STATE OF THE NATION ADDRESS BY IYALODE ALABA LAWSON, MFR, FIoD, JP, NATIONAL PRESIDENT OF THE NACCIMA
STATE OF THE NATION ADDRESS BY IYALODE ALABA LAWSON, MFR, FIoD, JP, NATIONAL PRESIDENT OF THE NIGERIAN ASSOCIATION OF CHAMBERS OF COMMERCE, INDUSTRY, MINES AND AGRICULTURE (NACCIMA) ON REVIEW OF THE STATE OF THE ECONOMY AND THE ASSOCIATION’S PERSPECTIVE ON SOME TRENDING SOCIO-ECONOMIC ISSUES HELD AT THE NACCIMA SECRETARIAT, IKEJA LAGOS, ON 28TH MAY, 2018.
Distinguished Gentlemen of the Press, on behalf of the Council, Executive Committee and entire members of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), I welcome you to this briefing on the State of the Nation. NACCIMA appreciates your continued support to our Association through your coverage of our events, activities and advocacy for the private sector as it continues to serve as the engine and growth of the Nigerian economy. We also recognise your role as the fourth estate of the realm in our common endeavour to create the Nigeria of our dream.
Today, it gives me great pleasure to present to you NACCIMA’s New Director General, Ambassador Ayoola Olukanni, whose profile has been distributed to you all. He joins us with a wealth of experience and knowledge acquired over a period of 35 years working as a career diplomat in the Nigerian Foreign service.He served at home and abroad, in our Diplomatic Missions in Brussels, Tel Aviv and Permanent Missions to the UN in New York, Nairobi and Vienna. He was also our former High Commissioner to Australia with concurrent accreditation to New Zealand, Fiji, Papua New Guinea and Vanuatu. He joined us as Director General after a thorough search. We will work together to reposition and rejuvenate the Association to attain greater heights and for the benefit of the Private Sector.
As you may already know, NACCIMA is a foremost member of the Organised Private Sector and the umbrella body for all City, State, Regional, Bilateral and Multilateral Chambers of Commerce, including Professional/Business Associations in Nigeria. Our membership base cuts across all sectors of the nation’s economy in all 36 States of the country and Abuja. So we are there right to the grassroots. Hence the Association has a duty to ensure that a suitable business environment which promotes the growth and development of the Real Sector is established and sustained.
This State of the Nation Address presents an opportunity to express NACCIMA’s views and recommendations concerning the nation’s economy, some trending socio-economic issues in the country as well as government’s policies and their impact on the private sector, private enterprise and the people.
2.0STATE OF THE ECONOMY.
After the lack luster performance of the economy reflected in negative economic growth rate from the first quarter of 2016 to the first quarter of 2017, the nation’s economy is once again experiencing growth. The recently released GDP report for the first Quarter of 2018 which indicates a GDP growth by 1.95% in real terms is a welcome development. It’s an indication that the nation’s economy remains on the track to sustainable growth. NACCIMA however wants to advocate an INCLUSIVE GROWTH which means a growth pattern which will positively impact on all sectors of the society and in particular the lives of ordinary people especially the poor.In other words We must ensure that people share in the Growth, it must not just remain mere figures.
The exit from recession and consequent economic recovery has been largely attributed to the upsurge in global crude oil prices which currently stands at a 4-year high of around $70. Other contributors to this improvement are the relatively stable monetary policies and fiscal discipline of the government; intervention programmes and strategies. International Development Agencies such as the World Bank and the International Monetary Fund (IMF) have attested to this. This increase in oil prices also signals increased foreign currency revenues, which has in a way helped stability of the Naira. However, given the volatility of global crude oil prices and the nation’s over dependence on imports, it is not yet UHURU for us. There must be sustained momentum in the development of the non-oil sector especially the mining, manufacturing and agricultural sectors which have the potential to revitalise the economy and ensure sustainable growth and development. .
