Economic reforms yet to fully impact businesses, says NECA

Businesses in Nigeria are still awaiting the full impact of the Federal Government's economic reforms, despite the administration's efforts, according to the Nigeria Employers’ Consultative Association (NECA). Adewale-Smatt Oyerinde, NECA's Director-General, stated that while reforms such as the removal of fuel subsidies and the liberalization of the foreign exchange market signal a commitment to market-driven policies, many domestic businesses, particularly Micro, Small, and Medium Enterprises (MSMEs), continue to struggle with operational challenges.

Oyerinde acknowledged that these reforms have improved fuel availability and signaled policy consistency, potentially boosting investor confidence. However, the depreciation of the naira has significantly increased production costs, eroded competitiveness, and heightened operational risks for numerous businesses. "Many private sector operators are yet to experience the anticipated gains of the reforms as they continue to grapple with inflation, energy costs and exchange rate volatility," he said.

The declining purchasing power of consumers and rising production expenses are placing considerable pressure on businesses. This has led some firms to adjust their investment plans and overall operations in response to the prevailing economic conditions. While developments in areas like housing, industrial investments, and local petroleum refining have created opportunities and improved fuel supply, persistent grid instability and reliance on alternative energy sources remain a major constraint.

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Many private sector operators are yet to experience the anticipated gains of the reforms as they continue to grapple with inflation, energy costs and exchange rate volatility.

"In spite of the ongoing reforms in the power sector, insufficient electricity supply remains the number one constraint to business productivity and competitiveness across the country," Oyerinde emphasized. He noted that despite improvements in some macroeconomic indicators like foreign reserves and government revenues, these gains have not broadly translated into improved business operations or household welfare. High energy costs, multiple taxation, logistics challenges, and weak consumer spending continue to hinder productivity and limit business expansion.

NECA expressed caution regarding large-scale recruitment due to high borrowing costs, foreign exchange volatility, and escalating operating expenses. The association stressed that sustainable job creation hinges on deeper structural reforms that effectively reduce the cost of doing business and enhance access to affordable finance. NECA called on the government to prioritize stable power supply, lower energy costs, tax harmonization, consistent policies, and foreign exchange stability to foster economic recovery and strengthen investment.

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In spite of the ongoing reforms in the power sector, insufficient electricity supply remains the number one constraint to business productivity and competitiveness across the country.