New Telegraph

ORGANISED PRIVATE SECTOR WARNS: Govt’s pre-poll activities may suppress economic growth

Analysts

…says GDP may slow in Q1’22 …rues N2.29trn budget allocation to fight insecurity

…flays new excise duty on beverages

Members of the organised private sector have expressed pessimism over the country’s economy during the current year 2022. They are of the view that being the year preceding the long expected 2023 election year, greater attention will be paid more to political issues than economic transformation by the federal government.

The OPS, the leading voice of the Nigerian business community, private sector operators and chambers of commerce across the country, pointed out that government’s drive for revenue would be intensified this year, with the cost of doing business further increasinh amidst new duty tariffs introduction in a bid to shore up its revenue. Speaking with New Telegraph on the operators’ expectations from the Federal Government in 2022, President, MAN, Engr. Mansur Ahmed, explained that firms that do business with government needed to be wary and ensure payment for jobs done and supplies made in order not to face challenges with getting paid. The MAN helmsman stressed that improvement in economic performance in Q4’21 and Q1’22 would largely depend on the ability of government to sustain the current relative economic stability, support the productive sector and ensure security of lives and property.

In addition, Ahmed added that improvement in economic growth would also depend on sustained increases in the price of crude oil and proper allocation of forex to the productive sector. The MAN President said manufacturingperformance would improve if forex is made available to the industrialsectorforimportationof raw materials and machine that are not local available and the disposable income of Nigerians is enhanced. “Growth of real GDP of Nigeria is expected to remain positive in Q4’21 and Q1’22. Growth in manufacturing sector is expected to remain positive in Q4’21 but may slow in Q1’22 but still within the positive quadrant,” Ahmed stated.

In his submission, renowned economist and Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), who is also the immediate past Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, disclosed that government must do everything within its powers not to allow the country’s fragile GDP slide further this New Year, saying that Nigeria’s economy witnessed four consecutive quarters of GDP growth since the exit from recession in fourth quarter of 2020.

Speaking more on this, the economic expert said there was a GDP growth of 0.51 per cent, in the first quarter; 5.01 per cent in second quarter; and 4.03 per cent in the third quarter of 2021. To him, these are indications that the economy is on recovery path.

These could be attributed to a rebound in domestic economy following the relaxation of restrictions on economic activities and movement within the country, revitalisation of sectors that were earlier on lockdown following the onset of Covid-19 such as the hospitality, entertainment, aviation, roadtransportation, tourism, among others, restoration of supply chains that were disrupted at the inception of the pandemic and recovery of the global economy following improvements in investor sentiments as a result of improved vaccination in many parts of the world. Others are a rebound in commodity prices, which had a positive impact on macroeconomic outlook, as crude oil price, for instance, has recorded an impressive recovery in the last couple of months, as well as economic stimulus programmes by monetary and fiscal authorities.

However, for the recovery to be sustained in 2022, Yusuf said: “It is important to create an enabling environment for positive investor sentiments in the economy. This should be driven by policy, regulation, macroeconomic conditions, and security of life and property.”

On his part, the Director- General of MAN, Segun Ajayi-Kadir, said that government in the spirit of growing the country’s GDP should halt the plans to kick-off the introduction of excise duty collection on carbonated and non-alcoholic drinks, saying it would be counterproductive to local manufacturers of beverages and non alcoholic drinks in the country. Ajayi-Kadir explained that the burden of excessive duty tariffs on the country’s manufacturing sector by government should be reviewed this year for the sake of manufacturers that are being confronted with multiple taxation from governments for a sector that has been battling from the debilitating disruptiveeffectof COVID-19, the non-accessibility of the government’s relief funds, foreign exchange rate volatility and most importantly, manufacturing challenges in the country.

“We want to see the Federal Government halting the plans to introduce new excise dutycollectiononcarbonated and non-alcoholic drinks in the country this year. “Burden of multiple taxes have been affecting our businesses and production heavily. Our manufacturing sector is yet to fully stabilise from numerous straits confronting manufacturing, propagated by fiscal and monetary policies of government.” Commenting further, the MAN DG posited that the association wanted to see rapid improvement in the patronage of made-in-Nigeria manufactured products, especially among the government ministries, department and agencies (MDAs) in 2022.

He, therefore, urged the Federal Government to review and strengthen the Executive Order 003 signed by President Muhammadu Buhari into law in 2017, mandating all MDAs to give first choice to made in Nigeria products in public procurements, only a quantum of them have keyed into it. A Former President of Lagos Chamber of Commerce and Industry (LCCI), Mrs. Toki Mabogunje, while speaking on Nigeria’s participation in African Continental Free Trade Area (AfCFTA) agreement, stated that all eyes would be on government to ensure implementation of the scheme is ratified this year by African Union (AU). Mabogunje said that the regional economic communities needed to find appropriate policy steps that will ensure a speedy and effective implementation of the continental trade agreement to realise the $6.7 trillion revenue projection. According to her, Nigerian government should champion the final ratification of AfCFTA implementation scheme in 2022 to boost continent’s trade, revenue earning and GDP growth. “The issues around market size, economic size, diversity, supply chains opportunities and many more will be appreciated and good take away for all participants in AfCFTA.

“We also just need to recognize the reality and cost of AfCFTA varying from country to country. “So, it is the function of our preparedness. As countries, it is a function of our competitiveness, it is the function of the quality of our infrastructure, the quality of our institutions and it is also the function of the policies we put in place.” New Telegraph gathered that there were still issues surrounding market size, economic size, diversity, supply chain opportunities, foreign exchange, trade policy, Customs, tariff difference, rule of origin and others to be sorted out for the continental trade agreement to be a success.

In his submission, the Chairman, Corporate Affairs and Strategic Planning Committee for Manufacturers Association of Nigeria (MAN) and Managing Director/ Chief Executive Officer of Krisoral, Igwe Chris Oranu Chidume, Eze Ana-Ukwu, said the business community wanted government to reduce the ongoing extortion at the ports this year because of its impediments on goods clearance. He, therefore, urged the Federal Government to ensure adequate payment of security agents in order to reduce the level of extortion from Nigerian manufacturers in a bid to improve business growth. According to him, the country’s ports play a key role in trade facilitation in Nigeria and the sub Saharan region.

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