By Dike Onwuamaeze
The Lagos Chamber of Commerce and Industry (LCCI) has commended the Central Bank of Nigeria (CBN) over the low interest rate environment in the economy.
The Chamber also urged the banking sector regulator to sustain the policy throughout 2021.
The chamber gave the commendation yesterday when its President, Mrs. Toki Mabogunje, addressed a press conference on the, “State of the Economy,” in which she predicted that the Nigerian economy would exit recession and return to positive growth in the second quarter of 2021
According to the LCCI boss, the current low interest regime is good for investors to mobilise cheap funds locally, adding that it also contributed significantly to the impressive performance recorded by the Nigerian stock market the previous year.
She said: “A low interest regime will encourage blue-chip corporates to undertake further investments, thereby stimulating aggregate demand and economic growth. We expect the CBN to maintain its pro-growth policy stance by keeping interest rates low, to stimulate redirection of funds from money market to the real economy. The focus of improving credit access by small businesses must be sustained.”
Mabogunje stated that in the absence of major shocks, the economy was expected to, “return to positive growth path in the second quarter of year 2021 albeit the pace of recovery is expected to be subdued within the region of one per cent.”
She noted that projections by World Bank, the IIF and the International Monetary Fund put Nigeria’s annual average growth for year 2021 at 1.1 per cent, 1.2 per cent and 1.5per cent respectively.
The President of the LCCI posited that the country’s economic recovery prospects in 2021 would depend on the effective management of the COVID-19 pandemic locally and globally, widespread COVID-19 vaccine rollout, the direction of global oil market and the quality of Nigeria’s fiscal, monetary, trade and regulatory policies.
She said: “Accelerating the pace of economic recovery requires fiscal and monetary authorities to be well coordinated to promote growth-enhancing and confidence-building policies that would encourage more private capital inflows into the economy.
“Investment-led growth strategy is critical for inclusive and sustainable economic growth. Strong commitment to key reforms will not only boost output recovery but will also put the nation on a path of macroeconomic stability.”
The LCCI recommended a review of the foreign exchange management framework to expand the scope of market mechanism in the determination of the exchange rate and the mobilisation of efforts in making the business environment more conducive for micro, small and medium sized enterprises (MSMEs) and large corporates, by addressing structural bottlenecks and regulatory constraints contributing to high cost of doing business in the country.
It also recommended consistency in government policies to attract investments and the prioritisation of public spending to support critical capital development expenditures in road, railways, power, health, education, etc.
The chamber also called on the federal government to sustain its policies on deregulation of the downstream segment of the country’s oil and gas sector, the passage of Petroleum Industry Bill (PIB) and the implementation of cost-reflective electricity tariffs.
It also asked the government to prioritise the fight against insecurity and the deepening of investors’ confidence on the Nigerian economy in order to arrest the “sharp decline in foreign capital inflows to the Nigerian economy to $8.61 billion between January and September 2020, compared with $20.19 billion in the corresponding period of 2019.”
The chamber also appealed to President of United State, Mr. Joe Biden, to throw the weight of the United States’ government behind the candidacy of Dr. Ngozi Okonjo-Iweala for the Director General of the World Trade Organisation (WTO).