LCCI says industrial sector now in deep recession

The Lagos Chamber of Commerce and Industry (LCCI) says the industrial sector is now in deep recession, while the policy environment is fragmented as there is yet no cohesion among ministries, departments and agencies (MDAs).

In its one year assessment of Muhammadu Buhari administration, the chamber says the investor confidence is now negative (-8) as against positive (+7.3) in June 2015, owing to uncertainty of policy direction.

LCCI says though ease of doing business improved by one percent in the past 12 months, the country’s position of 169 still means the challenging business environment persists.

In a statement, Muda Yusuf, director-general of the chamber, commended the current administration’s fight against corruption, saying that anti-corruption war of the present administration should continue unabated.

“Manufacturing is increasingly depressed due foreign exchange crisis, leading to lack of raw materials (capacity now 53.7 percent as against 54.9 percent). There is deepening recession in the industrial sector (from -2.53 percent in June 2015 to -5.49 percent in June 2016); and declining growth of the agricultural sector( from 4.70 percent in June 2015 to 3.09 percent in June 2016) ,” Yusuf said.

The report shows that services declined from 7.04 to 0.80 percent in the past 12 months, while power output dropped from 3205 mega watts to the current 2500MW.

Owing to deregulation, there is a positive trend on diesel as its price fell from N160 in June 2015 to N129, but active rigs in the oil& gas sector fell from 10 to four, owing to low price and no due incentives.

Also, passenger traffic in the aviation sector fell from 4.2 million to 3.8 million in the last 12 months, just as unemployment rose from 24.1 percent to 29.2 percent. Interest rate dropped one percent to 12 percent, while the stock market made N2.72 trillion loss.

“The absence of well structured, broad-based and synergised economic blueprint with clearly stated goals, plans, policies and strategies to drive the economy is largely responsible for the current economic challenges and policy ambiguity the nation is undergoing. Economic policy space remains unclear. Policy conception is faulty, hence, policy coordination and implementation suffer serious setback. There is, therefore, urgent need for central policy strategy with detailed and well-designed policy direction. This is critical to effective and efficient coordination and implementation of policy,” the LCCI DG says.

“While the policy goal of eliminating corruption is laudable, the need for concerted effort on the side of the government with respect to policy, legal and regulatory environments in order to boost private sector participation is highly desirable. Improving the ease of doing business through efficient business environment vis-à-vis effective infrastructure in all facets of the economy is important,” he stated.

ODINAKA ANUDU