The Chamber,
in a statement made available to newsmen, said it was very concerned about the
current state of Nigeria’s economy and the consequences of the Central Bank of
Nigeria (CBN’s) approach to the management of foreign exchange over the last
few months.
The chamber
bemoaned the unfriendly business environment in the country in 2015, saying it
undermined the capacity of investors to maximise abundant business
opportunities, in Africa’s largest economy.
“With
drastic fall in oil price, heavy fuel subsidy bill, nearing N1trn in 2015, wide
spread insolvency among state governments across the country, increasing
sovereign debt and debt service obligation of N1.3t in 2016, the financial
crisis may linger in the new year,” it
predicted.
The
statement or economic review and projection into the year 2016 signed by the
Director General of the chamber, Mr.
Muda Yusuf, described the Central Bank of Nigeria (CBN) forex restrictions
policy in 2015 as one of the “costliest” policies in Nigeria in the recent
years.
On business
environment in 2015, Yusuf expressed concern over the deplorable state of roads
leading to the Lagos ports (Apapa and Tincan Island), saying, “these ports account for over 60 percent of the cargo coming
into the country and an estimated 70 percent of customs’ revenue. The poor
state of the roads has multifarious effects on the private sector, economy and
the citizenry.”
He listed
the negative effects of the bad port access road as risk to the lives of
citizens arising from containers falling off the trucks, congestion at the
ports resulting from the delay in the evacuation of cargo; high demurrage paid
by importers to terminal operators and shipping companies as a result of delays
in the clearance and evacuation of cargo in the ports; high cost of
transportation for evacuating cargo because of the prolonged engagement of the
trucks by importers, arising from the delays; serious traffic congestion along
the roads leading to the Ports, which often spill over into the Lagos
Metropolis, causing severe traffic jam and loss of man hours and delays in
getting raw materials, and other inputs from the ports to the factory premises
in Lagos and other parts of the country.
“We urge the Federal Government to fix these roads as a matter of utmost urgency, as these are Federal roads. It is also important that the Trailer Park under construction in the neighbourhood of the Tincan Island port be urgently completed to reduce the menace of trucks and tankers on Lagos roads. Above all, reforms of the downstream petroleum sector should be accelerated to reduce the importation of petroleum products and by extension the pressure on Lagos ports,” he said.
The Chamber
predicted GDP growth in 2016, saying it is expected to “rebound,
though, slowly to about 3.5 if the right mix of fiscal and monetary policies
are put in place to stimulate the economy and attract domestic and foreign
investments. With drastic fall in oil price,
heavy fuel subsidy bill, nearing N1trn in 2015, wide spread insolvency among
state governments across the country, increasing sovereign debt and debt
service obligation of N1.3t in 2016, the financial crisis may linger in the new
year.”
According to
Yusuf, while the recovery is expected to be driven by increase in government
expenditure, the growth in oil sector might be constrained by low price and
investment drive. He said the exchange rate volatility would persist to fuel
high inflation, which may rise to between 10 and 11 percent.
Macroeconomic
features for 2016 including clearer macroeconomic policy space; expansionary
fiscal stance; huge debt profile; improved power supply and infrastructure, PIB
acceleration and downstream deregulation and blocking leakages by Treasury
Single Account (TSA) were listed by the Chamber.
Sectorally,
Yusuf said the targeted N300billion by the Nigerian banks to boost lending to
Small and Medium Scale Enterprises (SMEs) and the agriculture sector in 2016
will boost SMEs development and employment and thus increase non-oil export,
just as the insurance industry would remain largely underpenetrated with
insurance density at about 0.225 percent. Accordingly, it said the change in
this industry with respect to growth and penetration remains bleak, even as the
sector is still highly fragmented. The declining GDP is also expected to
strain, to a large extent, the performance of this industry.
Continuing,
he said the subsidy arrears payment and end of subsidy regime could result in
improved market efficiency and profitability as downstream sector players
explore pricing dynamics to boost investment. The expected deregulation in the
downstream sub-sector will be a game changer, the chamber said. (Source: Guardian)
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