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Nigeria’s economic recovery in Q2 depends on increased investment, non-oil sector – LCCI

by with No Comment Business

The Lagos Chamber of Commerce and Industry (LCCI) has projected that Nigeria’s economy is expected to commence full recovery in the second quarter of 2021 following disruptions occasioned by the COVID-19 outbreak.

READ ALSO: Inflation widens negative real return on investment

The chamber, however, adds that this anticipated recovery will be driven majorly by the increased inflow of Foreign Direct Investments (FDI) and full utilization of the country’s non-oil sector.

Addressing journalists at the chamber’s quarterly press briefing on the state of the economy in Lagos, Toki Mabogunje, president, LCCI, said although Nigeria exited recession in the fourth quarter of 2020, it did not imply an end to the country’s economic woes as growth has remained fragile since then.

“Growth recovery should gain momentum starting from the second quarter of 2021, with oil sector in deep contraction due to suppressed production, fragile recovery in global oil demand, regulatory and investment climate issues, we expect the non-oil sector to drive growth in the year 2021,” Mabogunje said.

“However, major risks to economic growth include heightened security concerns, weak confidence of investors, relatively lower oil production and weak commitment to key policy, regulatory and institutional reforms,” she explained.

Read Also: Declining oil production signals more trouble for Nigerian economy

She said that increased inflow of investment is also critical to achieve economic growth, and urged that the federal government implement policy reforms that will attract investments and ease the business environment, particularly in addressing insecurity and multiple exchange rate windows in the country.

Mabogunje noted that there is a strong correlation between insecurity and investment, however, insecurity has worsened over time in Nigeria, causing the country to be perceived as an unsafe location for investments which scares prospective investors away.

She said if not promptly addressed, insecurity will continue to weaken the government’s efforts in attracting private investments into the country.

Other than the rising insecurity, she said the country’s foreign exchange policy direction needs to be clear and precise, noting essentially the need to unify Nigeria’s multiple exchange rates. She added that policymakers and financial regulators need to complement their activities and policies to avoid lack of cohesion.

She reasoned that the lack of cohesion among policymakers sends a negative signal to the investment community

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LCCI Seeks National Asset Register For Debts

by with No Comment financeNews

The Lagos Chamber of Commerce and Industry (LCCI) has sought a national asset register to document the specific projects that the debts are incurred for so as to ease the pressure of debt service on the budget.

READ ALSO: FDC Analysts Predict March Inflation To Hit 17.8%

“We note that the majority of Nigeria’s debts are not linked to assets or specific projects. As such, it is critical to create a national asset register, and have a coordinated mechanism in place for valuing and managing Nigerian assets”, noted LCCI President Toki Mabogunje

She faulted government’s penchant for issuing new debt to redeem maturing ones as not being an optimal debt management strategy.

“It is critically important to replace existing debts with asset-linked securities to reduce debt cost. This will ease the pressure of debt service on the budget,” Mabogunje said.

she said further that LCCI acknowledged the introduction of the electronic call-up system at Apapa and Tin Can ports, which is aimed at resolving the systemic gridlock crisis around the Apapa corridor caused by port congestion.
“This measure is a work-in-progress and may not alone provide a sustainable solution to numerous issues faced by economic agents at the ports.

“It is important for the Federal Government, Lagos State government, Nigerian Ports Authority (NPA), and other relevant stakeholders to address the internal issues within the ports including the terminal operators, custom processes and procedures, quality of cargo handling equipment, lack of credible framework for dispute resolution on import valuation and classification, presence of several government agencies with overlapping roles, serial extortions and racketeering; and other structural bottlenecks stifling the ease of doing business at the ports.

“The solution to this problem must be holistic and inclusive. It demands strong political will to bring discipline to the entire cargo clearing and export evacuation processes.

Despite the laudable initiative of the Electronic Call Up system and the initial successes recorded on its introduction, there seems to be a reversion to the old ways. Many importers and exporters are expressing severe frustrations,” she said.

The LCCI president asserted that to achieve an enabling investment environment for the advancement of the Nigerian economy and the good of all investors and economic players, right policy and regulatory framework are imperative,” Mabogunje concluded.

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