The Nigerian economy underwent series of upheavals in 2017 as a result of the downturn caused by the crash in global prices of crude oil from mid-2015, a situation which resulted in intense economic instability, with the country officially entering a period of economic recession in the second quarter of 2016. This situation raised questions about the validity and efficacy of the Government’s fiscal and monetary policies.
With the marginal growth in the Gross Domestic Product (GDP) and exit from recession by the 2nd quarter of 2017, an immeasurable amount of lessons have been learnt by both Government and the private sector stakeholders.
As concerted efforts geared towards putting the economy on the path of sustainable growth continue to yield some results, 2018 offers us a crucial opportunity to apply lessons learnt during the last recession which, according to the NBS, officially ended in Quarter 2 of 2017 with a marginal growth of 0.72% recorded in GDP.
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) anticipates a conscientious implementation of the 2017 budget of recovery, a swift in-depth review of the projects and programmes of the proposed 2018 budget to genuinely identify questionable areas for debate or review, the thorny issue of budget funding and subsequent passage of the budget within the first quarter of 2018. This is key to resolving the infrastructural deficit challenge currently faced by Nigerians and every sector of the economy.
The Association commends the activities of the Presidential Enabling Business Environment Council (PEBEC) and other stakeholders in improving the Ease of Doing Business in Nigeria and expects that the gains already recorded (evidenced by Nigeria’s improved ranking in the World Bank’s Doing Business Report for 2018 as well as being on the list of top 10 most improved economies in the world) will be consolidated on in 2018 by formulation and implementation of sound economic policies and programmes.
This should be in addition to reducing the astronomically high interest rates hovering around 17.86% for Prime Lending and 31.39% Maximum Lending which continue to be detrimental to entrepreneurship development and business expansion.
The double digit inflation rate which now stands at 15.90% remains a constant source of worry especially in the light of rising unemployment which currently stands at 18.8%.
NACCIMA judiciously commends the increase in Internally Generated Revenue (IGR) raked in from the Voluntary Asset and income Declaration Scheme (VAIDS) as recently declared by the Chairman of Federal Inland Revenue Service (FIRS), Babatunde Fowler. We however look forward to the expansion of the tax net to capture defaulting tax payers while diligent tax payers in the real sector reap dividends in form of improved infrastructure, waivers and other incentives which can attract current defaulters to becoming compliant citizens. These in addition to an improved business environment have the potential to bring about a reduction in the unemployment rate in 2018, encourage youth empowerment while boosting the growth of Micro, Small and Medium Enterprises and the implementation of the key activities in the Economic and Recovery and Growth Plan (2017-2020).
The renewed focus on economic diversification and reduced dependence on crude oil earnings has drawn more attention to the potential in the agriculture sector which is evident as the nation inches closer to projected self-sufficiency in rice production in 2018. The Agriculture sector is the largest employer of labour; a major contributor to the nation’s Gross Domestic Product (GDP) and one of NACCIMA’s core advocacy areas. It is without doubt that the sector requires more of government intervention in 2018 as private sector interest in the prospects the sector offers in meeting local and export demand for food and cash crops garners momentum. The Association’s deep interest in the Agriculture sector’s ability to liberate the nation’s economy from the current quagmire it faces culminated in the first NACCIMA–NIRSAL Agriculture and Agribusiness Policy Linkage Conference held in Abuja in November 2017 during which extensive discuss on maximizing and encouraging investments in the agricultural sector were held. The outcome was the creation of an Implementation Task Force by the Honourable Minister of Agriculture, Chief Audu Ogbeh, to champion an agricultural revolution in 2018 with NACCIMA as a major player. NACCIMA once again reiterates the call for a single digit interest rate for agriculture lending to promote commercial agriculture, agribusiness activities, as well as more incentives for local producers of agricultural machinery and equipment.
The Association is worried about the rising spate of insecurity in the country as this discourages critical investment in the economy by both local and foreign investors. We hope for significant improvement in security in 2018 through further strengthening of all our nation’s security agencies and efficient securing of our borders.
It is pertinent to state that the recurring issue of scarcity of petroleum products which results in untold hardship to citizens and businesses who as a result of the inadequacies in the power sector depend on petroleum products to run their businesses is fast becoming an alarming trend. The Association recommends that as the Nigerian National Petroleum Corporation and other relevant stakeholders seek lasting solutions to the challenges in the petroleum sector, more effective temporary measures should be to put in place to assuage the difficulty faced by Nigerians in 2018.
NACCIMA looks forward with optimism that the manufacturing and mining sectors of the economy will in 2018 receive more attention from the Government through the implementation of policies, programmes, incentives and projects which engender the growth of small and large businesses, encourage more local and international investors while promoting inclusive growth and development in all sectors of the economy.
In summary, the Association expects increased growth rate of Gross Domestic Product (GDP) in 2018, buoyed by the continuing stability of global prices of crude oil which are currently above the budgetary targets. The Association believes that GDP growth rate will average 3.5% in 2018 in line with the prediction of the Medium Term Expenditure Framework (MTEF) 2018 – 2020. Inflation rate (Year on Year change) will continue to fall slowly but will remain within double digits within the year 2018, perhaps falling to as low as 12.5%. Unemployment rates will remain high and rise at a slower rate but should stabilize in mid-2018 as increased Foreign Direct Investment, Government Spending, and preferential lending rates to certain sectors of the economy begin to trickle down to the populace in terms of job creation.
As the “Voice of Nigerian Business” the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture will continue to advocate for policies which advance a constructive and competitive environment for the pursuit of enterprise.
IYALODE ALABA LAWSON. MFR, FIoD, JP.
National President, NACCIMA.
29th December, 2017.