The Lagos State Chamber of Commerce and Industry (LCCI) has expressed fears that the country’s economy may suffer stagnation in the third quarter (Q3) of the year, following hike in interest rate by the Central Bank of Nigeria (CBN) and rising energy costs.
LCCI President, Michael Olawale-Cole, said this at a media parley on the state of the Nigerian economy, held in Lagos.
He said the Chamber had pointed out earlier that rate hikes alone would not curb the inflationary pressures facing the economy, and emphasised the need to pay attention to supply-side support to reduce rising production costs caused by the high cost of energy and raw materials.
Olawale-Cole pointed out that with the costs of diesel skyrocketing above N800/litre, Jet-A1 at N710/litre, and PMS selling above the government-regulated price of N165/litre, production costs would continue to rise, leading to a decline in manufacturing and increase in job losses.
He further noted that the worsening security situation in many parts of the country, if not tackled, would continue to threaten agricultural production, manufacturing value chains and logistics.
The LCCI President also noted that the Chamber expects Nigeria to witness some fiscal challenges, occasioned by the country’s huge debt burden, accompanied by high debt servicing and heavy subsidy costs, warning of heightened fears of contracting output, constrained production, and recession risks.
“Sustaining the pace of recovery in 2022 and navigating through the growing uncertainties in the global economy requires well-coordinated fiscal and monetary policies in promoting growth-enhancing and confidence-building policies that would encourage private and foreign capital inflows into the economy,” Olawale-Cole said.
On food security, the LCCI boss said for Nigeria to be self-sufficient in food production, the country must boost its agricultural output sustainably and discourage dependence on imports, warning of a looming food scarcity, which would worsen the plight of the poor if nothing is done quickly.
He also called for the removal of petrol subsidy and for oil theft to be curtailed to provide fiscal space for subsidised production of goods and services as well as for infrastructure, health, and education financing.
The LCCI President also charged the CBN to embark on monetary tightening to tame inflation, and ensure that targeted concessionary credit to the private sector is sustained for Medium, Small and Micro Enterprises (MSMEs).
On his part, the Deputy President, LCCI, Gabriel Idahosa, noted that the food inflation in the past months, confirms that food prices have a high impact on the headline inflation, stating that the high cost of production occasioned by the rising fuel prices, forex scarcity, and supply chain disruptions may remain in the short term if nothing is done.
He reiterated the Chamber’s position on the rising inflation, noting that rate hike alone would not tame the rising inflation while advising the government to invest more in boosting supply and cushioning the cost of production.
