Focus on fixing Nigeria’s economic challenges, NECA urges FG

A key member of the organised private sector (OPS) – Nigeria Employers’ Consultative Association (NECA), has stressed the urgent need for the Federal Government to focus its effort on addressing daunting challenges bedevilling Africa’s biggest economy.

NECA listed such challenges to include inflation rate, poor infrastructure, the lack of alignment of fiscal and monetary policies, increasing tariffs, taxes, levies and charges which place a heavy burden on businesses, foreign exchange crisis, and persistent vandalism/illegal refineries, with attendant effect on Nigeria’s crude production, among others.

Speaking on Tuesday at the 65th annual general meeting of NECA, in Lagos, Taiwo Adeniyi, the president, said despite the OPS’ consistency in drawing the attention of the government to these challenges, most of them have remained unresolved in the last ten years.

According to Adeniyi, while the OPS would admit some of the challenges were beyond the control of the government and enterprises, in many cases, however, the problems have been aggravated by the insensitivity of regulatory agencies of government at various levels.

Specifically, on the inflation rate and its negative impact on the economy, Adeniyi, who quoted the National Bureau of Statistics (NBS), said Nigeria’s inflation rate rose to 17.71 percent in May 2022, which was 0.89 percent point higher than 16.82 percent recorded in the previous month, although lower than 17.93 percent in May 2021.

The urban inflation rate rose to 18.24 percent (year-on-year). The rural inflation rate increased to 17.21 percent (year-on-year) with food inflation hitting 19.5 percent.

He said: “Inflation reduces the standard of living of households by diminishing their purchasing power and also raises the cost of doing business, affecting the profitability and competitiveness of businesses.

The government should address critical issues such as insecurity, which has contributed to low food production, especially in food-producing states, and rising food prices. In addition, there is also a need to strengthen the country’s exchange rate management by embracing a single market-responsive exchange rate. This is important because the scarcity of foreign exchange is partly responsible for the continued depreciation of the naira, resulting in high inflation.”

On infrastructure, while he lauded the Federal Government’s Executive Order 07, which aimed at fostering partnership with OPS, he, nevertheless noted that much has not been achieved with it.

“While we commend the government for the massive investment in rail projects, more focus should also be given to other critical infrastructure that will promote the real sector. Nigeria requires about $2.9 trillion (N87 trillion) in 30 years to close its infrastructural gap.

With the contending need for scarce funds in all sectors, the government should sustain the enlistment of the private sector as a critical partner in this onerous task of infrastructural development,” he said.

Read also: The link between informal economy and economic development in Nigeria

NECA also decried the rising prices of diesel which have put businesses at risk as running costs have escalated significantly.

As a way forward, he said: “In the short run, the government can support businesses by providing financial support to SMEs to survive the current high operating cost induced by high diesel prices. In the medium and long term, the government needs to focus on the power and refinery production capacity.”

He believed that an improvement in the power situation would reduce businesses’ reliance on diesel to power their operation. “The government needs to intensify efforts to increase the number of functioning refineries in the country thereby increasing domestic production of refined petroleum products, including diesel,” Adeniyi said.

Chris Ngige, minister of labour and employment, speaking at the meeting, said the Federal Government was concerned about the high-level unemployment in the country and was taking measures to address it.

Ngige, represented by Nnamdi Enuah, Lagos zonal controller of labour and employment, said such measures include a skill acquisition training programme for youths by his ministry, including graduates from tertiary institutions.

“There’s also massive infrastructural development ongoing, including rail which is providing direct and indirect employment,” Ngige said, adding that the government was also implementing the ‘ease of doing business’ to encourage more investment and job creation.

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