TUE, MARCH 05 2019-theG&BJournal- The Lagos Chamber of Commerce and Industry (LCCI) is demanding more economic reforms from the new Federal Government under President Muhammadu Buhari.
The Chamber outlined their demands today in Lagos with a set of agenda in which they urged President Buhari to commit to policies and programmes that will accelerate economic growth and ensure that the growth rate surpasses the rate of growth of population.
The LCCI say the agenda is articulated in the context of business activities at this time.
‘’As you might be aware, business and economic issues are dynamic. Emerging issues would be raised in our continuous advocacy activities and engagement with the government and its agencies. We will ensure that private sector sustains its commitment to collaboration with the government in the national interest and to enhance the global competitiveness of the Nigeria economy.’’
In the agenda document presented by its President MR. Babatunde Paul Ruwase, the LCCI admits and recognises that the Economic Recovery Growth Plan [ERGP] underscores the philosophy of private sector led economy but wants government policies and actions to be in tandem with the contents and direction of ERGP.
‘’The private sector should be positioned to play the role expected of it in this important policy document. This economy is blessed with quality entrepreneurs that can transform our huge potentials into concrete outcomes and value creation if they have the right environment,’’ Ruwase said.
The latest National Bureau of Statistics shows that the nation’s GDP grew by 2.4% in the fourth quarter of 2018 compared to third quarter 2018 growth of 1.8 %. The full year GDP growth was 1.9%; better than 2017 of 0.8%. But the LCCI see this performance and weak and fragile.
‘’It is also far below 3% annual population growth. This remains a cause for concern due to its implications for poverty and sustainable growth in the country,’’ LCCI said.
The areas of concern for LCCI are in the funding of government operations, Visa policy, electricity sector, the Customs Service and ease of doing business, rail and road infrastructure, access and cost of credit for MSMEs and oil and gas sector reforms.
‘’We need to deal urgently with the cost of governance as well as the issue of value for money in government expenditure. We recognize that there is a correlation between investment growth, GDP performance and tax revenue. This underscores the very important role that investment can play in boosting the revenue of government. As investment grows, job creation will improve, and tax revenue will be positively impacted,’’ LCCI said, noting the concerns of top government functionaries who have repeatedly expressed concerns over the funding gap that exist in government.
‘’It is therefore important to quickly develop a fiscal sustainability strategy as the administration progresses into its second term.’’
According to LCCI, the government also need to watch the growth of recurrent expenditure in order to give more room for infrastructure financing.
‘’Currently, the summation of recurrent expenditure and debt service is equal to total government revenue. This financing structure is certainly not sustainable; what this means is that capital project will naturally be funded by borrowed funds. It is important to put in place an appropriate Public Private Partnership to attract private capital in the financing of bankable public sector projects.’’
The LCCI also pressed for urgent action on economic integration. They say the Nigeria economy has more to gain by being part of the economic integration process at the regional level (ECOWAS) and at the continental level (AFCFTA) in contrast to manufactures position which suggests concerns that AFCFTA will dwarf their competitiveness. To address the manufactures concerns, LCCI say appropriate safe guard measures should be put in place to protect vulnerable sectors of the economy and to also ensure that there is effective enforcement of the rules of origin.
‘’Once this is done, we request that Nigeria signs the AFCFTA.’’
Reform of the country’s visa policy is also included in their list of demand. They are proposing a more liberal visa policy favouring investors mostly but for nationals of selected advanced economies who can be granted visa free entry into Nigeria for a maximum of 30 days.
‘According to the LCCI, this is the practice in many of the emerging economies and their economies have benefitted tremendously from this policy. This would impact positively on our FDI and hospitality and tourism industry.
One of the biggest institutional challenges facing the business community today is the Nigeria Customs Service. The institution has created a lot of uncertainty and bottlenecks in the international trade process. The Nigeria Customs Service (NCS) has also not fully subscribed to the Executive Orders focused on promoting ease of doing business in the country.
‘’We therefore advise that NCS should be compelled forthwith to subscribe to the Ease of Doing Business policy of government, without necessarily compromising its security surveillance. It should also do more to prioritise its trade facilitation role,’’
Besides seeking reforms in rail and road infrastructure, the Chamber wants an effective credit guarantees to de-risk lending to the MSME sector. Credit guarantee scheme for MSMEs will promote lending and provide guarantee of loan repayments.
SMEs which contribute about 90% of business activities in Nigerian do not have sufficient access to capital. The enactment of the Secured Transaction in Movable Assets Act, 2017 (popularly called Collateral Registry Act 2017) provided the legal framework for MSMEs to borrow fund with assets like motor vehicles, equipment & machinery, stock, inventory, accounts receivables and farm products. Nevertheless, a lot still needed to be done to ensure greater access particularly for rural MSMEs.
There is an urgent need to improve the regulatory environment in oil and gas industry. This will unlock huge foreign direct investment in the sector, especially in gas and deep-water exploration. This is one of the major objectives of the 15 year old Petroleum Industry Bill [PIB] which is still in limbo.
‘’We request that a more expeditious consideration be given to the bill through appropriate collaborative actions with the national assembly.’’
Crude oil export is our biggest foreign exchange earner; ironically, the biggest foreign exchange expenditure is also on the importation of petroleum products. Increases in crude oil price benefits the Nigerian economy with regards to foreign exchange earnings but penalises the economy in terms of the huge foreign exchange commitment to importation of refined petroleum products and high energy cost. We need to prioritise local refining of petroleum products to ease pressure on our reserves.
Additionally, we request the intervention of the presidency to reduce the burden of excessive taxation on oil and gas investors in the country. There is currently a proposal by the NPA to impose $1 levy on every barrel of oil export. There are also new levies being proposed under the National Oil Spill Detection and Response Agency [NOSDRA] amendment bill and the Maritime University amendment bill. We also seek protection for the manufacturers of gas cylinders to promote industrialisation, self-reliance and conservation of foreign exchange. We already have huge capacity to meet local cylinder demands.
We acknowledge the efforts by government to improve liquidity in the power supply chain, the drastic reduction in the debt owed to gas suppliers and the Generating companies, improvement in power generation, and the enhancement of carrying capacity of the transmission grid. We are also aware that the Minister of power is promoting alternative models to fix the problem at the distribution end.
But a chain can only be as strong as its weakest link. The distribution end is still grappling with numerous challenges which limit the capacity to deliver power to end users. The power situation continues to pose challenges to business operators. There are complaints across all sectors about high energy costs especially high expenditure on diesel. The situation has worsened with the increase in global crude oil price. Many businesses spend as much as 20-30% of their total operating cost on generating power. We propose that policies and incentives be put in place to encourage decentralisation and more off grid solutions.
The government should encourage and facilitate more off grid power generation for improved access to power. The Aba and Sura market power initiatives should be widely replicated across the country.
Digital applications bring tremendous value to processes and enhances efficiency in any system. This is no less true for government operations, including the bureaucracy. Therefore, we urge that the scope of digital applications and the use of technology be increased to promote efficiency across the MDAs. This will reduce human interface, increase the speed of transactions, and improve efficiency. We acknowledge that some of this have started as part of the Ease of Doing Business programme of government. The Corporate Affairs Commission process is an example.
|twitter:@theGBJournal|email: info@govandbusinessjournal.com.ng|
