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.