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LCCI expects improved economic growth performance in Q2, Q3

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Toki Mabogunje, President LCCI

The Lagos Chamber of Commerce and Industry (LCCI) forecasts an increase in the growth performance index in the second and third quarters of 2021.

The President of LCCI, Mrs Toki Mabogunje, made the prediction at the LCCI quarterly press briefing on Tuesday in Lagos..

According to her, the expected growth in subsequent quarters is on account of improved economic activities in the non-oil sector, supported by higher oil prices and production.

Mabogunje, however, noted that juxtaposing Nigeria’s current growth level with its estimated 2.7 per cent population growth implied a slow paced economic growth.

She said that the development was not fast enough to create new opportunities to accommodate the rapidly growing population.

She called on policymakers to pursue critical reforms to bolster confidence in the economy, accelerate post-pandemic recovery and alleviate poverty.

“Accelerating the pace of recovery requires both fiscal and monetary policymakers to be well-coordinated in promoting growth-enhancing and confidence-building policies that would encourage private and foreign capital inflows into the economy,” she said.

Mabogunje said that sectoral performances for the first quarter of 2021 were sluggish as eight sectors reported expansion while 11 sectors contracted.

She noted that the growth was driven by the non-oil sector, which expanded by 0.79 per cent in the quarter under review.

The LCCI president attributed the marginal improvement to sustained relaxation of COVID-19 restriction measures and further reopening of the economy.

“Agriculture demonstrated resilience in the first quarter amid heightening insecurity and lingering supply chain disruptions orchestrated by the pandemic.

“Manufacturing returned to positive growth trajectory after three consecutive quarterly contractions, partly supported by developmental finance intervention of the Central Bank of Nigeria (CBN).

“Segments of manufacturing with high levels of backward integration had lesser degrees of shocks from foreign exchange crisis in the economy.

“We note the sustained recovery in the construction and real estate sector, supported by improved activities of private and public sectors associated with implementation of capital projects,” the LCCI president said.

She said that the ICT sector maintained an impressive performance in the quarter under review, adding that it was expected, given the opportunities created for technology in the post-pandemic era,” she said.

Read also: LCCI boss, Yusuf, seeks holistic approach to power sector challenges

On electricity, she said that cost-reflective tariff appeared to have impacted positively on the electricity sector which recorded 8.66 percent.

She, however, said that some issues had yet to be resolved in the electricity sector.

“Electricity supply in many parts of the country is still epileptic; the metering programme is not keeping pace with demand,” she said.

On foreign exchange, Mabogunje said that the chamber welcomed the adoption of the Nigerian Autonomous Foreign Exchange Rate (NAFEX) as the official exchange rate.

She said that unification was expected to improve the country’s currency management framework, given that the multiple exchange rate system had been creating uncertainty and was a source of arbitrage.

According to the LCCI president, the foreign exchange market was still faced with liquidity challenge.

“While the CBN has adopted the NAFEX rate as the official rate in the gradual transition to a unified exchange rate system, the currency market is still beset with persisting liquidity challenge evidenced by wide premium between the NAFEX and parallel market rates.

“There is a need for the CBN to scale up its intervention efforts and roll out more friendly supply-side policies to boost liquidity in the market.

“This would help to bolster investor confidence and attract foreign investment inflows into the economy,” she said.

She called for deliberate efforts toward making the business environment more conducive for micro, small and medium enterprises and large corporates.

The LCCI president said that this could be achieved by addressing structural bottlenecks and regulatory constraints contributing to high cost of doing business.

Mabogunje also called for deepening of deregulation efforts in the downstream oil industry by ensuring market-reflective pricing model for petroleum products.

“A supportive and conducive investment environment is critical in facilitating private sector involvement in economic recovery process.

“Holistic and dynamic review of the security architecture to address the seemingly worsening security situation in the country is also very imperative,” she said.

Mabogunje lauded inauguration of the National Steering Committee of the National Poverty Reduction with Growth Strategy.

She said that the calibre of its membership spoke of President Muhammadu Buhari’s commitment to lifting 100 million Nigerians out of poverty by 2030.

She said that what would make a difference between the programme and previous ones would be implementation and appropriateness of the strategy.

“A major deliverable of the committee should be the co-ordination of these initiatives to avoid duplication of efforts and working at cross purposes.

“Building the capacity of the economy to create wealth and jobs should receive greater attention.

“This should apply to all strata of economic players – micro enterprises, small businesses, medium enterprises and large corporates.

“We should also prioritise investment in human capital, especially education and wealth, both of which are becoming increasingly inaccessible by many households,” she said.

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