Oil prices: Nigeria's economy is still vulnerable-LCCI

The Lagos Chamber of Commerce and Industry (LCCI) has said Nigeria’s economy is still vulnerable to external shocks due to fluctuations in global oil prices.

LCCI President, Mrs Toki Mobogunje said this in Lagos while addressing newsmen on a theme, “State of the Nigerian Economy”.

She said the mono-product nature of the economy would continue to expose the nation to volatility in the global oil market with its attendant consequences on the economy.

Mabogunje called on the Federal Government to intensify diversification efforts and embrace structural reforms to attract private investment and stimulate economic growth.

According to her, businesses still struggle to survive owing to the multiplicity of levies, infrastructure challenges, sluggish growth, excessive regulation, high cost of credit and unfavourable government policies.

She said the challenges confronting the growth of businesses had remained in spite of the country’s upward movement by 15 places in the ease of doing business ranking.

The LCCI president advised government to vigorously implement friendly policies to support expansion of businesses.

Speaking on inflation, Mabogunje advised the government to stem rising consumer prices through increased investment in infrastructure, especially power and transportation.

“The inflation rate, at 11.98 per cent in December, was the fourth consecutive month of rising inflation. Rising inflation has a profound welfare effect on citizens as it weakens purchasing power, as heightened food inflation naturally escalates poverty conditions.

“Policymakers need to worry about the increasingly intense inflationary conditions, especially the food component of inflation,” she said.

This Mabogunje said, would help bridge the supply gaps and reduce transportation costs.

On foreign exchange and external reserves, she said the approach of supporting the reserves with foreign portfolio investment were unsustainable.

The LCCI president said there will be problems if portfolio investors develop apathy for Nigerian assets.

She also noted that the current security situation in the country has devastating implications for business activities, economic growth, food production and investment. Mabogunje urged the government to ensure a concrete and sustainable means of reducing youth unemployment by stimulating investment across all sectors of the economy.

On 2020 budget, she urged the government and its agencies to release performance reports to stakeholders and the general public on a periodic basis.

Speaking on the adoption of Eco as a common currency within the ECOWAS sub-region, Mabogunje noted that the change had no significant implication on the Nigerian economy.

She, however, explained that the manner of adoption of the currency by the francophone countries raised concern around the mutual confidence levels between the anglophone and francophone countries in the region.

“Currency issues are not the biggest issues in the integration process in ECOWAS, as the bigger issues are around non-tariff barriers to trade. The challenges of weak compliance with the ECOWAS protocols, especially around the ECOWAS Trade liberalisation scheme and connectivity between countries in the sub-region are major problems. It is important to get priorities right as far as economic integration issues are concerned,” she said.