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The umbrella body for employers called for immediate application of the right economic and monetary policies and, particularly, development of local productive capacities through massive investments in infrastructure to rescue the economy from recession.
The employers spoke on the heels of the National Bureau of Statistics (NBS) figures which, last week, confirmed that the nation’s economy has gone into recession and that no fewer than four million jobs had been lost in the last three quarters.
At its 59th Annual General Meeting in Lagos, President of NECA, Larry Ettah, said Nigeria urgently needed to fix its erratic power supply to beat down the cost of local production of goods and services and reduce the over $2 billion import bills that was putting pressure on the foreign exchange.
The current 4,000 megawatts of electricity, Ettah said, was far below what was required to bail the economy out of recession, contending that Nigeria urgently needed between 15,000 and 20,000 megawatts of electricity to kick-start local production.
He said this was required to re-energise many businesses which were faced with rising production and operational costs leading to retrenchment, compounding the rising unemployment rate of over 13 percent.
The NECA boss implored the Federal Government to look beyond the seeming good performance of some “big” businesses in gauging the state of the economy, pleading with government to spend quality money to revamp the economy. “We need to invest in boosting our infrastructural stock, we need to reduce our domestic debt, there is need to spend to position our economy to be export oriented and less dependent on import”, he stated.
Ettah, who is also the Group Managing Director/CEO of UAC of Nigeria PLC, lamented that members had been going through untold challenges to remain afloat , confessing that he was short of words to capture the extremes of hardship and trauma businesses had had to contend with to remain standing in the last one year.
“The mortality rate of micro, small and medium scale businesses is alarming and, if we are going to get a firm grip of the panacea to the high youth unemployment in Nigeria, then we must pay heed to the imperatives for sustainable enterprise”, Etta stated.
Commenting on the economy in 2015 and the outlook for 2016, the NECA President said: “With a growth rate of 2.79 percent in 2015, the year recorded a dramatic slowdown from the 5-6% growth the Nigerian economy has become accustomed to recording. The triple jeopardy of a stand-still in government as a result of the 2015 election; a new government grappling to settle down and the drastic fall in government revenue as a result of fall in the crude oil prices, dealt a massive blow to the economy”.
The NECA boss stated that 2016 had “so far not been any better with multiple economic challenges: depleted foreign reserves from USD 29.9 billion in November 2015 to USD25.71billion on August 19th, 2016; Naira depreciation by 31.7 percent from N197/USD in March 2015 to N330/USD in August 2016; high capital outflow, particularly portfolio investment; upward trend of inflation from 8.5 percent in March 2015 to 15.6 percent in June 2016 and increased interest rates”. Ettah explained that the economy contracted in the first quarter of 2016 and also in the second quarter as well, implying that the economy is now in recession.
According to him, the economic challenges had impacted on the real sector, resulting in the decline in capacity utilisation, closure of businesses, redundancies and retrenchments, astronomical cost of forex plus smuggling, import restrictions, trade credit evaporation ( S&P, Moody and Fitch cuts Nigeria’s ratings / outlook to negative, rating remains at B+), shrinking supplier credit and Bills For Collection, reluctance by export credit agencies to grant more credit among others.
“While there is no doubt that the past administration was profligate in its management of our commonwealth, it is quite evident that the lack of clarity about the economic agenda of the current government and some wrong policy choices have contributed to the current economic stagnation and recession”, he said.
While lauding the 2016 federal budget, the NECA President said: “We, therefore, welcome the thrust of the 2016 budget which recognises that meaningful GDP growth requires quality spending to reflate the economy. We need to invest in boosting our infrastructural stock; we need to reduce our domestic debt; and there is the need to spend to position our economy to be export oriented and less dependent on import.
We hope this budget will be faithfully implemented as this is key to the revival of the economy from the current recession.”
Ettah highlighted key national issues facing the economy to include the perennial delay in the passage of the annual budget/appropriation process, deregulation of the foreign exchange market, deregulation of the downstream sector, expansionary fiscal policy/tax base, commitment to infrastructural development, curbing the menace of insecurity, decadent state of our industrial relations system and unbridled regulatory disposition.
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