The Nigerian economy, despite its adverse economic conditions, is likely to end the current year on a growth rate of two percent or 2.5 percent.
Toki Mabogunje, president of the Lagos Chamber of Commerce and Industry (LCCI), made the projection during the recently conducted 133rd annual general meeting of the chamber in Lagos.
To ensure the actualisation of the growth, Mabogunje urged that Nigeria’s fiscal and monetary sides of the economy should promote growth-enhancing and confidence-building policies that would encourage private capital flows to the economy, and also develop a medium-term recovery plan anchored on local productivity, ease of business, attracting private investment, and developing physical and soft infrastructure.
She noted that Nigeria’s inflation figure would be sustained at its double-digit level in the short to medium term, largely driven by persistent food supply shocks, foreign exchange illiquidity, higher energy cost, potential removal of fuel subsidy, insecurity and social unrest in the Northern region. These structural factors,she noted, will continue to mount pressure on domestic consumer prices.
Mabogunje also asserted the worsening security challenges in some parts of the country, may cause production to shrink and supply chain to be disrupted despite the 5.4 per cent growth recorded in the non-oil economy.
According to the LCCI president, key drivers of the non-oil sector growth all year round include; finance and insurance at 23.2 per cent, transport and storage at 20.6 per cent, trade at 11.9 per cent, telecommunications at 10.9 per cent,manufacturing at 4.3 per cent, construction at 4.1 per cent, real estate at 2.3 per cent, as well as agriculture at 1.2 per cent.
“However, with the worsening security perception about the country, foreign investors are not interested in bringing in Foreign Direct Investments to Nigeria,” she lamented.
Commenting on the decision of the Monetary Policy Committee of the Central Bank of Nigeria to retain policy parameters, she said that while the CBN has been keen to extend credit to the real economy as a way of supporting the economy, the fact remains that credit provision in recent times has proved ineffective in boosting output growth and stabilising consumer prices.
“A broad-based combination of fiscal and monetary policies is imperative to achieving the twin objective of economic growth and price stability,” she suggested.
Looking forward, she emphasised that factors such as oil prices, oil production, output growth, inflation, foreign exchange stability, foreign capital inflows, credit to the private sector are expected to influence monetary policy in the short to medium term.
“On the fiscal side, we expect to see clear communications and actions on the proposed fuel subsidy removal and how this will ease government’s revenue and boost investment in infrastructure,” she added.
