‘One year after, economic policy remains unclear’
• Macro-economic outlook maintains southward trend
• Sectoral indicators on steady negative rating
• Mohammed lauds govt’s great strides, Gbajabiamila says budget contains blueprint
While the policy of checking corruption is laudable, the absence of a well-structured, broad-based and synergised blueprint for development is largely responsible for the current economic crisis the nation is undergoing, the Lagos Chamber of Commerce and Industry (LCCI) has declared.
In its assessment of President Muhammadu Buhari’s administration after one year, the chamber stated that the unclear economic policy had fuelled worsening inflation, while the general macro-economic outlook such as the gross domestic product (GDP), interest rate, fiscal deficit (debt profile) and foreign direct investment (FDI) remain negative with attendant consequences on business and the economy as a whole.
According to the Director-General of the LCCI, Muda Yusuf, while the anti-corruption war is ongoing with emphasis on recovering looted funds from both onshore and offshore havens, government needs to implement reforms that make corruption difficult to thrive.
Indeed, a review of activities across the sectors showed a negative profile between June 2015 and May 2016.
For instance, the agricultural sector recorded a 1.61 per cent decline in growth from 4.70 per cent in 2015 to 3.09 per cent in 2016, followed by the industrial sector which further slipped into recession, dropping by 8.02 per cent, while the services sector recorded a sharp decline in growth by 6.24 per cent.
But faulting the notion that the government has no clear economic blueprint, Leader of the House of Representatives, Femi Gbajiabiamila, yesterday said that the 2016 budget contained the economic policies of the administration.
Fielding questions yesterday during the second edition of the quarterly report on legislative activities of the House of Representatives, Gbajabiamila also revealed that President Muhammadu Buhari was influenced into accepting deregulation and fuel price increase based on the reality on ground.
The lawmaker who also acknowledged the unfavorable economic predicament Nigerians were passing through, however, said the experience was not peculiar to the country, as, according to him, other countries were also passing through economic hardship.
Speaking in the same vein, Minister of Information and Culture, Alhaji Lai Mohammed yesterday insisted that the administration had made great strides towards fulfilling its promises.
He thanked Nigerians for their support, understanding, perseverance and trust that they reposed in the leadership of Buhari in the past year and also assured Nigerians that the change the administration promised is real, despite the tough situation .
At a meeting with members of the Broadcasting Organisation of Nigeria (BON) in Abuja, Mohammed noted that the nation is passing through a very difficult situation, with the loss of over 60 per cent of the national income due to the crash in the price of crude oil.
The LCCI’s review showed that the aviation sector equally witnessed a decline with some players exiting the country, while the real estate industry continues to experience an increasing rate of vacancies for both commercial and residential real estates.
In terms of power, the average hour of electricity witnessed by consumers dropped to five hours from 13 hours, even as consumers continue to pay much higher with rampant cases of estimated billing system, while non-performing loans from the financial sector rose by 38.6 per cent due to the inability of ailing firms to service their loans.
To check the negative outlook, he stated that policy attention should be focused on monthly developments in general price level while improving the ease of doing business through efficient business environment vis-à-vis effective infrastructure in all facets of the economy.
According to him, there is an urgent need for a central and detailed policy strategy with a well-designed direction for effective and efficient coordination and implementation, noting that policy conception is faulty, hence, policy coordination and implementation suffer serious setback.
“The Lagos Chamber of Commerce and Industry recognises the fact that the current economic situation is challenging. The global economic reality, fall in global oil prices, economic policy shortcomings and insurgency all play a very critical role in the weak economic performance of the country. In realisation of these challenges, government efforts at stabilising the economy are commendable.
“We commend government’s efforts in fighting corruption which has become endemic in our system. For instance, the level of impunity in governance has reduced drastically due to government anti-corruption stance. This is creating a positive brand for the country globally.
However, while the anti-corruption war is still ongoing with emphasis on recovering looted funds from both onshore and offshore, it is our wish that government review its processes and implement reforms and frameworks that make corruption difficult to thrive.
“The fight against insurgency has also yielded some good results. This remarkable success in containing insurgency also deserves commendation.
We urge the government to pay more attention to the growing security breaches coming from groups such as the armed herdsmen and the Niger Delta Avengers. This is very important because the economy can only thrive in a peaceful and secure environment,” he added.
Yusuf noted that the imperative to make very strong moves to resolve the weakening oil revenue and find creative ways of incentivising forex inflow to Nigeria so as to boost liquidity and ease access to forex through alternative sources such as FDI in critical sectors of the economy and the Diaspora remittances.
“We welcome government’s recent removal of subsidy on kerosene and PMS. However, we call for full deregulation of the downstream petroleum sector. This will reduce distortions in the downstream oil industry, eliminate corruption that has marred the sector over the years, increase government revenue while empowering the government to fund infrastructure and other social interventions.
“There is also a need for clarity on what the CBN describes as a special window for critical transactions for which preferential rates will apply. We would like to caution against possible abuse and distortions that such a window could create.”
According to the group, as an immediate measure, relaxing the impediments that will allow liquidity to flow into the autonomous forex market is desirable.
“Though the budget has been signed into law after about four months of delay, we expect marginal recovery in economic activities as soon as the disbursement of capital projects and social intervention programmes start. The 2016 budget assent and implementation should give rise to a positive macro environment. However, inflationary impact remains a concern as the presidency will become more practical in its quest to deliver on some critical electoral promises”, LCCI advised.