The Lagos Chamber of Commerce and Industry has expressed serious concerns over the country’s inflation rate which stands at 12.9 per cent.
At its second quarterly media briefing on the economy in Lagos recently, the President, LCCI, Mr. Goodie Ibru, said, “The inflationary situation is still a cause for concern. The rate was 12.6% in January but rose to 12.9% in April.
Inflationary situation affect the economy in two major ways: First, it weakens purchasing power and reduces effective demand for goods and services. Secondly, it increase production cost across all sectors and erodes profit margins.”
“The inflation challenges could be more effectively managed though the channels of monetary policy and more importantly through output growth,” he added.
Also, Ibru said the country’s journey to economic prosperity may be a mirage after all, except the Federal Government confront headlong the incidences of insecurity, erratic power situation and corruption.
On power, he said, “The power situation is still a major problem for business across all sectors. Expectedly, energy intensive sectors are worst hit. Energy cost remains a major threat to business sustainability. We are of course aware of the power sector reform being currently implemented by government. We can only pray that the outcome begins to manifest sooner than later.”
He, however expressed the opposition of the Chamber to fixed charge component of the new electricity tariff which ranges from N500 to N100,000, which would be paid by consumers, whether there is power or not.
“It is not equitable and should be reviewed,” he said..
Highlighting how the security challenge is taking its toll on the economy, he said, “The economy of many of the affected states are on the verge of collapse with implication for investment losses and job losses; hospitality industry in the affected states have been paralyzed; many investors, especially SMEs, are relocating to other states with the attendant challenges; inventory and stocks of many companies have been trapped in some locations in the affected states and many firms have lost up to 30 per cent of their sales as they can no longer access most part of the northern market”
“Manufacturing firms sourcing raw materials from the north are now facing serious challenges; projects funded by banks in the affected states are now at risk, serious perception problem has been created for the country; many bank branches have been closed, while the working hours for others have been drastically reduced; sales representatives of many companies have fled the affected states; many projects under construction in the north have been abandoned and security budgets have been scaled up by many firms,:” he added.
On the vexed issue of Central Bank of Nigeria autonomy, the Chamber, said he has watched with keen interest the debate on the autonomy of the Central Bank of Nigeria.
“We need to stress that the global best practice is for the Central Bank to be autonomous, financially and operationally, in order to be able to discharge its functions effectively and promptly.
We align ourselves with the school of thought that is in favour of the preservation on the autonomy of the CBN. We recall that it was this autonomous status that enabled the CBN to respond quickly to the challenges of the recent crisis in the Nigerian banking system. It is on record that no bank failed in the process because of the speed and effectiveness of its intervention,” he said.
He added, “However, we concede that the autonomy cannot be absolute. In any events, no institution should have absolute powers. Therefore, what is necessary is to strengthen the existing structures of controls within the framework of the CBN Act 2007.
We know for instance that the CBN Governor is an appointee of the President; therefore the President has some oversight responsibilities over the CBN Governor. The board of directors also has powers of checks and balances even though the governor is the chairman of the Board.”