#EndSARS Crisis Could Make Nigeria’s Recession Persist, Says LCCI

The Lagos Chamber of Commerce and Industry (LCCI), on Saturday said Africa’s largest economy is unlikely to come out of recession this year.

Director-General, LCCI, Dr. Muda Yusuf, said Nigeria’s economic “recession could linger all through the fourth quarter of this year.”

He noted that the recent devastation caused by the #End SARS crisis could make the recession persist fur­ther, stating that the crisis has dampened enthusiasm among investors.

According to the National Bureau of Statistics (NBS), Nigeria’s economy recorded contraction for a second quarter running, shrinking by -2.48% in third quarter ended Sep­tember, 2020.

In second quarter, the econo­my contracted sharply by -6.1% compared to 1.87% recorded in first quarter of 2020.

The -2.48% contraction recorded in the review period, represents an improvement of 2.48% com­pared to the -6.1% recorded in second quarter of 2020.

The NBS noted that the per­formance of the economy in Q3 2020 reflected the effects of the restrictions to movement and economic activity imple­mented across the country in early Q2 in response to the COVID-19 pandemic.

Reacting to the NBS’s data, Yusuf noted that the news of the recession did not come as a surprise.

He stated that the econom­ic contraction was 3.62 per cent in the third quarter as against 6.1 per cent in second quarter.

He, however, noted that with these numbers, we could possibly say that the worst was over as the contraction in the third quarter was much less than what was experi­enced in the second quarter.

“Regrettably, the #EnSARS crisis may perpetuate the reces­sion into the fourth quarter. The protests and the destruction that followed was a major set­back for our economic recovery prospects,” he stated.

The LCCI boss added: “From an economic perspec­tive, 2020 has been a very bad year, the worst in recent his­tory. We are faced with the double jeopardy of a stum­bling economy and spiraling inflation.

“The October inflation numbers of 14.23 per cent was the highest in 10 months. In economic parlance, this con­dition is characterised as stag­flation. The effects of these developments are evident in business and in households.”

Yusuf observed that sales were slowing, profit margins were being eroded, produc­tion costs escalating, unem­ployment rising, poverty sit­uation worsening, purchasing power weakening, and a gen­eral social discontent.

“Regrettably, and as if these were not bad enough, the business community con­tinues to grapple with unfa­vourable policy, institutional and regulatory challenges im­peding investment,” he said.

To facilitate quick recovery, the LCCI DG said the country should restore normalcy to the foreign exchange market by broadening the scope of market expression in the al­location mechanism.

He explained that the ports system, especially the key in­stitutions in the internation­al trade processes, should be more investment-friendly, as trade was critical to recovery.

Yusuf said: “We should show greater commitment to the fixing of the structural is­sues to reduce production and operating costs for investors in the economy.

“Following the #EndSARS experience, the state of inter­nal security is beginning to impact negatively on inves­tors’ confidence. Security presence is becoming less visible, especially in the ma­jor cities.

“The psychological effects could adversely affect invest­ment and economic recovery. We appreciate the setback suffered by the police as a result of the recent protests and we empathise with them. But, we need to give security confidence to citizens and in­vestors.”

He stated that incidents of kidnapping, banditry, herd­ers-farmers clashes had not abated, stressing that these also had grave implications for investments

The LCCI chief, however, expressed hopes that the econ­omy would resume to the path of growth in the first or sec­ond quarter of 2021, barring any new disruptions to the economy.