3.1GDP GROWTH RATE
According to the Nigerian Bureau of Statistics (NBS), Nigeria’s economy grew by 1.95% in Quarter 1 2018. This increase can however be traced to increase in global oil prices and the output from the oil sector. On the other hand the non oil sector contracted from 92.65 % of GDP in the 4thQuarter of 2017 to 90.4% in the 4th quarter of 2018. This is an indication that we have a lot of work to do to increase the output from the non-oil sector. We need to pay more attention to this sector in view of the non-reliability of oil prices which more often than not is also subject to vagaries of the International political environment.
The Foreign Exchange market is at present stabilizing with official Naira-to-USD exchange rate being around N305 per USD while the parallel market rate hovers around N360 to N365 per US Dollar. We must still work on improving and strengthening the Naira.
Inflation continues to be in the double digits, 16% last year and slight decrease to 13.34% in March 2018. As at April, 2018 it stands at 12.48%. Despite the consecutive decline with a positive growth on the economy, the fact remains that for an Economy like ours inflation rate remains high and steps must be taken to redress the imbalance.
The nation’s foreign exchange reserve dropped for the first time in eight months during the early part of May, 2018, it has however increased to $ 47.75 billion as at 21st of May, 2018. This is a good indication because it will lead to more liquidity in the Foreign Exchange market and help to stabilise the NAIRA. The Association urges for more favourable and stable Government policies to encourage more domestic investments by the Private Sector especially in the non oil exports in line with the commitment to diversify the economy, improve revenue generation and contributions to the nation’s external reserves.
3.5MONETARY POLICY RATE (MPR)
The Central Bank of Nigeria for the past 21 months has kept the Monetary Policy Rate and Cash Reserve Ratio constant at 14% and 22.5%. This has been a major issue at the monetary policy Committee’s (MPC) meetings and It’s a matter of concern to the Private Sector. The CBN Governor in a communiqué after the two-day meeting held from 21st -22ndMay, 2018 revealed that the committee agreed to retain the MPR figure along with the Cash Reserve Ratio of 22.5% alongside all other policy parameters with the optimism that with more time, key macroeconomic variables will continue to evolve in a positive direction. The private sector is advocating a review of the policy to encourage the sector and more investments.
Though there has been a slight decrease in the Prime Lending rate from 17.53% in February 2018 to 17.24% in April, 2018 while the maximum lending rate increased from 31.40% in February to 31.56% in April 2018;this impact is virtually unfelt because the double digit interest rates remain too high and do not encourage business growth or expansion. The high interest rates impacts most especially on Small and Medium Enterprises. NACCIMA is of the firm opinion that a single digit interest rate will drive growth in the private sector and especially the SMEs which can play important role in creating employment and make significant contributions in the quest to improve productivity in the non-oil sector.
When Inflation and Interest rates are very high and unemployment figures continue to rise, it is a very disturbing trend and a cause of deep concern especially to the Private Sector. According to the National Bureau of Statistics (NBS) in their 3rd Quarter 2017 reports on Unemployment rates;the nation’s unemployment rate has risen to 18.8% and underemployment rate of 21.2%. NACCIMA continues to advocate for more friendly government policies to promote the growth and sustainability of businesses and encourage entrepreneurship with the goal of expanding employment.
4.0 OUR VIEWS ON SOME TRENDING ISSUES IN THE COUNTRY.
4.1SECURITY OF LIVES AND PROPERTY
It is obvious that continued incidences of killings, herdsmen-Farmer crisis and other forms of criminalities, have reached an alarming proportion in our country. Insecurity has remained a pervasive problem which has resulted in insecurity of lives and properties and given the impression that our country is unsafe, invariably discouraging genuine local and foreign investors. Without doubt the impact of insecurity is already being felt in the economy with reduced food production from predominantly agricultural regions of the country and consequential high cost of food and raw materials. It’s also affecting investor confidence and perception of the country as an insecure environment for investment friendly location.
We all know businesses thrive better in an environment of security. We commend efforts of the government and our security forces in the fight against terrorism and to resolve the farmers-Herdsmen problems. We must however do more to halt incessant killings across the nation and convince the world that ours is a secured nation.
The Association is therefore appealling to the Federal and State Governments to intensify efforts to address the problem of security. This can be done by first demonstrating political-will to put in place the necessary practical measures and mechanisms to prevent the return of militants and sectarian groups. Let us find a lasting solutions to the insecurity of lives and properties This is very urgent especially as the 2019 elections draw near.
