By Our Reporter
The Nigerian Chambers of Commerce Industry, Mines and Agriculture (NACCIMA) has rated the nation’s economic performance as at the end of the third quarter low and below expectations following inability of the Federal Government to put in place, policy thrusts, which are expected to drive the economy.
NACCIMA National President, Chief Bassey Edem, stated that while the private sector appreciates the enormity of the task inherited by the new administration and its effort in ensuring that the economy is re-engineered to meet up with the yearnings of the business community, “it is important to note that what an average Nigerian desire at the moment is for the ‘Change’ they voted for to be translated into a significant positive impact on the real sector and the economy in general”.
Edem while addressing a press briefing to review the state of the economy in Lagos, pointed out the need for government to address macro-economic indicators that have been going negative.
“NACCIMA urges the Central Bank of Nigeria (CBN) to bring down interest rates and its Monetary Policy Rate (MPR) currently standing at 13 per cent to a single digit in order to prevent economic recession. If the interest rates and MPR are down to single digit, it would force commercial banks to lend to the business community at single digit.
“Although the nation’s Gross Domestic Product (GDP) is still on a positive side erasing fears of a possible economic recession, stating that CBN must seek ways to introduce structural monetary and fiscal policies that supports economic and industrial development”, he added.
He said during the first half of the year, exchange rate hovered between N196 – N197 to the US dollar as at September 2015, stating that during the second half of 2014, exchange rate stood at N165 – N170 per US dollar at the official market.
“In the parallel market it hovers between N225 – N230 per US Dollar within the same period as against N180 – N190 per dollar in the corresponding period in 2014. Inflation rate increased steadily and peaked at 9.3 per cent in August as against 8.0 per cent for the same period in 2014,” he added.
He pointed out that GDP growth rate figure for the second quarter of 2015 was 2.35 per cent which was lower by 1.61 per cent of the figure achieved in the preceding quarter, also stating that external reserves decreased from US$31.20 billion at the end of the July 2015 to US$30.63billion as at September 2015.
He noted that MPR remains unchanged at 13 per cent, but stated that interest rate, maintained a double digit, hovering around 17 per cent and 28 per cent as against a single digit rate expected by business operators.
“Within the period under consideration, capacity utilisation in the real sector, continued to hover around 45 per cent showing huge un-utilised capacities. Meanwhile, the real sector still grapples with high interest rate, insufficient power and energy supply and efficient infrastructure that could make it assume its position as the engine of economic growth.
On power supply, Edem stated that there has been noticeable improvement in electricity supply in the country in recent time, but stressed that the target of power generation and supply envisaged under the privatisation arrangement has not been met four years after its introduction.
“The administration of President Mohammadu Buhari needs to bring fresh perspective and impetus to ensure rapid expansion of the power sector, so that the energy being generated can conveniently meet the needs of the manufacturing sector while reducing their reliance on alternative sources of energy at exorbitant cost,” he said.
He said the interest rate which still hovers between 17 per cent and 28 per cent is a major challenge to the business community, predicting that the situation may continue as long as the apex bank retain its MPR at 13 per cent.
“We counsel that the Federal Government revisit and consider the need to bring down the rate to a single digit, which will automatically force down the lending rate in the banks. The effort by government to stimulate the real sector of the economy may be in futility if the current trend in lending rate continues, and impede the ability of manufacturers, entrepreneurs and indeed the real sector to access fund for operation as well as for expansion,” the NACCIMA boss said.
Meanwhile, the NACCIMA boss while speaking on the Economic Partnership Agreement (EPA) advised the federal government not to sign the agreement, maintaining that Nigeria is not yet ripe for the pact.
“If we sign this act, it will defraud us because we currently have no product to sell simply because our infrastructure, cost of production is still on the high side. Nigeria should not sign the agreement because we currently have infrastructural deficiencies. We will definitely be on the losing side if we sign the pact.”