Gabriel Idahosa, the president of the Lagos Chamber of Commerce and Industry (LCCI), said in a chat with the Punch that NBS report was a “technical improvement” and not reflective of economic realities.

Idahosa took exception to the NBS’ unemployment rate methodology, saying,

“The technical improvement in the employment rate is more of a way that employment is now calculated; but the reality is that the economy is not looking like an economy where unemployment is significantly reducing.”

Nodding in agreement with Idahosa, Dr Muda Yusuf, the director of the Centre for Promotion of Private Enterprise, rejected the unemployment data as “not a true reflection of the reality of the job situation.”

Yusuf said he found it difficult to agree with the NBS data and called for a new methodology that reflects the country’s situation.

“I think we need a methodology that will reflect the reality of this environment much better than what we currently have. We need to review the methodology or have a parallel methodology that will reflect more on the reality that is on the ground.

“Employment is about making a living. You have an engagement that cannot guarantee a source of livelihood, no matter how minimal. I’m not sure we can regard that as employment. If you look at the challenges facing the economy and the complaints by those who are supposed to be employers of labour, then you will agree with me that not many of them are actually engaging people,” he said.

The economist argued that many forms of self-employment hardly count as meaningful employment as ongoing reforms have worsened their performance as he cited the real sector’s third-quarter Gross Domestic Product figures.

“Many micro and small enterprises are struggling; that is if they are still in business,” Yusuf retorted. “And if you also look at the GDP data – well the GDP data ideally should reflect the health of the economy – the big sectors that normally generate jobs are slowing down.

“Agriculture just recorded 1.14 per cent GDP growth, manufacturing recorded less than 1 per cent (a 0.92 per cent GDP growth), trade where we have a lot of informal sector players recorded 0.65 per cent GDP growth. That’s less than 1 per cent.

“Real estate, which is another major source of employment, recorded 0.68 per cent. So generally, we are looking at key sectors that create jobs that are slowing down compared to last quarter. So, where are the jobs coming from?”

However, Yusuf urged the Federal Government and the private sector to consider how to create more jobs and a sustaining environment for job retention.

He remarked, “I think there’s a lot that we need to do to create the environment for more jobs to be created and retained by the entrepreneurs.

“For some of these workers, they can’t even afford transportation costs to go to their places of work. Many SMEs are struggling with the exchange rate issue, cost of transportation issues, energy issues, regulatory issues and challenges with the clearing of cargo. All of these things are depleting the amount of jobs.”

While speaking on the country’s unemployment rate, Dr Femi Egbesola, the national president of the Association of Small Business Owners of Nigeria, said the reported reduction in Nigeria’s unemployment rate, despite harsh economic conditions, can result from several factors.

He said, “These factors include changes in growth in the informal sector. Economic pressures have pushed more people into informal or subsistence work, such as trading, farming, or gig-based roles, which are now classified as metrics for employment.

“Another reason is shifts in economic dynamics, or deliberate efforts to reclassify employment statistics. For instance, the threshold for what constitutes employment (e.g., working just one hour per week) could lower unemployment figures without reflecting significant improvements in job quality or income levels.

“Recent government Initiatives could be another factor. Government funding interventions, employment programs, or skill acquisition initiatives may create temporary or part-time jobs that count towards employment figures. However, while unemployment rates are a critical economic indicator, they don’t always capture the nuances of economic well-being, especially in a country like Nigeria with a large informal sector. A more comprehensive picture would include metrics like income distribution, poverty levels, and labour force participation rates.”

Meanwhile, he asserted that the rise in Nigeria’s GDP despite widespread economic hardship could be attributed to a variety of structural, methodological, and sector-specific factors.

He added,

“GDP measures the total economic output and does not necessarily reflect the distribution of wealth or the living standards of citizens. One factor for the recent GDP increase is the growth in specific sectors. Certain sectors may contribute disproportionately to GDP growth, even if their benefits don’t trickle down to the general population: Examples are Oil and Gas, Agriculture, Trade, and Exports, which may inflate GDP figures.

“Another factor is inflation’s role in nominal GDP.  Rising prices (inflation) lead to an increase in nominal GDP, as the value of goods and services appears higher. Increased spending on essentials like food, housing, and transportation contributes to GDP growth, even if many people are living in poverty. Also, government spending on infrastructure, social programs, or debt servicing can artificially inflate GDP without improving economic conditions for most citizens.”

