Activities leading to the 2015 elections continue at a feverish pace, the Lagos Chamber of Commerce & Industry (LCCI), on Sunday warned that the economy would be on the receiving end, resulting from the “distractions of partisan politics and heightened election spending”.
The Chamber in its 2014 economic and business outlook, signed by its President, Remi Bello, said the nation’s economy in 2014 would be characterised largely by macroeconomic and investment climate conditions that prevailed in 2013.
How this plays out on business activities, and as such the prosperity of businesses, the statement added, would depend largely on capacity to manage ensuing risks.
One of such risks, he noted, is that arising from the increased electoral spending in the months ahead, it will be difficult keeping inflation within single digit band in 2014, given the various variables that would generate pressures on prices.
He therefore stressed the need to fashion strategic policies to take of such conditions which investors in the economy need to take account of while designing their business strategies for the year.
LCCI said GDP growth would remain strong at over 6 per cent, relative to global average of 3.1 per cent, following which Nigeria’s economy may emerge as Africa’s largest, and among the world’s top 30, after the planned rebasing in 2014.
“The moderate risk of fiscal imbalances which may result from revenue shortfalls, especially with regard to crude oil output would make budget assumption of 2.39 million barrels per day appear optimistic given the prevailing situation in the oil producing areas, attacks on pipelines and oil theft”, he said.
He stressed that “in 2014, the economy will be characterized by the following risk conditions which investors in the economy need to take account of in their business strategy for the year. However, the resilience of the economy will endure.”
“The moderate risk of fiscal imbalances which may result from revenue shortfalls, especially with regard to crude oil output would make budget assumption of 2.39 million barrels per day appear optimistic given the prevailing situation in the oil producing areas, attacks on pipelines and oil theft”, he said.
Bello however assured that the positive outlook of the global economy this year would impact positively on crude oil prices which could serve to sustain the current growth momentum of the Nigerian economy.
For him, the “performance of the major drivers of growth are also expected to be sustained – telecommunications sector, Building and Construction; Hotel and Restaurants; and Solid Minerals.
“The market size, driven by high and growing population and emerging middle class will remain robust with corresponding opportunities for investors,” he stressed.
From reports, he continued, the moderate regulatory risk in a harsh regulatory environment has become a concern to many investors, who therefore see some regulators as “overbearing and create dislocations for investor. But with increasing communication and mutual understanding, the risk may be mitigated in the New Year”.
The industrialist added that “as the political activities begin to gather momentum on the run up to the 2015 election, transactions or projects that are public sector driven will be more vulnerable.
“It is therefore advised that from 2014, exposure to big public sector transactions of long term nature should be undertaken within this context”, he added.
