The Lagos Chamber of Commerce and Industry (LCCI) has released its review of President Muhammadu Buhari’s administration, noting that the greater part of the president’s four years in office, which ends tomorrow, was characterised by massive slowdown in virtually every sector of the economy.
This, the chamber said, consequently impacted on virtually every sector of the economy.
“The regime came on board with an exceptionally high goodwill and with very high expectations from the citizens. The expectations weakened soon after as the regime was up to a slow start, from an economic management perspective,” according to the review, which was signed by the Director General of the chamber, Mr. Muda Yusuf.
LCCI said, “the appointment of ministers took an unusually long time, about six months into the administration. The key reforms, especially in respect of the petroleum industry and the infrastructure sectors were also slow in coming.
“The decline in oil price and the activities of the militants in the Niger Delta regrettably compounded the economic challenges of the country in the first two years of the regime, culminating in a recession in 2016. However, the economy came out of recession soon after in 2017 following the recovery of oil price.”
According to the LCCI review, the Nigeria’s economy grew by about four per cent in the first quarter of 2015. However, in the subsequent quarters, the economy witnessed a downward trend, reaching a low of -2.3 per cent in 2016 third quarter.
This, it said, was largely as a result of sharp decline in oil price and oil production, adding that the economy has since recovered from the recession and now on a growth path even as the annual average growth from the first quarter of 2015 till date is 1.05 per cent. However, the latest GDP report indicates a growth of 2.0 per cent in first quarter.
Based on these indices, the chamber averred that, “the growth performance over the past four years has been fragile driven largely by the non-oil sector which is itself grappling with severe productivity issues resulting from the huge deficit in infrastructure.”
This, it said underscored the need for urgent economic diversification anchored on improved productivity across sectors and structural reforms.
The chamber was particularly worried that real sector of the economy was neglected as, “investments in treasury bills and federal government bonds have become more attractive than investments in the real economy such as manufacturing, agriculture and solid minerals.”
It noted that, “Even the financial institutions would rather invest in treasury bills and bonds rather than lend money to entrepreneurs. The dynamics of the debt market has become a constraining factor on the financial intermediation role of the banking industry. This is a scenario that is detrimental to wealth creation and employment generation in the Nigeria economy.”
The LCCI also expressed concerns over the nation’s rising debt, saying that it does not portend well for the economy frequently.
In the 2019 budget, debt service provision was N2.14 trillion; capital expenditure provision was N2.9 trillion and estimated revenue for the federal government was N6.97 trillion. This implies that debt service as a percentage of revenue was 30.7 per cent; and debt service as a percentage of capital budget was 73.8 per cent.
“The high deficit in infrastructure, the gridlock at the Lagos ports, high interest rate and unfair competition from imported products were also factors that constrained the growth of the industrial sector during the review period. High energy cost continued to impede the competitiveness of the sector. The import dependent nature of the Nigerian manufacturing sector also posed considerable adjustment challenges for the sector over the past four years.
“The agricultural sector gained significant government support especially in funding, especially rice farming and processing,” stating, however, that the pace of mechanisation was still low which is why is why food prices remain an issue in the country.
“It is only mechanised agriculture that can guarantee food security in a country with an estimated population of 200 million. The protracted challenge of insecurity took its toll on the agricultural production in the country, especially in the last two years of the administration,” it added.
On the oil and gas sector the review noted that the pace of reforms in the sector has remained painfully slow over the past four years.
“The Petroleum Industry Bill [PIB] was stalled, impeding the progress of the sector. In the upstream segment, contracting processes under the joint venture partnership took between 12 – 36 months.
“This was a major problem for investors in the sector. This is one reason that no new investors are coming into the sector,” the chamber said.
“The downstream was equally plagued by the excessive regulation which made it difficult to unlock the huge potentials of the oil and gas sector. It is desirable to fully liberalise the sector so that investors can inject the needed private capital.”