Industrialists says We expect Better Business Environment through Right Policies

LCCI President, Chief (Mrs) Nike Akande

INDUSTRIALISTS in the country have taken a look back at the out gone 2015 and expressed hope that 2016 will usher in a better business environment for them if the right policies are put in place by the federal government to stimulate the economy and attract domestic and foreign investments.

They made their expectations for the new year known through their various trade associations like the Lagos Chamber of Commerce and Industry, LCCI; Nigerian-British Chamber of Commerce (NBCC),  Ikorodu Chamber of Commerce and Industry (ICCI), etc.

Muda Yusuf, Director General, LCCI , noted that this year, the chamber expects the businesses of their members to surge and the country’s GDP growth to rebound, though, slowly to about 3.5 if the right mix of fiscal and monetary policies are put in place.

According to him, while the recovery is expected to be driven by increase in government expenditure, the growth in oil sector may be constrained still by low price and investment drive.

“Also the exchange rate volatility is expected to persist fuelling high inflation of about 10-11 percent. However, correction towards Real Effective Exchange Rate (REER) in the form of exchange rate adjustment is likely in Q1, 2016. This will reduce the pressure on external reserves.

Sectoral Outlook 2016

*The targeted N300 billion by the Nigerian banks to boost lending to Small and Medium Scale Enterprises (SMEs) and the agriculture sector in 2016 will boost SMEs development and employment and thus increase non-oil export.

*Subsidy arrears payment and end of subsidy regime likely to result in improved market efficiency and profitability as downstream sector players explore pricing dynamics to boost investment. The expected deregulation in the downstream sub-sector will be a game changer.

*With the declining trend of global oil price and its attendant impact on government revenue and foreign reserves, general business outlook will remain tense. Implications on cost of and access to credit will be undesirable. Businesses, especially those with high forex exposure, will continue to face challenges of meeting foreign obligations to suppliers and partners. This will also impact contractual trust and integrity.

*Risk of default in financial obligations in both public and private sectors will be high as macro-economic conditions and cash flow remains tight. Also, in a review of 2015 carried out by the NBCC, the Chamber’s President, Prince Dapo Adelegan, stated that the Federal Government has much to do to move the economy forward in the New Year.

He said that the chamber has requested the government to develop policies that will enhance accessibility of Foreign exchange for critical goods. Adelegan said the recent restriction of 41 items from accessing foreign currency by Central Bank of Nigeria has resulted to reduction in trade relations, lost of jobs and rise in exchange rate in the country.

The Chamber has also charged the government to drive import substituting strategies by supporting small businesses with adequate funding to achieve price stability and increase aggregate output in the country. “With a N6 trillion budgets for 2016, borrowing plans may require some Foreign exchange depreciation to attract foreign capital to fund the federal government’s spending plans.

Nigeria has recorded only about $1.35 billion as Foreign Direct Investment, nearly 40 percent less than the figure recorded in 2014, and a worse situation has been recorded for investments in financial assets, where huge sell- off had been seen and foreign investors’ confidence have dropped as a result of the foreign exchange policies,” said Adelegan

Tope Oluwaleye, Director General, ICCI, also noted: “We hope that our members will thrive in their businesses in 2016 as government addresses these issues which had hitherto been a constraint to the development of commerce and industry in Nigeria.

“Last year witnessed the advent of a new government which promised change in the national life – change from what we had been used to in terms of governance, living conditions, provision of infrastructure, and better life generally. “To a large extent, this expected change is still evolving. Many people had wished that Government would move faster, but I believe that it  is good to lay the  necessary foundation to the change, lest we find ourselves back at square one.

Economically things are  yet to improve:  the Naira is still in a downward spiral and the cost of oil, globally, is southbound. These have impacted seriously on Nigeria where some state governments even found it difficult to pay salaries. Now there  are hints of  workers’  layoff and all that. So 2015  was generally a bag of mixed blessings: economic downspin and hope as espoused by the advent of a new government.

“Normally one would expect 2016 to be markedly better in all these areas. The budget appropriation for 2016 had been variously described as capable of lifting the country out of the woods. One hopes and  prays this would be so, but the continued slide in the price of oil which is the premise of the budget gives cause for concern. As a nation we need to find  alternative source of funding fast. In this regard one hopes that the Solid Minerals sector would be adequately explored.

In 2016, we expect that  a right economic direction would be espoused by government so that industries can thrive. For most businesses the challenge is not so much access to funds as the  right  enabling environment to function. Therefore one would expect the emplacement of infrastructure like regular provision of power, good road network and so on. Thank God the present administration is tackling the issue of corruption so we expect the mitigation of this vice in the country’s business space in the New Year,|” he stated.

•Difficult access to forex to persist
•Likely exchange rate adjustment in Q1

By Franklin Alli & Naomi Uzor