As Nigeria celebrates its 62nd Independence anniversary today, the Lagos Chamber of Commerce and Industry has said the country is at a crossroads and needs big decisions in order to turn the corner.
The LCCI said in a statement that the Nigerian economy had significantly transformed from a largely independent agrarian economy to a net importer of finished goods.
“The economy is now financed mainly by oil revenue, which has exposed the economy to the effects of external shocks,” it said. “Our nation is at a cross-road and in dire need of big decisions to drive the drastic transformation the economy requires to return to economic prosperity.”
It said the economic growth trend, measured by the GDP performance, had generally been positive over the last two decades, except for recent challenges posed by debt crises, inflation risks, insecurity, and foreign exchange illiquidity.
It said: “There is an urgent need to address the weak government revenue base caused by oil theft and pipeline vandalism, rising and unsustainable debt profile, over-dependence on oil revenue, exposure to foreign shocks through inadequate forex supply, double-digit inflation, etc.
“The growth of the telecommunications sector stands out as one of the most resilient sectors in the last year. Many sectors have leveraged telecom’s innovative possibilities to make significant progress through ICT, especially in the services sector. Today, we have tech-enabled platforms supporting healthcare delivery, agriculture, education, transport, etc. The Government should commit to supporting this sector’s growth and strive to create an enabling regulatory environment.”
The LCCI said the financial services sector had been significantly transformed since Independence through leveraging technology to enhance service delivery, adding that the sophistication of the industry could compare with its counterparts even in advanced economies.
“However, the financial intermediation role of the banking system is still below expectation. It still has some weak linkages with many other sectors of the economy, which has constrained the sector’s impact on the economy from a systemic perspective,” the chamber said.
The quality of the business environment remains a concern to investors, especially in the real sector, according to the LCCI.
It said weak infrastructure, uncertain policy environment, and institutions had continued to adversely affect the efficiency, productivity, and competitiveness of many enterprises in the economy. These conditions pose a major risk to job creation and economic inclusion across sectors, it said.
The woes in the agriculture and manufacturing sectors, according to the LCCI, are responsible for the frightening rise in the country’s inflation rate, which rose to a 17-year high of 20.54 percent in August.
It said, “And with the excruciating burden from debt service, subsidy payments, and worsening insecurity, many more production activities may be constrained in the coming months.
“The Federal Government needs to sustain its targeted interventions in selected critical sectors like agriculture, manufacturing, export infrastructure, tackling insecurity, and free up more money from subsidy payments. We urge the Government to tackle oil theft to earn more foreign exchange, borrow from cheaper sources to reduce the burden of debt servicing, and take a decisive step towards removing fuel subsidies.”
The chamber said poor power supply remains a major burden on businesses. “It is one area in which the trend since independence has been that of progressive decline. Power supply has consistently lagged behind the pace of economic activities and population growth.”
It said this development impacted negatively on investment over the past few years with increased expenditure on diesel and petrol by enterprises.
“This also comes with the consequences of declining productivity and competitiveness. With the frequent collapses recorded by the national grid, we can no longer rely on a centralised power source. The way to go is renewable energy and decentralizing the national grid,” it said.