The Lagos Chamber of Commerce and Industry (LCCI) has raised concerns about the slow pace of economic growth recorded by the country thus far.
According to the president, LCCI, Toki Mabogunje, juxtaposing the current growth level with population growth estimated at 2.7 per cent by the World Bank implies the economy is not growing fast enough to create new opportunities for its rapidly-growing population.
She said Nigeria’s actual output performance is significantly below its potential output level, stressing that achieving key development outcome such as employment creation and poverty reduction will always remain elusive in the light of fragile recovery.
She called on policymakers to pursue critical reforms to bolster confidence in the economy, accelerate post-pandemic recovery and alleviate poverty.
She said: “The IMF and World Bank are projecting growth figures of 2.5 per cent and 1.8 per cent respectively on the assumption of stronger commodity prices, transition to market-reflective exchange rate system, vaccination progress, and gradual implementation of reforms in the oil sector. While these factors appear somewhat realistic in our view, we believe rising insecurity; lingering forex illiquidity; low vaccination rate and lack of will to follow through with critical reforms constitute major downside risks to the country’s growth outlook.”
The LCCI president at its quarterly press conference on the state of the nation recommended that accelerating the pace of recovery requires both fiscal and monetary policymakers to be well-coordinated in promoting growth-enhancing and confidence-building policies that would encourage private and foreign capital inflows into the economy.
“As such, we recommend accordingly: While the Central Bank of Nigeria (CBN) has adopted the Nigerian Autonomous Foreign Exchange Rate (NAFEX) rate as the official rate in the gradual transition to a unified exchange rate system, the currency market is still beset with persisting liquidity challenge evidenced by wide premium between the NAFEX and parallel market rates,” she added.
She noted that to consolidate on this positive development, there is a need for the CBN to scale up its intervention efforts and rollout more friendly supply-side policies to boost liquidity in the market, saying that this would help bolster investor confidence and attract foreign investment inflows into the economy.
She, however, noted that the forex market is still faced with liquidity challenges as many investors are lamenting about the difficulties in accessing foreign exchange for the importation of raw materials, equipment and critical inputs for production and processing.
“The situation is taking a huge toll on capacity utilization, recovery and sustainability of businesses in the production sector,” she said.
The LCCI president also believes that there was an urgent need for economic managers to deliberate efforts towards making the business environment more conducive for MSMEs and large corporates at the national, sub-national and local government levels is imperative.
“This can be achieved by addressing the structural bottlenecks and regulatory constraints contributing to the high cost of doing business. A supportive and conducive investment environment is critical in facilitating private sector involvement in the economic recovery process,” she added.
On inflation, she said inflation at 17.93 per cent remains elevated and portends serious implications for various economic agents including households, businesses, and investors, adding that an inflationary environment erodes consumers’ real disposable income, weakens purchasing power, escalates production cost, worsens cost of living, dampens corporate profitability and undermines investor confidence.