THE Lagos Chamber of Commerce and Industry, LCCI, has called on the federal government to provide more detailed plans and strategies to tackle the critical socio-economic, and security challenges facing the nation.
Reacting to the New Year address by President Bola Tinubu, LCCI Director General, Dr. Chinyere Almona, who commended the President’s commitment to addressing critical issues that impact the economy, noted that the speech had no clear strategies for tackling the challenges.
LCCI spoke as the Nigeria Employers’ Consultative Association, NECA, warned that there would be no significant growth in the nation’s economic outlook in the next six months, saying the economy would remain bleak as fuel subsidy removal and forex harmonisation worsened socio-economic woes.
Also, the Manufacturers Association of Nigeria, MAN, said the outlook for the manufacturing sector in the first half of 2024 might not be positive,.
No measures to close widening wealth gap
In a statement, Almona said while the commitment to building a fair and equitable society and addressing inequality was commendable, there were no specific policy measures to close the widening wealth gap in the country.
He said: “LCCI appreciates the President’s efforts to address these critical issues facing the nation. However, the chamber urges the administration to provide more detailed plans and strategies to tackle these challenges such as inflation, under-employment, security, and social inequality. A transparent and inclusive approach to governance will contribute to building public confidence and achieving sustainable economic growth.”
Boosting power supply, food production
LCCI applauded plans for the power sector and food production and recommended steps to achieving them.
“The commitment to power projects, including the Siemens Energy initiative and efforts to enhance the reliability of transmission lines is a positive step towards addressing the critical issue of electricity supply, which aligns with the business community’s aspirations for a robust and diversified economy.
“However, there is an urgent need to address the structure of the power sector. The government needs to consider bringing private sector investment into the transmission segment of the power sector. This would ensure adequate technical and financial capacity for a well-functioning sector to power economic growth.
“The focus on cultivating farmlands to grow staple crops and boost food security aligns with the need to ensure constant food supply, security, and affordability for citizens. However, LCCI cautions that the productivity of the farmlands and the effectiveness of investments in food production are subject to adequate security measures. Investment in agriculture has a limited chance of success as long as the government fails to deal with the security issues.”
New national wage
“The announcement of a new national living wage is a positive step towards ensuring the well-being of workers and promoting inclusive economic growth. The dedication to creating a conducive business environment is commendable. The assurance to simplify fiscal and tax policies, the commitment to removing obstacles hindering business competitiveness, and the call for collaboration with the private sector resonate well with the Chamber’s vision for a thriving business environment,” Almona stated.
Managing fuel subsidy removal impact
The chamber also called for the careful management of the impact of the fuel subsidy removal
“LCCI believes that while removing the fuel subsidy was necessary, its impact on individuals, families, and businesses, leading to discomfort, must be carefully managed. The potential ripple effects on the cost of living and inflation must be closely monitored. Acknowledging the challenges of high inflation (above 28%) and an unacceptable under-employment rate is crucial.
“However, specific strategies to address these issues were not mentioned, leaving room for concerns about the impact on citizens.
“While efforts to address security challenges were mentioned, specific details on comprehensive security strategies were limited. The acknowledgment that security problems are not entirely solved raises questions about the effectiveness of current measures.
“The commitment to building a fair and equitable society and addressing inequality is commendable, however, specific policy measures to close the widening wealth gap are unclear,” the statement added.
Economy to remain bleak in next 6 months – NECA
On its part, NECA, the umbrella organization for employers in the country, said the economy would begin to show signs of growth after six months of the government’s pragmatic implementation of various initiated reforms, among others.“In a chat with Vanguard, NECA Director-General, Adewale-Smart Oyerinde, described 2023 as most challenging for businesses, compounded by the petrol subsidy removal and harmonization of foreign exchange rates.
His words: “2023 was a year in which we had significant economic challenges that created different dynamics for organised businesses. While trying to surmount the obstacles that COVID threw on our way, other challenges that we created for ourselves as a people continued to dig us deeper into the hole. 2023 came with many challenges.
Issues that hurt businesses in 2023
“It is now stale news to say tax remains top of the issue that organised businesses faced. Policy inconsistency from 2022 up to the early part of 2023 was also a serious challenge that organised businesses faced. While the last administration made promises, the rate of reversal of those policies made it very difficult for organised businesses to plan.
“Similarly, regulatory and legislative incursion and harassment negated all the attempts at improving the ease of doing business. These were the things that we faced in the early part of 2023.
“After the general elections, he continued: “The new government came up and removed the fuel subsidy, which naturally increased the cost of doing business and living. Just as energy cost skyrocketed, the cost for logistics also skyrocketed. The harmonisation of the exchange rate also came with its own dynamics.
“The value of naira plummeted significantly and we are still trying to find a balance. Forex, which remains scarce, also had serious effects on the cost of doing business for organised businesses, especially those compelled to import inputs.
“All of these things created problems for organised businesses. Though some have said the government is only seven-month-old and it has started on a good trajectory by trying to reverse the pattern of recklessness that we witnessed in the past, we hope that the effect of those policies will start coming to fruition as quickly as possible this new year.
