Nigeria’s economy faces recession risks, job losses, if… ― LCCI

The Lagos Chamber of Commerce and Industry (LCCI) has charged the Federal Government to quickly address the issues of rising energy costs, oil theft, CBN’s rate hike and insecurity, among others if the nation is to avert the risks of going into another recession and eventual job losses.

The Chamber’s President, Asiwaju Michael Olawale-Cole, made this assertion at a media briefing organised by the Chamber On The State of The Nation on Tuesday, in Lagos.

While acknowledging the 3.11 per cent year-on-year growth Nigeria’s Gross Domestic Product (GDP) recorded in the first quarter of 2022, the LCCI’s boss however believed, many factors, if not addressed, might weigh down such growth as the nation’s entered the third quarter of the year.

“In the third quarter, many factors will weigh on growth such as CBN’s rate hike as well as the rate hikes by other central banks around the world; oil theft, rising energy costs with diesel above N800/litre, Jet-A1 atN710 per litre, and PMS selling above the government-regulated price of N165/litre.

“ These price levels will continue to aggravate production costs which may lead to restrained manufacturing and eventual job losses,” he stated.

Olawale-Cole also argued that, while the worsening security situation in many parts of the country, would continue to threaten agricultural production, manufacturing value chains, and logistics, there might also be some fiscal constraints due to debt overhang accompanied by a high debt service burden and heavy subsidy costs.

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He, therefore, called for well-coordinated fiscal and monetary policies to enable the economy to sustain the pace of recovery in 2022, and navigate through the growing uncertainties in the global economy.

One of the ways to achieve that, he stated, is to ensure food security, and sustainably boost agriculture output, and discourage continued dependence on imports.

The two-time Lagos State commissioner also called for the removal of fuel subsidies, and curtailment of oil theft so as to give fiscal space for subsidised production of goods and services as well as for infrastructure, health, and education financing.

“The Chamber has consistently advocated the removal of fuel subsidies and full deregulation of the petroleum downstream sector to attract required investments into the sector. No investor wants to invest in an industry where they cannot even recover their cost of production. While we expect some respite from the commencement of commercial private sector refining and modular refineries, we call on the regulators to ensure a conducive business environment that supports these investments coming on stream soon.

“The twin factor of fuel subsidy payments and crude oil theft have combined to deny Nigeria the gains of the high crude oil price on the international market,” he stated.

While calling on the CBN to initiate a gradual transition to a market reflective, unified exchange rate system, Olawale-Cole also charged the apex bank on the need to roll out more friendly supply-side policies that would boost productive sectors, bolster investor confidence and help attract foreign investment inflows into the economy.

On the ease of doing business in Nigeria, the LCCI’s helmsman charged the Federal Government with the need to address structural bottlenecks and regulatory constraints, that had continued to contribute to the high cost of doing business in the country.

Olawale-Cole also called on the federal government to explore other sources of power generation, especially renewable energy; and initiate moves towards having cost-reflective tariffs in the sector; since that, he stated, would boost power supply and encourage investments in the sector.

Describing the industrial actions embarked upon by members of the Academic Staff Union of Universities (ASUU) and the Joint Action Committee of the Senior Staff Association of Nigerian Universities and the Non-Academic Staff Union of Education and other Allied Institutions, as disheartening, Olawale-Cole noted that the negative development could worsen the nation’s security challenges, increase drug abuse among the youth, and raise social vices.

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Nigeria’s economy faces recession risks, job losses, if… ― LCCI

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Nigeria’s economy faces recession risks, job losses, if… ― LCCI