By Rukayat Moisemhe
Lagos, Oct. 5, 2021 The Lagos Chamber of Commerce and Industry (LCCI) has anticipated an improvement in the third and fourth quarters growth performance of the economy this year, largely on account of low base effect arising from Q3 and Q4-2020’s performance.
Mrs Toki Mabogunje, President LCCI, made the projections at the LCCI’s Quarterly State of the Economy Conference on Tuesday in Lagos.
According to her, recovery is expected to be driven by massive policy support and continued vaccination deployment in advanced economies.
She, however, noted that recovery would be uneven across countries amid highly unequal access to vaccination.
“Juxtaposing the current growth level with population growth estimated at 2.7 per cent by the World Bank implies the economy, as of Q2 2021, was almost at the same growth level with the population growth on average.
“We only hope to see this strong growth level continue into the rest of the year.
“Nigeria’s actual output performance is still below its potential output level as recorded in the pre-COVID-19 period.
“Achieving key development outcomes such as employment creation and poverty reduction will always remain elusive in the light of fragile recovery.
“This reinforces the need for policymakers to pursue critical reforms to bolster confidence in the economy, accelerate post-pandemic recovery and alleviate poverty,” she said.
The LCCI President, however, projected fragile growth in developing economies in the fourth quarter of the year due to the joint impact of elevated Coronavirus (COVID-19) infection rates and other factors.
Mabogunje said other factors such as limited access to vaccines, partial withdrawal of policy support, and weak capital inflows would likely offset the benefits associated with rising commodity prices and stronger external demand.
“The International Monetary Fund (IMF) and World Bank projected growth figures of 2.5 per cent and 1.8 per cent respectively.
“This is on the assumption of stronger commodity prices, transition to market-reflective exchange rate system, vaccination progress, and the successful implementation of reforms in the oil sector.
“While these factors appear somewhat realistic in our view, we believe rising insecurity, lingering forex illiquidity, low vaccination rate and lack of will to follow through with critical reforms constitute major downside risks to the country’s growth outlook,” she said.
Addressing sectoral performances, the LCCI President said that 14 sectors reported expansion while three sectors contracted.
Mabogunje stated that the growth was driven by the non-oil sector, which expanded by 6.74 per cent in the quarter under review.
She noted that agriculture demonstrated resilience in the second quarter amid heightening insecurity and lingering supply chain disruptions orchestrated by the poor state of roads.
“Also, manufacturing sustained the positive growth trajectory after contractions in 2020, partly supported by developmental finance interventions of the Central Bank of Nigeria amid numerous headwinds that confronted industry players.
“Segments of manufacturing with high levels of backward integration had lesser degrees of shocks from foreign exchange crises in the economy.
“During the quarter, the sector was driven mainly by growth in trade 22.49 per cent, telecommunication 5.90 per cent, road transport 92.38 per cent, electricity 78.16 per cent, crop production 1.38 per cent and food, B beverage & tobacco 4.87 per cent.
“These records reflect the easing of supply chain disruptions and increasing business and economic activities across the country relative to the same period a year earlier,” she said.
Mabogunje called for deliberate efforts towards making the business environment more conducive for Micro, Small and Medium Enterprises (MSME) and large corporates at the national, subnational, and local government levels.
This, she noted can be achieved by addressing the structural bottlenecks and regulatory constraints contributing to the high cost of doing business.
“A supportive and conducive investment environment is critical in facilitating private sector involvement in the economic recovery process.
“Beyond the issues around the collection and distribution of the Value Added Tax (VAT), the government must become more concerned about the needs of the goose that lays the eggs, the private sector.
“The private sector accounts for over 80 per cent of total economic activities in Nigeria and it is therefore imperative to ensure an enabling operating environment for investors in the economy,” she said.
She also called for the deepening of deregulation efforts in the downstream oil industry under the recently signed Petroleum Industry Act (PIA) 2021.
This, Mabogunje explained, could be achieved by ensuring a market-reflective pricing model for petroleum products and intensifying diversification efforts within the oil sector to gas and other petrochemical products.
” The chamber is also urgently calling for a holistic and dynamic review of the security architecture to address the seemingly worsening security situation in the country,” she said.
LCCI anticipates improved growth in Q3, Q4 Projection
By Rukayat Moisemhe