The Lagos Chamber of Commerce and Industry (LCCI), one of Nigeria’s leading private sector advocacy groups, has set some key fiscal and other policy measures for the Federal Government to adopt in its current efforts to keep the nation’s economy on the path of sustainable growth this year.
The group, in its ‘New Year Statement On The Economy 2023’ signed by the Director General, Dr. Chinyere Almona, elaborately reviewed the global and domestic economies’ performances in 2022, with specific references to micro and macroeconomic challenges, sectoral performances and prospects and believed that the adoption of the canvassed policy options remained crucial to preventing the nation’s economy from sliding into recession in 2023.
On the global economy generally, the LCCI predicted that as we enter the year 2023, the global economy, beyond the mounting uncertainties, may continue to face a confluence of challenges, ranging from persistently high inflation and aggressive global monetary policy tightening to the continued disruptions caused by the Russia-Ukraine war and the energy crisis, weak consumer demand and political upheavals, our projected outlook remains a hard landing.
According to the OPS group, with several shocks suffered by many economies and over a greater portion of 2022, various projections and analysis of economic conditions across regional blocs point to the likelihood of a recession or a significant slowdown of growth in 2023 due to spiralling inflation, high energy cost, monetary policy tightening, and weakening consumer demand.
It noted that global growth, though positive, slowed down by about 50 percent between 2019 and 2022.
The group projected that looking further into 2023, the war in Ukraine and mounting sanctions on Russia may all continue to impact supply chains for commodities and shocks to financial systems across the world.
This is even as it stated that the likely failings of the G7 countries’ agreement on Russian oil price cap, resurgence of Covid infections and likely return of restrictions, and renewed tensions in the Middle East may all continue to keep oil price upward and volatile in the short term.
Reflecting on the performance of the domestic economy, the Chamber cautioned that for Nigeria, the base factors that may continue to drive the major economic indicators were the rising inflation rate, tight monetary policies, an unstable currency, foreign exchange scarcity, debt burden, currency management, food supply disruptions, exchange rate volatility, and election spending.
To mitigate the negative implications of the base factors for the economy, it advised the Federal Government to sustain its targeted interventions in selected critical sectors like agriculture, manufacturing, export infrastructure, tackling insecurity, and free more money from subsidy payments.
The LCCI further advocated: “It is very imperative that we need sound monitoring and evaluation over the budget allocations to capital projects and defence spending to respectively tackle infrastructural deficit and the fight against insurgency.
“We urge the government to tackle oil theft to earn more foreign exchange, borrow from cheaper sources to reduce the burden of debt servicing, and pave way for the removal of the fuel subsidy by the incoming government.
“With increased spending by the government for census and general elections, the government must block revenue leakages, reduce costs, and empower the private sector to create jobs and generate more revenue to the government”, it added.
On monetary policy development options, the OPS’ group recalled that it had earlier recommended that monetary policy rate hikes alone would not curb inflation except the real factors like food supply disruptions, high energy cost, scarcity of FOREX, and the security challenges around agricultural production locations that have fuelled low production and high logistics cost.
It maintained that in 2023, to achieve the targeted goals of the monetary policy measures there was the need for fiscal interventions to support strategic sectors like manufacturing, agriculture, transport logistics, and more allocation of foreign exchange (FX) to productive sectors.
