The Lagos Chamber of Commerce and Industry (LCCI) has raised concerns on the impact of Nigeria’s inflation rate, which surged to a 28-year high of 34.60 per cent in November.
The unprecedented rise is tightening margins for businesses across the country, as soaring prices strain operations and reduce profitability.
According to the LCCI’s Director-General, Dr. Chinyere Almona, businesses should brace for further challenges as elevated inflation signals a likely increase in interest rates.
“The Central Bank of Nigeria (CBN) is expected to respond to these inflationary pressures with higher interest rates following its upcoming Monetary Policy Committee (MPC) meeting,” Dr. Almona warned in a statement.
The LCCI highlighted the far-reaching consequences of the inflation surge. Consumer spending has significantly declined due to diminished disposable income, particularly as food and core inflation erode purchasing power.
Non-essential goods and services have seen reduced demand, further pressuring businesses. Rising costs for transportation, rent, and energy have compounded the situation, increasing production expenses and cutting into profit margins.
“The persistent high inflation weakens Nigeria’s macroeconomic stability, deterring local and foreign investments,” Almona noted.
The chamber pointed to the country’s capital importation data as a red flag, adding that $1.25bn was recorded in the third quarter of 2024, a stark drop from $2.60bn in the previous quarter.
Of this amount, Foreign Direct Investment (FDI) contributed only $103.82m, underscoring investor concerns over Nigeria’s economic climate.
In addition to addressing inflation, the LCCI emphasized the need for sustained efforts to boost production and defend the Naira.
Almona called for coordinated policies to enhance oil production and attract foreign exchange (FOREX), alongside regulatory reforms to create a stable investment environment.
“Recent investments in oil fields must be supported by sound policies to maintain and attract further capital,” she said.
The LCCI also underscored the importance of addressing insecurity to stabilize agricultural production and curb soaring food prices.
The organization urged the government to invest in intelligence and surveillance technology, increase funding, and pursue constitutional amendments to enable multi-level policing.
Despite these challenges, the LCCI remains optimistic about the potential of ongoing reforms.
“If sustained, these measures can steer the economy back toward growth and improve critical indicators such as inflation, interest rates, and exchange rates,” Almona concluded.