Sectoral performances sluggish, says LCCI

By Okwy Iroegbu-Chikezie

The performances of the various sectors of the economy remained sluggish, as 11 sectors contracted in the first quarter of this year, the Lagos Chamber of Commerce & Industry (LCCI) has said.

Making this known, LCCI President Toki Mabogunje, however, said growth was driven by the non-oil sector, which expanded by 0.79 per cent in the quarter under review.

According to her, the non-oil sector growth was fuelled by expansion in Information and Communications Technology (ICT) (+6.3 per cent); manufacturing (+3.4 per cent); agriculture (+2.3 per cent) and

real estate (+1.8 per cent).

Mabogunje, in statement, which was made available to The Nation, attributed the marginal improvement to sustained relaxation of  COVUID-19 restriction measures following significant moderation in

pandemic cases that is supporting the further reopening of the economy.

She said: “Agriculture demonstrated resilience in the first quarter amid heightening insecurity and lingering supply chain disruptions orchestrated by the pandemic.’’

“Manufacturing returned to positive growth trajectory after three consecutive quarterly contractions, partly supported by developmental finance intervention of the Central Bank of Nigeria amid numerous headwinds confronted by industry players including foreign exchange illiquidity”.

The LCCI president also revealed that segments of manufacturing with high levels of backward integration had lesser degrees of shocks from foreign exchange crisis in the economy.

She noted the sustained recovery in the construction and real estate sector, supported by improved activities of private and public sector associated with implementation of capital projects.

According to her, the ICT sector maintained its impressive performance in the reviewed quarter as expected given the opportunities created for technology in the post-pandemic era.

However, the cost reflective tariff appears to have impacted positively on the electricity sector which recorded 8.66 per cent. It proved to be one of the highest sectoral growth performances in the GDP report.

Mabogunje argued, however, that a lot of issues remained to be resolved in the electricity sector, as electricity supply in many parts of the country is still epileptic. She also added that the metering programme is also not keeping pace with demand.

On the sectors with positive growth numbers, she stated that the reviewed quarter included human health and services (+4.7per cent) and water sewage (+14.8 per cent).

On other sectors that recorded contraction, Mabogunje said the transportation and storage sector recorded the most severe contraction of 21.9 per cent,  principally driven by double-digit contraction in road transport sub-sector (-24 per cent) and aviation (-12 per cent).

“The weak performance of road transport sub-sector could be attributed to the multidimensional impact of insecurity on movement of people, goods, and services; and that of aviation sector to difficulties experienced by industry players in sourcing foreign exchange, which has continued to impact operational costs with a corresponding spike in air fare” she said.

The LCCI chief lamented that juxtaposing current growth level with population growth estimated at 2.7 per cent by the World Bank implies the economy is not growing fast enough to create new opportunities for its rapidly-growing population.

”Nigeria’s actual output performance is significantly below its potential output level. Achieving key development outcomes such as employment creation and poverty reduction will always remain elusive in the light of fragile recovery, and this reinforces the need for policymakers to pursue critical reforms to bolster confidence in the economy, accelerate post-pandemic recovery and alleviate poverty”, she stated.

The Chamber, however, recommended accelerating the pace of recovery which requires both fiscal and monetary policymakers to be well-coordinated in promoting growth-enhancing and confidence-building policies that would encourage private and foreign capital inflows into the economy.

LCCI also asked government to make deliberate efforts towards making the business environment more conducive for MSMEs and large corporates at national, sub-¬national and local government levels by   addressing the structural bottlenecks and regulatory constraints contributing to high cost of doing business.

In addition, a supportive and conducive investment environment, the Chamber added, was critical in facilitating private sector involvement in economic recovery process.

Others are the need to deepen deregulation efforts in the downstream oil industry by ensuring market-reflective pricing model for petroleum products; the need for clarity in government’s policy direction by ensuring consistency in economic policies.

Mabogunje added that policy consistency was imperative for long-term investment planning and business projections and a holistic and dynamic review of the security architecture to address the seemingly worsening security situation in the country.