The Lagos Chamber of Commerce and Industry (LCCI) on Friday, lent its endorsement to the World Bank’s criticism of the Nigerian National Petroleum Corporation (NNPC), as lacking transparency and underperforming.
The LCCI said the World Bank made this concern known in its recent World Bank’s Nigeria Development Update (NDU) themed “Turning the Corner, From Reforms and Renewed Hope to Results” launched Wednesday.
“We share similar views with the World Bank on the opacity and underperformance of the (NNPC) and other Government-Owned Enterprises (GOEs),” a statement signed by Chinyere Almona, director general of LCCI said.
Speaking on the report, Almona noted the Bank’s concerns about the Nigerian economy despite the reforms carried out so far including fuel subsidy removal, liberalisation of the foreign exchange market, removal of 43 items from FX restrictions and tightening of monetary policy.
She said a detailed review of the report revealed key concerns in the Nigerian economy to be high inflation, revenue leakages, unstable FX market due to liquidity challenges, increased poverty due to the high cost of living, partial return of subsidy, and sub-optimal GDP growth.
“To increase government revenue, we advocate for far-reaching reforms and commitment on the part of the government to improve transparency and a comprehensive strategy that will improve the performance of the enterprises, including privatization options,” Almona said in the statement.
“However, we do not support the immediate increase in value-added tax (VAT) due to its cost impact on consumers in the immediate term,” she said.
On the partial return of subsidy, the Chamber supported the views of the World Bank and the need to adjust petrol prices to reflect market conditions. “Over the years, the Chamber has consistently advocated for the full deregulation of petroleum products. We are, however, worried about the monopoly in the importation and supply of the products by NNPC and the lack of transparency in the pricing of the products,” the statement said.
About the unstable FX market, the Chamber recommended that the government, in the short term, must address the supply gap in the market and improve its forex earnings by declaring an emergency in oil & gas production.
“In the medium term, the government must strategically pursue and incentivize the local production of basic household needs that are being heavily imported to reduce the huge demand of FX. Further, there is a need to build market confidence around free FX pricing and implement policies to channel FX supply into the market.”
The LCCI noted with concern, as highlighted by the World Bank, the continued uptick in inflation and its severe impact on businesses, consumers’ income, spending and saving, as well as manufacturing productivity in the country.
“We urge the CBN to intensify its efforts to address the challenge by adopting the right policy mix and ensuring synergy with fiscal authorities,” Almona said.
The Chamber recommends, in the short run, that there is a need for the government to focus on the critical needs of the poor and ensure regenerative investments in priority sectors of the economy, including agriculture, transport, health, youth development and human capital, infrastructure and housing.