…..says economic diversification still largely constrained
Sequel to the assessment of realities in the macroeconomic environment, the Lagos Chambers of Commerce and Industry (LCCI) has said Nigeria economy is yet to recover from the 2016 recession.
The Director General LCCI, Dr. Muda Yusuf who spoke on this said growth is still sluggish and weak to create employment opportunities for the fast-growing population and lift millions of Nigerians out of poverty.
Yusuf bemoans that fact the key sectors that has the capacity to fast track Nigeria’s economic diversification are still largely constrained.
Commenting on the recently released 4th quarter 2019 Gross Domestic Product by the National Bureau of Statistics, the Director General LCCI stressed that “we note that the performance of key sectors that has the capacity to facilitate economic diversification were still largely constrained.
Highlighting the sector, Yusuf stated that manufacturing sector grew at a slower pace of 0.77 per cent in 2019 as against 2.09 per cent in 2018. Growth of the sector was heavily weighed down by the oil refining sub-sector which slumped by 32 per cent in 2019.
“Despite being the biggest beneficiary of CBN’s push for credit flows into the real economy, productivity in the manufacturing sector continues to be challenged by tough operating environment, poor infrastructure and unpredictability of government policies.
According to him, “agriculture sector recorded a modest growth of 2.36 per cent in 2019 compared with 2.12 per cent in 2018. Agriculture productivity is threatened by insecurity issues in the food-producing region, notably farmers-herders tension in the Middle Belt, poor road and railway network and adoption of outdated farming methods by small scale farmers. This has led to low agricultural yields”.
He said that “Trade sector remained in recession in 2019, as it contracted by 0.63 per cent and 0.38 per cent in 2018 and 2019 respectively. The suboptimal performance of trade could be attributed to border closure, high inflation, which affects purchasing power, foreign exchange exclusion policies, poor domestic connectivity and security issues”.
Continuing Yusuf said that the “Real estate maintained its negative growth trajectory in 2019, contracting by 4.74 per cent and 2.36 per cent in 2018 and 2019 respectively. Real estate is a critical sector considering its employment-generating capacity.
However, the absence of effective mortgage finance system, high cost of building materials, absence of long-term funds, infrastructure issues and weak macroeconomic fundamentals are major downside risks to performance of the sector”.
While addressing the issue the LCCI Boss posited that “there is need for government to embrace structural, policy and regulatory reforms to unlock the huge growth potentials in the economy.
The areas to focus on are highlighted as follows: Need for agricultural mechanisation as over 70 per cent of farmers in Nigeria operate on a small scale; need to support the sector with seedlings; development of rural infrastructure; provision of modern farm equipment at subsidised rates and ensuring linkage between agriculture and industry.
He further said that there is need to fix power challenges to reduce cost and enhance competitiveness; ensuring patronage of locally produced items; curbing smuggling and dumping; urgent need to reform port processes and ensure better port infrastructure”.
He said there is also “need to improve domestic connectivity through better transportation infrastructure; easing of cargo clearing process; promotion of economic integration at the sub-regional and continental levels; easing cross-border trade challenges and Nigerian Customs prioritising trade facilitation over revenue generation. Need to create an effective mortgage finance system with single digit interest rate; creation of long-term pool of funds to finance the sector. easing the challenges of land documentation and perfection of land titles; and review of import tariffs on some critical building materials in which there is limited local production capacity”.