NACCIMA urges FG to offload financial assets to capital market

The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has called on the Federal Government to offload its financial assets to the capital market, stressing that 2025 expenditure framework is skewed towards huge capital transfers to certain sectors that will not add value to the national wealth.

The National President, NACCIMA, Dele Oye in a signed statement on options for economic reform and consequences for the Medium-Term Expenditure Framework (MTEF) FOR 2025-2027, stated that the payment of high interest rates to local and overseas creditors regardless of asset class is close to financial “harakiri”.

“Financial assets (loans) should be created and counterbalanced by equivalent investment in productive assets which are expected to repay the loans.

“If these assets are offloaded to the capital markets, it will be possible to transfer many unproductive public sector loans off balance sheet thereby unburdening the government from excessive borrowing. Please note we do not advocate transferring public monopoly to private monopoly or creation of private uncompetitive markets. Government should learn from past experience and avoid engaging in new ventures that will create further bad loans,” he explained.

He said the fiscal deficits arise when public sector expenditure exceeds public sector income, maintaining that the funding of these fiscal deficits through borrowing results into high interest rates and high inflation.  

Oye, however, urged the FG to put a cap on public sector funding

“The solution to high interest rates and high inflation, is for the public sector to spend less and to start becoming an efficient productive unit,” he said.

On enhancing production, he said, “We also need to debunk the myth of government earning more revenue under the pretext of improved productivity. For avoidance of doubt, payment of customs duties and taxation are not due to improved government productivity. These revenues are purely private sector revenues which constitute a transfer of wealth and capital from the productive private sector to an ever-expanding unproductive public sector.

“The public sector does not own factories nor does it produce any goods and services sold to the customers. Rather it extracts value from the citizens through regulatory fiat. Awarding contracts is not the same as enhancing production.”

He noted further that aggressive repayment of domestic loans using the excess revenues would result in lower interest rate payments which is expected to lead to more cash flow for FAAC and lower borrowing requirements.

“Early repayment or transfer of government loan assets will improve Liquidity and result in cheaper single digit loans to the Private Sector. Generally, Public sector loans must be secured with real assets or must be within the tenure of the government. Longer term loans must be investments in real assets and not on the government balance sheet. This shift would promote private sector growth and ensure that capital is allocated efficiently,” he explained. 

He said the 2024 economic performance was unsatisfactory for the private sector.

“All data, metrics and consequent statistics confirm that the Nigerian private sector has borne fully, the negative burdens of the current economic reforms. While in contrast, the Nigerian Public sector continues to thrive and expand.

“All economic benefits of the recent economic reforms have been translated to the public sector through high capital transfers and revenues. The private sector faced higher inflation, higher cost of borrowing/repayment for existing loans, the $2.4 billion CBN unpaid forwards, currency devaluation and higher costs in all sectors of the economy.

“This continued imbalance caused by increased public sector expenditure has destroyed value in the private sector due to excessive fiscal deficits which are financed through government borrowing at very high unsustainable interest rates. We are therefore making recommendations and suggestions that may be considered in the short to medium term,” he added.