By Goddy Egene
The Nigerian Employers Consultative Association of Nigeria (NECA) has called on the federal government to put more efforts in finding a solution to current challenges being faced by companies operating in the country.
Speaking at the annual general meeting (AGM) of association, the President of NECA, Mr. Larry Ettah said businesses are grappling with extremely traumatic times, therefore calling on the government to look beyond the seeming good performance of a handful “big” businesses in gauging the state of the economy.
“In recent times at our AGMs, we have variously described our operating environment as challenging, unpredictable, unstable and energy sapping. These words are, of course, true and descriptive of what our members have experienced in keeping their businesses afloat. As I reflect on the events and situation of our economy in the past one year, I am truly short of appropriate words to capture the extremes of hardship and trauma businesses have had to contend with to remain standing. Suffice it to say congratulations to any enterprise whose head is still standing above the inclement weather of our operating environment,” he said.
Ettah, who is also the Group Managing Director/CEO of UAC of Nigeria Plc said the mortality rate of micro, small and medium scale businesses is alarming and, noting that if we are going to get a firm grip of the panacea to the high youth unemployment in Nigeria, then we must look at the imperatives for sustainable enterprise.
Commenting on the economy in 2015 and the outlook for 2016, the NECA boss said: “With a growth rate of 2.79 percent in 2015, the year recorded a dramatic slowdown from the 5-6 per cent growth the Nigerian economy has become accustomed to recording. The triple jeopardy of a stand-still in government as a result of the 2015 election, a new government grappling to settle down and the drastic fall in government revenue as a result of fall in the crude oil prices dealt a massive blow to the economy.”
According to him, 2016 has so far not been any better with multiple economic challenges including: depleted foreign reserves from $29.9 billion in November 2015 to $25.71billion as at August 19, 2016; Naira depreciation by 31.7 per cent from N197/US$ in March 2015 to N330/USD in August 2016; high capital outflow, particularly portfolio investment; upward trend of inflation from 8.5 per cent in March 2015 to 17.1 per cent in July 2016 and increased interest rates.
Ettah said that the economic challenges had impacted on the real sector, resulting in the decline in capacity utilization, closure of businesses, redundancies and retrenchments, astronomical cost of forex plus smuggling, import restrictions, trade credit evaporation, shrinking supplier credit and bills for collection, and reluctance by export credit agencies to grant more credit.
Ettah noted that “While there is no doubt that the past administration was profligate in its management of our commonwealth, it is quite evident that the lack of clarity about the economic agenda of the current government and some wrong policy choices have contributed to the current economic stagnation and recession.”