The Lagos Chamber of Commerce and Industry (LCCI) has recommended palliatives for banking and aviation sectors to minimise the impact of the coronavirus pandemic on the nation’s economy.
It also said that such palliative would engender quick economic recovery after the pandemic.
LCCI Director-General, Dr Muda Yusuf, listed the palliatives in a statement themed: “2020 Post COVID-19 Agenda; Business and Economic Sustainability Propositions” issued to newsmen on Monday in Lagos.
Yusuf stressed the need for commercial banks to take a cue from the Central Bank of Nigeria (CBN) by offering some level of reprieve to their customers.
He called for an urgent engagement between the Bankers Committee, the Central Bank of Nigeria and the business community to discuss the monetary component of the rescue plan for businesses at this critical time.
“A good credit regime is critical to the sustainability and progress of an economy and the palliatives, announced by the CBN in response to this pandemic, are commendable.
“But there is the bigger issue of private sector indebtedness to the commercial banks.
“As at December 2019, banks credit claims on the private sector, stood at N15.2 trillion.
“The way this exposure is managed will be crucial to the realisation of the economic and business continuity outcomes in the Nigerian economy,’’ he said.
The DG listed opportunities for loan moratorium, restructuring of facilities, refinancing and interest rate concessions in the light of the unprecedented downturn in the economy as necessary palliatives.
Effective from March 2020, Yusuf urged that banks grant a one-year moratorium and six months interest rates concessions to customers on existing facilities.
To make this possible for commercial banks, he advised a review of the Cash Reserve Ratio from the current level of 27 per cent to 20 per cent.
This, he explained, would give room for the banks to offer these interest rate concession and a moratorium on loans to investors.
“These times call for sacrifice from all stakeholders in the economy – the banking community, the depositors, the government, the financial system regulators and the business community.
“We hope the deposit money banks would take a cue from the gesture of the central bank on the interest rate cut and moratorium granted on its intervention funds.’’
For the aviation sector, as palliatives, the industry guru seeks support aimed at augmenting insurance premiums, which are dollar-denominated as cover were mostly underwritten abroad due to lack of local capacity.
He also appealed for support to pay for operational cost including international lease rental on grounded aircraft, aircraft maintenance due for C- Check and other routine maintenance that takes place, irrespective of lockdown.
Yusuf called for waiver of taxes and other regulatory levies/fees, one-year waivers on import duty for spare parts, commercial banks moratorium during the period of lockdown and six months thereafter.
“There should be support on refund on ticket purchases during period of lockdown, general stabilisation funds to guarantee uninterrupted operation of the airlines.
“There should also be the suspension of all Passenger Service Charge (PSC) and Ticket Sales Charge (TSC), Navigation Charges for 180 days as well as landing and parking charges,’’ Yusuf said.
According to him, soft loans to airlines at an interest rate not exceeding five per cent and full implementation of the Executive Order on the removal of VAT from air transportation should also be considered.
For the petroleum downstream sector, the LCCI boss welcomed the full deregulation of the petroleum downstream sector of the economy.
The DG, however, requested that complementary legal framework be expeditiously put in place to avoid truncation of the process.
He expressed the belief that the economy would profit immensely from its significant reform.
According to him, it would free resources for investment in critical infrastructures such as power, roads, rail systems, health sector and education sector as well as unlock the huge private investment potentials in the downstream oil sector especially in petroleum product refining.