The Centre for the Promotion of Private Enterprise (CPPE) said, business managers and owners need to prioritise technology to reduce cost and ensure competitiveness while charging industries to deepen backward integration to reduce forex exposure.
CPPE, in its report on ‘Nigeria 2024 Economic Review and 2025 Outlook,’ advocated reduction in debt financing to reduce the burden of high interest rate; adoption of efficient energy solutions to reduce the pressure of high energy cost, saying, supply chains should be domesticated as much as possible even as there must be focus on talent retention, especially, in specialised job functions.
The director/CEO of CPPE, Dr. Muda Yusuf urged entrepreneurs to ‘incorporate scenario planning framework in business strategy to manage uncertainties and volatilities; and businesses must ensure cost optimisation.’
Speaking on policy implication, Yusuf said, the government should expedite action to expedite boost capitalisation of the development finance institutions; Bank of Industry (BoI), Bank of Agriculture (BOA), Nigerian Export-Import Bank (NEXIM) to deepen development finance interventions.
He called “for the need to revitalize and restructure the Bank of Agriculture to support the agricultural sector and agro-allied industries with the much-needed concessionary financing. Current high interest rates in the commercial banks continues to impede the recovery and growth of the Nigerian agricultural and agro-allied sectors of the economy.
“The CBN should soften its tightening stance in order to support investment growth and job creation in the economy. Current high interest regime foisted by the tightening regime increases the risk of loan defaults, increasing the prospects of higher non-performing loans in the financial sector.
“High interest rates also increase debt service cost for the government with the current huge exposure to domestic debts. High interest rates typically pose significant risks to business sustainability amidst numerous headwinds. There is a need to protect the real economy from the adverse consequences of free market principles. This is the basis of government intervention in a market economy.”
He said, exposure to the risks vary across sectors, adding that, businesses would therefore need to calibrate their strategies according to the level of exposure these risks, which are forex volatility risk; interest rate risk; inflation risk; financial and monetary policy risk; regulatory risk; cybersecurity risk; insecurity risk; political risk; corruption risk, especially with regard to public sector transactions and contracts; and environmental /climate change risk.
