By Bimbola Oyesola 08033246177, [email protected]
Unless the knotty issue of insecurity is addressed, increased agricultural production will be insufficient to reduce inflationary pressures, says the Nigeria Employers’ Consultative Association (NECA).
According to NECA, despite the Nigerian government’s reopening of land borders, which were closed since October 2019, inflation hit a four-year high of 18.1 per cent in March 2021.
President of NECA, Taiwo Adeniyi, in his address at the 64th annual general meeting of the employers’ body, noted that, while Nigerians expect higher agricultural production to relieve inflationary pressures in the coming months, the positive impacts could be thwarted by repeating significant structural obstacles such as food shortages, energy tariff hikes, fuel price hikes and increases in transportation and logistics costs.
The association also projected a slow but positive growth closing of the economy at 2.2 per cent to 2.5 per cent.
Adeniyi noted that there is growing concerns of stagflation. Where inflation rate is high at 17.9 per cent, food inflation at 22.72 per cent, economic growth rate slows, and unemployment remains steadily high (33.3 per cent), second highest after Bosnia & Herzegovina and Namibia (33.4 per cent).
He warned that the combination of rising unemployment and prices and low growth, often described as “stagflation,” could trigger significant social unrest.
The International Monetary Fund (IMF) had earlier predicted a 2.5 per cent growth and 16 per cent inflation rate by end 2021,
The employers’ body also said it expects the Monetary Policy Committee (MPC) to introduce tighter monetary options to curtail the rising inflationary trend.
Adeniyi, who highlighted some policy recommendations and future outlook in charting new economic directions for the country’s long-term growth, stated that more effort was needed and greater political will critical for the economy to continue on the path of steady growth.
According to him, curtailing rising insecurity and regional agitations would bring to the fore positive policy direction in the next two quarters. He said, following government’s constrained fiscal space, investment in critical sectors would drive economic recovery and sustain growth momentum in the medium term.
He maintained that attracting and retaining investments into critical sectors in Nigeria would require a stable environment, where policies are fairly predictable or at least policy uncertainties are reduced to the barest minimum.
For Nigeria to become strong and robust, the NECA president emphasised the need to achieve high and steady economic growth.
He reasoned that Nigeria, which required more than just a resurgence of the economy, must also increase inclusiveness of growth, arguing that, for decades, the nation had battled to create inclusive growth, with the economy on a shaky growth path since recovering from the 2016 recession and the COVID-19 pandemic that threw it back into another recession in 2020.
He said, “With the devastating impact of the twin phenomena of poverty and unemployment, as the level of insecurity continued to accelerate, the conversation for achieving inclusive economic recovery has never been more important.
“Government and relevant stakeholders must work together to address the constraints to value-chain development in high-growth and employment-elastic sectors such as manufacturing, construction, trade, health, professional services with information and communication technology and renewable energy sectors as growth enablers.”
In their remarks, International Labour Organisation, director for Nigeria, Ghana, Sierra-Leone and Liberia and liaison office for ECOWAS, Vanessa Phala, pledged the body’s support to employers from an economic view to address interventions comprehensively.
President of the Nigeria Labour Congress (NLC), Ayuba Wabba, stated that Nigeria lacked the competitiveness to excel, as it was not manufacturing to optimal capacity to create more jobs.
Wabba, speaking on the Africa Continental Free Trade Agreement (AfCFTA), stated that the rule of origin must be respected so that Africa, and indeed Nigeria, would not be turned to a dumping ground due to the large population and viable economy.
On challenges bordering on multiple taxation, policy inconsistency, high inflation rate and devaluation of the naira, he saif there was an urgent need to address the challenges and reverse the negative trend.
The labour leader advised that government needed to create the conducive environment for businesses to thrive, adding that Nigeria was sitting on a time bomb, considering the large number of unemployed youths in the country.