The Lagos Chamber of Commerce and Industry (LCCI) has urged the Federal Government to peg the maximum interest rate of commercial banks loan to a single digit of nine per cent.
Its President, Mr Babatunde Ruwase, speaking at the Lagos State University (LASU), Ojo, 2019 International Conference on
Accounting, Finance and Insurance, also called for a long term repayment schedule.
Ruwase spoke at the three days conference organised by the university’s Faculty of Management Sciences, Departments of Accounting, Banking and Finance and Insurance.
Theme of the conference is: “Financial Institutions and Sustainable Development; Perspective of Accounting, Finance and Insurance.”
Ruwase, represented by Mr Muda Yusuf, LCCI Director-General, said reduction of the interest rate would ensure an affordable credit for investors and would in turn facilitate a drive in the economy.
He said that this was so because key projects such as Agriculture, Manufacturing, Real Estate, Transportation, Solid Minerals, among others that could drive development required low cost and long tenure funds.
“These are the sectors that drive development in a country, and the type of funding they need does not require short term fund that would be costing about 25 or 30 per cent interest rate.
“Some people have developed high blood pressure because they took bank loans and have been unable to repay due to the interest rate,” he said.
Ruwase said there was an infrastructure deficit of about N3.4 billion in the country, adding that only the private sectors, through access to affordable credit, could intervene to addressing it.
He said there was a need to develop the right model of policies in terms of fiscal and monetary to ensure the flow of resources from the financial systems to developmental projects and the real economy.
“We can have a framework of credit guarantee to minimise the risk of borrowing, because one of the reasons why banks do not lend money to the real sector and SMEs, is because of the high risk,’’ he said.
Ruwase, however, called for a better rewarding system for farmers at the agricultural sector, if the country was determined to reducing poverty as the current reward template for farmers was not commensurable to their inputs or efforts.
He said the regulatory and intervention role of the Central Bank of Nigeria (CBN) and a credit guarantee scheme could ensure that the financial institutions supports the development processes better than what it was presently.
In his remarks, Prof. Taiwo Asaolu of the Obafemi Awolowo University (OAU), Ile-Ife, called for an integration of the old or disruptive form of technology and the new technology to advance an improved course for finance and other sectors.
Asaolu, represented by Prof. Kolawole Subair of Global Research Fellow, Centre for Entrepreneurship and Sustainable Development, Indiana University, USA, said Nigeria was still backwards in several areas in terms of technology advancement.
“This is because some of the feats we have been able to achieve are still developing.
“I believe that the disruptive technology is not to destroy, but to improve and how we do this matter,” he said.
Also, Prof. Olanrewaju Fagbohun, Vice-Chancellor of LASU, said theme of the conference was apt, because the seemingly overwhelming challenges of the private sector and financial institutions were taken toll on the economy.
Fagbohun said: “The threat of economic stability posed by the mass exodus of the manufacturing firms to neighbouring countries like Ghana, South Africa, among others on the account of poor or unfriendly economic, financial and social infrastructure.”
According to him, the multiplier implications of these humdrums could only be imagined.
Fagbohun said the conference would provide an opportunity to cross fertilise ideas on core issues like: Fiscal Policy and Tax Reforms, Corporate Governance, Business Risk Management, the perfection and Implication of National Financial Intelligence Reform Policy, Forensic Accounting and Auditing.
The Vice-chancellor expressed optimism that the communique from the intellectual discourse would open a road map to ensuring not only the survival and growth of both the private and public sector.
He said it would also facilitate total re-engineering cum complete overhauling of the entire financial sector.
In his remarks, Prof. Babatunde Rahman Yusuf, Dean, Faculty of Management Sciences, said the conference was aimed at assessing the impact of financial institutions sustainability regulations on Nigeria economic development.
Yusuf said it would also show the gaps in the government financial framework with regard to the various policies put in place and discuss among other issues on how pragmatic financial regulations could be formulated and implemented.
LCCI urges private sector to leverage on creativity, innovation to rebound post COVID-19 economy
“In the light of the foregoing therefore, policymakers and the organized private sector need to come together to rescue the economy from collapse at this critical time.
“We, however, believe there is also need for sustained improved domestic productive capacity and human resources in priority sectors,” she said.
On agricultural production, Mabogunje said that although the sector remained the largest sector of the Nigerian economy and employed two-thirds of the entire labour force, production hurdles have significantly stifled the performance of the sector.
According to her, the main factors undermining production include reliance on rainfed agriculture, smallholder land holding and low productivity due to poor planting material, low fertilizer application and a weak agricultural extension system, amongst others.
She projected that with the COVID-19 induced lockdown in some states, the food situation was most likely to worsen with farmers having to cope with movement restrictions and paralyzed supply chains.
According to her, transport restrictions and quarantine measures are likely to impede farmer’s access to markets thus curbing their productive capacities and hindering them from selling their produce.
This, she said, would most likely drive up food inflation which currently stands at 14.98 per cent and has been a major driver of headline inflation with increasing food prices.
“We commend the effort of the Minister of Agriculture and Rural Development in inaugurating a joint technical task team on emergency response to COVID-19.
“However, we are of the opinion that more actions are required beyond free and unhindered movement of food.
“We, therefore, urge the Minister to work with relevant agencies for farmers to adhere strictly to health measures both in and outside the farm and create a biosecurity protocol for producers of animal products as well as fresh fruit/vegetable producers.
To enable businesses navigate the storms as well as preserve employments, Mabogunje said it was imperative to have an urgent rescue package in recognizing the role of business and investment in the economy.
She stressed the need for a year’s tax break for healthcare and pharmaceutical companies, airlines, manufacturers, agro-processors, SMEs and hospitality players.
In addition, she urged for the temporary suspension of 50 per cent increase in Value Added Tax (VAT) rate till year end and the suspension of P.A.Y.E for the next six months.
This, she said, would help boost the purchasing power and aggregate demand, thereby stimulating the economy.
