The Organised Private Sector (OPS) on Wednesday urged the Federal Government to sustain the various policies that catalysed the country’s exit from recession.
In separate interviews with newsmen stakeholders in the OPS also urged government to focus on economic diversification to prevent a relapse of the recession.
Muda Yusuf, Director-General, Lagos Chamber of Commerce and Industry (LCCI), expressed concern on the country’s 0.55 per cent growth rate which was largely driven by improvement in oil prices and output.
The LCCI director-general said that this was fragile and volatile, stressing the need to reduce the country’s exposure to shocks from global crude oil prices.
Newsmen recall that data from the National Bureau of Statistics (NBS) reveals that the country’s recovery from recession was largely driven by the performance of the oil, agriculture, manufacturing and trade sectors.
Nigeria’s economy emerged from recession in the second quarter, expanding 0.55 percent year-on-year, the NBS said on Tuesday, as economists expressed concern at the sluggish recovery.
It shrank by 1.5 per cent in 2016 for its first annual contraction in 25 years. It also declined in the first quarter of this year, due to lower revenues from oil — its dominant export — and a shortage of hard currency.
“If we do not intensify efforts on economic diversification, we can easily slip back into recession.
“To diversify the economy, we need to put in place policies that would continue to ensure the stability of the macroeconomic environment and address ease of doing business.
“Already, a lot is happening concerning easing the business environment but a lot more could still be done.
“We need to drive down cost of operation for businesses; diversification within the oil and gas sector should be our target because we should be doing more of refining, petrochemicals, fertiliser and more of gas-based industries.
“We need to address infrastructure issues because we need infrastructure to diversify and you cannot have sustainable industrialisation and agricultural sector development without infrastructure,” Yusuf said.
The LCCI boss urged the government to urgently address the issue of multiplicity of foreign exchange rates, saying that it was affecting investors’ confidence.
According to him, addressing the issue of interest rate is a major factor that can positively boost growth of all sectors of the economy to reduce reliance on oil.
“If the environment is right, we can get diversification that is sustainable and that comes with higher productivity.
“Some people argue that the GDP is diversified but productivity levels in most sectors are very low.
“For instance, what is the contribution of agriculture to revenue, it is virtually nil. Although, it is contributing almost 20 per cent to GDP but its contribution to revenue is zero.
“These are the things that should be done so that if there is any shock in oil price, the economy would not slip back to recession,” Yusuf said.
Dr Frank Jacobs, President, Manufacturers Association of Nigeria (MAN), said that intensifying efforts on the implementation of the Economic Recovery and Growth Plan (ERGP) would deepen economic diversification.
Jacobs added that implementing the ERGP would also boost job creation and improve the nation’s business environment.
Dr Olusegun Omisakin, Head of Research, Nigerian Economic Summit Group (NESG), said that diversifying government’s revenue base from 75 per cent reliance on oil sector would ensure sustainability of the economic recovery.
Omisakin urged the government to encourage value addition of the country’s produce and improve investment in the non-oil sector to boost its contribution to the country’s revenue base.