4.2 THE 2018 NATIONAL BUDGET
NACCIMA commends the Federal Government of Nigeria and all its Ministries, Departments and Agencies (MDAs) for the timely presentation of the proposed 2018 Budget to the National Assembly. We however decry the late passage of the budget by the National Assembly. NACCIMA is of the opinion that this act of passing yearly budgets late is unhealthy for the economy. It does not augur well for the management of the country’s resources and projects. It also has direct implications on projects; programmes and spending by Government. Likewise it affects planning by the Private Sector. As the “Voice of Nigerian Business”, Stakeholders in the Private Sector and concerned citizens, we call for swift passage of our yearly budget. And now that the 2018 budget has been passed we call for its urgent implementation. In doing so, we applaud the allocation of about 30% of the budget to infrastructural development in the 2017 and proposed 2018 budgets. We urge for judicious and strict implementation of the budgets in order to achieve the projected gains in all sectors of the economy.
Nigeria’s debt profile continues to rise. This is an area of deep concern to the private sector. Though the nation’s debt profile is considered quite low in relation to the nation’s GDP, there is a need for caution once again on borrowing. According to a December 2017 Debt Management Office report, external debt stands at $18.9 billion as against $15.04 billion of June2017, while the nation’s internal debt as at December, 2017 stands at N12.5 billion as against $12.03 billion for June, 2017. We must be very careful not to slip back into status of a debtor nation as was the case in the recent past when we had to go a-begging for debt forgiveness and debt cancellation. NACCIMA therefore urges that there must be restraints on borrowing and if it’s absolutely necessary to do so, these funds should be judiciously utilized and channeled towards development of infrastructure which will contribute to overall productivity.
4.4THE ECONOMIC RECOVERY AND GROWTH PLAN (2017-2020)
We all know the background to the ERGP. The nation’s economy was practically dependent on crude oil which provides close to about 70% of Government Revenue and 90% Foreign exchange earnings. The collapse of oil prices from a height of over $ US 100 to around $30 dollars set the economy onto a downward trend and eventually a collapse of GDP marked by collapse of many industry and increasing unemployment. The economy eventually slipped into recession in Q2 of 2016. The Government therefore had to do something hence the ERGP launched in 2017 as a medium term plan for the purpose of restoring economic growth while leveraging on the ingenuity and resilience of the Nigerian people which is described as the nation’s most priceless assets. The plan also recognize the need to leverage on Science , Technology and Innovation.
Notably under its principles the ERGP focuses on tackling constraints to growth and leverage on the power of the private sector to achieve transformative growth. In addition it also focuses on investing in Infrastructure, improving the business environment and promoting digital led growth.
In a recent presentation at our AGM in Kano, on the journey so far under the ERGP, the Senior Special Assistance to the President on the ERGP, revealed that after taking key actions, such as allocation of 30% of budgetary allocation to capital/infrastructure, establishments of PEBEC, improved financial and economic management process at sub-national level, opening of an alternative window for access to Forex by exporters, the ERGP is having positive impact. This was evident in the signs of recovery by the economy, decline in inflation rates, growing foreign reserves, Improvement in ease of doing business, (Nigeria was ranked 145 in 2017 as against 169 in 2016). He also revealed that the ERPG FOCUS LAB designed an inclusive process for addressing difficult issues and accelerating solution to development has been of great help. The ERGP Focus Lab focused on delivering quick and fast results to citizens by identifying actionable projects and removing road blocks and developing an enabling framework for the sector.
NACCIMA was invited and attended the final session of the Abuja FOCUS LAB and saw its potentials in the implementation of the ERGP especially in three strategic areas : Agricultureand Transportation, Manufacturing and Processing, Power and Gas Supply. The Association commends and supports these initiatives under the ERGP Focus Labs which we anticipate will be replicated in all regions of the country to encourage better participation and buy-in especially by Small and Medium Enterprises (SMEs). The Private Sector also anticipates that through the ERGP Focus Lab, National Action Plans NAP 3.0, activities of the Presidential Enabling Business Environment Council (PEBEC) and renewed interests in developing the non-oil sector especially the agriculture, manufacturing and mining sectors will be a means to consolidate the ERGP and other Government programmes aimed at improving the Ease of Doing Business in Nigeria and ensuring improved investor confidence in Nigeria’s economy.
