The Director, Chief Executive Officer Center for the Promotion of Private Enterprise (CPPE), Muda Yusuf has urged President Bola Ahmed Tinubu’s administration to deploy urgent measures to mitigate the soaring cost of living and the escalating operating and production costs, especially for businesses.
“The Tinubu administration needs to promptly deploy measures to mitigate the current headwinds inflicted by the current reforms. The interventions should be a mix of direct interventions, tax incentives for low-income employees and small businesses, reduction in import duty on some critical intermediate products for key sectors of the economy, and import duty concessions for the transportation, health, power, and energy sectors,” Yusuf said.
During the CPPE Half Year Economic Review on Monday, he attributed the negative performance of five economic sectors in the first six months of 2023 to the domestic reforms of former President Muhammadu Buhari Administration.
The key sectors that contracted included agriculture, mainly the livestock sub-sector, oil refining, textiles, rail transportation, and insurance while manufacturing, food and beverage; chemical and pharmaceutical; vehicle assembly; road transport; Information and Communications Technology (ICT); financial institutions; and real estate grew positively in the period under review.
Yusuf said the country’s economy was impacted by diverse global and domestic variables in the first half of the year. But on the domestic front, the major headwinds to growth were the naira redesign policy of the Central Bank of Nigeria (CBN).
Yusuf who is also the former Director General of the Lagos Chamber of Commerce and Industry (LCCI) said, “The naira redesign policy of the CBN, persistent dysfunctional foreign exchange policy, the political transition processes, weak recovery of oil production and the intractable challenge of insecurity in parts of the country were the major domestic headwind to growth in the first half of 2023.
“Key sectors that contracted included agriculture which contracted by 0.9 per cent, the first time in about a decade. The livestock subsector was the worst hit as it contracted by a staggering 30.6 per cent, Other sectors that contracted include oil refining which contracted by 35.8 per cent; textiles, 3.7 per cent; rail transportation 49 per cent and Insurance, 8 per cent.
“Sectors that posted positive growth numbers were manufacturing, which grew by a marginal 1.6 per cent; food and beverage, 3.9 per cent; chemical and pharmaceutical, 6.2 per cent, vehicle assembly, 5.4 per cent; road transport, 8 per cent; ICT, 11 per cent; financial institutions, 25 per cent; and real estate, 1.7 per cent.”
He said that the Tinubu administration is charting a new and positive course for the economy which portends bright prospects for recovery and growth.
He said, “Inflationary pressures may intensify in the near term, the exchange rate may come under pressure in the short term as forex demand backlog exerts pressure on the official forex window. But the pressure is expected to ease before the end of the year.
“Also, the CBN should put in place a sustainable intervention framework to moderate the volatility in the forex market.
“This would pave the way for an equilibrium exchange rate which would be more tolerable and sustainable.”
