Current reforms in critical sectors should be sustained, says LCCI DG

The Director General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said while the country’s leadership and the citizens bask in the euphoria of the exit from recession, what is paramount is the impact on the cost of doing business, productivity of the investors, competitiveness of firms and the sustainability of investments.

“To the average Nigerian, what matters is the effect on welfare, especially lower food prices, reduced cost of healthcare, improved transportation system, constant power supply and security of lives and property. “With unemployment rate at an all-time high of 18.8 per cent in the third quarter of last year and many employers, including the public sector, finding it difficult to pay workers as and when due, we need to worry about recovery and rapid job creating growth this year,” Yusuf said.

Without being too pessimistic, he stated that the fundamentals of the economy are improving, with numerous opportunities and potentials, crude oil prices and output levels have recovered, foreign reserve is improving and inflation on a steady decline, hoping that these impressive outcomes will be sustained into a better part of the year.

He explained that given the prevailing economic fundamentals and with government commitment to sustain economic reforms, the LCCI projects the GDP growth to record three to four per cent this year; oil price to average around $50 per barrel; external reserve to hit $40 billion mark; and Headline Inflation at 13 per cent.

According to him, for Nigeria to sustain the present economic recovery and achieve the growth forecast, it must adhere to aggressive investment in infrastructure to boost productivity in the economy, reduction in multiplicity of exchange rates, alignment of procurement policies at all levels of government to support domestic investment; investment policy that would protect domestic investors; tax policy that is investment friendly; and interest rate policy that is investment friendly.

“Current reforms in such critical sectors as power, agriculture, solid minerals and oil and gas should be sustained.“The executive orders signed in May last year should be fully enforced to improve the way government does business, thereby improving the business environment,” he stated.

United Kingdom-based Fitch Ratings, in its prediction, stated that Nigeria’s economy would experience growth this year, with about 2.6 per cent, which is a bit higher than the International Monetary Fund’s (IMF) 1.9 per cent projection.The global rating organisation, in its latest report on Nigeria, noted that a revival of the economic growth by sustained implementation of coherent macroeconomic policies could lead to positive rating, while a failure to realise an improvement would be negative for the country.

According to its spokesperson, Peter Fitzpatrick, the recovery would be driven mainly by increased foreign exchange (FX) availability to the non-oil economy and fiscal stimulus, as higher oil revenue and various funding initiatives have raised government’s ability to execute capital spending plans.He noted that the growth forecast was subject to downside risks, as the FX market “remains far from being fully transparent and domestic liquidity have become a constraint.”

On Nigeria’s public finances, the agency pointed out that the failure of the Federal Government to narrow the fiscal deficit, leading to a marked increase in public debt, would be negative for the government, while it expects higher revenues to drive a narrowing of the general government deficit to 3.4 per cent, as oil production rises and the overall economy recovers.

According to the firm’s baseline projections, the Gross General Government Debt (GGGD) would continue to rise to 29 per cent of GDP in 2026, saying the main risk to debt sustainability would be a failure to reduce the primary budget deficit, which could bring the debt level to 45 per cent of GDP over the same period.

On the impact the delay in approval of this year’s Appropriation Bill would have on the economy, Fitch said: “The government has again faced delays in getting parliamentary approval for the budget, with much of the delay coming from legislators seeking more spending in their respective states.

“This will remain an obstacle to a smooth budgeting cycle, as the next general election in 2019 approaches and members of the National Assembly focus more on shoring up their own regional political bases.”The IMF had in its prediction cautioned that the growth expansion would remain subdued due to population growth, stressing that the projected growth was still lower than the 2.7 per cent population growth rate.