LCCI seek prudent fiscal policy measures to manage inflation
By Merit Ibe
The Lagos Chamber of Commerce and Industry (LCCI) has charged the Federal Government to adopt more prudent fiscal policy measures to effectively manage inflation and address the issue of high interest rate and exchange rate volatility in the country.
The chamber made the call following the report by the National Bureau of Statistics (NBS) on Nigeria’s Gross Domestic Product (GDP) growth rate for the second quarter of 2023, in which the country’s economy grew by 2.51 percent in the second quarter compared to 2.31 percent in the first quarter of 2023.
The second quarter growth implies the 11th consecutive quarter of economic growth, though lower than the 3.54 percent recorded in the same quarter of 2022.
Reacting in a statement, Director General of the chamber, Chinyere Almona, said this may be attributed to the challenging economic conditions caused by fuel subsidy removal and exchange rate harmonization.
Almona commended the Federal Government’s declaration of a state of emergency on food security and urged it to prioritise farmers’ areas of assistance, fertilizers and seeds to mitigate the effects of subsidy removal and create strategic food reserves to be used as price stabilisation mechanisms.
The NBS recently revealed that Nigeria’s headline inflation rate rose to 24.08 percent in July 2023, higher than the 22.79 percent recorded in June.
NBS stated that on a year-on-year basis, the headline inflation rate was 4.44 percent points higher when compared to the rate recorded in July 2022, which was 19.64 percent.
Analysis of the GDP result showed that transport & storage (–50.6 per cent), oil and gas (–13.4 per cent), education (1.4 per cent), agriculture (1.5 per cent) and other services (1.7 per cent) are the slowest growing sectors. The growth recorded in the manufacturing sector remained low at 2.20 percent.
LCCI viewed that the significant contraction recorded in transport and storage and the sub-optimal growth in manufacturing and trade largely reflect the deregulation of the downstream oil sector, exchange rate volatility and weak consumer demand.
“The recovery in agriculture is significant, however, growth remained low and may be attributed to insecurity and policy gaps. We also note that high growth in solid minerals is insignificant, mainly due to the sector’s relatively small size.
“The Chamber recommends that the government adopt more prudent fiscal policy measures to effectively manage inflation and address the issue of high-interest rate and exchange rate volatility,” she said.
