Exit from recession not end to Nigeria’s economic woes ― LCCI

The Lagos Chamber of Commerce and Industry (LCCI) has warned that Nigeria’s exit from recession should not be seen as signalling an end to her numerous economic woes.

Giving this warning in her ‘State of the Nation Address,’ in Lagos, on Wednesday, the Chamber’s President, Mrs Toki Mabogunje, stated that despite the quick exit, the nation’s economic growth still remains fragile.

She noted that rising consumer prices, weak employment level, lingering liquidity concerns in the foreign exchange market, depressed purchasing power and weak investor confidence, had continued to be major factors stifling her economic growth.

Mabogunje stated that though those challenges had been part of the country’s economic narrative, prior to COVID 19, the advent of the pandemic had, however, succeeded in amplifying them.

According to her, further increase in the unemployment rate from 27.1 per cent, in the second quarter of 2020 to 33.3 per cent, recorded in the fourth quarter, also bore eloquent testimony to the fact that the economy was far from being out of the doldrums.

Besides, the LCCI boss stated that the nation’s economy had not expanded fast enough to create vast opportunities for employment, especially the youth, a development, she noted, had continued to have profound implications for per capita income growth, which had been on the downward trajectory for the sixth consecutive year since 2015.

Mabogunje also expressed concerns about heightened security concerns, weak confidence of investors, relatively lower oil production and weak commitment to key policy, regulatory and institutional reforms.

She however expressed optimism that the commencement of vaccination exercise and the significant moderation in Covid-19 infection numbers in the first quarter, would help in bringing the economy back on its feet.

“With the oil sector in deep contraction due to suppressed production, fragile recovery in global oil demand, regulatory and investment climate issues, we expect the non-oil sector to drive growth in the year 2021. Output growth is expected to be positive albeit fragile in the first quarter of 2021.

“Growth recovery should gain momentum starting from the second quarter of 2021 as result of steady progress in vaccine deployment across the nation, sustained policy support in the real economy and low base effect arising from Q2-2020’s steep contraction,” she stated.

In order to accelerate the pace of recovery, Mabogunje stressed the need for both fiscal and monetary policymakers to be well-coordinated, in promoting growth-enhancing and confidence-building policies that would encourage private capital inflows into the economy.

She also called on the government at national and sub-national levels to create a supportive and conducive investment environment to facilitate private sector involvement in the economic recovery process.

“Also imperative is the need to deepen reforms particularly in the country’s Oil and Gas industry to bolster investor confidence and stimulate healthy competition.

“Deliberate efforts of policymakers towards addressing the numerous structural bottlenecks, stifling the ease of doing business, is critical. This would complement fiscal and monetary policy support aimed at boosting growth,” she added.

While recognising the impact of rising oil prices on domestic energy prices, Mabogunje again called for total deregulation of the downstream petroleum industry, describing it as the most sustainable policy option for the sector.

“The philosophy should be for the government to put the legislative and commercial framework in the market and allow the market to operate itself. There is a need for a transition to a market-driven environment, through policy-backed legislative and commercial frameworks, thereby enabling the sustainability of the sector,” she added.

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