of the Nigerian economy, require access to affordable credit and technology-driven lending platforms to thrive and contribute meaningfully to economic growth.
The LCCI’s overall outlook for 2025 is contingent on the government’s commitment to implementing targeted interventions, addressing structural bottlenecks, and fostering alignment between monetary and fiscal policies. The Chamber believes that proactive reforms are essential for navigating the current economic challenges and unlocking sustainable growth. These reforms should focus on creating a conducive business environment, promoting private sector investment, and addressing the underlying structural issues that hinder economic development. The LCCI reiterates its commitment to advocating for a stronger economy and a more business-friendly environment, urging the media to amplify its policy recommendations and contribute to the national dialogue on economic development. The Chamber sees its role as a key partner in the government’s efforts to transform the Nigerian economy and achieve sustainable prosperity.