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Commenting on the inflation figure on Tuesday, he said, “It is troubling that we are witnessing a resurgence of high inflationary pressures after some few months of respite despite policy measures to tame inflation, especially on the monetary side. Purchasing power had continued to plunge over the past few months. The situation had been further exacerbated by the surging petrol price.”

Nigeria’s headline inflation rose to 32.70 per cent in September which demonstrated a reverse of the slowing inflation rate in the previous two months of July and August.

The latest Consumer Price Index report from the National Bureau of Statistics shows that inflation figure is a marginal increase of 0.55 per cent from the August 2024 figure of 32.15 per cent, reflecting ongoing price pressures across the country.

Dr. Yusuf attributed the increase in inflation to factors such as the rising cost of petrol, depreciation of the naira, and surging transportation and logistics costs.

He noted, “the reality is that the dynamics driving inflation are yet to be effectively subdued. These factors include the depreciating exchange rate, surging fuel price, rising transportation costs, logistics and supply chain challenges, high energy cost, climate change including resultant incidents of flooding, insecurity in farming communities and structural bottlenecks to production.

“These are largely supply-side issues. There is also the factor of seasonality of agricultural outputs which activates seasonal price surge in some food crops. Elevated inflationary pressures escalate production costs, weakens profitability, and dampens investors’ confidence.”

Yusuf urged the government to provide concessionary import duties for industrialists and prioritise the resolution of critical issues like power supply, logistics, and foreign exchange.

Also, he highlighted the importance of sub-national governments in addressing food inflation by improving rural infrastructure to ease transportation and access to markets.

It cannot be overemphasized that capital is a vital ingredient for economic growth, but since most nations cannot meet their total capital requirements from internal resources alone, they turn to foreign investors.

For instance, the Central Bank of Nigeria (CBN), since the first quarter of this year, has sold trillions worth of treasury bills at near record interest rates in a move to mop up excess cash liquidity in the economy in a bid to tame inflation.

The interest rate on CBN’s Treasury bills have ranged between 19 per cent and 22 per cent near the Monetary Policy Rate (MPR) of 24.75 per cent.

Meanwhile, going by the outcome of the Monetary Policy Committee (MPC) meeting on March 26, 2024, had led to raise in the Monetary Policy Rate (MPR) by 200 basis points to 24.75 per cent from 22.75 per cent; and retention of Cash Reserve Ratio (CRR) of Deposit Money Banks at 45.0 per cent pose a major risk to the financial intermediate role of banks in the Nigerian economy.

This seems to pose a constraint to the capacity of the banks to support economic growth and investment, especially in the real sector of the economy because the increases are quite significant.

Although, analyst  have urged the apex bank to reconsider its decision on interest rate hike.

According to Dr. Chinyere Almona,  the director-general of Lagos Chamber of Commerce and Industry (LCCI), the apex bank should  reconsider its decision on interest rate hike.

She acknowledged the Central Bank of Nigeria’s (CBN) goals of curbing inflation and stabilising the exchange rate as praiseworthy but emphasised the need for these objectives to be achieved without impeding private sector endeavours and economic expansion.

Almona highlighted that the rate hike policy of the apex bank particularly impacted Small and Medium Enterprises (SMEs), pointing out that SMEs, which typically operate on narrow profit margins, depend significantly on access to cost-effective credit to maintain their business activities and foster growth.

In her words: “the recent hikes in the MPR have directly translated into higher interest rates, making it more expensive for businesses to access credit for working capital, expansion, and sustainability.

“We have consistently advised that rate hikes alone will not curb inflation without resolving challenges of the real sector of the economy. The real sector has demonstrated the capacity to create more jobs, manufacture products for consumption and export, and sustain the industrial base of the economy.

“While we understand that high-interest rates attract Foreign Portfolio Investments and local investors to treasury bills and bonds, we lament the drying up of funds away from the private sector to government treasuries.”

On his part, Dr. Muda Yusuf, the  chief executive officer  of Centre for the Promotion of Private Enterprise (CPPE),  explained that bank lending has been constrained by the high CRR, saying, “the credit situation in the economy is already very tight, with lending rate ranging between 25 -30 per cent.

The Nigerian banks are yet to live up to their financial inter-mediation role because of these constraining factors.”

According to Yusuf, the new dramatic increase in MPR to 22.5 per cent hike means that the cost of credit to the few private sector that have exposure to bank credits will increase which will impact their operating costs, prices of their products and profit margins, amidst very challenging operating conditions.

