Reforms in real sector, agric needed to stimulate economy

Although latest data from the National Bureau of Statistics (NBS) showed that the Gross Domestic Product report for the 2019 fiscal year reflected an economy growing by 2.27 percent in 2019, operators in the real sector have urged the Federal Government to embrace structural, policy and regulatory reforms to unlock the huge growth potentials in the economy.

According to the operators, the recorded growth remains weak and reflects the slow recovery from recession. They noted that despite being the biggest beneficiary of CBN’s push for credit flows into the real economy, productivity in the manufacturing sector continues to be challenged by tough operating environment, poor infrastructure and unpredictability of government policies.

Similarly, agriculture productivity is noted to be threatened by insecurity issues in the food-producing region, notably farmers-herders tension in the Middle Belt, poor road and railway network and adoption of outdated farming methods by small scale farmers.

The suboptimal performance of trade was attributed to border closure, high inflation, which affects purchasing power, foreign exchange exclusion policies, poor domestic connectivity and security issues.

Indeed, the NBS report for the manufacturing sector, stated that in the fourth quarter of 2019, the sector grew by 26.29 per cent year-on-year.

This is 7.27 percentage points lower than the 33.57 percent recorded in the corresponding period of 2018 and 13.40 per cent points lower than the preceding quarter’s figure of 39.69 per cent.

The NBS put the contribution of manufacturing to nominal GDP in the fourth quarter at 11.37 per cent, higher than the 10.11 per cent recorded in the corresponding period of 2018.

According to the Manufacturers Association of Nigeria (MAN), manufacturing contribution to GDP rather remained stagnant at 8.74% in the last quarter of 2019, adding that the development clearly depicts that the manufacturing is still struggling.

“This is not too good for an economy that will soon be exposed to the vagaries of the AfCFTA that would commence effectively July 2020. It also reemphasizes the need for Government to consciously continue to address the perennial issues hindering optimum performance of real sector of the economy to guarantee improved performance and sustained growth”, MAN President, Mansur Ahmed said.

To the Lagos Chamber of Commerce and Industry (LCCI), the economy is not growing fast enough to create opportunities for the citizens, while the performance of key sectors that have the capacity to facilitate economic diversification is still largely constrained.

Its Director-General, Muda Yusuf, said: “The assessment of realities in the macroeconomic environment suggests that the economy is yet to recover from the 2016 recession. Growth is still sluggish and weak to create employment opportunities for the fast-growing population and lift millions of Nigerians out of poverty. There is need for government to embrace structural, policy and regulatory reforms to unlock the huge growth potentials in the economy”.Yusuf said these shocks would remain as long as the country remained critically dependent on crude oil both for revenue and foreign exchange earnings.

“There is need to fix power challenges to reduce cost and enhance competitiveness and ensure patronage of locally produced items. Government needs to curb smuggling and dumping, while urgent need to reform port processes and ensure better port infrastructure.

“For the trade sector, government needs to improve domestic connectivity through better transportation infrastructure, promote ease of cargo clearing process as well as economic integration at the sub-regional and continental levels, while also addressing cross-border trade challenges”, he added.