The Lagos Chamber of Commerce and Industry (LCCI) has tipped sectors like manufacturing, agriculture, transport, telecommunications and trade as major drivers of economic growth, anticipating that they would deliver a Gross Domestic Product (GDP) growth rate above three per cent in 2023, higher than the less than average two per cent recorded in 2022.
The LCCI also projected that the Central Bank of Nigeria (CBN) may hike the Monetary Policy Rate (MPR) from 16.5 per cent to 17 per cent when its Monetary Policy Committee (MPC) meets this month, as part of efforts to curb inflationary pressure and prevent capital flight.
The chamber made these projections in a statement titled: “The LCCI New Year Statement on the Economy 2023,” signed by its Director General, Dr. Chinyere Almona; in which it urged the federal government to sustain its targeted interventions in selected critical sectors like agriculture, manufacturing, export infrastructure, tackling insecurity, and freeing more money from subsidy payments.
The LCCI stated: “In 2023, we expect to see growth in sectors like manufacturing, agriculture, transport, telecommunications, and trade. With Nigeria having the third largest subscriber base in Africa (after South Africa and Egypt), the telecoms sub-sector is expected to record growth above the 10.1 per cent achieved in Q3 2022 driven by the growing deployment of Payment Service Banks (PSB) by the telcos, increase in subscribers using more telcos’ services, and the expected innovation coming with the launch of the 5G technology.
“The government needs to be more sensitive to the regulation of the ICT sector to promote growth and support private sector operations.
“In 2023, government’s intervention through targeted financing support to the agro sector can boost agricultural production, create jobs, and lower the spiking food inflation that has been responsible mainly for the rising headline inflation all through 2022.”
The LCCI also projected that the manufacturing sector, which suffered headwinds such as scarcity of forex for import of inputs, weakened consumer demand due to weak purchasing power, high energy cost, logistical challenges, policy uncertainties, and harsh regulatory environment in 2022, “may likely record a growth in the sector away from the negative growth of -1.9 per cent it recorded as at Q3 of 2022.”
It added: “With lowering imports due to forex scarcity, local manufacturing could rev up in growth to meet the growing unmet local demand for hitherto imported finished products.”
It, however, stated that this could only happen if the government would address issues like rising inflation, scarcity of FOREX, high energy cost, high interest rates, and logistics challenge due to insecurity in most parts of the country.
The chamber also projected that in the case of subsidy removal by the new administration, “we should expect some shocks to the economy in the short term with possibility of adjusted pricing and demand in response to market forces in the long run.”
It added that: “the Dangote Refinery coming into operations by mid-year will boost production levels and support growth in the manufacturing sector. However, the contribution of manufacturing to GDP may fall from the 8.2 per cent recorded during the third quarter of 2022 except the government takes urgent and targeted financing support to critical productive infrastructure in the country.”
The LCCI observed that in 2022, the CBN in response to the spiraling inflation rate, deployed a tightening monetary policy to stabilise prices.
“The rates rose from 11.5 per cent in January and peaked at 16.5 per cent as at November 2022. This is expected to rise further during the MPC meeting in January to 17 per cent to curb the persistent inflation and prevent capital flight.
“The Chamber had earlier recommended that rate hikes alone would not curb inflation except the real factors like food supply disruptions, high energy cost, scarcity of forex and the security challenges around agricultural production locations that have fueled low production and high logistics cost.
“In 2023, we need fiscal interventions to support strategic sectors like manufacturing, agriculture, transport logistics, and more allocation of forex to productive sectors.”