Supply chain, production base disrupted by worsening insecurity
The Lagos Chamber of Commerce and Industry (LCCI), has declared that the worsening security challenges in some parts of the country have shrunk the production base of the economy such that supply chains and foreign Investors have been disrupted along the value chain, thus leading to scarcity of goods in the domestic market.
The chamber opined that, with the worsening security perception in the country, foreign investors are not interested in bringing in FDIs to Nigeria noting that despite Nigeria’s economic backdrop, the year 2021 was characterised by significant trends of recovery in the global and domestic economy.
It said with the vulnerabilities, the risk to economic recovery, macro-economic and financial recovery remained elevated.
These were the findings of the former LCCI president, Mrs Toki Mabogunje, following the chamber’s yearly meeting on the review of the state of the economy.
According to her, the pandemic aggravated the myriads of challenges facing the country.
She identified some of them to include sustained double-digit inflation, unsustainable debt profile, revenue mobilisation challenges, budget disruption, foreign exchange illiquidity, disruption to business and commercial activities, reduced disposable income, escalation in poverty, unemployment rates, as well as reduced investor confidence, among others.
The former LCCI president commended the fiscal and monetary authorities, as well as the private sector for their concerted efforts in mitigating the adverse effects of the public health crisis on the economic and business environment adding that this has led to a downward trend in the number of confirmed cases of Covid-19 and sustained recovery in business activities.
She emphasized that the response by the government to the disruptions and economic shocks have seen the implementation of key reforms that the organised private sector had been advocating over the years while stressing that notable amongst these reforms are the passage of the Petroleum Industry Act 2021, the proposed removal of fuel subsidy, and increased investments in rail infrastructure.
Mabogunje affirmed that the LCCI has remained resolute in promoting investment-friendly policies that support private sector development.
This, she said, the chamber had been consistent in public advocacy, particularly in protecting the business interests of its members.
Speaking on inflation, she said despite the downward trend of the inflation rate, it is worrisome that the inflation rate has remained at double-digits while citing structural factors such as persistent pressure on food prices due to disruption to the agricultural value chain, the higher energy cost for industries, foreign exchange scarcity, insecurity in agro-producing states and poor infrastructure have continued to drive consumer prices at a double-digit rate.
Continuing, she projected that looking forward, inflation is expected to sustain its double-digit level in the short to medium term largely driven by persistent food supply shocks, foreign exchange illiquidity, higher energy costs, potential removal of fuel subsidy, insecurity and social unrest in the Northern region.
While describing her presidency at the LCCI, Mabogunje said “I was a COVID-19 president, when people ask me about my tenure, I say to them that I was a Covid president, who became president at a very challenging time in our over hundred years history.
“I came in at a time when there was a global health crisis when Covid-19 was ravaging the world with disruption to global supply chains and economic lockdowns, We did our best as a foremost chamber to turn our adversities into triumphs, challenges into opportunities.”