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LCCI Forecasts Harsh Year for Small Businesses in Lagos


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The Lagos Chamber of Commerce and Industry on Monday has warned that the harsh economic environment would cause most Micro Small and Medium Enterprises to struggle for survival in the 2021 fiscal period.

The chamber said this on Monday in its Business Review for 2020 and Outlook for 2021 released by the its Director-General, Dr Muda Yusuf.

Mr Yusuf said that the major disruptions of COVID-19 and the EndSARS protests, experienced by businesses operating within the Lagos metropolis had made it difficult for them to break even.

He said that the sharp Naira exchange rate depreciation coupled with sustained acceleration in domestic prices had led to a spike in production and operating costs for investors.

Mr Yusuf predicted that 2021 would be a tough year for MSMEs which he attributed a lack of quick fixes for structural issues and the government’s unwillingness to implement regulatory and institutional reforms.

Mr Yusuf said: “Without bold policy pronouncements in this regard, constraints to the ease of doing business including FX shortage, escalating production costs, high regulatory costs, infrastructure inadequacies and delayed cargo clearance will persist into year 2021.

“These constraints will be more profound on businesses in the real economy and we believe the sluggish pace of recovery will continue to subdue consumer demand, albeit the impact on earnings performance will be disproportionate across sectors.

“While most MSMEs will struggle to survive in year 2021 amid unfavourable economic conditions, we expect most large corporations to demonstrate resilience in the coming year.

“We expect the economy to return to the path of positive growth in the second quarter of 2021.

“This will expectedly impact on the macroeconomic environment which may ease some of the critical economic conditions currently impeding economic growth.”

Mr Yusuf said that while the fiscal and monetary authorities as well as the coalition of private sector players provided several relief measures to cushion the impacts of the pandemic on the business community, there are still major challenges that are impeding the growth and development of businesses.

Some of the challenges faced by the business community include liquidity crisis in the foreign exchange market, sharp exchange rate depreciation, high energy and production cost, ports congestion, cumbersome and burdensome customs processes, insecurity, inconsistent policies, regulatory uncertainties, and traffic gridlocks.

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