“Commercial banks are implored to offer reprieve to businesses and corporates indebted to them which could be in form of loan moratorium and restructuring,” she said.
Mabogunje also urged the Central Bank of Nigeria to review the cash reserve ratio downwards to 20 per cent from the current 27.5 per cent to enable commercial banks have more liquidity to support businesses.
“While we commend the government on the various measures already put in place to cushion the effect of this pandemic both on individuals and buisnesses, we are concerned that the current approaches used in implementing some of these measures would not yield the desired result.
“There is therefore a need for restrategising and ensuring proper coordination both at the states and federal level.
“We urge the government to focus on the completion of critical infrastructure projects nationwide such as the Lagos-Ibadan expressway, Lagos-Ibadan rail project, Enugu Airport, the Second Niger Bridge, East-West Road.
Edited By: Edith Bolokor/Wale Ojetimi (NAN)
COVID-19: LCCI says short, medium term outlook for economy bleak
Mabogunje said that the pandemic had resulted to unprecedented collapse in commodity prices, capital flight, turmoil in the capital market, supply chain disruption across sectors, and destabilisation of commercial and economic activities.
“Hence, we resonate with the International Monetary Fund’s position on a looming severe contraction of the economy by year end 2020,” she said.
According to her, reforms such as the liberalisation of the petroleum downstream sector, exchange rate convergence, securitizing government’s equities in joint ventures, privatizing government’s redundant assets and PPP-led infrastructural development are critical.
She said that export diversification, agro-based industrialization and cut in governance costs were direly needed to aid the rebound of the economy going forward, and especially in times of adversity.
Mabogunje, however, acknowledged the sustained recovery of the Nigerian economy as GDP growth advanced to 2.55 per cent in the final quarter of 2019, compared to 2.28 per cent in the preceding quarter.
She, however, also noted the broad-based underperformance across key sectors such as agriculture, trade and manufacturing, with strong potentials to drive economic diversification.
On oil prices, she expressed deep concern about the slump in crude oil prices due to weakening demand, as Brent, Nigeria’s benchmark grade, had dropped by over 60 per cent since the beginning of the year.
She said that the agreement by the Organization of Petroleum Exporting Countries and Allies and G-20 to reduce supply by 13.2 million barrels may not significantly boost oil prices to desired levels if global oil demand remains subdued.
On the nation’s external reserves, Mabogunje said the Chamber had noted the continued depletion in external reserves since the beginning of the year.
“More so, the sustained depletion of foreign reserves amid supply-demand imbalance in the global oil market will only exacerbate the country’s vulnerability against external shocks,” she said.
Also on foreign exchange, Mabogunje projected that another ‘price adjustment’ was inevitable in the next three months if global oil prices fail to pick up by the end of the second quarter.
“LCCI notes that exchange rate at the Official, Bureau-de-Change and Investor & Exporter windows was weakened to N360/$, N378/$ and N380/$ respectively from N306/$, N357/$ and N366/$ and the naira has weakened to about N420/$ in the parallel market.
“We also note the disparity across different exchange rate segments and urge that the gap between official rate and the parallel market be effectively managed so as not to give room for round-tripping or arbitrage opportunities,” she said.
On the equity market, Mabogunje said the impressive performance of the Nigerian stock market in early-to-mid January 2020 was noted.
“With the current uncertainties in the macro-environment, the outlook for the equity market is bleak as the covid-19 shock has significantly distorted the earnings projections of listed corporates.
“We, however, believe this period of low stock prices presents ample opportunity for investors to take position in fundamentally sound stocks with demonstrated history of consistent earnings growth and dividend payment,” she said.
On inflation, Mabogunje projected that consumer prices, especially food, would come under pressure in coming months due to disruption to agriculture value chain and commencement of planting season.
“This will reduce agricultural output,” he said
She urged government to stem rising consumer prices through measures aimed at bridging supply gaps and reducing transportation costs.
On the socio-economic and business impact of lockdown, the LCCI President acknowledged the efforts of Federal Government, states, monetary authorities and organized private sector towards containing the COVID-19 pandemic.
Mabogunje disclosed that a survey by the Chamber on the impact of the pandemic on the Lagos business community revealed that 81 per cent of respondents were ‘severely’ affected by the pandemic with the median daily revenue loss of N500, 000.
“The lockdown has significantly destabilized business and economic activities especially in the informal and MSMEs sectors given their lack of adequate cash buffers to withstand the shock.
“Although government have rolled out raft of relief measures to support businesses, we observe that these packages are tilted more towards formal establishments while micro and small-scale enterprises as well as informal businesses have been largely left out.
“The palliatives given by the various governments though laudable were not sufficient to address the social fallouts of the lockdown.
“We note that the palliatives were poorly articulated and failed to adequately capture significant fraction of low-income households who rely on daily income for livelihood,” she said.
On the flip side, Mabogunje said that the current economic crisis provided a silver lining in the form of opportunities.
According to her, the pandemic would open up opportunities in areas inclusive of import substitution, creativity, innovation, and the non-oil export.
“There are already signals of protectionist tendencies and possibilities in the light of border restrictions on the movement of human and goods.
“In the days ahead, countries across the world may place technical embargo on exports of essential goods in a bid to meet local demand and as way of managing disruption to global supply chain.
“We are however convinced therefore, that the current situation presents an opportunity for the country to stimulate and promote import substitution.
“This implies changing the narrative from the base, mobilise resource and galvanize critical stakeholders and actors to create economy focused on major commodities (intermediate and finished goods), but equally competitive on a global scale ,” she said.
Edited By: Angela Okisor/Oluwole Sogunle (NAN)
LCCI wants direct utilisation of CACOVID donations for acquisition of critical medical needs
The Lagos Chamber of Commerce and Industry (LCCI) on Thursday said donations by Coalition Against COVID-19 (CACOVID) should be utilised directly for acquisition of needed items to achieve its purpose.