“We know that the last administration supported the naira with over N150 billion on a monthly basis for us to have a seemingly workable naira exchange rate. This government has stopped that pattern. It also stopped the pattern of fuel subsidy that had become a deep hole in the country’s purse while aligning the fiscal and monetary policy environment. This is a positive for us. We are hoping that the foundation that they have set will create an opportunity for the economy to start booming before the end of 2024, so that the pattern of businesses exiting the country and high rate of unemployment will reduce significantly.
For us, 2023 was a challenging year and we hope that the steps taken by this administration will yield positive results this 2024.”
NECA’s outlook for 2024
On the economic outlook for this year, the NECA DG said: “The first and second quarters might not be called definitive quarters for us. Probably, the end of second quarter to the end of the year might be more friendly. For instance, there was a report that the dollar inflow to the country has increased by about four per cent.
”We also know that the Taiwo Oyedele Presidential Committee on Fiscal and Monetary Reforms will round off its work between the first and second quarters of 2024 with the expectations that the implementation of far-reaching recommendations of that committee will start coming up to make the tax environment much more friendly and make tax collection much more efficient as well as reduce the burden of multiplicity of taxes on organised businesses.
“If that is done, it would create a bit of dynamics within the context of multiplicity of taxes – both legal and illegal – that organised businesses are paying.
“As reported, we know that the Port Harcourt Refinery has come on board, Dangote Refinery has received the fourth tranche of millions of barrels of crude oil. The expectation is that, by the reason of both refineries coming on board and one or two modular refineries, the pressure on forex will reduce.
”The forex that is used in the importation of petrol might be saved, resulting in an increase in the volume of forex we have in the country, which could also have an effect on the value of the naira.
“In the long run, it is all about demand and supply because if there is shortage of dollars and huge naira chasing a few dollars, naturally demand and supply say if demand is more than supply, then the price will go up. If supply is more than demand, the price will come down. It is simple economics.
“The price of crude has also increased significantly. This will change the game for the government as more revenue will come in. We also know that a lot of reforms and private sector engagement are going on in most of those agencies.
“If we aggregate all these signals, we might want to say we are getting a semblance of positive vibes. If all these things are implemented conscientiously with a high level of citizen engagement and consensus, there are chances that 2024 will be better than 2023.
“We believe that with continuous engagement and advocacy by the private sector, 2024 will be a foundational year for the prosperity and economic growth we are all anticipating.”
MAN unveils sector outlook for 2024
In like manner, the Manufacturers Association of Nigeria, MAN, Director General, Mr Segun Ajayi-Kadir, in an interview with newsmen, projected that 2024 would be challenging, with a subtle possibility of recovery from the third quarter.
According to him, the envisaged recovery is highly dependent on the deployment of policy stimulus supported with a synthesis of domestic growth, driven by export-focused and offensive trade strategies.
This, he said, would promote resilience, steady growth and ensure that the sector gained meaningful traction in the later part of the year.
He noted that a quick examination of the trajectory of manufacturing globally portrayed a struggling sector challenged by key macroeconomic variables and externalities, leading to dwindling growth.
This, he said, was evidenced by the manufacturing growth rates in China, United States of America, and South Africa with Nigeria not exempted.
He noted that the manufacturing growth rate nose-dived to 0.48 per cent in Q3 2023, against 2.4 per cent in 2021.
Drawing from likely economic dynamics and in the light of the aforementioned, the projections for the manufacturing sector in 2024 are as follows: There will be clarity on the actual and specific policy direction and priority areas of the current administration, especially around deepening industrialisation and we look forward to engaging government in this regard.
“In 2024, sectoral real growth is expected to hit about 3.2 per cent; contribution to the economy will most likely exceed 10 per cent and the Manufacturers’ CEOs Confidence Index is predicted to rise above the 55 points threshold by the end of Q4 2023.
“Average capacity utilisation will still hover around the 50 per cent threshold as the foreign exchange related challenges and high inflation rate limiting manufacturing performance may linger until mid-year.
“The sector may experience a meagre improvement in manufacturing output as foreign exchange and interest rates related challenges are expected to subside from the third quarter.”
Ajayi-Kadir added that higher manufacturing output was envisaged from the beginning of the third quarter of the year as the government disburses capital provisions of the budget to abandoned, ongoing and new capital projects with expected special preference for locally made products.
He said the ongoing concessions of seaports, airports and roads might also provide opportunities for the cement sub-sector and contribute to infrastructure upgrades needed to enhance manufacturing productivity.
He said results of the emerging upward surge in global oil prices, domestic oil and gas production, local refining of petroleum products and projected gains of exchange rate unification would promote stability in the foreign exchange market.
This, he stated, would impact manufacturing positively from the second half of the year and lead to reduction in the pressure on demand for foreign exchange and improve the inflow of export proceeds from oil and gas.
“We should expect dynamic implementation of the Electricity Act 2023, which will increase private investment in renewable energy, enhance energy efficiency and improve electricity supply to the manufacturing sector.
“The improved electricity supply will ameliorate the issue of inadequacy, reduce the disruptions occasioned by frequent outages and in turn improve energy security.
“In broad terms, the year 2024 may start on a tough note for manufacturing but may end with some measured improvements because the envisaged policy reforms, improved commitment to domestic production and general positive outlook seems favourable for the sector,” he said. (Vanguard)
