LCCI Urges FG to Explore Alternatives to Borrowing for Budget Funding

The Lagos Chamber of Commerce and Industry (LCCI) has advised the Federal Government to consider alternative funding options for the 2025 budget amid growing concerns over Nigeria’s rising debt profile. With borrowing making up a significant portion of the proposed budget’s financing plan, stakeholders are calling for a more sustainable approach to bridge fiscal deficits.

In a statement, LCCI President Michael Olawale-Cole highlighted the risks associated with Nigeria’s current borrowing strategy, particularly the increasing burden of debt servicing, which already consumes a significant percentage of government revenue. “Relying heavily on borrowing to fund budgets is unsustainable and poses long-term risks to fiscal stability,” Olawale-Cole warned.

The chamber proposed several measures the government could adopt to reduce its dependence on loans:

1. Improving Revenue Generation
   LCCI urged the government to enhance its revenue collection mechanisms, particularly by broadening the tax base and addressing inefficiencies in tax administration. Reducing tax evasion and plugging revenue leakages could significantly boost government income without increasing tax rates.
2. Promoting Public-Private Partnerships (PPPs)
   The chamber recommended leveraging PPPs to fund capital-intensive projects such as infrastructure development. By involving private sector investors, the government can reduce its financial burden while accelerating project execution and efficiency.
3. Asset Monetization
   Monetizing underutilized government assets was another option highlighted by LCCI. The sale or concession of dormant assets could provide a one-time boost to revenue while ensuring these assets contribute to the economy.
4. Boosting Non-Oil Exports
   Nigeria’s economy remains heavily reliant on oil revenue, making it vulnerable to global price fluctuations. The LCCI emphasized the need to diversify exports by supporting sectors such as agriculture, manufacturing, and technology to generate foreign exchange earnings.
5. Encouraging Diaspora Investments
   The Nigerian diaspora represents a significant potential funding source. The government could introduce instruments such as diaspora bonds or create incentives to attract investments from Nigerians abroad.
6. Reducing Recurrent Expenditure
   The chamber also called for more disciplined fiscal management, particularly by cutting non-essential recurrent expenditures. Rationalizing the size of government and reducing administrative costs were highlighted as critical steps to free up resources for development projects.
7. Strengthening Governance and Transparency
   Improved governance and transparency in public finance management can boost investor confidence and attract more domestic and international funding. Ensuring that every naira spent delivers value will also reduce waste and improve the impact of public spending.

Olawale-Cole concluded by emphasizing that a shift towards sustainable fiscal practices is essential to avoid the pitfalls of over-indebtedness. “The government must prioritize policies that drive economic growth, create jobs, and improve revenue streams without imposing an excessive debt burden on future generations,” he said.

The call by LCCI comes as public discourse around Nigeria’s debt sustainability intensifies. While borrowing remains a viable tool for funding development projects, experts argue that excessive reliance on it could erode economic stability and limit the government’s ability to respond to future crises.

Exploring innovative and sustainable funding options will be critical to ensuring the success of the 2025 budget and securing Nigeria’s long-term economic health.