The Lagos Chamber of Commerce and Industry (LCCI) has advised the Central Bank of Nigeria (CBN) to implement more favourable supply-side policies in order to boost productive sectors.
The LCCI’s president, Michael Olawale-Cole, stated this on Tuesday in Lagos at the chamber’s third quarterly media briefing on the state of the Nigerian economy in 2022.
To combat rising inflation, the CBN increased its benchmark interest rate to 13% in May.
However, the Lagos chamber of commerce stated that raising interest rates alone would not be sufficient to reduce inflationary pressures.
It emphasised the importance of the apex bank focusing on increasing supply and cushioning rising production costs caused by high energy and raw material costs.
“While the Central Bank of Nigeria (CBN) embarks on monetary tightening to tame inflation, it should ensure that targeted concessionary credit to the private sector is sustained for MSMEs,” Olawale-Cole said.
“The CBN must begin a gradual transition to a unified exchange rate system and allow for a market-reflective exchange rate.”
The CBN must also implement more accommodating supply-side policies in order to boost productive sectors, boost investor confidence, and attract foreign investment inflows into the economy.”
“We reiterate our position on rising inflation: rate hikes alone will not address rising inflation.” The government should invest more in increasing supply and lowering production costs.
“There is a need to address structural bottlenecks and regulatory constraints that contribute to the high cost of doing business.”
“A supportive and conducive investment environment is critical in facilitating private sector participation in the economic recovery and growth process.”
According to the chamber, the burden of fuel costs on businesses will continue as long as Nigeria imports refined fuel.
It advocated for the elimination of gasoline subsidies and the reduction of oil theft in order to create fiscal space for subsidised production of goods and services, as well as infrastructure, health, and education financing.
It went on to say that increasing local refining will help to alleviate the worsening fuel supply crisis and its knock-on effects on production and prices.
In response to the frequent failures of the national grid, LCCI urged the government to implement cost-reflective tariffs in the power sector.
According to the chamber, this will attract the necessary investment to increase power supply and possibly end the problem.
On the Academic Staff Union of Universities (ASUU) strike, Olawale-Cole urged the government and the union to reach an amicable solution to the education sector’s problems.
“The Lagos Chamber and the business community are concerned, as this negative development has the potential to worsen our security challenges, increase drug abuse among our youth, and increase social vices,” Olawale-Cole said.
“We cannot expect half-baked graduates to build a prosperous economy.”
“Nigeria must begin to focus more on improving its latest Human Development Index (HDI), which ranked 161st out of 189 countries.”
