NACCIMA speaks,bemoans worsening state of Nigeria’s economy

The Nigerian Association of Chambers of Commerce, Industry, Mines And Agriculture (NACCIMA) has expressed concerns over the rising profile of Nigeria’s external indebtedness, persistent budget deficit, rising inflation, infrastructural deficit , port challenges and insecurity in the country, noting  that  these vices have macroeconomic implications  the  growth and development of the country.  

The Nigeria’s umbrella  chamber  which spoke on Thursday at a  press briefing on the  reviews of the state of the economy by Ide John C. Udeagbala its  National President, also  called for caution on the 2023 general election , warning   that “the government should note that a violent – prone general election will rub off negatively on businesses and worsen investor – confidence in our economy. We call on politicians and their supporters to play a fair game putting the country first in their quest for victory at the polls.”

Speaking on the state of the nation’s debt profile , Udeagbala said that  Nigeria’s total foreign debt, as at September 2021, stood at 38 billion US Dollars, an increase of around 150% from 15 billion US Dollars in September 2017.

He said that “while domestic debt rose by 38% from 16 trillion Naira to 22 trillion Naira over the same period. While a pro-debt argument has been consistently put forward that Nigeria’s public debt is relatively sustainable at 25% of its GDP, it is now generally accepted that the current levels of debt service payments are considerably high and unsustainable given dwindling government revenues.”

“NACCIMA, once again counsels all levels of government, especially the Legislative and the Executive branches to consider other sources of funding, such as a preference for an increased tax base over increased taxes, and leveraging public-private-partnerships for tax credits spread over time.”

With regards to foreign trade, data as at the end of the third quarter of 2021 shows a persistence in Nigeria’s negative terms of trade which stood at NGN8.8trillion; this is reflective of total exports worth NGN13.1trillion against NGN21.9trillion in total imports. It is pertinent to note that such huge deficits have been rare occurrences in the history of our country’s terms of trade.

Other negative terms of trade have been NGN2.2trillion in 2015; NGN895billion in 2016, NGN637billion in 2019; and NGN8.1trillion in 2020. We demand that something drastic is done to reverse this trend, and as we struggle to come to grips with this new reality, the private sector acknowledges the increased pressure on government to generate foreign exchange and shore up foreign reserves.

 It is noteworthy that one of government policies to achieve this has been through the management of foreign exchange policies.

Despite this, “we have witnessed the devaluation of the Naira against the US Dollar, an exchange rate that is officially NGN415 to 1USD but about N585 to the Dollar in the unofficial market. This has come with consequences of increased costs of production of raw materials and consumables.

According to the latest data from the National Bureau of Statistics, the Nigerian economy slowed down slightly from a 5.01% percent growth in the second quarter of 2021 to a 4.03% growth in the third quarter.

While this is somewhat reflective of the global economic outlook which expects that economic recovery will be slow amid continued evolution of COVID-19 variants, diminished policy support, and lingering supply bottlenecks, it is the position of our Association that chances of accelerated recovery in Nigeria will be hindered by continuous institutional and infrastructural deficiencies that continue to plague the Nigerian economy.”

On  inflation , NACCIMA  President noted that “inflation measured on a Year-to-Year basis, first rose to double digits in February 2016 and has increased persistently (with a few dips here and there) to 15.63% as at December, 2021. We hope that recent reports of increasing hyper-inflation will not return us to the highest ever inflation rate of 18.17% as at March 2021.

On infrastructure , Udeagbala said “the most pragmatic solution to the problem of Nigeria’s widening infrastructure deficit is to seek a wider collaboration between the public and private sector as is evident in the success stories of the Presidential Executive Order 7 of 2019 on Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme.

“We propose this strategy due to the fact that capital expenditure has fallen short in implementation in recent years. Only 60% of the NGN2.7trillion budgeted for capital expenditure in 2020, and 55% of the N2.1trillion budgeted in 2019, were actually expended. We recommend for the massive expansion of Executive Order 7, which constitutes a non-interest loan by the private sector to the government towards infrastructure development, payable in future, in the form of tax credits.

Udeagbala  also spoke on the security situation in the country , saying “ our country demands urgent attention and determined action. NACCIMA uses this opportunity to underscore the importance of security of lives and property to economic growth and development. We call on the Federal Government, through its security agencies, to intensify efforts to counter and end the activities of kidnappers, bandits, terrorists, and other perpetrators of violence. Insecurity dampens investor-confidence and labels the country as unsafe to do business. Such a situation does not present our country in good light to the rest of the world.”

“NACCIMA hereby calls on the relevant Ministries, Departments and Agencies of government, responsible for protecting lives and property, to work concertedly and intensify their efforts, especially as we approach the general elections. On its part NACCIMA is ready to partner with these MDAs using existing institutions such as the Police Community Relations Committee, to increase the effectiveness of security policies and measures.”

NACCIMA observes with dismay the unabating bottlenecks at our ports which have been hindering our quest to be a maritime hub in West Africa. Our members still encounter man-made delays in processing the clearance of their goods at the ports.

“ We call for the opening of more sea ports in the country and the simplification of clearing procedures. In consonance with one of recommendations of the World Customs Organisation, we demand for the establishment of the Customs And Excise Appeal Tribunal to act as ombudsman in the resolution of disputes arising from imports and exports at the ports.

On the  CBN e-invoicing policy “NACCIMA notes the recently introduced e-invoicing and price verification policy of the Central Bank of Nigeria, which is set to commence on 1st February, 2022. We call on the CBN to postpone the date of commencement of this policy to enable our members get acquainted with the new dispensation. Transition challenges will lead to chaos with immediate implementation. We also request the CBN to make the operation of these policies cost-friendly.”

“The government should note that a violent – prone general election will rub off negatively on businesses and worsen investor – confidence in our economy. We call on politicians and their supporters to play a fair game putting the country first in their quest for victory at the polls, the National President of NACCIMA said.

Therefore NACCIMA called for  a need for wider stakeholder consultations in policy design and implementation; a cohesive strategy to ensure that policies do not cancel each other out; enthronement of policy changes that will improve our ease of doing business, and leveraging the private sector for infrastructure development and productivity.