SECOND ANNIVERSARY OF PRESIDENT BOLA AHMED TINUBU’S ADMINISTRATION: May 29, 2025

The Lagos Chamber of Commerce and Industry (LCCI) congratulates President Bola Ahmed Tinubu, GCFR, on his administration’s second anniversary. Bold macroeconomic reforms have characterized the past year, aimed at correcting long-standing structural distortions. While these reforms have come with significant short-term socio-economic costs, they offer the potential for long-term macroeconomic stability and inclusive growth if implemented effectively and supported by strong institutional backing.

Two years into the administration, Nigeria has undergone significant policy shifts—most notably, the removal of fuel subsidies, exchange rate liberalization, and attempts to shore up public revenues through tax reforms. While aimed at achieving long-term macroeconomic stability, these measures have also imposed short-term hardships on businesses and households, particularly small and medium-sized enterprises (SMEs), which remain the backbone of the Nigerian economy.

Macroeconomic Outlook

Nigeria’s GDP grew by 3.4% in 2024, up from 2.74% in 2023, driven by the services sector, which expanded by 5.37% and accounted for over 57% of GDP. This growth, while positive, has been uneven; manufacturing and agriculture continue to struggle due to high production costs, insecurity, and logistical inefficiencies, limiting business competitiveness.

Inflation remains a critical challenge, at 23.71% as of April 2025. Fuel subsidy removal and FX liberalization increased prices, especially for transportation and food. The removal of fuel subsidy alone freed up an estimated $7.5 billion annually, but tripled fuel costs. While this improves the fiscal outlook, it increases business operating expenses, particularly logistics, agro-processing, and retail SMEs.

FX reforms and unification of the exchange rate have improved transparency and boosted confidence, with the naira stabilizing around ₦1,600/$ and external reserves rising above $37 billion. However, businesses still face challenges accessing forex for imports, and many continue to price goods defensively due to volatility concerns.

Public debt rose to ₦144.67 trillion, with debt service still consuming over 90% of federal revenue. The government must consider cheaper sources of debt, deploy debt into the real economy to subsidize production.

Economic Conditions and Policy Coordination

The current macroeconomic landscape reflects a nation in transition. On one hand, the government’s economic reform agenda—centered on the Renewed Hope mantra—has attracted some investor interest, revived engagement with multilateral institutions, and improved public finance efficiency. On the other hand, inflationary pressures have reached historic highs, driven by high energy costs, food insecurity, forex instability, and weak industrial productivity.

There are also growing concerns about policy coordination. While monetary authorities target inflation, fiscal policy expands through borrowing and recurrent expenditure. This divergence has weakened the impact of economic interventions and eroded investor confidence.

Small Business Challenges

SMEs in Nigeria have continued to face daunting obstacles, including:

1. Limited access to affordable credit due to high interest rates.
2. Unstable power supply and rising energy costs.
3. Regulatory bottlenecks and multiplicity of taxes at all tiers of government.
4. Foreign exchange scarcity and import restrictions.
5. Security challenges that disrupt supply chains and raise operational risks.

These challenges have led to business closures, job losses, and reduced output across multiple sectors.

Recommendations

In our quest for a better business environment, we urge the government to consider the following recommendations in the coming year:

1. Enhance Policy Coordination: There must be greater synergy between monetary and fiscal policies. The Central Bank of Nigeria, the Ministry of Finance, and the development finance institutions should work in tandem to manage inflation without stifling productive investment.
2. Strengthen the Ease of Doing Business Framework: Streamline regulatory processes, eliminate multiple taxation, and expand digitization of government services to reduce compliance burdens on SMEs. We call on the full implementation of the tax reforms recently approved by the National Assembly and many other policy reforms.
3. Scale Up Targeted SME Support: Introduce concessionary loan schemes tied to output targets for agro-processing, tech innovation, and light manufacturing sectors. We recommend that specialized banks, such as the Bank of Industry, Bank of Agriculture, Development Bank of Nigeria, NEXIM Bank, and others, be adequately funded to offer targeted financing at concessionary rates.
4. Improve on Infrastructure: Accelerate investment in off-grid and renewable energy solutions for industrial clusters and commercial hubs. The proposed ₦20 trillion Renewed Hope Infrastructure Fund and the flagship projects, such as the Lagos-Calabar Coastal Highway, are promising. The execution of these initiatives must include job creation, cost-effectiveness, and robust participation in the private sector.
5. Expand Social Safety Nets: To cushion the impact of subsidy removal and high inflation, social protection programs should be better targeted, transparent, and integrated into digital ID systems for efficiency.
6. Promote Local Content and Value Addition: Incentivize domestic production through tax reliefs, export facilitation, and backward integration policies to reduce import dependency. While we commend the Nigeria First Policy, we urge the government to intentionally support local firms in increasing production in response to the expected demand for local goods.
7. Sustain Reforms in the Forex Market: While the unification of exchange rates was a bold move, the market must be deepened, predictable, and transparent to inspire investor trust and stabilize currency flows.
8. Deepen Stakeholder Engagement: The Federal Government should institutionalize regular dialogue with the organized private sector, civil society, and subnational actors to ensure inclusive and sustainable economic policies.

Conclusion

The second anniversary of the Tinubu administration is both a moment of reflection and a call to action. Nigeria stands at a pivotal juncture where the right mix of policy coherence, institutional reforms, and stakeholder collaboration can unlock the nation’s vast economic potential.

Dr. Chinyere Almona, FCA

Director-General

Lagos Chamber of Commerce & Industry

May 29, 2025