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Real sector needs right policies on taxation, regulations and trade, says LCCI

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Muda Yusuf


The Director General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, has called for the consolidation of the current reforms in the oil and gas, and electricity sectors of the economy in 2021.

Speaking with The Guardian, he said: “First, government needs to sustain the current reforms in the petroleum sector and cost-reflective tariff to ensure that we have the much-needed investment in the oil and gas, as well as electricity sectors.

“As you know, energy is a big issue in the Nigerian economy and the only way we can turn around the energy sector, particularly the electricity sub-sector, is to make it attractive for investors so that they can continue to put in money.
 
“If we get electricity right, other sectors in the economy will be positively impacted. So, we have to see a sustained commitment to ensuring a cost-reflective tariff.

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“This is also applicable to the petroleum sector. We have the downstream with the deregulation initiative, although it is still partial in some ways, as the sector is not fully deregulated. However, it is a welcome development.”
 
Yusuf added: “Government had to backtrack a little and it is understandable because of the social and political environment, considering that if we had to continue to reflect the pump price strictly to oil price, there will be issues politically and socially. So, the government had to tread softly. The journey has started and we are on the right path.
 
“For the upstream sector, we have the Petroleum Industry Bill (PIB), which needs an accelerated consideration, because the oil sector is no longer attractive as it used to be globally and we have to get the policy environment right, else we may lose out completely.

“Focus is moving away from fossil fuel to electric and renewables. So, we need to quickly get whatever benefit we can get through the quick passage of the PIB, but not in the current form, because it is still eliciting some concerns from the upstream sector investors.

“So, there has to be proper consultations with the investors in the upstream to get the right kind of quality legislation to support investment in the upstream sector.”
 
He called on the government to fix the seaports, saying: “As a matter of fact, the state of our seaports is one of the biggest embarrassments in the country today. There have been issues with the quality of facilities at the ports, corruption with multitude checking and checkpoints within the port by the Customs and terminal operators. There is also the issue of traffic gridlock and checkpoints even outside the port when cargoes have been cleared.

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“So, we are hoping that this year, all these anomalies will give way. Government needs the political will to reform the port and the Nigeria Customs Service (NCS).

“We need to get the economy ready for the African Continental Free Trade Area (AfCTA), which is going to throw up a lot of opportunities and challenges, particularly for the real sector because of competitiveness issues that will arise from it.”

We need to do whatever we can to support the players in the real sector, so that they don’t lose out completely in the after regime.
 
“Government needs to support them with infrastructure, which may not be delivered immediately, but should be top on the agenda. Government also needs to support them with the right policies around taxation, regulations and trade.

“All these are necessary to strengthen the competitiveness of the real economy, so that when we step fully into the after, businesses will be able to survive and the economy will also be able to benefit.

“Lastly, government needs to fix the security challenges in the country, as the security situation is becoming very threatening and embarrassing at the dawn of each new day and it is not giving confidence to investors. I don’t have details of how it can be fixed, that is the responsibility of the government and experts in that field, but we just have to get it fixed, whatever it takes.”

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On the fiscal projections for the year, the LCCI boss said he was not so optimistic, as they are dependent on oil price, which at the moment are not so fantastic, with the country’s oil output also not looking bright due to OPEC production policy.
 
“So, there isn’t much that we can expect, in terms of revenue that is so dramatically different from what we have, especially in terms of tax revenue, which is a function of economic performance.

“At the moment, the economy is still struggling with recession and this may continue until the end of the first quarter (QI). So, if the economy is slowing down, the revenue cannot grow.
 
“There is need for a correlation between revenue and performance of the economy itself. Don’t forget that we have issues of heavy debt burden. So, the fiscal outlook is not looking so fantastic, but what is important is for government to put the right policies in place to build an economy that is robust, then the fiscal outlook for the year will be fantastic.”   

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