Its Director-General, Dr Muda Yusuf, said this in a statement in Lagos while underlining the need for the private sector fund to be well-utilised.
According to him, it is not advisable to hand over cash to the government or its agencies.
“It is much better to identify the critical needs and provide resources directly for the acquisition of the needed items, medications, food items and personal protective equipment (PPE).
“The spending priorities of the money raised should be guided by a robust needs assessment as established by medical teams in the frontline of managing this pandemic.
“They know better what the gaps are and this should guide the targeting of expenditure.
“This approach will also make it possible to get better outcomes from these donations,” he said.
Yusuf said that Coalition Against COVID-19 (CACOVID) donations, spearheaded by Alhaji Aliko Dangote, reflected private sector’s commitment to business sustainability and Corporate Social Responsibility (CSR) ideals.
According to him, the well-being of a business is dependent on the well-being of the society in which it operates.
Yusuf said that a business could only be good and stable as the community in which it was operating, adding that the private sector intervention was significant as government had funding limitations.
“I must also commend the leadership demonstrated by Alhaji Aliko Dangote in mobilising the private sector for this historic intervention,” he said.
He said any socially responsible organisation should be part of this fight against COVID-19, as it was not just a philanthropic gesture but a matter that borders on business sustainability.
“The success of a business is not measured only in terms of the returns to shareholders; it is also assessed by the impact that the business makes on other stakeholders,” he said.
Yusuf said there was need for Federal Government to invest massively in Nigeria’s health sector, as low level of investment in the sector had been the biggest challenge.
According to him, government investment in the sector is one of the lowest you can find anywhere in the world.
Yusuf said that the government should take urgent steps to ensure compulsory health insurance scheme in the country.
Yusuf said once effective demand was generated through the introduction of health insurance, there would be good supply side response from private investors who would invest in the sector.
“This is something that we need to do very urgently to salvage our deteriorating health sector,” he said.
Edited By: Chidinma Agu/Wale Ojetimi (NAN)
LCCI says NNPC decision to end subsidy/under recovery a game changer
The Lagos Chamber of Commerce and Industry (LCCI) says the
COVID-19: LCCI recommends palliatives for banking, aviation sectors
It also said that such palliative would engender quick economic recovery after the pandemic.
LCCI Director-General, Dr Muda Yusuf, listed the palliatives in a statement themed: “2020 Post COVID-19 Agenda; Business and Economic Sustainability Propositions” issued to newsmen on Monday in Lagos.
Yusuf stressed the need for commercial banks to take a cue from the Central Bank of Nigeria (CBN) by offering some level of reprieve to their customers.
He called for an urgent engagement between the Bankers Committee, the Central Bank of Nigeria and the business community to discuss the monetary component of the rescue plan for businesses at this critical time.
“But there is the bigger issue of private sector indebtedness to the commercial banks.
“As at December 2019, banks credit claims on the private sector, stood at N15.2 trillion.
“The way this exposure is managed will be crucial to the realisation of the economic and business continuity outcomes in the Nigerian economy,’’ he said.
The DG listed opportunities for loan moratorium, restructuring of facilities, refinancing and interest rate concessions in the light of the unprecedented downturn in the economy as necessary palliatives.
Effective from March 2020, Yusuf urged that banks grant a one-year moratorium and six months interest rates concessions to customers on existing facilities.
To make this possible for commercial banks, he advised a review of the Cash Reserve Ratio from the current level of 27 per cent to 20 per cent.
This, he explained, would give room for the banks to offer these interest rate concession and a moratorium on loans to investors.
“We hope the deposit money banks would take a cue from the gesture of the central bank on the interest rate cut and moratorium granted on its intervention funds.’’
For the aviation sector, as palliatives, the industry guru seeks support aimed at augmenting insurance premiums, which are dollar-denominated as cover were mostly underwritten abroad due to lack of local capacity.
He also appealed for support to pay for operational cost including international lease rental on grounded aircraft, aircraft maintenance due for C- Check and other routine maintenance that takes place, irrespective of lockdown.
Yusuf called for waiver of taxes and other regulatory levies/fees, one-year waivers on import duty for spare parts, commercial banks moratorium during the period of lockdown and six months thereafter.
“There should be support on refund on ticket purchases during period of lockdown, general stabilisation funds to guarantee uninterrupted operation of the airlines.
“There should also be the suspension of all Passenger Service Charge (PSC) and Ticket Sales Charge (TSC), Navigation Charges for 180 days as well as landing and parking charges,’’ Yusuf said.
According to him, soft loans to airlines at an interest rate not exceeding five per cent and full implementation of the Executive Order on the removal of VAT from air transportation should also be considered.
For the petroleum downstream sector, the LCCI boss welcomed the full deregulation of the petroleum downstream sector of the economy.
The DG, however, requested that complementary legal framework be expeditiously put in place to avoid truncation of the process.
He expressed the belief that the economy would profit immensely from its significant reform.
According to him, it would free resources for investment in critical infrastructures such as power, roads, rail systems, health sector and education sector as well as unlock the huge private investment potentials in the downstream oil sector especially in petroleum product refining.
Edited By: Abiodun Esan/Abdulfatah Babatunde (NAN)
LCCI reels out post COVID-19 rescue plan for economic sustainability
The Lagos Chamber of Commerce and Industry (LCCI) on Monday reeled out post pandemic rescue plan targeted at salvaging the national economy after the exit of the novel coronavirus currently ravaging the world.
Its Director-General, Dr Muda Yusuf, made the recommendations in a statement to newsmen in Lagos.
Yusuf explained that the recommendations became imperative to minimise the effects of the global economic meltdown on the Nigerian businesses and engender sustainability.
He proposed tax breaks and concessions for investors by suspending all forms of taxes for health sector investors, agriculture and agro – processing, aviation and hospitality sectors for at least one year.
In addition, the LCCI boss called for an extension of filling of annual returns, including payment of due amounts to June 30, 2020.
