The overall economy and business conditions for manufacturers and Micro, Small and Medium Enterprises (MSMEs) in the first half year remained challenging due to rising interest rates, inflationary pressure, foreign exchange scarcity and the liberalisation of the downstream sector of the oil and gas industry, the Lagos Chamber of Commerce and Industry (LCCI) has revealed.

Making this known at a mid-year economic review and outlook in partnership with Cordros Capital, LCCI President, Dr Michael Olawale-Cole, said despite the harsh and difficult operating environment in the first half of the year, opportunities for business growth and sustainability in Nigeria and the global market still abound.

He indicated that the half-yearly event reviewed vital policy developments and macroeconomic performance, showing outlook and expectations for the next half of the year as well as risks and opportunities.

Pointing out that the cost of living has significantly increased, he said the first quarter GDP slowed to 2.31 per cent, primarily driven by growth in the non-oil sector while the oil sector remained in recession. The country also witnessed a significant decline in foreign direct investments (FDIs), coupled with a high level of the public debt stock and concerns for debt sustainability, high unemployment, and poverty level, he added.

The International Monetary Fund (IMF) had in its July 2023 World Economic Outlook (WEO) update, lowered its growth projection for Nigeria in 2023 to 3.2 per cent from 3.3 per cent in 2022, reflecting worsening security issues in the oil sector, policy risks, and skyrocketing inflation.

Olawale-Cole added that in a bid to address a number of the long-standing macroeconomic imbalances and change the economy’s trajectory, the present administration introduced several reform policies, including fuel subsidy removal, foreign exchange unification as well as palliative measures to ease the effect on businesses, low-income people and the most vulnerable.

He, however, urged the government to consider the urgent need for an all-encompassing economic and fiscal plan, full/ partial divestment of state-owned real estate, improved transport sector and energy assets as post-election priorities; focus more on asset-based and equity offerings to improve revenue as well as an urgent institutional reorganisation for the CBN and NNPC to improve transparency and accountability.

He added that NNPCL’s operating environment is opaque, which is anti-competition, adding that the oil sector will attract the desired investment if the government liberalises fuel import licenses and other vital activities in the midstream and downstream.

He also urged the government to unlock revenue from assets by complementing tax with rent, fees, dividends and capital gains; borrow better to reduce debt costs by issuing a more asset-linked debt than IOUs and non-interest-bearing debt opportunities should be explored as emerging markets tilt towards project equity financing.

Finally, he said, BDCs should not be referred to as parallel or unofficial markets, because they are officially licensed to trade.