The Lagos Chamber of Commerce and Industry has called on the federal government to urgently adopt fiscal policy measures to drive the country’s non-oil exports, FX earnings, competitiveness and industrialisation.
Speaking at the chamber’s quarterly press conference on the state of the economy in Lagos recently, Gabriel Idahosa, LCCI’s president emphasised the importance of a strong fiscal policy that promotes export and local manufacturing.
“We urge the government to adopt prudent fiscal policy measures and create a business environment that promotes non-oil export growth and competitiveness,” Idahosa said.
“This is projected to boost export earnings, diversify foreign exchange earnings, raise domestic revenue, increase business productivity, and improve citizen welfare,” he added.
He also called on the government to address factors driving up production costs for manufacturers to enable the country’s products to compete favourably.
“The increase in production costs could lead to higher prices for goods and services, potentially affecting the competitiveness of Nigerian products in Africa and global markets, respectively,” he stated.
“We urge the Government to focus on improving real sector productivity with massive investment in infrastructure, reviving government-owned oil refineries, and reducing the bottlenecks in fuel supply,” Idahosa said.
He urged FG to pay more attention to the manufacturing industry by addressing issues of high interest rates, multiple taxation, and volatile naira among others limiting the country’s industrialisation drive.
He noted that growth in the sector has remained weak owing to the multiple challenges Nigerian manufacturers face, thus making them uncompetitive in the international market.
The manufacturing sector remained weak as growth slowed to 1.28 percent in the second quarter (Q2) from 1.49 percent in the first quarter (Q1) to 2.20 percent in the corresponding quarter of 2023, he noted, citing data from the National Bureau of Statistics.
“Recent manufacturing indicators reflect a burdened production sector bedevilled with the high cost of production driven by high interest rates, a weak currency, weak consumer demand as inflation erodes consumers’ purchasing power, and costly logistics due to high energy costs,” Idahosa said.
On managing persistently high inflation, the chamber recommended that the monetary and fiscal authorities focus on the factors driving inflation rates by tackling supply-side deficiencies.
Idahosa said that instead of focusing too much on the demand side, stressing that increasing food production is an important part of the supply-side deficiencies that need to be addressed.
“Increasing food production requires reducing insecurity in our farmlands.” “The Government must remain focused on boosting food production through ongoing policy reforms, targeted fiscal interventions, and better management of Nigeria’s floating exchange rate regime.”
The LCCI president emphasised the need for the government to make credit available to Micro, Small, and Medium Enterprises (MSMEs) to support their operations and production lines.
Read also: LCCI calls for holistic approach to tackling inflation
“Concessionary rates lower than the Central Bank of Nigeria (CBN) prevailing Monetary Policy Rate (MPR) is hereby advocated for MSMEs,” he said.
“The high lending rates make it challenging for businesses to access credit, especially for Small and Medium Enterprises (SMEs) that are the backbone of the economy,” he noted.
He stated that the private sector, which serves as the engine of growth and employment generation in Nigeria, is plagued with increased borrowing costs, reduced investment incentives, heightened uncertainties in our policy environment, and a pressured foreign exchange market.
“The recent hikes in the MPR have directly translated into higher interest rates, making it more expensive for businesses to access credit for working capital, expansion, and sustainability.
“With the high yields from treasury bills and bonds, the government is attracting investments from local and foreign portfolio investors. This has, however, crowded out the private sector from accessing credit.
“We have consistently advised that rate hikes alone will not curb inflation without resolving the challenges of the real sector, which comprises the agriculture and manufacturing sectors.
“The real sector has demonstrated the capacity to create more jobs, manufacture products for consumption and export, and form the economy’s industrial base.
“While we understand that high interest rates attract Foreign Portfolio Investments (FPIs) and local investors to treasury bills and bonds, we lament the drying up of funds away from the private sector to government treasuries,” Idahosa said.
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