He pushed for unconditional waiver of penalties and interests of all outstanding tax payments, temporary suspension of recently introduced 50 per cent increase in Value Added Tax till the end of 2020.
The Director-General further called for a 50 per cent reduction in all taxes currently being paid by companies in manufacturing for one year, and the suspension of PAYE for all employees for a period of six months.
This, he explained, would put some money back in the hands of the employees during this period to strengthen the purchasing power of citizens and stimulate output within the economy.
“It has become imperative to commence conversations about policy measures and reforms that need to happen for the realization of desired continuity outcomes.
“This is done through the injection of liquidity [depending on the fiscal space] or through policy measures that offer some accommodation that facilitates economic and business recovery.
“To save the economy from collapse, we need to salvage investments across all levels – micro, small, medium and large enterprises,” he said.
For the real sector, the DG reeled out fiscal policy palliatives to include zero import duty on health sector raw materials and equipment to incentivize greater private sector investment in the health sector.
“Also, manufacturing raw materials and intermediate products should attract import duty waiver for six months to accelerate a rebound of the sector.
“Agro-processing inputs should enjoy import duty waiver for one year and there should be suspension of excise duty payment for manufacturers for one year.
“There should be greater commitment of government and its agencies to the patronage of made in Nigeria products by creating a strong monitoring framework to ensure compliance with the relevant executive order.
“Import duty waiver on machineries without need for any bureaucracy for at least 12 months to facilitate the completion of ongoing projects by industrialists is also key,” he said.
Edited By: Wale Ojetimi (NAN)
COVID-19: LCCI donates food items, medical supplies to LASG
The President, Lagos Chamber of Commerce and Industry (LCCI), Mrs Toki Mabogunje, on Sunday donated food items and medical supplies to the Lagos State Government.
Mabogunje said in a statement in Lagos that the donation was part of its support to the state to mitigate the challenges of containing Coronavirus pandemic.
She added that the donation was also to alleviate the economic hardship of the less-privileged in the society.
Nigeria News Agency reports that the donation included bags of rice, cartons of noodles and alcohol-based hand sanitizers.
The donations were received by the Deputy Chief of Staff, Mr. Gboyega Soyanwo and Commissioner for Transport, Dr. Frederic Oladeinde, on behalf of the Gov. Babajide Sanwo-Olu.
“It has become imperative for us at LCCI as a socially responsible organisation to support the efforts of the government in helping to cushion the effects of the pandemic on Lagos residents.
“We commend efforts of the Federal Government, Lagos State Ministry of Health, Nigeria Centre for Disease Control (NCDC) and Federal Ministry of Health for being frontliners in the war against the pandemic.
“The business community will continue to support government at all levels to subdue the ravaging pandemic,” she said.
Edited By: Chidinma Agu/Felix Ajide
COVID-19: LCCI donates food, medical supplies to Lagos govt.
The Lagos Chamber of Commerce and Industry (LCCI) has donated food and medical supplies to the Lagos State Government in support of its efforts at containing the spread of COVID-19.
Mrs Toki Mabogunje, President of LCCI, said in a statement on Sunday that the donation would help to mitigate the challenges of the pandemic and alleviate the economic hardship of the less-privilege in the state.
She said the supplies, inclusive of bags of rice, several cartons of noodles and alcohol-based hand sanitizers, were received on behalf of the Gov. Babajide Sanwoolu by his Deputy Chief of Staff, Mr Gboyega Soyanwo and Commissioner for Transport, Dr Frederic Oladeinde.
“It has become imperative for us at LCCI as a socially responsible organisation to support the efforts of government in helping to cushion the effects of the pandemic on Lagos residents.
“We commend the combined efforts of the Federal, Lagos and other states, and their ministries and agencies, notably, Lagos State Ministry of Health, Nigeria Centre for Disease Control (NCDC) and the Federal Ministry of Health, for being front liners in the war against the pandemic.
“The business community will continue to support the government at all levels to subdue the ravaging pandemic,” she said.
Edited By: Wale Ojetimi
LCCI says March MPC meeting’s outcome expected
Dr Muda Yusuf, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), says outcome of the Monetary Policy Committee (MPC) March meeting of Central Bank of Nigeria (CBN) was expected.
Yusuf told the Nigeria News Agency on Wednesday in Lagos that pursuing a policy of monetary easing would have been inappropriate, given the current circumstances.
“It would have been inappropriate to expect another round of stimulus proposal from the recent MPC meeting soon after a comprehensive stimulus package for businesses were announced by CBN only few weeks ago.
“It would have been nice to extend the support to the public health management systems at the Federal and State levels in a more holistic manner as this is the paramount challenge at this time,” he said.
On the option of tightening, the director-general said the key policy levers of the apex bank were already in tightening mode.
“The CRR, Liquidity Ration and the MPR, are already high.
“There is also the impact of the 65 per cent Loan to Deposit Ratio (LDR) on the investment options open to the banks.
“Therefore, an intensification of the tightening stance would have been an overkill for the banking system,” Yusuf said.
He explained that as in most economic challenges, monetary intervention could only fix a fraction of the problem as there existed fundamental macroeconomic issues affecting investors confidence at this time.
According to him, these were issues around the plunge in crude oil price, exchange rate depreciation, depletion of foreign reserves, inflationary pressures, stock market slump, regulatory issues and policy concerns.
“All of which are critical drivers of investment decisions and investors’ confidence.
“Unless the external sector normalises, there is very little domestic policy responses can do to fix these disruptions, especially in the light of the vulnerabilities of the Nigerian economy,” Yusuf said.
He stressed that times like these required that all policy instruments must be brought to bear on the economy to prevent further slide.
“Fiscal policy measures could bring some interventions to the table-tariff policy needs to be adjusted for intermediate products and raw materials of targeted sector of the economy.
“Similar steps could be taken in respect of taxation- tax waivers, concessions or tax cuts for target sectors.
