Lagos — The Lagos Chamber of Commerce and Industry (LCCI) yesterday said the nation's economy still remained vulnerable to external shocks due to lingering fluctuations in global oil prices.
The President of LCCI, Mrs. Toki Mabogunje, who disclosed this at an interactive session with the media in Lagos, said the volatility in the international oil prices and the slow fiscal growth explained why Moody and Fitch, two global credit agencies, downgraded the nation's economic outlook from stable to negative recently.
While appraising the state of the nation's economy further, the industrialist noted that despite the sustained recovery of the economy, the growth remained fragile as it is not broad-based across sectors.
She said: "In the third quarter of 2019, 10 sectors expanded, six contracted and three recorded moderation in growth. We believe the economy is not growing fast enough to create opportunities for the citizens."
The LCCI President called on government to as a matter of urgency intensify diversification efforts and embrace structural reforms to attract private investment in stimulating economic growth.
Commenting on business environment, she attributed the progress in the 'ease of doing business assessment' to efforts of the Presidential Enabling Business Environment Council (PEBEC) and some improvements in government processes.
Mabogunje, however, noted that many businesses were struggling to survive on the back of multiplicity of levies, infrastructure challenge, sluggish growth, excessive regulation, high cost of credit and government policies.
According to her, considering the role of business in the economy, government should vigorously implement friendly policies to support expansion of business.
The Organised Private Security (OPS) group noted further a sustained uptick in headline inflation since September 2019; adding that the rising inflation, particularly the food prices, has a profound welfare effect on citizens as it weakens purchasing power and escalates poverty conditions as food is basic to human existence.
On the Finance Act, the LCCI boss confirmed that the act will help support the funding and implementation of the 2020 budget but expressed concern over the increase in VAT rate from 5percent to 7.5percent.
She pointed out that the new tax regime would not support manufacturers and other stakeholders in the real economy while it will also affect cost of production and profit margin, with consumers at the receiving end.
She advised the government to utilise the additional income that will be generated from the increase in VAT to develop quality infrastructure and that it should not be used only on payment of workers' salaries.