The Association however recommends that the government mandates all Ministries Departments and Agencies (MDAs) to provide clear guidelines with timelines of how they intend to achieve the programmes in the ERGP so as to enable the private sector monitor and review their progress in order to achieve the expected dividends.
We must continue to put structures in place to facilitate trade. PEBEC for ease of doing business is a laudable initiative. There are other factors, we must work on whivh include; road infrastructure and the case of Access roads to the Apapa and Tin can ports are illustrative of how our dilapidated roads and consequential traffic gridlock and delays hinder trade. The mile long queue of trailers are indeed embarrassing. We cannot be working out policies to facilitate trade and leave our road and ports infrastructure in the state they are across the country.
The current state of some equipment in use by some operators at the ports is also worrisome. There are several , with inadequate and old equipments; non functioning scanners and required automation systems to facilitate prompt clearances of containers and goods. This was confirmed during a recent On-The-Spot-Assessment Visit to Sea and Border Posts in South West by NACCIMA as a member of the National Trade Facilitation Committee (NTFC). All of these must be addressed to enable us make appreciable progress in the area of trade facilitation.
4.5.1 The African Alliance for E Commerce and Single Window Payment System.
As part of the effort to improve trade facilitation, Nigeria in 2012 joined the African Alliance on Electronic Commerce (AAEC). One of the objectives of the AAEC was to encouraged member states establish the Single Payment Window System to facilitate trade especially through the use of ICT. Nigeria commenced the process of establishment of the Single Window. Unfortunately it appears to have been abandoned. NACCIMA recently attended a sensitization workshop on this trade facilitation system and it was demonstrated that is indeed of importance if we are to fully take advantage of the advancing frontiers of E-Commerce. NACCIMA is willing to work with other stakeholders, MDAs and the Customs Department to ensure the implementation of Nigeria’s Single Window payment system.
4.5.2The African Continental Free Trade Area (AfCFTA) Agreement.
Nigeria played an important role in the evolution and negotiations of the AfCTA. It was therefore lamentably that we did not sign the agreement at the onset for various reasons including what has been lack of adequate and wide consultations with all STAKEHOLDERS. The Ministry of Trade Industry and investment and Office for Trade Negotiations have initiated a nation wide consultation process which hopefully will clear the way for final decisions. It is in our interest to be part of the continental wide initiative designed to improve intra Africa trade.
4.6NAIRA – YUAN CURRENCY SWAP
NACCIMA has taken due cognisance of the proposed Naira-Yuan Currency Swap deal which is expected to facilitate improved trade with China, further stabilise the forex market, reduce demand for dollars, reduce cost of imports from china and improve Nigeria-China relations amongst other projected benefits. While this may be a major development, it is necessary for Nigeria’s Real Sector Stakeholders to be invited for in-depth discussions on the immediate, short term and long term implications of taking this decision plus the modalities attached. We look forward to receiving the guidelines to be sent by the Central Bank of Nigeria expected next week.
4.7INADEQUATE AND POOR STATE OF INFRASTRUCTURE: ROADS, RAIL, POWER SUPPLY.
Infrastructure especially roads, active rail networks and power are globally acknowledged as crucial to successful industrialization and promote Ease of Doing Business. They are major components in the bid to promote Nigeria’s Zero-Oil Plan but the current state of inadequate socioeconomic infrastructure continues to impede the full attainment and growth of businesses. It is disheartening to note that the huge investments in the power sector over the years are yet to translate into stable power supply. NACCIMA counsels the Federal Government, Power Transmission Companies and Power Distribution Companies (DISCO) to resolve the issues bordering on capacity for effective distribution of electricity generated by transmission companies. Though both Federal and State Governments commendably have intensified efforts to solve the infrastructure issues, many Federal and State roads are in a state of disrepair, rail lines which should enhance local, intraregional and international trade facilitation are inadequate and obsolete hence the increased pressure on the inadequate roads networks in the country.
