The Lagos Chamber of Commerce and Industry (LCCI) has urged the Federal Government to embrace more prudent fiscal policy measures as a means to effectively manage inflation and tackle the challenges of high interest rates and fluctuations in exchange rates within the country.
The chamber’s call follows the recent release of the National Bureau of Statistics (NBS) report on Nigeria’s Gross Domestic Product (GDP) growth rate for the second quarter of 2023. The report revealed that the country’s economy expanded by 2.51 percent during the second quarter, compared to the 2.31 percent growth observed in the first quarter of the same year.
While the second quarter growth signifies the 11th consecutive quarter of economic expansion, it remains lower than the 3.54 percent recorded during the equivalent quarter in 2022.
In response, Chinyere Almona, the Director General of the LCCI, issued a statement attributing this moderated growth to the demanding economic circumstances stemming from fuel subsidy removal and exchange rate harmonization.
Almona praised the Federal Government for declaring a state of emergency concerning food security and advised them to prioritize aiding farmers with essential resources like fertilizers and seeds. She also recommended the creation of strategic food reserves to serve as mechanisms for stabilizing prices, thus mitigating the impact of subsidy removal.
The NBS recently revealed that Nigeria’s headline inflation rate had risen to 24.08 percent in July 2023, surpassing the 22.79 percent recorded in June of the same year. On a year-on-year basis, the July 2023 headline inflation rate was 4.44 percent points higher than the rate registered in July 2022, which stood at 19.64 percent.
An analysis of the GDP data indicated that the slowest growing sectors were transport & storage (–50.6 percent), oil and gas (–13.4 percent), education (1.4 percent), agriculture (1.5 percent), and other services (1.7 percent). The manufacturing sector exhibited a subdued growth of 2.20 percent.
The LCCI observed that the notable decline in transport and storage, as well as the lackluster expansion in manufacturing and trade, can be largely attributed to the deregulation of the downstream oil sector, fluctuations in exchange rates, and weakened consumer demand.
“The recovery in agriculture is significant, however, growth remained low and may be attributed to insecurity and policy gaps. We also note that high growth in solid minerals is insignificant, mainly due to the sector’s relatively small size.
“The Chamber recommends that the government adopt more prudent fiscal policy measures to effectively manage inflation and address the issue of high-interest rate and exchange rate volatility,” she said.
