LCCI Backs World Bank On Nigerian Economy Despite Reforms

The Lagos Chamber of Commerce and Industry (LCCI) threw its weight behind the recent World Bank report on the Nigerian economy despite recent reform.

In a statement titled ‘LCCI statement on World Bank’s Nigeria Development Update’ signed by the director-general of LCCI, Dr. Chinyere Almona, the chamber said, the World Bank was concerned about the state of 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.

The World Bank had earlier raised these concerns in its recent World Bank’s Nigeria Development Update (NDU) themed ‘Turning the Corner, From Reforms and Renewed Hope to Results’.

Almona noted that,  “A detailed review of the report revealed that the key concerns in the Nigerian economy are 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.

“We share similar views with the World Bank on the opacity and underperformance of the Nigerian National Petroleum Corporation (NNPC) and other Government-Owned Enterprises (GOEs).

“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 privatisation options. However, we do not support the immediate increase in value-added tax (VAT) due to its cost impact on consumers in the immediate term.”

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, saying “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.

“In relation to the unstable FX market, the Chamber recommends 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,” she stressed.

LCCI DG added that, “in the medium term, the government must strategically pursue and incentivize the local production of basic household needs that are being heavily imported in order 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 further said:  “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. 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.”