‘Economy projected to recover in Q2 in absence of major shocks
LCCI charts path for Nigeria’s growth recovery
Notwithstanding anticipation of slow growth, reflecting the lingering effects of the COVID-19 pandemic on the economy and prospects of stricter containment measures amid a new strain of the virus, the Lagos Chamber of Commerce and Industry (LCCI), has projected a return to positive growth in the second quarter (Q2) of this year.
According to the Chamber, Nigeria’s economic growth trajectory is hinged on effective management of the pandemic locally and globally; widespread vaccine rollout; direction of global oil market, and quality of fiscal, monetary, trade and regulatory policies.
Indeed, LCCI noted that accelerating the pace of economic recovery requires the fiscal and monetary authorities to be well-coordinated to promote growth-enhancing and confidence-building policies that will encourage more private capital inflows into the economy.
The President, LCCI, Toki Mabogunje, at a press briefing on the state of the nation, said investment-led growth strategy is critical for inclusive and sustainable economic growth, maintaining that strong commitment to key reforms will not only boost output recovery but will also put the nation on a path of macroeconomic stability.
“We accordingly recommend a review of the foreign exchange management framework to expand the scope of market mechanism in the determination of the exchange rate. The unification of the exchange rates should be prioritised. This is imperative for expediting recovery and bolstering investor confidence,” she advised.
She also advocated mobilisation efforts in making the business environment more conducive for micro, small and medium enterprises (MSMEs) and large corporate by addressing structural bottlenecks and regulatory constraints contributing to high cost of doing business.
She equally stressed the need for clarity in government’s policy direction by ensuring consistency in economic policies, which is imperative for long-term investment planning and business projections.
Mabogunje said going forward in 2021, the deregulation of the downstream oil industry must be sustained, even as this will not yield the desired benefits for players and Nigerians, given the monopolistic structure of the downstream sector, characterised by huge dependence on the NNPC for products supply.
“We also urge the Federal Government and the Nigerian National Petroleum Corporation to create an enabling regulatory environment that encourages domestic and foreign investment in refineries to boost domestic refining capacity,” she added.
She urged the National Assembly to enact a law that would promote a more effective and efficient governance, administration, host community development and fiscal framework for the petroleum industry. She argued that a competitive Petroleum Industry Bill (PIB) will preserve the integrity of the existing projects, whilst also encouraging future growth of oil production and make Nigeria an investment destination of choice.
“We recommend that the input of the private sector stakeholders should be given due consideration by the National Assembly.
The National Assembly has expressed commitment to passing the PIB before the end of the first quarter of 2021. We believe the passage would also encourage investments in private sector refineries and position Nigeria as a major refining hub in West and Central Africa,” she said.
Mabogunje added that for economic and business sustainability in 2021, businesses must maintain a flexible operational structure by embracing technology to adapt to changing market dynamics, to facilitate smooth transition when implementing remote working structures.
She also stressed the need for business owners to effectively communicate continuity measures with key stakeholders, to responsibly manage diverse expectations from employees, suppliers, customers, partners, etc.
She added: “Corporate entities must constantly review their operating models to identify activities that can be discontinued during this COVID-19 period in order to reduce operating costs and support margin. These disruptions should propel businesses to look beyond their traditional operations and identify new business ideas that can complement their existing operations.”
Mabogunje tasked policymakers to expeditiously develop a framework that would ensure the country has a well-diversified revenue base given the volatilities of crude oil price, noting that it is imperative for macroeconomic stability.