By Merit Ibe
The Lagos Chamber of Commerce and Industry (LCCI) has lamented the worsening security situation in the country, currently putting agricultural production, manufacturing value chains and logistics in harmsway.
President of the chamber, Michael Olawale-Cole, who made the remark during his address on the state of the economy yesterday, forecasted that in the third quarter of 2022, several factors will weigh on the growth of the economy including Central Bank of Nigeria (CBN) rate hike as well as rate hikes by other central banks around the world.
He noted that the rising energy costs with diesel above N800/litre, Jet-A1 at N710 per litre and PMS selling above the government-regulated price of N165/litre, will continue to aggravate production costs which may lead to restrained manufacturing and eventual job losses.
“The worsening security situation in many parts of the country will continue to threaten agricultural production, manufacturing value chains and logistics.”
The LCCI boss also noted that the chamber expects to experience some fiscal constraints because of debt overhang accompanied by a high debt service burden and heavy subsidy costs. “There are therefore heightened fears of contracting output, constrained production and recession risks as we navigate the murky waters of 2022.” He said
To sustain the pace of recovery, LCCI recommended a well-coordinated fiscal and monetary policies in promoting growth-enhancing and confidence-building policies that would encourage private and foreign capital inflows into the economy.
He advised that to ensure food security, agriculture output should be sustainably boosted and to discourage continued dependence on imports.
“For food security, scarcity is looming large on the horizon and if nothing smart and quick is done, it would further exacerbate the plight of the poor.
“The Human Development Index (HDI) of Nigeria, which is the index used by the United Nations to measure real development in a country, was 0.539 points in 2019, leaving it in 161st place in the table of 189 countries last published.
While the Central Bank of Nigeria (CBN) embarks on monetary tightening to tame inflation, it should ensure that targeted concessionary credit to the private sector is sustained for MSMEs.
“The CBN needs to initiate a gradual transition to a unified exchange rate system and allow for a market reflective exchange rate. The CBN also needs to roll out more friendly supply-side policies to boost productive sectors, bolster investor confidence and help attract foreign investment inflows into the economy.