Also, Dr Timothy Olawale, Director-General, Nigeria Employers’ Consultative Association (NECA), said maintaining status quo indicated that MPC appeared to have lost faith in the effectiveness of a rate cut in tackling economic growth-related problems.
Olawale explained that the crisis should have offered the MPC an opportunity to eliminate distortionary market policy and reduce the MPR to the same rate as its intervention funds, at least to nine per cent.
He called for synergy between fiscal and monetary policies to drive the economy, which according to him, was already at the bleeding stage.
“We expected that the committee should have addressed the issue of rates more drastically.
“Given the recent pronouncement made by the Governor of CBN on interest rates on some of its intervention schemes, it is obvious that a high interest rate is a risk to the economy at this time.
“We believe that the MPR should not be a weak link in the overall responses,” he said.
Edited By: Olagoke Olatoye
COVID-19: LCCI calls for review of govt expenditure
crude oil price had fallen below $30 per barrel and the oil price budget benchmark for 2020 budget was $57 per barrel.
“This sharp drop in revenue would cause significant dislocations in the 2020 budget and in the economy, especially for a country already grappling with challenges of weak revenue performance and a complete erosion of fiscal buffers,” he said.
The director-general said it was instructive that government had taken steps to review the underlying assumptions and the content of the 2020 budget.
According to him, budget implementation will be constrained, infrastructure financing will be affected, borrowing may increase and the capacity to fund capital project will be severely constricted.
“With this scenario, the outlook for oil-dependent economies look rather gloomy,” Yusuf said.
He urged the government to look in the direction of equity financing, against the option of tax credit in its quest for complimentary funding sources for infrastructure.
“Also, public-private partnership and dialogue should be deepened to harness quality ideas on how to manage this rather scary situation,” he said.
Yusuf said it was also important not to respond to the situation in panic mode to avoid a disproportionate response which he explained could cause more harm to the economy.
Edited By: Chioma Ugboma/Adeleye Ajayi
Drop in oil price: Opportune time for govt. to liberalize downstream oil sector- LCCI
Dr Muda Yusuf, Director-General, Lagos Chamber of Commerce and Industry (LCCI) has urged the federal government to come up with an exit strategy to pave the way for the complete liberalisation of the downstream oil sector.
Yusuf gave the advice on Wednesday in Lagos, in his reaction to the federal government’s reduction in petrol pump price from N145 to N125.
“The report of a slash in petrol price from N145 to N125 per litre is a welcome development, especially in the light of the slump in global crude oil price.
“However, what is desirable ultimately is for the federal government to come up with an exit strategy to pave the way for a complete liberalisation of the downstream oil sector.
“This is an opportune time to do so,” he said.
The Director-General stressed that the Nigerian economy had suffered huge losses as result of overeregulation of the downstream oil sector over the years.
“The sector had been denied private investment over the years because of the challenge of the pricing policy.
“We hope that this price review signals the commencement of the liberalisation of the sector,” he said.
Edited By: Oluwole Sogunle
COVID-19: Outlook for global economy bleak — LCCI
The LCCI’s President, Mrs Toki Mabogunje, made the assertion at the LCCI’s Forum on Impact of Coronavirus on Nigerian Economy, on Tuesday in Lagos.
Mobogunje, represented by the Deputy Vice President of LCCI, Mr Michael Olawale-Cole, said that the COVID-19 outbreak which had dealt a severe blow to the global economy, if not curtailed, could result to global economic recession.
According to her, the disease has disrupted and is still disrupting businesses, economic and financial activities across the globe.
She commended the efforts of both the federal and the Lagos State governments at curtailing the spread of the virus.
“The COVID-19 outbreak has seen businesses shutting down operations, factories closing, schools on recess and conferences, sporting events, concerts and business meetings have all been suspended.
“Also, global equities and commodities markets have been severely affected.
“Oil prices have been hit hard due to drastic cut in global oil consumption, compounded by the ongoing price war between Saudi Arabia and Russia.
“So far, on the confirmed case of the virus in Nigeria, the efforts of the federal government and the Lagos State government to curtail the spread of the disease is highly commendable,” she said.
Speaking at the event, Dr Ayo Teriba, Chief Executive Officer, Economic Associates, faulted the intervention measures by the Central Bank of Nigeria (CBN) to cushion the effect of COVID-19 on the Nigerian economy.
The Nigeria News Agency reports that the governor of CBN, Mr Godwin Emefiele, had announced a further moratorium of one year on all principal repayments on the bank’s intervention facilities and interest rate reduction on such facilities from nine per cent to five per cent for one year, effective March 1.
Teriba said that a system-wide intervention that ensured rates across board were reduced would have been a better option.
“It is not right to cut rates for only companies with direct link and dealings with the apex bank.
“A regulator is meant to protect the whole system and not just his own books,” he said.
He said that the current health challenges, with its political, economic, social and health effects, though temporary, may have permanent consequences, should the timeline of the pandemic be prolonged.
According to him, the duration of the adverse social and economic effects for Nigeria is dependent on how long the world can bring the pandemic sufficiently under control, for the restrictions of movement and public gathering to be lifted.
“The absence of vaccine, which has led to low oil prices that has threatened to derail the budget, devalue the Naira may end in recession.
“Temporary problems may have permanent consequences if they lead to bankruptcy, loss of jobs and wealth,” he said.
Also, Mr Ajibola Olomola, Partner, Tax, Regulatory & People Services, KPMG, in his remarks, encouraged more private sector investment in the area of health, to help curtail the spread of the pandemic.
He also called for increased investment in technology to optimise existing business processes.
“Due to the outbreak, many brick-and-mortar retail businesses, shopping malls and department stores have taken a considerable hit in China.
“On the other hand, emerging community shops and online shops are increasing their trading volume and attracting a mass of new customers.
“Companies should also experiment on the possibility of large-scale remote working conditions for employees and its impact of productivity,” he said.
