The Lagos Chamber of Commerce and Industry (LCCI) has advised the Federal government of Nigeria to adopt more prudent fiscal policy measures to effectively manage inflation and address the high-interest rate and exchange rate volatility.
Dr. Chinyere Almona, the FCA Director General Lagos Chamber of Commerce and Industry, an arm of the organised Private Sector OPS, gave the advice which commenting on the GDP report for the second quarter of 2023.
Almona said: “We commend the Federal Government’s declaration of a state of emergency on food security and urge them to prioritise farmers’ areas of assistance, fertilisers, and seeds to mitigate the effects of subsidy removal and create strategic food reserves to be used as price stabilisation mechanisms”.
“The National Bureau of Statistics (NBS) reported that the Nigerian economy grew by 2.51% in the second quarter compared to 2.31% in the first quarter of 2023. The Q2 growth implies the 11th consecutive quarter of economic growth, though lower than the 3.54% recorded in the same quarter of 2022.
“This may be attributed to the challenging economic conditions caused by fuel subsidy removal and exchange rate harmonisation. Analysis of the GDP result showed that growth was primarily driven by the service sector at 4.42% and contributed 58.42% to aggregate GDP. The recession in the oil sector persisted with a higher contraction of –13.43% in the quarter compared to –4.21% in the previous quarter.”
Almona further added: “The significant decline in the oil sector reflects suboptimal daily oil production due to a lack of accountability, oil theft, pipeline vandalism, underinvestment, and rising cost of production. The non-oil sector grew by 3.58%, a slight expansion of 0.81% points compared to 2.77% in Q1 2023 and lower by 1.19% points compared to Q2 2022.
“The top five sectors that contributed to growth are solid minerals (31.9%), finance & insurance (26.8%), utilities (11.0%), information and communication (8.6%), and construction (3.4%). In contrast, the slowest growing sectors are transport & storage (–50.6%), oil & gas (–13.4%), education (1.4%), agriculture (1.5%) and other services (1.7%). The growth recorded in the manufacturing sector remained low at 2.20%.”
The LCCI pointed out that the significant contraction recorded in transport & storage and the sub-optimal growth in manufacturing and trade largely reflect the deregulation of the downstream oil sector, exchange rate volatility, and weak 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”, it added.