By Adedapo Adesanya
- High influence from prolonged border closure expected.
- Government policies to determine outcome.
The cost of doing business in Nigeria is expected to rise in 2020, the Lagos Chamber of Commerce and Industry (LCCI) has projected. This was revealed by the Director-General, Dr Muda Yusuf, in the LCCI 2019 Economic Review and Outlook For 2020 on Thursday in Lagos.
According to the outlook, high cost of doing business will be caused by poor infrastructure in the country, excessive regulations placed by government, multiplicity of taxes and levies, among other considerations.
Recalling that Nigeria recorded improvement on the Ease of Doing Business Ranking due to some recent policy measures, the present realities wouldn’t improve if these challenges were not properly addressed going into 2020, he opined.
Speaking on the trade sector, the DG said that the performance in 2020 would be shaped by the direction of government policies considering the border closure among others.
Mr Yusuf said that the manufacturing sector would continue to benefit from the Central Bank of Nigeria’s credit policy push, noting that competition between foreign and local producers would likely become non-existent on prolonged closure of land borders.
He also said that headline inflation was expected to trend higher in 2020, saying that this would be driven by implementation of new minimum wage and continued closure of the land border.
According to him, the higher Value Added Tax (VAT) rate of 7.5 percent and the early disbursement of funds for budget implementation following the return of the budget cycle would also be a great advantage.
“We expect economic growth to remain subdued at around 2 percent by 2020 as consumer demand, as well as private sector investment, will most likely remain weak.
“We are of the view that failure by government to fix structural constraints with regards to fixing power challenges and rehabilitating deplorable road networks, will perpetuate the poor productivity and performance of the sector.
“In our opinion, continued protectionist measures of government will most likely limit growth in 2020.
“Elsewhere, the level of the country’s engagement in Africa Continental Free Trade Area (AfCFTA) scheduled to kick-off July 1, 2020, will also impact the performance of trade sector.
“As a sustainable solution, it is imperative to fix the fundamental issues of high cost of domestic production, the prohibitive cost of cargo clearing at the Lagos ports, prohibitive import tariffs, high cost of logistics within the economy, and border policy capacity,” he said.
On the performance of the agricultural sector, the Director-General projected improved credit flow to agriculture on the back of proposed increase in deposit money banks’ loan to deposit ratio to 70 percent.
Mr Yusuf expressed the view that prolonging closure of the land borders would further add impetus to agricultural output in 2020.
“The monetary value of agriculture output has been on the upward trajectory, rising 40 percent quarter-on-quarter to N5.41 trillion between July and September from N3.86 trillion between April and June, compared with N3.60 trillion in the first quarter.
“The CBN, like it did in 2019, will maintain status quo by not relenting in supporting the sector with much-needed funds in ensuring that the wide gap between local demand for food and supply is bridged.
“However, risk factors to our prognosis include security challenges in the north-east zone; a major food producing region in the country, resurgence in herders-farmers clash in the North-central region.
“Overall, we expect the sector to sustain its upward growth trajectory in 2020,” Mr Yusuf added.
Dipo Olowookere