Emerging risks, rising energy costs cloud GDP growth projections, says LCCI

Notwithstanding projections of a positive growth for the country’s economy in the fourth quarter, the Lagos Chamber of Commerce and Industry (LCCI) has expressed concerns about emerging shocks, threats...

Michael Olawale Cole, President of LCCI

Notwithstanding projections of a positive growth for the country’s economy in the fourth quarter, the Lagos Chamber of Commerce and Industry (LCCI) has expressed concerns about emerging shocks, threats, and risks that have created fears of slowing growth and even recession in the coming quarters going into the new year 2023.
According to the chamber, with the worsening security challenges in some parts of the country, forex scarcity, and high energy costs, growth may shrink as production bases come under siege, and supply chains disrupted leading to scarcity of goods in the markets.

The LCCI added that worsening security perception about the country, and the coming of a new government, foreign investors are not interested in bringing in investment to Nigeria at this time.

The chamber had projected that the Nigerian economy would end the year 2022 with a positive growth territory within the region of three and four per cent.

President, LCCI, Dr Michael Olawale-Cole, said this at the chamber’s yearly general meeting in Lagos, yesterday. He noted that the rising cost of diesel and persisting poor power supply have pushed businesses to run on unsustainable costs and produce at uncompetitive prices.

“This can lead to job losses if the output is constrained due to the unbearable cost of production. If not quickly tackled, these challenges will likely subdue the GDP growth potentials and projections for 2022. The most sustainable solution to Nigeria’s power shortages is the transition to renewable energy and the decentralization of the national grid”, he added.

The LCCI President stated achieving the chamber’s projected growth trajectory required the fiscal and monetary sides of the economy to promote policies that encourage private capital flows to the economy.

He said that fiscal and monetary authorities must develop a medium-term growth plan anchored on boosting local production, supporting ease of doing business and attracting private investment.

Olawale-Cole added that the authorities must also develop physical and soft infrastructure, business-friendly regulatory policies, economic diversification, and employment generation among others.

“We have, however, in the course of the year, advocated for a well-coordinated synergy between the fiscal and monetary authorities, as well as members of the private sector in navigating the uncertain economic terrains.
“We would continue to engage with the government in creating an enabling business environment where the private sector is empowered to create jobs and generate revenue for the government,” he said. Olawale-Cole projected that inflationary pressures would sustain its double-digit level in the short to medium term.

This, he explained, was largely driven by persistent food supply shocks, foreign exchange illiquidity, higher energy costs, speculative spending based on the Naira redesign policy, insecurity, and electioneering campaign spending.

“These structural factors will continue to mount pressure on domestic consumer prices,” he said. Addressing the power sector, the LCCI President noted that the frequent collapse of the national grid showed that it could not supply sufficient power to meet the electricity demand of Nigerians.

He added that the sector recorded issues of vandalisation, disrupted gas supply, inability of distribution companies to take up generated power and the challenges of achieving 100 per cent metering for power consumers.

Olawale-Cole said the activities of the chamber’s service committees and sectoral groups were sustained during the year in spite of the numerous challenges of the business environment.

According to him, all the committees and sectoral groups performed very well and the achievements recorded could not have been possible without the support and cooperation of everyone.

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