The Lagos Chamber of Commerce and Industry (LCCI) has raised concerns over the unfair advantage enjoyed by certain importers of petroleum products, including the Nigerian National Petroleum Corporation Limited (NNPCL), and called for equal access to the foreign exchange market.
Dr Michael Olawale-Cole, the President of LCCI, addressed these issues during the LCCI 2023 Second Quarter Economic Review held in Lagos.
Dr Olawale-Cole emphasized the need for competition and transparency in the pricing mechanism of petroleum products in the downstream sector. He expressed worries about speculation surrounding the pricing of Premium Motor Spirit (PMS) and urged the regulator to enhance transparency in pricing.
This, he stated, would prevent a return to fuel subsidies and promote healthy competition in the market.
He further stressed the importance of preventing NNPCL, as the historical sole supplier and the supplier of last resort, from using its dominant position to hinder new importers from entering the market. Dr Olawale-Cole called for pricing that accurately reflects international import prices and the current foreign exchange rate.
The LCCI president also commended the government for its recent policy reforms, namely the removal of fuel subsidies and the harmonization of the exchange rate.
He expressed expectations for the sustainability of these policies and their positive impact on investment, fiscal stability, and external sectors. Additionally, he advocated for further policy reforms to improve the business environment, boost investor confidence, stimulate economic growth, and address poverty and unemployment.
Regarding the country’s manufacturing sector, Dr Olawale-Cole projected weak growth in the short term due to reduced consumer spending. However, he remained optimistic about the sector’s medium-term outlook, anticipating increased investment in oil refining and other opportunities following the subsidy removal.
Discussing the global economy, he predicted a considerable slowdown in the second quarter of 2023 due to continued monetary policy tightening aimed at curbing inflation. He noted that inflation was expected to gradually decline as demand weakened and commodity prices stabilized.
Dr Olawale-Cole urged the Federal Government to prioritize addressing the security challenges that have adversely affected the business community and deterred investment inflows.
He emphasized the need for targeted interventions in critical sectors such as agriculture, manufacturing, and export infrastructure. Furthermore, he called for improvements in electricity supply, resolution of distribution companies’ profitability issues, and measures to address poor power generation.
The LCCI president applauded recent efforts by the Federal Government to enhance infrastructure and urged for more developments that would benefit the organized private sector. He specifically highlighted the need to address the poor state of roads and inadequate connectivity between farms, factories, and markets, which have led to increased logistics costs.
To mitigate disruptions to the supply chains of raw materials, Dr Olawale-Cole recommended subsidizing inputs for manufacturers and increasing the allocation of foreign exchange for the importation of critical inputs.
In conclusion, he urged the Central Bank of Nigeria (CBN) to sustain targeted concessionary credit to Micro, Small, and Medium Enterprises (MSMEs) while managing inflation and exchange rates. He stressed the importance of addressing the issue of unemployment alongside other economic concerns.