Due to the COVID-19 pandamic ravaging the country, the Lagos Chamber of commerce and Industry (LCCI), on Tuesday said Nigerian economy may experience recession by the end of the third quarter of this year.
Mrs.Toke Mabogunje,President, LCCI, who disclosed this at a press conference in Lagos,said there are indications that the economy of the country would not escape economic down turn on account of the pandemic.
According to her: “It is expected that the economic fallout of the pandemic, notably disruptions to global supply chains, lockdown, travel restrictions, weakening oil prices, foreign exchange liquidity challenges and weak export would manifest in the second-quarter growth numbers, with more pronounced impact on sectors struggling with growth before this crisis.As the pandemic protracts and commercial activities remained subdued, the prognosis is that the economy could slip into recession by the end of the third quarter.”
She said that the business community continues to reel from the unprecedented crisis precipitated by the pandemic and associated containment measures.
“We note activities are yet to resume in certain sectors such as tourism, hospitality, entertainment and education. Many businesses are presently in dire financial straits as they battle with escalating costs, high receivables, loss of credit lines and other contractual obligations amid revenue shocks. The impact is more pronounced on micro and small enterprises, with inadequate financial buffers to withstand shocks of this magnitude,” she added.
According to her, LCCI acknowledged the efforts so far by the Federal and State Governments, Central Bank of Nigeria (CBN) and private corporations towards assuaging the impact on the business community.
She reiterated the need for government to consider intervention packages for sectors that have been badly hit by the pandemic with a view to enabling them bounce back as well as adding value to the economy.
She expressed concern over the country’s rising debt portfolio in the which he said hit N28.63 trillion at the end of March,this year.She implored the federal government to be more careful in the quest for borrowing.
She added:“We call for caution on the continued use of debt to meet fiscal obligations especially at a time the country is struggling to generate adequate revenue. “The option of equity financing should be more rigorously explored, and it is a better and more sustainable financing strategy that could be deployed to bridge fiscal deficit.”
She observed that the the recent adjustment of the exchange rate from N360/$ to N381/$ is a round peg in a round hole towards unifying the multiple exchange rates and improving transparency of the country’s forex management in the country
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She commended the federal government on the removal of subsidy on Premium Motor Spirit (PMS), adding that the development would rescue the nation’s economy from ruin.
She,however,picked holes in the roles of the Petroleum Product Pricing Regulatory Agency (PPPRA) in fixing fuel price in a deregulated regime.
She added:“The transition to a market-based pricing regime in the downstream segment of the oil sector is a move in the right direction.However, price-fixing by the Petroleum Product Pricing Regulatory Agency (PPPRA) is not consistent with the philosophy of a market-driven downstream sector. It is a contradiction in terms.
She emphasized the need for the speedy consideration and passage of the revised Petroleum Industry Bill (PIB by the National Assembly.
