The Lagos Chamber of Commerce and Industry (LCCI), at the weekend, charged the President Bola Ahmed Tinubu-led administration to focus more on economic diversification, improved power supply, infrastructure, stronger monetary policy, enhanced revenue generation and jobs creation to achieve a viable and resilient economy.
It also urged the Federal Government to do more in tackling insecurity, rising inflation, support the agricultural sector, Small and Medium Enterprises (SMEs) and Information and Communication Technology (ICT) sectors to further grow and develop the country’s economy and improve the socio-economic well being of all Nigerians.
Director-General of LCCI, Dr. Chinyere Almona, gave the charge in a paper titled: One Year On The Saddle: LCCI’s Assessment Of President TinubDr Administration on Saturday, June 1, 2024 in Lagos.
Presenting an executive summary of the government’s performance in the last one year, she said: “Generally, the economy has been in an adjustment mode with several variables like stubborn inflation, persistent weakening of the Naira, supply chain disruption driven by insecurity and weak production base, defining the outlook at any given time.
“While policy choices have been liberal on the sides of the monetary and fiscal authorities, expected outcomes have not been recorded yet. Some bold decisions were taken at some point with sincere intentions of fixing structural deficiencies.
“Significant decisions were removing fuel subsidies, harmonizing official and parallel exchange rates, and adopting a cost-reflective electricity tariff, among others. There is now the need for a systematic review and evaluation of these policies to achieve the best-desired outcomes.”
Almona argued that the Gross Domestic Product (GDP), which is the leading economic performance indicator, is a favourable comparison between the GDP recorded in the first quarter of 2024 (2.98 percent) and 2.31 percent in the corresponding period of 2023.
“We understand that generally, the beginning of any year presents with slow growth dynamics which are expected to pick up in subsequent quarters. However, suppose we must achieve the government’s target of 3.37 percent
The issues of power supply, rising cost of production, foreign exchange (FOREX) illiquidity and its impact on imported raw materials for manufacturers, making better choices of monetary instruments and dealing with the security challenges that hitherto have impeded agricultural production and supply chain disruptions must be addressed,” she stated.
On the continuous rising inflation, she noted that the fight against inflation has not been successful, as the prices of goods keep increasing, with the inflation rate rising from 22.22 percent in April 2023 to 33.69 percent in April 2024, recording over a 10 percent leap in 12 months.
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“In attempts to curb the flaring inflation, the Central Bank of Nigeria (CBN), through the instrument of rate hikes, has consistently increased the benchmark rate, the Monetary Policy Rate (MPR), within the last 12 months.
“This has made borrowing costlier and constrained new credit for productive activities. This has continued to weaken our production base and impede new job creation in the economy,” she said.
Giving further breakdown of the President’s performance, she said Tinubu signed a budget of N28.7 trillion in 2024 tagged “Budget of Renewed Hope,” comprising N1.74 trillion for statutory transfers, N8.27 trillion for debt servicing, non-debt recurrent expenditure of N8.76 trillion and capital expenditure of N9.99 trillion.
“Nigeria’s debt stock was N97.34 trillion ($108.22 billion) at the end of 2023, compared to N87.38 trillion ($113.42 billion) at the end of June 2023, representing an increase of about N10 trillion. The total public debt stock increase is reflected in domestic and external debt.
“Between May 2023 and April 2024, the Federation Account Allocation Committee (FAAC) disbursement increased by 93.1 percent to N1.87 trillion from N976.3 billion. However, April declined slightly compared to FAAC disbursed in March at N2.33 trillion.
“The Tinubu administration achieved some level of fiscal consolidation, reducing the budget deficit to 4.5 percent of GDP from 5.7 percent the previous year, while public debt levels remain high at 34 percent of GDP, though manageable within the current fiscal framework.
Presenting an overview of sector performance, the LCCI boss explained that the first quarter of 2024 presented some challenges, with nominal GDP growth slowing to 8.21 percent year-on-year, while quarter-on-quarter growth was negative at -17.67 percent, reflecting a contraction, but despite this, the sector’s contribution to nominal GDP remained substantial at 14.79 percent.
“The government must address the FOREX crises, adopt lower exchange rate for import duties on imported raw materials for manufacturing, offer manufacturers concessionary interest rates in the face of shrinking credit to the private sector and ensure the policy environment is stable and predictable,” she added.
On the agricultural sector, she said the President Tinubu administration was impacted mainly by insecurity, fuel subsidy removal and consistent exchange rate depreciation, which increased the cost of fertilizer and other input costs in the first year adding that some parts of the country recorded the worst flooding in history in the last quarter of 2023, significantly affecting crops such as rice, maize and soybeans.
It, however, implemented several intervention policies, including distributing N100 billion fertilizers to boost food production, but affordable food is still a far cry, as the National Bureau of Statistics (in NBS) revealed that food inflation consistently increased in the last 12 years, reaching 40.53 percent in April 2024 compared to 24.82 percent in May 2023.
“In terms of GDP, agriculture sector growth has mainly been sub-optimal. In the first quarter of 2024, the sector grew marginally by 0.18 percent compared to 2.10 percent and 1.30 percent in Q4 and Q3 of 2023, showing a downward trend in the sector’s output.
“To address low agricultural output, the government should address the country’s high level of insecurity and the exchange rate crisis. In addition, the government must incentivize agricultural processing and invest in vital infrastructure such as power and transportation,” she further said.
On the ICT Sector, Almona pointed out that its growth since the second quarter of 2023 has been on a downward trend, reflecting several challenges facing the sector, such as exposures to exchange rate depreciation, poor electricity and high cost of fuel, high interest rates and government policies.
“In Q1 2024, the sector grew by 5.43 percent compared to 6.33 percent in Q4 2023, 6.69 percent in Q3 2023 and 8.60 percent in Q2 2023. In the previous year, several promising tech start-ups in Nigeria with the potential to contribute to the economy’s productivity immensely stopped operation because of the government’s inconsistent approach to policies related to the sector’s support,” LCCI’s performance indicator revealed.
