The Lagos Chamber of Commerce and Industry,LCCI has deplored the low performance of the country’s power sector since its independence in 1960.
Its Director-General,Dr. Chinyere Almona,who disclosed this in a statement in commemoration of Nigeria’s independence celebration lamented that there has been progressive decline in the sector.
Power supply,she said, has consistently lagged behind the pace of economic activities and population growth,adding that the development impacted negatively on investment over the past few years with increased expenditure on diesel and petrol by enterprises.
“This also comes with the consequences of declining productivity and competitiveness. With the frequent collapses recorded by the national grid, we can no longer rely on a centralized power source. The way to go is renewable energy and decentralizing the national grid”,she added.
She said the oil sector has consistently recorded negative growth for the ninth consecutive quarter, contracting again by -11.8% y/y in Q2 2022 following a higher contraction of -26% y/y in first quarter.
She said: “If oil revenue makes up more than 80 percent of government revenue, we expect the government to tackle the menace of oil theft and pipeline vandalism with sterner approach”
The non-oil sector grew by 4.8% y/y in Q2 ’22 against 6.1% y/y in Q1 ’22. Key drivers within the non-oil economy include transportation and storage (51.7% y/y), finance and insurance (18.5% y/y), telecommunications (7.7% y/y), trade (4.5% y/y), real estate (4.4% y/y), construction (4.0% y/y), manufacturing (3% y/y), and agriculture (1.2% y/y).
She emphasized the need for the government to continue with the non-oil campaigns and interventions to sustain the targeted financing towards boosting non-oil export for enhanced foreign exchange earnings.
She said the growth of 1.2% recorded for agriculture and the 3% for manufacturing are comparatively low when compared with other sectors that grew at above 5%.
She emphasized the need for the federal government to sustain its targeted interventions in selected critical sectors like agriculture, manufacturing, export infrastructure, tackling insecurity, and free up more money from subsidy payments.
She added that the government should tackle oil theft to earn more foreign exchange, borrow from cheaper sources to reduce the burden of debt servicing, and take a decisive step towards removing fuel subsidies.
She lamented insecurity situation in the country which has impacted investment inflow and worsened the country’s perception and image by the global investing community.
Access to markets in the troubled parts of the country,she said, has been reduced for many enterprises, with negative consequences for investors’ confidence,adding that agricultural production bases have been negatively impacted, leading to food scarcity and rising food inflation.
The challenges of production in the economy have over the last few decades grown progressively largely because of the quality of infrastructure,she said,adding that the development explains high risk of industrial investment in Nigeria.
She also said the various policy interventions have not had the desired impact on the sector.
She maintained that unless there is effective and sustained protection and support for the sector, and a dramatic improvement in infrastructure, the outlook for the sector will remain gloomy, particularly for the small-scale industries.
According to her,most SMEs are constrained due to the rising cost of production.It is impossible to have a vibrant manufacturing sector in the face of cheap imports into the country and high production and operating cost in the domestic economy.
She added that manufacturers have to worry about high energy costs; they have to worry about high-interest rates – 25% and above.
“They have to worry about a multitude of regulatory agencies making different demands on them; they have to worry about massive smuggling and under-invoicing of imports, they worry about trade facilitation issues at the seaports and many more. For most manufacturing SMEs, it is a nightmare. Yet production is critical to enduring economic and social stability. The way forward is to address the fundamental constraints to manufacturing competitiveness in the Nigerian economy.
“In reality, job losses in the sector have increased over the decades as productivity declined on the back of the difficult operating environment. Our nation is at a cross-road and in dire need of big decisions to drive the drastic transformation the economy requires to return to economic prosperity. Our nation, Nigeria, has come a long way and is too big to fail”