The Lagos Chamber of Commerce and Industry (LCCI) has said Nigeria’s strong commitment to key reforms in 2021 would not only boost output recovery but would also put the nation on a path of macroeconomic stability.
LCCI President, Mrs Toki Mabogunje projected a return to a positive growth path for the Nigerian economy in the second quarter of 2021 while addressing Jounalists at the first edition of the chamber’s quarterly news conference.
Mabogunje hinged the country’s recovery prospects in year 2021 on the local and global effective management of the pandemic, widespread vaccine rollout, direction of global oil market and the quality of fiscal, monetary, trade and regulatory policies.
For economic and business sustainability in 2021, the LCCI President advised businesses to maintain a flexible operational structure by embracing technology to adapt to changing market dynamics.
However, she noted that the projection was subject to the absence of major economic shocks.
Mabogunje said that the projected recovery was expected to be subdued within the region of one per cent.
“Projections by the World Bank and the International Monetary Fund put Nigeria’s annual average growth for year 2021 at 1.1 per cent and 1.5 per cent, respectively.
“Expectation of slow growth momentum reflects the lingering effects of the pandemic on the Nigerian economy and prospects of stricter containment measures considering the new strain of COVID-19 pandemic.
“In the absence of major shocks, the Lagos Chamber expects the economy to return to positive growth path in the second quarter of year 2021 albeit the pace of recovery is expected to be subdued within the region of one per cent,” she said.
She also brought to the fore the need for business owners to effectively communicate continuity measures with key stakeholders.
This, she said, would help to responsibly manage diverse expectations from employees, suppliers, customers, and partners.
Mabogunje also advocated the imperative of self-reliance with respect to food security, drug security and energy security.
“Corporate entities must constantly review their operating models to identify activities that can be discontinued during this COVID-19 period in order to reduce operating costs and support margin.
“The need for policymakers to expeditiously develop a framework that would ensure the country has a well-diversified revenue base given the volatilities of crude oil price is critical.
“Deepening efforts to improve and sustain investment in human capital development, particularly education and health infrastructure, is crucial.
“Also, a review of the foreign exchange management framework to expand the scope of market mechanism in the determination of the exchange rate must be done.
“The unification of the exchange rates should be prioritised. This is imperative for expediting recovery and bolstering investor confidence,” she said.
Mabogunje urged for the sustenance of the deregulation of the downstream oil sector in 2021, in spite of the pushback by consumers.
She, however, noted that deregulation would not yield the desired benefits for industry players and Nigerians given the monopolistic structure of the downstream oil industry.
“We also urge the Federal Government and the Nigerian National Petroleum Corporation to create an enabling regulatory environment that encourages domestic and foreign investments in the refineries to boost domestic refining capacity,” she said.
The LCCI President urged the government at all levels to prioritise efforts to deepen and gain investors’ confidence in the Nigerian economy.
According to her, investors’ confidence in the Nigerian economy weakened further in the previous year due to aggravated fiscal and external risks precipitated by pandemic-related disruptions.
This, she said, reflected in the sharp decline in foreign capital inflows to the economy to $8.61 billion between January and September 2020, compared with $20.19 billion in the corresponding period of 2019.
“Going into 2021, the Chamber tasks policymakers to pursue an investment-led growth strategy.
“Economic growth strategy must be private capital-driven given its multiplier effects on the economy.
“The Central Bank of Nigeria (CBN) must also normalise the foreign exchange market, de-emphasise demand management policies, and intensify efforts in improving the supply side of the foreign exchange market.
“We welcome the CBN’s recent policy stating that beneficiaries of the Diaspora Remittances should be paid in foreign exchange.
“The policy is a step in the right direction in resolving the liquidity issue in the currency market by ensuring the availability of foreign exchange, especially at the retail segment.
“This should be replicated for other sources of inflows such as export proceeds, Foreign Direct Investments, and Foreign Portfolio Investments.
“Robust remittance inflow is expected to moderate foreign exchange pressure and narrow the wide parallel market premium as economic agents would have access to a harmonised rate,” she said.