Tinubu’s scorecard: LCCI faults rising inflation, FX market instability, others

Chinyere Almona, director-general, Lagos Chamber of Commerce and Industry (LCCI)

The Lagos Chamber of Commerce and Industry (LCCI) says President Tinubu’s first year in office has been characterized by accelerating inflation, rising public debt, FX market instability and interest rate hikes that have weakened the performance of the manufacturing, agricultural and telecoms sectors.

The chamber said the economy has been in an adjustment mode with several variables like stubborn inflation, persistent weakening of the country’s currency, supply chain disruption driven by insecurity, and weak production base, defining the outlook at any given time.

Chinyere Almona, the director general at LCCI made this known in a statement in which she gave an evaluation of the administration’s stewardship to Nigerians in the last 12 months.

The chamber pointed out that some bold decisions were taken at some point with sincere intentions of fixing structural deficiencies; such as removing fuel subsidies, harmonising official and parallel exchange rates, and adopting a cost-reflective electricity tariff, among others.

However, it said that there is now a need for a systematic review and evaluation of these policies to achieve the best-desired outcomes.

Gross domestic product

Looking at the gross domestic product (GDP), the leading economic performance indicator, LCCI compared what was recorded in the first quarter of 2024 (2.98 percent) and 2.31 percent in the corresponding period of 2023.

And concludes that ordinarily the country would have achieved its target of 3.37 percent, but for issues around power supply, rising cost of production, and forex illiquidity, among others.

LCCI explained that those shortfalls of the government are having an undue impact on imported raw materials for manufacturers, making better choices of monetary instruments, and dealing with the security challenges that hitherto have impeded agricultural production and supply chain disruptions.

Acceleration inflation

LCCI disclosed that the government’s fight against inflation has not been successful, as the prices of goods keep an upward trend, with the inflation rate rising from 22.22 percent in April 2023 to 33.69 percent in April 2024, recording more than a 10 percent leap in twelve months.

“In attempts to curb flaring inflation, the Central Bank of Nigeria, through the instrument of rate hikes, has consistently increased the benchmark rate, the Monetary Policy Rate (MPR), within the last twelve months.

“This action has made borrowing costlier and constrained new credit for productive activities. This has continued to weaken our production base and impede new job creation in the economy,” the statement read in part.

Fiscal policy and government finance

LCCI observed that the government’s spending was largely sub-optimal due to substantial debt services and returning subsidy payments.

Thus, removing subsidies was to reduce the enormous fiscal burden on the government and improve its financial well-being.

The President, the chamber said, signed a budget of N28.7 trillion in 2024 tagged “Budget of Renewed Hope”, comprising N1.74 trillion for statutory transfers, N8.27 trillion for debt servicing, non-debt recurrent expenditure of N8.76 trillion, and Capital expenditure of N9.99 trillion.

Nigeria’s debt stock was N97.34 trillion ($108.22 billion) at the end of 2023, compared to N87.38 trillion ($113.42 billion) at the end of June 2023.