Policy Implementation, Forex, Security Needed for Nigeria’s Economic Recovery – LCCI, Experts

The Lagos Chamber of Commerce and Industry has projected that the blend of fiscal and monetary policies as well as resolving lingering foreign exchange problems and security issues is much needed for expected Nigeria’s economic recovery going forward.

These were highlighted at a webinar organised by the Lagos Chamber of Commerce and Industry (LCCI) and Pricewaterhouse Coopers (PwC) on the theme: “2021 Mid-Year Economic & Business Review and Outlook Webinar”.

Speaking on this in her address, Mrs Toki Mabogunje, President, LCCI, projected fragile economic recovery for the second quarter in Nigeria amidst sluggish sectoral performances from the impact of the COVID-19 pandemic on businesses.

Mabogunje anchored the projections on sustained oil prices, progress in vaccination and gradual implementation of reforms in the oil sector.

She, however, noted that factors such as lingering foreign exchange problems, absence to follow through on critical reforms and insecurity may hinder the projections.

“We must find ways to mitigate risks, highlight investments opportunities and how these opportunities can be leveraged upon to improve the Nigerian economy,” she said.

Mabogunje said the economy saw a rebound in the first half of the year after which rising oil prices.

She said a transition to a market-reflective exchange rate, increased vaccinations and other developments contributed to the growth projections of 2.5 per cent and 1.8 per cent by the International Monetary Fund and the World Bank respectively.

Mabogunje said, “However, rising security tensions, lingering liquidity constraints in the currency market, low vaccination rates and poor policy implementation pose major downside risks to the country’s near term growth outlook.

“Consumer prices were suppressed in the second quarter but headline inflation remains elevated at 17.75 per cent with profound implications for living conditions, investment, production costs and corporate profitability.”

Also, LCCI and PwC Nigeria have said that rising insecurity, liquidity issues emanating from dwindling foreign investments and remittance inflows threaten Nigeria’s economic growth and recovery projections as stated by International Finance Corporations.

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On his part, the Fiscal Policy Partner and Africa Tax Leader at PwC Nigeria, Mr Taiwo Oyedele, stated in his presentation that African CEOs and small business enterprise owners expressed confidence in increased revenues according to surveys from PwC, Mastercard and the Stanbic IBTC Purchasing Managers Index with the WHO predicting steady high oil prices.

He said forex liquidity issues from a decline in foreign investments, diaspora remittance, insecurity, rising debt and service costs.

He noted that the pandemic had accelerated digital transformation and the need to invest in talent management.

Oyedele said that foreign exchange liquidity, economic recovery in the second quarter of the year would drive monetary policy direction and financial market performance.

He noted that rising debts and revenue challenges, coupled with the pandemic effect on economic growth would intensify the government’s focus on tax compliance and revenue mobilisation.

“CEOs are concerned about threats in the external environment such as challenges of policy and tax uncertainty, overregulation. amongst others.

“Fifty-four per cent of the CEOs are also concerned about cybersecurity up significantly by 38 per cent from last year.

“Now is the time for business leaders to drive growth from new possibilities, take action, transform and build forward better, and adopt leadership agenda to take on tomorrow,” he said.

Dr Andrew Nevin, Partner and Chief Economist, PwC, noted that Nigeria holds as much as $900 billion worth of dead capital in residential real estate and agricultural land with the government’s abandoned property valued at N230 billion.

Nevin added that the country’s housing deficit was pegged at seven million and needed 700,000 units of houses annually to bridge the deficit.

The economist charged the government to harness the power of the diaspora via remittances, drive export growth and diversification through services, build innovation hubs, industrial clusters and improve education to improve a lot of Nigerians.

He added that growth at the subnational levels of the nation must be addressed to tackle the disparities.

“In the view of Africa’s 40 per cent projected population growth chart and Lagos projected as the largest city in the world by 2100, Nigeria’s must find its development path.

“With Gross Fixed Capital formation at only 19 per cent of Gross Domestic Product, Nigeria needs significant Foreign Direct Investment to bridge infrastructure deficit key to diversification.

” The exchange rate, fuel subsidy and power sector need total structural and policy reforms as they are largely distorted. There is also a need to move the informal sector to the formal sector,” he said.

 

 

 

Nigeria’s economic recovery