Foresees improved economy in H2’21·    

*Calls for coordination between fiscal, monetary policies

By Yinka Kolawole

As the states and the Federal Government fight over control of the Value Added Tax, VAT, revenue, the Lagos Chamber of Commerce and Industry, LCCI, has rolled out a compromise position which it sees as most beneficial to all stakeholders.

Meanwhile, the Chamber has predicted improved economic performance in the second half of the year (H2 2021) – the third and fourth quarters, against the backdrop of 5.01 percent Gross Domestic Product, GDP, growth in the second quarter (Q2 2021).

READ ALSO:Law Enforcement Training Institute Bill scales 2nd reading at Lagos Assembly

Speaking at the Chamber’s fourth quarterly briefing in Lagos yesterday, President, LCCI, Mrs Toki Mabogunje, however, called for a better coordination of fiscal and monetary policies to accelerate the pace of recovery.

On the Chamber’s VAT recommendation, she said the chamber is seeking a review of the sharing formula to be weighted in favour of derivation to drive innovation on revenue generation in all the states towards increasing their internally generated revenue.

Mabogunje noted that the original formula for the distribution was 50% to the Federal Government; 35% to states; and 15% to LGAs. But with effect from January 1999, the formula was adjusted to be 15% to FGN; 50% to states; and 35% to LGAs. Presently, the states and LGAs share their allocation using the factors of equality 50%; population 30%; and derivation 20%.

“We advise that the current sharing formula for the states and LGAs be adjusted using the factors of equality 20%; population 30%; and derivation 50% going forward. This arrangement should be agreeable to all concerned parties. This can drive innovation on revenue generation in all the states towards increasing their internally generated revenue,” added.

Recommending public policy positions for growth, Mabogunje stated: “Accelerating the pace of recovery 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.”

According to her, the Central Bank of Nigeria (CBN) should scale up its intervention efforts and roll out more friendly supply-side policies to boost liquidity in the market. She added that deliberate efforts must be made to ensure more conducive business environment for micro, small and medium enterprises (MSMEs) and large corporates at the national, subnational, and local government levels.

The LCCI president lamented that the foreign exchange (forex) market is still faced with liquidity challenges. “Many investors are lamenting about the difficulties in accessing forex for the importation of raw materials, equipment, and critical inputs for production and processing. The situation is taking a huge toll on capacity utilization, recovery, and sustainability of businesses in the production sector.”

She also noted that the burdensome process of moving goods from the ports and extortions by government agencies persists. “The bottlenecks with the clearing of cargoes especially the activities of the Nigeria Customs Service (NCS) constitute a significant deadweight to the process. We advocate for an urgent reformation of the NCS through executive orders or legislative actions to enable Customs discharge its trade facilitation functions effectively.