The Lagos Chamber of Commerce and Industry, LCCI, has raised serious concerns over slow pace of reforms in the oil and gas sector, especially the fact that the Petroleum Industry Governance Bill could not make it through the eighth National Assembly.
The Chamber also noted that even the part that was passed was not signed by the President thus affecting the growth of the sector.
In her remark at the virtual presidential dialogue policy meeting at the weekend, President of the LCCI, Mrs. Toki Manogunje, stated that obviously these are surely not the best of times for the Nigerian economy and for businesses as the effects of the Covid-19 disruptions have been very profound.
The short-term outlook of the key economic indicators is not looking bright; however, we are hopeful that we would turn the corner sooner than later, said Mabogunje.
“As we all know, the major trigger of the economic downturn was the Covid-19 induced slump in oil price, resulting in the plunge of both revenue and foreign exchange earnings.
Besides there were serious disruptions in the supply chains with consequential dislocations to many production processes.
The liquidity crisis in the foreign market has reached a scary level reflecting in acute foreign exchange scarcity, sharp depreciation in the exchange rate, widening parallel market premium and weakening investors confidence.” she said.
According to the Chamber, the Nigerian economy has some strong fundamentals as natural resources endowments are vast, the domestic market is large, and the people are resourceful and enterprising.
Mabogunde, however, added that what is missing are the enablers as times like these offer tremendous opportunities for innovation, creativity, export growth and import substitution, stressing that “These are the silver linings in the current economic downturn.”
She acknowledged the spirited efforts of the federal government to fix the Nigerian economy with the Economic Sustainability Plan that offers a financial commitment of N2.3 trillion now in place to support vulnerable sectors and create jobs.
The plan was the outcome of the efforts of the Economic Sustainability Committee, Chaired by His Excellency the Vice President, Prof Yemi Osinbajo.
Her remarks also faulted failure of the Nigerian Customs Service to adhere to the Executive Order which forbids customs checkpoints around the ports and within given geographical delimitations in the country.
She said that closure of the land borders has enormous implications for cross border economic activities around the country but there are indications that the closure is indefinite.
“While we share the concern of government on issues of security and smuggling, we believe that the indefinite closure of land borders is not the solution to the problem.” complained Mabogunje.
Speaking further, she said, “We are excited about the signing of the AFCTA. But we need to get ourselves ready for the pressure of competition inherent in the continental economic integration agenda.
A number of commitments were made about the creation of an environment that would enable the private sector to be competition ready. But not much has happened in this regard so far.”
On infrastructure, the LCCI commended efforts of government to fix strategic infrastructures, including roads and railways, but observed that funding has remained a major challenge.
The Chamber therefore seeks introduction of a new funding model with much bigger focus on private sector capital within a Public Private Partnership [PPP] framework for infrastructure development in the country.
Furthermore, she stated that investment climate issues and cost of doing business are very critical issues that need to be tackled as the ease of doing business remains a major challenge.
According to her, the key cost drivers are the high energy cost, depreciating exchange rate, high cost of fund, high transportation cost, high transaction cost at the ports, among others, adding that there is a limit to which these costs can be passed on to the consumers, especially in an environment of weak and declining purchasing power.
“I would like to underscore the need for regular engagements and communication on policy issues to ensure quality feedback and enrich the policy making process.
This should cover macroeconomic policies, sectoral policies. These will include foreign exchange policy, Trade policy, Tax policy, Energy policy, transport policy, Industrial policy, Agricultural policy, ICT policy, among others. Some of these are cross cutting, while others are sector specific.
Regular engagement with relevant stakeholders in the various sectors will bring a great deal of value to the economic management process.
The regulatory environment also needs to align with this vision. This policy dialogue is our contribution to this process.” she added.