4.8 ANTI-CORRUPTION CRUSADE
The Anti Corruption crusade by the current administration is laudable, and efforts to retrieve the country’s looted treasury are applauded. However for the current crusade to be sustainable, Government should ensure Good Governance are entrenched in every aspect while law enforcement agencies are empowered to forestall future occurrences of the pillaging of the country’s treasury.
4.9NACCIMA and ADVOCACY ACTIVITIES
My mission is to ensure the Association increases the momentum of its advocacy activities in collaboration with other members of the Organised Private Sector, Government and relevant stakeholders to improve the economy. Our recent advocacy activities are evident in our continued support for the Economic Recovery and Growth Plan (ERGP) 2017-2020; promotion of the Zero-Oil Plan, aimed at promoting production in the non-oil sector especially agriculture. The Association has also been involved in various trade facilitation meetings, workshops, data gathering and analysis, on-the-spot visits and Business forums organized by the Federal Ministry of Industry, Trade and Investment, Nigeria Export Promotion Council (NEPC), Nigeria Investment Promotion Council (NIPC), Standards Organisation of Nigeria (SON) and other Ministries, Departments and Agencies of Government (MDAs). We also have thriving partnerships with various International Development Agencies such as UNIDO, UNDP, Investment and Technology Promotion Office (ITPO) Nigeria, Centre for International Private Enterprise (CIPE) and the German Agency for International Cooperation (GIZ) and EU amongst others. We shall continue to work with these organizations to promote improved performance by the private sector which has been Identified as the engine of growth and development of the economy.
4.10TURNING OUR POPULATION INTO AN ASSETS.
Before concluding this briefing I would like to make a brief remark about our population trend. Recently, the National population Commission revealed that we are now 198 million. We maintain our population as the most populous nation in Africa and now the 7th Largest in the world. It a known fact that if care is not taken a population size can become a burden. At this same time if properly harnessed population size may be an assets. Against the background of our GDP and growth rate, our population GDP / ratio is not encouraging we must do something to increase our GDP. We must work to turn our population into an asset and this will involve increasing productivity. Education is important in this regard especially our youth given the youth bulge in our population.
4.11NEW FRONTIERS:THE CREATIVITY INDUSTRY
The creativity industry is an area which is fast growing. Today it covers music, art and culture, films, theatre etc. It’s is estimated to be worth $2 trillion globally and in Africa estimated to be worth around $57 billions. The growth and development of the Nigerian music scene and Nigerian artistes and film industry is widely acknowledged. Nollywood is reputed to be the third largest movie industry in the world and indeed financial institutions such as the Bank of Industry have facilities to promote this sectors which is providing a lot of employment for our youth and providing opportunities for them to harness their creativity. NACCIMA is ready to work with government and stakeholders to harness the opportunities in the creative industry as it evolves to be a major sector of the global economy and our nation as we have clearly seen.
Distinguished Gentlemen of the Press, all these details about our economy, our current socio-political situation and challenges affirm that there is still a lot of work to be done by us all. Largely, we remain a mono product economy. We have talked so much about a future without oil and diversification. Let us put in place a Programme of Action of a Nigeria not dependent on oil alone. Let’s us revive our industries that is the path to giving employment to our people including our youth. Let us support the non oil sector, by scaling up agricultural productivity and its value chain with focus on our SMEs. Let us faithfully implement the 2016 Mining Road map for the growth and development of the Nigerian Mining Industry, so we can truly becoming a mining nation and move on to the roads to shared mining prosperity. And finally our people are our greatest assets, let turn our population into an Assets by providing good education especially to our youth. Because they are our future. When we leave the stage they are the ones who will run with the vision of a glorious Nigeria of our dream. NACCIMA is ready work with Government, other members of the Organised Private Sector (OPS) and all other stakeholders to make the Nigeria of our dream.
NACCIMA once again expresses its appreciation to the press and other friends who are here today for being part of this State of the Nation Address.Thank you all for your attention and God bless. moo
IYALODE ALABA LAWSON, MFR, FIoD, JP.
National President NACCIMA.
NACCIMA’S STATE OF THE NATION ADDRESS – 28TH MAY, 2018.