The Commissioner for Health, Lagos State, Prof. Akinola Abayomi, who was represented by Dr Soji Ologun, said that the health, social and economic impact of recorded cases have been rapidly curtailed.
He sought the support of the Organised Private Sector (OPS) to beef up surveillance at the air, sea and land borders.
Edited By: Vivian Ihechu/Oluwole Sogunle
GDP growth: LCCI wants govt to do more
The Lagos Chamber of Commerce and Industry (LCCI) on Tuesday said that the Gross Domestic Product growth recorded in the country was still sluggish.
Its Director-General, Dr Muda Yusuf, said in a statement in Lagos that the growth was still weak to create employment opportunities for the fast-growing population and lift millions of Nigerians out of poverty.
He urged the government to embrace structural, policy and regulatory reforms to unlock the huge growth potential in the economy.
“The LCCI notes the marginal improvement in Nigeria’s output performance as GDP grew faster by 2.27 per cent compared to 1.91 per cent recorded in 2018.
“The growth in the year 2019 was largely driven by the oil sector which grew at a faster pace of 4.59 per cent in 2019, from 0.97 per cent in 2018.
“This was fuelled by increased average daily crude production of 2.01 million barrels in 2019 compared with 1.92 million barrels in 2018, as well as favourable oil prices which averaged at about $64 per barrel in 2019.
“We note that the performance of key sectors that has the capacity to facilitate economic diversification was inspiring.
“However, the manufacturing sector, in spite of being the biggest biggest beneficiary of Central Bank of Nigeria’s push for credit flows, continues to grow at a slower pace.
“Manufacturing sector grew at a slower pace of 0.77 per cent in 2019 as against 2.09 per cent in 2018,” he said.
Yusuf said that growth of the sector was heavily weighed down by the oil refining subsector which slumped by 32 per cent in 2019.
“Also, productivity in the manufacturing sector continues to be challenged by tough operating environment, poor infrastructure and unpredictability of government policies,” he said.
The LCCI DG noted that the agricultural sector recorded a modest growth of 2.36 per cent in 2019 compared with 2.12 per cent in 2018,
He said there was need to focus on to agricultural mechanization, as over 70 per cent of farmers in Nigeria operate on a small scale.
“Also, there is need to support the sector with seedlings, develop rural infrastructure, provide modern farm equipment at subsidized rates and ensure linkage between agriculture and industry,” Yusuf said.
For the manufacturing sector to thrive, the DG called for fixing of power challenges to reduce cost and enhance competitiveness.
“Also, patronage of locally produced items, curbing of smuggling and dumping, reform of port processes and better port infrastructure would go a long way in growing the sector, ” he said.
On trade, Yusuf said there was the need to improve domestic connectivity, ease cargo clearing process, promote economic integration at the sub-region, and ease cross-border trade challenges.
“Trade sector remained in recession in 2019, as it contracted by 0.63 per cent and 0.38 per cent in 2018 and 2019 respectively.
“The suboptimal performance of trade could be attributed to border closure, high inflation, which affects purchasing power, foreign exchange exclusion policies, poor domestic connectivity and security issues,” he said.
The DG urged the Nigerian Customs Service to priorities trade facilitation over revenue generation.
On real estate, the Industry expert said there was the need to create an effective mortgage finance system, and reduce interest rate.
He said that easing issues of land documentation and creation of long term pool to finance the sector were pertinent to ensure growth.
“Real estate maintained its negative growth trajectory in 2019, contracting by 4.74 per cent and 2.36 per cent in 2018 and 2019 respectively.
“Real estate is a critical sector, considering its employment-generating capacity.
“However, the absence of effective mortgage finance system, high cost of building materials, absence of long-term funds, infrastructure issues and weak macroeconomic fundamentals are major downside risks to performance of the sector,”he said.
Edited By: Oluwole Sogunle
Osinbajo, LCCI discuss economy, Apapa gridlock, others
The Vice-President, Prof. Yemi Osinbajo, on Friday received a delegation of the Lagos Chamber of Commerce and Industry (LCCI), led by its President, Mrs Toki Mabogunje at the Presidential Villa in Abuja.
Mabogunje, who spoke with State House correspondents after the meeting, said the delegation and the vice-president discussed issues bordering on the economy, infrastructure deficit and the perennial gridlock in Apapa, Lagos.
She said there was need for the government to strengthen Public Private Partnership initiatives in infrastructure development.
“We are looking at the state of the economy. We are looking at the progress government has made so far. What is still left to be done and the idea the private sector has on how we can move this country forward.
“Some of the things we spoke on centered on the problem of infrastructure deficit. We already know there is the PPP partnership on the building and fixing of roads.
“We have said that we should encourage more private sector participation.
“We were informed that there is an infrastructure fund that has been set up for this purpose.’’
Mabogunje said the private sector and LCCI could work with government to attract more investors and put more money into the infrastructure fund.
“Secondly, we talked about Apapa gridlock. We were updated on progress so far. We have been told that the rail link to the port should be ready by the middle of this year.
“We are very happy to hear that. We talked about other things that could be happening around port operations and relieving of the stress on the road for commuters.’’
The LCCI said the discussion also covered private sector activities with the Federal Government–the presidential dialogue and the quarterly business policy briefings.
According to her, the quarterly business forum has died a bit over the years.
She said that the vice-president had promised that the quarterly presidential dialogue would be revived.
Mabogunje described dialogue as a good platform for the business community to deliberate with the vice-president on issues of the economy.
She said the LCCI was planning to host the vice-president in the third quarter of the year.
Mabogunje also spoke about the Federal Government’s policy of Value Added Tax (VAT).
“What we are saying about policy issue is that we recognise that government has revenue constraints and that the VAT issue that has just come is an attempt by the government to raise more capital for itself.
“However, we feel that money should be directed towards filling the infrastructure gap, the infrastructure deficit.
“That if that money is now taken and applied towards addressing infrastructure deficit, it would bring some relief to tax payers in terms of having better infrastructure to run their businesses and improve the country’s rating on the ease of doing business.’’
