By Peter Egwuatu
LAGOS—The Lagos Chamber of Commerce and Industry, LCCI has condemned the proposed plan by the Federal Government to privatise the Bank of Industry, BOI and Bank of Agriculture, BOA which are the major Development Finance Institutions, DFIs in the country, saying their primary purpose for their establishment will be compromised.
The chamber also expressed concern over the cost of cargo clearing and the general operating cost in the Nigeria ports, saying “Nigeria ports have gained reputation as one of the most expensive to do business in the world.”
The chamber, in a communiqué after its council meeting held at the weekend, said “The development objectives of the DFIs will be compromised in the event of their privatisation because development objectives are at variance with profitability objectives. “
It stressed that the primary objective of a typical private enterprise is profit maximisation, while the worry of government should be development. “This is the fundamental basis for government intervention in an economy. The global practice is for DFIs to be government owned because of the peculiarities of their mandates” the chamber added.
Part of the resolutions reached at the meeting presided by the LCCI Chairman, Mr. Remi Bello stated that the basic objective of development finance is to support the growth and development of the real sector and infrastructure in the economy which entails the provision of subsidized long term affordable finance to investors in these sectors, adding that a privatised entity would not be able to deliver this mandate because of the economics of the enterprise.
According to the chamber , “The real sector financing would suffer if the DFIs are privatised. Such an outcome would have consequences for the capacity of the real sector to grow and create the much needed jobs.”
The chamber, however, has cautioned that government should rather improve on the capitalization of the DFIs and create a framework that would allow for an independent and professional management of the DFIs.
“This is the way to go. It is important to develop models and structures that would make public institutions work rather than duplicate them or discard them. Populating the boards of vital public institutions with politicians is not in the best interest of the economy and the country.
The LCCI also urged the government to ensure more effective regulatory environment in the ports to protect port users. It urged government to undertake more investment in ports infrastructure to increase the capacity of the port to take bigger vessels in order to reduce the cost of freight to the country. The council reiterates that political stability is necessary to ensure investors’ confidence and the economic progress of the country.