Following hard economic times that characterised the year 2016 for both the government and the organized private sector, the Abuja Chamber of Commerce, industry, ACCI, has charged the federal government to address the fiscal and monetary policy inconsistencies that prevailed in the just ended 2016.
The chamber also challenged the federal government to sustain efforts on economic diversification, while urging it to always carry along private sector its economic policy formulation.
The Chamber in a statement said a single digit interest rate should be implemented to stimulate the real sector of the economy and enhance access to finance to increase economic activities in the country.
The chamber’s review of the Nigerian economy in 2016 showed that it was really a tough year for many businesses in Nigeria. The crashes in crude oil prices during the year it said shattered the nation’s economy beyond pundits’ expectation.
“Businesses suffered from hash economic policies, several job losses, closure of some businesses, reduced production capacity, severe security issues, and the 2016 budget could not be implemented as planned,” it said.
Tony Ejinkonye the Chamber’s President was quoted in the statement stating that, “the nation’s Gross Domestic Product (GDP) contracted by -0.36 per cent in first quarter and -2.06 per cent in second quarter of 2016 to plunge the country into an economic recession”
The country’s foreign reserves depleted from $28,200 million in January to 25,720 million dollars in December 2016,while the statement revealed further that the 2.2mbpd oil production projection in 2016 could not be met due to increased cases of oil and gas pipeline vandalism by Niger Delta militants.
“About 1.7 million jobs were lost in 2016 with unemployment rising from 9.48 million at the beginning of the year to 11.19 million by the third quarter of the year,” the statement said.
While decrying some of the policy measures of the CBN, the statement said, “the CBN banned the sales of Forex to BDCs as part of measures to reduce the pressure on the nation’s foreign reserves. The banks also limited access to foreign transactions using the naira debit cards advising customers to use dollar or pound’s debit cards. They also limited ATM forex transactions to $100″
“A flexible exchange regime at was introduced which ended a 16-month fixed rate”
“Several exchange rates in a single economy prevailed during the year; for example, Pilgrims rate is N197/$, budget rate is N305/$, interbank rate hovered around N315/$, fuel imports rate is N316/$, BDC, N399/$, and black market rate N488/$.”
CBN also licensed 11 new international money transfer operators (IMTOs) to do business in the country’s foreign exchange market.
Despite all these measures, the chamber noted in the statement that scarcity of Foreign exchange persisted despite CBN’s interventions
Meanwhile Reports from the National Bureau of Statistics (NBS), indicates that the rate of inflation in Nigeria in 2016, increased significantly by 92 per cent from 9.62 per cent in January, to 18.5 per cent as at November.
The Chamber also pointed out in the statement that the output-cut agreement reached by the Organisation of Petroleum Exporting Countries (OPEC) in the last quarter of 2016 is expected to provide some respite for the Nigerian economy, because the deal exempts the country from cutting production and has also, is impacting positively on the price of crude oil in the international market.
It would be noted that the latest IMF report forecasts the Nigerian economy to grow at 0.6 percent in 2017; thus, the economy in 2017 is expected to recover from recession as revenue from crude oil sales improves.
“We believe that the recent pick-up in global economic activity in combination with supportive developments in the oil-market is seen leading to improved economic performance in 2017″The statement said.
