Dr. Chinyere Almona is the new Director-General of the Lagos Chamber of Commerce and Industry (LCCI). She speaks on burning economic issues, and how the government can sustain recorded economic growth.
You recently assumed duty, what are your plans for the chamber?
I am a seasoned professional with a broad range of experience. As the DG of LCCI, I am responsible for developing and directing the implementation of a strategy to ensure the achievement of objectives of the Chamber while ensuring and managing the growth and development of the institution.
I plan to build on the successes of my predecessor, by enhancing stakeholder engagement and advocacy with various arms of the State and Federal Governments. It is also critical for me to diversify and grow the Chamber’s revenue sources and improve efficiency and service delivery to members to increase member engagement. With the support of my team, I will improve the Chamber’s visibility via regular programmes and active use of social media.
We saw a 5 percent GDP growth in the second quarter, what does that mean for the economy?
According to data from the National Bureau of Statistics (NBS), the year-on-year growth rate of 5.01 percent was driven by some base-year effects, which means that the factors that constrained the growth of GDP in the base year of 2020 were resolved and led to more opening of the economy. So, the lockdowns in 2020 constrained production and made the GDP shrink. Coming into 2021 and with the economy reopening gradually, production expanded that led to the 5.01 percent growth when compared between the two periods. The opening of the economy saw many people go into retail trade and was well supported by growth in transport and logistics services. The non-oil sector also recorded a 92.58 percent contribution to the Q2 GDP. Government must therefore pay attention to the factors that made the nominal GDP shrink between the first and second quarters of 2021.
How does the government check inflationary trends, particularly on rising food prices?
We simply need to check the major factors driving the high rate of inflation which are supply chain disruptions caused by insecurity, forex scarcity, and speculative demand among others. In addition, we need to continue with the dedicated funding programmes targeted at critical growth sectors like agriculture, manufacturing, technology and entertainment. These sectors have shown resilience and are job-rich by nature of activities.
Despite stopping the sales of dollars to Bureau De Change, the Naira is on free fall, how can this be reversed?
Any exchange market responds to the forces of demand and supply. The forex market is not an exemption. We had envisaged that the banks will not be able to meet the demands for forex and this will force manufacturers to source forex from the parallel market with rates hitting the skies. We have also advised that raw materials that are not available locally but are a critical component of production should be supported till when we can build enough capacity to produce them locally. For instance, some of the 41 items excluded from CBN forex funding are critical ingredients of production for some manufacturers, and presently, they import such items at a rate above N560 per dollar rate.
Also, with hoarding and speculative demand, the rate of dollar will likely appreciate against the naira forcing manufacturers to source forex at a higher rate and produce at a higher cost and the costs will eventually be transferred to consumers.
What is LCCI’s position on the current battle over VAT collection?
The decision on who collects VAT rests on the judiciary and with the recent judgment on stay of execution of the earlier judgment, a status quo is expected by all parties pending when the appeal is resolved at the Court of Appeal. What it means is that the States cannot collect VAT now until when the FIRS suit at the Court of Appeal is resolved.
We have however advised that the sharing formula for the States and LGAs be reviewed such that States with more generation of VAT receive more. This will encourage States to become more serious about the business environment in their states and how companies there are supported to thrive.
What are the economic implications of the worsening security challenges?
According to the Global Ranking on Peace and Economic Impact of Violence by the Institute of Economics and Peace, “the global economic impact of violence was $14.4 trillion PPP in 2019, equivalent to 10.5 percent of global GDP or $1,895 per person. Globally, the consequences of violence amount to considerable direct and indirect costs that erode economic development, increase instability, increase inequality and erode human capital”.
With the worsening security challenges, production will shrink as production bases come under siege, supply chains are disrupted leading to scarcity of goods in the markets, with worsening security perfection about the country, foreign investors are not interested in bringing in Foreign Direct Investments (FDIs).
What is LCCI’s impression of the e-Naira from CBN?
Digital transformation is a journey, not a one-off event, and as digital transformation is evolving across the globe, Nigeria cannot afford to lag and do catch-up later. We only advise on international best practices well domesticated to fit our local economic realities. Regulation, case study analysis, and supervision are critical. With the proposed international financial centre, Nigeria seeking to be a big player in Africa through the African Continental Free Trade Agreement (AfCFTA), the emergence of special economic zones, and several other intercontinental trade agreements, a digital currency is likely needed to play a facilitation role for trade and exchange.
It is imperative that digital platforms be well supported and regulated to reduce cybercrimes. Since innovative digital solutions will continue to dominate the way business is done across the globe, Nigeria cannot afford to lag in the scheme of things. It is however important that strict regulations according to best practices are put in place.
How can MSMEs tap into opportunities of the AfCFTA agreement?
First, they must build capacity in understanding the rules, opportunities, procedures, and financing options available for trade expansion through the AfCFTA. Secondly, the government must create an enabling environment by curbing the menace of insecurity that has made it difficult for businesses to access raw materials for production. If our SMEs produce at higher costs, their products will not compete well at the international markets. Thirdly, there should be dedicated funding for targeted sectors where SMEs operate to empower more SMEs to scale up to meet international standards. Lastly, SMEs require support in packaging and marketing to the whole world.