Edited By: Silas Nwoha
LCCI reacts to upward review of CRR
The Lagos Chamber of Commerce and Industry (LCCI) says the upward review of the Cash Reserve Requirement [CRR] from 22.5 per cent to 27.5 per cent will lead to a reversal of the current downward trend in interest rate.
Its Director- General, Mr Muda Yusuf said this in a statement issued to newsmen on Monday in Lagos.
Yusuf was reacting to the outcome of the Central Bank of Nigeria [CBN] Monetary Policy Committee (MPC) meeting which ended on Jan. 24, 2020.
He noted that the current downward trend in interest rate was beginning to impact positively on the economy, especially the real sector.
Yusuf said that the adverse effect of the CRR increase on deposit mobilization could impact negatively on the financial intermediation role of Deposit Money Banks.
“The Chamber welcomes and aligns itself with the concerns expressed by the MPC on the rising debt profile and the associated sustainability concerns.
“Additionally, the need to rationalize fiscal expenditure and reduce cost of governance and the need for government to address structural and security issues to strengthen domestic productivity are noted.
“The use of Debt-to-GDP ratio as a measure of debt sustainability, vulnerability of the economy to external shocks and the imperatives of building buffers, risk of excess liquidity from maturing OMO bills are also of concern.
“However, a high interest trajectory [which the tightening policy portends] will impact negatively on investment growth especially in the real economy.
“The prospects for increased job creation may be further dimmed.
“Also, the recent rebound in the stock market would suffer a reversal as interest rate increases and money market instruments become more attractive to investors.
“We believe that what the economy needs at this time are policy actions aimed at stimulating investment to boost output, create jobs and ultimately moderate inflation.
“Monetary policy tightening will negate the realization of these objectives,” he said.
“Persistent focus on portfolio flows would continue to propel the Central Bank of Nigeria to keep interest rates high.
“This is inimical to investment growth and job creation endeavours.
“On the argument that the recent hike in CRR will help moderate inflation, we contend that food inflation is the bigger issue that needs to be dealt with in the inflation equation.
“Over the past few years, food inflation has stubbornly remained in double-digit territory since June 2015 while core inflation trends in single digit.
“We believe that food inflation is not driven by liquidity nor is it a monetary phenomenon.
“The continuous uptrend in inflation is driven largely by cost-push factors rather than demand-pull factors.
“Against this backdrop, the way forward lies in fixing the structural problems fuelling inflationary pressure as monetary policy instruments will have almost no impact in moderating inflation,” he said.
He noted that it would become increasingly difficult to unlock investment and jobs in real estate, manufacturing, agriculture, mining, infrastructural deficit, if the economy is taken back to the path of high interest rate regime.
This scenario, he explained, would equally result in high inflows of portfolio funds which are volatile and undependable.
“Even in some advanced economies, conscious efforts are being made to keep interest rate low and, in some cases, negative.
“Currently, policy rate in United States range between 1.5 per cent and 1.75 per cent; 0.75 per cent in United Kingdom and -0.1 per cent in Japan.
“December 2019 inflation number printed at 2.3 per cent, 1.3 per cent and 0.8 per cent in these countries respectively,” he said.
Additionally, the DG recommended that the implementation of the CRR should be within a framework that allows for automatic adjustment that reflects the dynamics of bank deposits.
Failure to have this, he said, could result in a situation where the CRR of some banks will shoot up to as high as 40 per cent, or more, which poses a risk to the stability of the financial system.
“As deposits level changes (rises/falls), cash reserves in the custody of the Central Bank should be automatically adjusted,” he said.
Edited By: Oluwole Sogunle
LCCI President pledges support for SMEs to stimulate economic growth
is third female president of the chamber since it came into existence 131 years ago.
She has promised to be more youth and gender inclusive in her quest to ensure the LCCI remains a model and leading voice of businesses in Nigeria to deliver value to the nation.
Edited by: Edith Bolokor/Oluwole Sogunle
Nigeria’s economy still vulnerable to external shocks, says LCCI President
The Lagos Chamber of Commerce and Industry (LCCI) says the nation’s economy is still vulnerable to external shocks due to fluctuations in global oil prices.
Mrs Toki Mobogunje, President LCCI, said this at a press conference on “State of the Nigerian Economy” on Wednesday in Lagos.
Mabogunje called on the Federal Government to intensify diversification efforts and embrace structural reforms to attract private investment and stimulate economic growth.
According to her, businesses still struggle to survive owing to multiplicity of levies, infrastructure challenges, sluggish growth, excessive regulation, high cost of credit and unfavourable government policies.
She said the challenges confronting growth of businesses had remained in spite of the country’s upward movement by 15 places in the ease of doing business ranking.
The LCCI president advised government to vigorously implement friendly policies to support expansion of businesses.
Speaking on inflation, Mabogunje advised the government to stem rising consumer prices through increased investment in infrastructure, especially power and transportation.
This, she said, would help bridge the supply gaps and reduce transportation costs.
“The rate at 11.98 per cent in December makes that the fourth consecutive month of rising inflation.
“Rising inflation has a profound welfare effect on citizens as it weakens purchasing power, as heightened food inflation naturally escalates poverty conditions.
“Policy makers need to worry about the increasingly intense inflationary conditions, especially the food component of inflation,” she said.
She said there would be problems if portfolio investors developed apathy for Nigerian assets.
The LCCI president also noted that the current security situation in the country had devastating implications for business activities, economic growth, food production and investment.
She urged government to ensure a concrete and sustainable means of reducing youth employment by stimulating investment across all sectors of the economy.
On the 2020 budget, Mabogunje urged government and its agencies to release performance reports to stakeholders and general public on periodic basis.
Speaking on the adoption of Eco as a common currency within the ECOWAS sub region , she noted that the change had no significant implication on the Nigerian economy.
She, however, explained that the manner of adoption of the currency by the francophone countries raised concern around the mutual confidence levels between the anglophone and francophone countries in the region.
