By Naomi Uzor

Lagos Chamber of Commerce and Industry, LCCI, has said that increased government borrowing from the domestic financial markets has become a major source of distortion of the financial inter-mediation process in the Nigerian economy.

Speaking at the 2015 Quarterly Press Conference, the President of the LCCI, Alhaji Remi Bello, said the value that the economy can derive from the banking institutions is inherent in effective inter-mediation and this implies the channeling of funds from the surplus segments of the economy to the deficit sectors of the economy, but this is not happening to the degree that could impact positively on job creation.

“With double digit interest rates on treasury bills and government bonds, a lot of funds are being channeled into the purchase of these treasury securities to the detriment of the real economy. It is in this context that we call on the monetary and the fiscal authorities to urgently review the yield on treasury securities to single digit. This is necessary to stem the crowding out effect of government borrowing in the financial market, and also reduce the cost of fund in the economy” he said.

He noted that the impending political transition at the federal level is unique in the history of this country as this is the first time that a sitting government will hand over to an opposition party.

“This could pose a risk to the quality of the transition process. It is against this background that we wish to stress that the two political parties should understand that government is continuum and everything possible should be done to make the transition process seamless. Having survived the more difficult phase of elections, the handing over of the apparatus of government should not be allowed to constitute any form of challenge. The maturity of the key players that was demonstrated after the elections should be sustained” he stated.

On power sector issues, he said, the burden of high energy cost for investors persisted in the period under review and remains one of the biggest issues in the investment environment, adding that, the power sector reform and the privatization that followed have not achieved the desired result.