Yemisi Izuora
The Lagos Chamber of Commerce & Industry, LCCI, has observed that realities in Nigeria’s macroeconomic environment suggests that the economy is yet to recover from the 2016 recession.
According to the Chamber, “Growth is still sluggish and weak to create employment opportunities for the fast-growing population and lift millions of Nigerians out of poverty.” and urged the government to embrace structural, policy and regulatory reforms to unlock the huge growth potentials in the economy.
In his reaction to the country’s Gross Domestic Product, GDP, growth, Director General, DG, of the LCCI, Muda Yusuf suggested that improvement in the economy can come with focus on agriculture, manufacturing, trade and real estate among others.
Yusuf said time has come for transformation into agricultural mechanization as over 70 per cent of farmers in Nigeria operate on a small scale.
He said there is urgent need to support the sector with seedlings, develop rural infrastructure, provide modern farm equipment at subsidized rates and ensure linkage between agriculture and industry.
On expanding the manufacturing space, the DG spoke on the need to fix power challenges to reduce cost and enhance competitiveness ensure patronage of locally produced items, curb smuggling and dumping, reform port processes and ensure better port infrastructure.
For the country to gain in the trade section, he urged for improved domestic connectivity through better transportation infrastructure, ensure ease of cargo clearing process, promote economic integration at the sub-regional and continental levels, ease cross-border trade challenges while Nigerian Customs should prioritize trade facilitation over revenue generation.
Under the real estate, the LCCI called for creation of effective mortgage finance system with single digit interest rate, creation of long-term pool of funds to finance the sector, easing the challenges of land documentation and perfection of land titles and review of import tariffs on some critical building materials in which there is limited local production capacity
Yusuf however, noted the marginal improvement in Nigeria’s output performance as GDP growth grew by 2.27 per cent compared to 1.91 per cent recorded in 2018.
The growth in the year 2019 was largely driven by the oil sector which grew at a faster pace of 4.59 per cent in 2019, from 0.97 per cent in 2018.
This was driven by increased average daily crude production of 2.01 million barrels in 2019 compared with 1.92 million barrels in 2018, as well as favourable oil prices (which averaged at about $64 per barrel in 2019).
Also, the ICT sector grew by 11.08 per cent in 2019 compared to 9.65 per cent in 2018. Growth in the ICT sector was driven by telecommunication and information services sub-sector, which rose by 11.33 per cent and 11.41 per cent in 2018 and 2019 respectively. The rapid growth of the ICT sector can be attributed to increased investment in fintech space, expanded e-commerce and diverse innovations in the use of ICT across sectors.
The agriculture sector grew by 2.36 per cent in 2019 as against 2.12 per cent in 2018. Growth of the sector was powered by crop production, which accounts for over 85 per cent of productivity in the sector.
On quarterly basis, agriculture expanded by 2.28 per cent and 2.31 per cent in the third and final quarter of 2019, which was supported by the sustained intervention of the Central Bank of Nigeria and positive impact of land border closure.
In the Arts, Entertainment & Recreation, growth by 4.12 per cent in 2019 was recorded as against 2.53 per cent in 2018. The improved growth was buoyed by creative industry players in the sector, favourable demographics and low infrastructure demand.
“We note that the performance of key sectors that has the capacity to facilitate economic diversification were still largely constrained.” Yusuf observed.
He observed that the manufacturing sector grew at a slower pace of 0.77 per cent in 2019 as against 2.09 per cent in 2018.
He noted that growth of the sector was heavily weighed down by the oil refining subsector which slumped by 32 per cent in 2019, adding that despite being the biggest beneficiary of CBN’s push for credit flows into the real economy, productivity in the manufacturing sector continues to be challenged by tough operating environment, poor infrastructure and unpredictability of government policies.
According to him, the sector recorded a modest growth of 2.36 per cent in 2019 compared with 2.12 per cent in 2018.
He regretted that the agriculture productivity was threatened by insecurity issues in the food-producing region, notably farmers-herders tension in the Middle Belt, poor road and railway network and adoption of outdated farming methods by small scale farmers which has led to low agricultural yields.
“Trade sector remained in recession in 2019, as it contracted by 0.63% and 0.38% in 2018 and 2019 respectively.
The suboptimal performance of trade could be attributed to border closure, high inflation, which affects purchasing power, foreign exchange exclusion policies, poor domestic connectivity and security issues.” he said.
Also the real estate maintained its negative growth trajectory in 2019, contracting by 4.74 per cent and 2.36 per cent in 2018 and 2019 respectively.
He said that the sector is a critical industry considering its employment-generating capacity, but noted that the absence of effective mortgage finance system, high cost of building materials, absence of long-term funds, infrastructure issues and weak macroeconomic fundamentals are major downside risks to performance of the sector.
