The Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) has urged the Federal Government to address the necessary economic parameters to prevent Nigeria from slipping into recession.
Mr John Udeagbala, National President, NACCIMA, gave the charge on Friday in Lagos, via a report from the association’s third quarter economic briefing.
Udeagbala said the advice was imperative, following the possible false sense of security from the 3.11 per cent economic growth recorded in this year’s first quarter.
He said that the statistics might not have fully captured the supply and value chain disruptions brought about by the COVID-19 pandemic and the Russia-Ukraine conflict.
“While other stakeholders might see this as the leveling out of economic growth from the COVID-19 pandemic, the private sector is concerned that external shocks brought about by the Russia-Ukraine conflict, have put immense pressure on the productive capacity of our economy.
“We therefore, urge once again, the implementation of government policy that places priority on improving domestic production, otherwise face a likely state of economic recession by the end of 2022,” he said.
On inflation, the NACCIMA president said that the decision of the Monetary Policy Committee of the Central Bank of Nigeria (CBN) to raise the Monetary Policy Rate from 13 to 14 per cent was welcomed.
He, however, stated that the move was majorly an inflation management measure, and did not address the root cause of the inflation such as rising food prices, devaluation of the Naira, and high cost of energy and transportation.
“Nevertheless, we look forward to the continued implementation of the Central Bank’s intervention in the agriculture, manufacturing, energy, healthcare and export sectors, which will ensure some improvement in food and energy supply,” he said.
Addressing the country’s power situation, Udeagbala called on the government to renew its focus on implementing policies to ensure Nigeria’s energy sufficiency to become a net exporter of petroleum products and eventually, electricity.
He also called for urgent action in fixing domestic refineries, or the implementation of the Petroleum Industry Act, which is currently hobbled by the petroleum subsidy regime.
“If we estimate that Nigeria has spent an average of N2trillion a year for the past 16 years on petroleum subsidy, it is time to ask ourselves, how many refineries could we have built in that time?
“As we acknowledge the economic impact of the sudden removal of petroleum subsidy, we advocate a gradual removal with attendant policy initiatives to cushion the effect on the economy.
“We can start by taking a look at other developing countries in this space, such as Trinidad and Tobago, who never had to carry out Turn Around Maintenance on their only refinery, or revisit crude oil to petroleum product swap arrangements,” he said.
Addressing unemployment, Udeagbala lauded the government’s innovative policies such as, approved tax reliefs and other incentives for startups to harness Nigeria’s digital innovation and entrepreneurship ecosystem.
He urged the government to further consider the security implications of the high unemployment rate of 33 per cent, and do more to address the regular faceoff with the Academic Staff Union of Universities (ASUU).
He emphasised the need for a foundation of quality education as a basis to ensure the employability of the Nigerian youth.
“The regular face-off between the Federal Government and ASUU, leading to incessant strikes, has gradually altered the educational systems in the country, limiting the number of productive graduates available.
“NACCIMA calls on the Federal Government to resolve such pending issues with a sense of urgency, even as we hope that the two-week ultimatum given to the Minister of Education by President Muhammadu Buhari will yield a lasting result,” he said.
On the country’s public debt, Udeagbala counselled all levels of government to consider other sources of funding, such as leveraging on public-private partnerships for tax credits spread over time.
He said the advice was very necessary because Nigeria’s current debt levels were unsustainable, as the International Monetary Fund (IMF), projects that by 2026, all of Nigeria’s revenue would go to servicing debt.
“The economy cannot run based on increasing the number of taxes borne by the private sector, as we have witnessed by recent laws passed by the National Assembly.
“We advocate policies that systematically and consistently increase the tax base in terms of the volume of production or the number of taxpayers.
“We also counsel that the executive and legislature make concerted efforts to reduce the cost of governance as a way to reduce the pressure to run a government based on debt,” he said.