“Currency issues are not the biggest issues in the integration process in ECOWAS, as the bigger issues are around non tariff barriers to trade.
“The challenges of weak compliance with the ECOWAS protocols, especially around the ECOWAS Trade liberalisation scheme and connectivity between countries in the sub region are major problems.
“It is important to get priorities right as far as economic integration issues are concerned,” she said.
Mabogunje lauded the 65 per cent loan to deposit ratio, saying it was a timely policy intervention to normalise credit markets, spur economic growth and broaden the interface between entrepreneurs and the banking system.
She implored the Central Bank of Nigeria and fiscal authorities to strengthen collateral registry to enhance the profiling of borrowers.
The LCCI president said this would help to address the downside risk with respect to loan asset quality arising from the new lending policy in the banking system .
Edited by: Buhari Bolaji/Oluwole Sogunle
LCCI urges FG not to make adoption of `Eco’ priority
Mr Muda Yusuf, the Director-General of Lagos Chamber of Commerce and Industry (LCCI), on Sunday urged the Federal Government not to make the adoption of the `Eco’ common currency, a priority.
Yusuf made the appeal in an interview with the Nigerian News Agency in Lagos.
He said that there were important economic issues that needed government’s attention.
“For us in Nigeria, the adoption of the `Eco’ on the issue of monetary union should not be a priority at this time.
“There are more important issues to address as far as economic integration is concerned.
“We need to get the sequencing right. We are still grappling with the challenges of preliminary stages of economic integration which are the Free Trade Area and Customs Union.
“There is the higher level of common market before we talk about monetary union, where we have the adoption of a common currency.
“The reality is that the pace of economic integration in ECOWAS has been very slow,’’ the LCCI boss said.
Yusuf advised government to give attention to building strong, diversified, competitive and inclusive economy.
According to him, a virile economy is critical to a beneficial participation in international trade, whether at the sub- regional, continental or global level.
Prof. Ndubisi Nwokoma, Director, Centre for Economic Policy Analysis and Research (CEPAR), University of Lagos, urged the Federal Government to pull out from the common currency adoption.
He said, “What the Francophone countries had done by renaming their own CFA franc as Eco and asking Nigeria to join, is an anomaly and a trap.
“So, the government of Nigeria should not join.’’
Nigeria and five other West African countries rejected the use of `Eco’ as the region’s single currency.
The rejection is sequel to the sudden renaming of CFA franc by Francophone countries of ECOWAS as `Eco’, which was not the decision of members of ECOWAS.
The decision was to adopt `Eco’ as the name of an independent ECOWAS single currency.
Edited by: Johnson Eyiangho/Adeleye Ajayi
LCCI to collaborate with brokers to promote insurance
The Lagos Chamber of Commerce and Industry (LCCI) has promised that it will collaborate with the Nigerian Council of Registered Insurance Brokers (NCRIB) to promote the acceptability of insurance by its members.
The LCCI’ s President, Mrs Olubunmi Toki, made the promise during a courtesy visit to the chamber by a delegation from the NCRIB.
A statement from NCRIB and made available to the Nigerian News Agency on Saturday in Lagos stated that the team was led by its President, Dr Bola Onigbogi.
Toki noted that insurance which plays catalytic roles in national economies of most nations is at the butt of Nigeria’s financial services sector.
She said that this was partly due to poor advocacy and strategies that could have helped to grow the sector.
She promised that the LCCI would, henceforth, promote the insurance products among its members.
Dr Bola Onigbogi in her response applauded the LCCI which she said had continued to be the vocal voice for the nation’s economic development.
She said that insurance brokers, as the professional intermediaries in the insurance value chain, would always be engaged by the Chamber to strengthen the businesses of its member companies.
“This is, especially, in the area of risk management and insurance,” she said.
Onigbogi explained that under her leadership, NCRIB had increased its advocacy, particularly, in the review of the laws on public procurement and health insurance.
She said that this was undergoing review at the National Assembly.
She advocated insurance covers for the yearly trade fairs usually organised by the LCCI.
Edited by: Angela Okisor/Peter Dada
L-R: The Executive Secretary, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr Fatai Adegbenro; Deputy President (NCRIB), Mr Rotimi Edu; President (NCRIB), Mrs Bola Onigbogi; President, Lagos Chamber of Commerce and Industry, (LCCI), Mrs Toki Mabogunje; Vice President, (NCRIB) Mr Tunde Oguntade and Director General, LCCI, Mr Muda Yusuf during a courtesy visit of NCRIB team to LCCI office in Lagos.
LCCI reacts as Buhari assents to finance bill
The Lagos Chamber of Commerce and Industry (LCCI) has commended the federal government on some of the expected positive impacts of the finance bill signed into law by President Muhammadu Buhari.
Its Director-General,Mr Muda Yusuf made the commendation in a statement made available to newsmen on Monday in Lagos.
It is also expected to improve revenue for the government as well as incentivise investments in infrastructure and capital markets.
Yusuf said that a number of favourable provisions for small businesses were reflected in the finance bill, now signed into law.
He said that the impact on government revenue would be positive, especially for states and local governments, as their fiscal position would be enhanced.
He, however, expressed concern on the impact the Value Added Tax (VAT)increment would have on businesses and end users from the cost pressure perspective, due to the high cost in operating environment.
Yusuf also expressed concern over the provision on minimum tax, saying that it was inappropriate to compel loss-making firms to pay tax, no matter how little.
This, the Director-General explained, amounted to erosion of capital for such businesses.
“The finance bill has a number of favourable provisions for small businesses and this is an aspect to commend.
“However, the VAT increment would impact adversely on businesses from cost pressures perspective.
“Margins would be affected, depending on the extent to which additional costs could be passed to consumers.
“It is inappropriate to compel loss- making firms to pay tax, no matter how little. This amounts to erosion of capital,” he said.
Edited by: Oluwole Sogunle