By Adedapo Adesanya
The Lagos Chamber of Commerce and Industry (LCCI) has urged the Nigerian government to adopt prudent fiscal policy measures and investment-friendly tax policies that work in tandem with the efforts of the Central Bank of Nigeria (CBN) to tame inflation.
The President of LCCI, Mr Gabriel Idahosa, said this at the Chamber’s first quarter of 2024 news conference on Thursday in Lagos, as he warned that as headline inflation continued its upward trend, it was telling on the ability of businesses to operate in the country.
He said in the last quarter of 2023, inflation notched higher to 28.92 per cent in December 2023, compared to 26.72 per cent recorded in September 2023,
Mr Idahosa also made a case for the government to strengthen its support to critical sectors like agriculture, road infrastructure, power, energy, and other key sectors because increasing the monetary policy rate has proven to be insufficient in taming inflation.
Last year, the CBN increased interest rates by more than 700 basis points to 18.75 per cent.
Citing the report from the National Bureau of Statistics (NBS), he noted that the inflationary pressures were primarily attributed to food and non-alcoholic beverages; housing, water, electricity, gas, and other fuel; clothing and footwear; transport, furnishing, household equipment, and maintenance.
He, however, projected that should the government be able to address the main drivers of inflation including food and transportation in 2024, projecting that the transportation component of inflation was likely to come down.
“This is because we can see the efforts being made to put buses on the road that are more gas or electric. For instance, Borno now has a large fleet of these vehicles and some companies in Nigeria are embracing producing gas-powered buses.
“Should this trend from now month by month continue, there would be a decrease in the cost of public transportation.
“Given the fact that Dangote has started refining fuel, we do not expect to see a dramatic reduction in the price of oil but we expect some reduction as we won’t spend dollars taking crude out or bringing it back.
“What that means is that sometime in the year, you won’t see a further dramatic rise in inflation,” he said.
Mr Idahosa said that the global economy in 2023 proved more resilient than expected in the face of significant monetary tightening, continuing policy uncertainties, multiple shocks from conflicts, and climate change.
He, however, noted that domestically, Gross Domestic Product (GDP) reports in 2023 showed quarterly growth that indicated a weak and fragile economy.
The LCCI president projected that in emerging markets and developing economies, growth was projected to remain steady at about 3.9 per cent in 2024.
He, however, stated that growth was expected to remain divergent in the region due to an array of global and domestic currents.
Mr Idahosa recommended that the federal government urgently address the structure of the power sector particularly, with a focus on the transmission segment.
This, he said, was needed to attract private sector investment into electricity transmission to bring in relevant financial, technical, and management capacity.
“The Federal Government needs to step up efforts to address the security challenges that have negatively affected investment inflows and improve the security measures adopted in tackling the menace of oil theft and vandalism.
“On agriculture sector growth, we urge the federal government to improve security and intensify the implementation of the national agricultural extension policy with a focus on improved and relevant agricultural technologies.
“The cost of logistics has gone up due to the poor state of our roads and the inadequate connectivity amongst farms, factories, and markets.
“The LCCI commends the Federal Government for the recent effort to attract private investment into the infrastructure sector. We also expect improved implementation of the capital funding allocated to infrastructures in the 2024 budget.
“While the CBN embarks on monetary tightening to tame inflation, it should ensure that targeted concessionary credit to the private sector is sustained for Micro, Small and Medium Enterprises (MSME),” he said.
