Security situation: Investors confidence declining – LCCI
On May 17, 2012 · In Business

Lagos Chamber of Commerce and Industry (LCCI) said the disturbing security situation in the country is impacting negatively on the investment environment, leading to declining confidence across the broad spectrum of prospective domestic and foreign investors in the economy.

In a release on the first quarter business environment report, Director General of LCCI, Mr. Muda Yusuf, said the security situation in the country has assumed disturbing dimensions which is impacting negatively on the image and perception of the country in the global community.

This, according to him, has led to escalation of risk of doing business in some parts of the country; relocation of businesses away from the troubled spots in the country; some organisations reviewing their security budgets upwards in the light of developments in the country and significant setback for the tourism sector in the country.

“There was an evident deterioration in power supply in the first quarter which took its toll on businesses in the Lagos area and other parts of the country. The partial removal of subsidy made the impact more severe, especially for SMEs that use smaller capacity electricity generators.

“The summary of the implications for business were sharp increase in operating cost due to high cost of diesel and PMS, competitive disadvantage for local producers and manufacturers, erosion of profit margins, sub-optimal capacity utilization and Business sustainability challenges,” he said.

Yusuf noted that the January protests paralysed the economy with huge losses to businesses and the economy and the cost of fuelling operational vehicles by firms increased by about 40 per cent, adding that this has implications for profit margin.

“Other product segments suffered drops in sales as firms and households spend more on fuel. Many organisations were compelled to review transport allowances for their workforce which meant additional operational cost with implications for bottom-line; Petrol retail outlets experienced an average of 20 per cent drop in sales and  inflationary impact across the economy, especially on consumer goods” he stated.

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