“It is thus imperative for the CBN to accelerate the process of increased capitalization of the development finance institutions to create a concessionary financing window for the real sector and the small businesses,” he said

The one time Chairman Lagos Chamber of Commerce, linked the increase in raw material imports (in naira terms) to the depreciation of the naira.

He said, “I think it is because of the naira depreciation. If you were importing something that was $1m when the exchange rate was N450, now you are importing products worth $1m and the exchange rate is N1,500.

“That is three times already if you multiply it in naira. So, in dollar terms, the import may have even reduced. We have to consider that.”

His reaction is coming on the heels of the recently released report of the Nigeria Bureau of Statistics (NBS) indicating that Imports of raw materials into the country rose by 25 per cent to N3tn in 2023.

The report also indicated that, the major raw materials imported during the period included cane sugar, other lubricating oils meant to be mixed further, preparations of milk containing vegetable fats and oils, mixtures of odoriferous substances, sheets for veneering, among others.

Conversely, Nigeria could only export raw materials worth N1.8tn between 2022 and 2023, recording a N3.6tn balance of trade.

Commenting on the implication of the trend, Mansur Ahmed, the immediate past president of the Manufacturing Association of Nigeria (MAN), said excessive reliance on the imported raw materials had significantly weakened the Nigerian manufacturing sector.

He said this during an annual general meeting of the Apapa branch of the Manufacturers Association of Nigeria.

According to him, “Our manufacturing sector is weak because it is dependent on imported materials that we then process. We must therefore scale up or scale down. Our manufacturers have to go back and do the transformation.

He noted that “Expert in manufacturing sector need to focus on this issue. We need to build infrastructure. I was in a meeting where the Vice President inaugurated the National Council on Infrastructure.”

Mansur, however, recommended a public-private partnership that aimed to encourage backward integration, import substitution and other measures that would curb excessive import of raw materials.

Recall that in a recent statement released in response to the recent hike in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria, the MAN expressed worry that the resulting limited access to credit would limit backward integration, research and development and innovation needed to enhance productivity and rapid industrial-led economic growth.

He however said “The CBN intervention did not address the bigger and the more troubling issue of the current prohibitive cost of cargo clearance at the ports which had risen by over 40 percent in the last two months.

Dr. Muda Yusuf, the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), made the call on Sunday in a document made available to journalists.

He said having a stable exchange rate for Customs duty will address bigger issues.

According to him, CPPE welcomes the decision of the (CBN) to approve the use of the exchange rate reflected on the import documentation (Form M) at the onset of the import transaction, adding that it was a laudable response to the grievances of investors in the economy.

He stressed that the development would reduce the current uncertainty around imports and related transactions in the economy, noting that  “The high exchange rate for import duty assessment is fueling the already high inflation, increasing production and operating costs for manufacturers and other businesses, worsening the cost-of-living crisis and putting thousands of maritime sector jobs at risk.

He underscores the fact that “There is also the added risk of cargo diversion to neighboring countries and heightened smuggling which could jeopardize the realization of customs revenue targets. In light of this, the CPPE strongly appeals to the CBN to peg the customs duty exchange rate at N1000/$ for the rest of the year in line with the federal government’s commitment to ease the current hardships on the citizens and the burden on businesses,”

He said that the current Customs duty exchange rate is still too high in the context of the current galloping inflation and difficulties facing businesses and citizens, adding that Instances of abandoned cargo are on the increase as a consequence of escalating trade costs.

He pointed out that these are not good outcomes for an economy seeking to ensure recovery, drive growth, promote inclusion, and guarantee social stability.

“Businesses are currently grappling with multiple macroeconomic and structural headwinds which are negatively impacting profitability, competitiveness, job creation, retention of existing jobs, and business sustainability.

“Pegging the Customs duty exchange rate resonates with the present intervention measures to mitigate the current hardships in the country. Besides, this proposition does not in any way detract from the economic reform agenda of the present administration.

“If anything, it would complement the economic transformation measures because of the expected positive impact on competitiveness, productivity, cost reduction, deceleration of inflation, and employment generation,” he added.

The session will hold under the theme “sustainable development of the agricultural sector for national well-being” at the 38th edition of the Omolayole Management Lecture (OML). The OML honors one of Nigeria and Africa’s outstanding business and management icons, Dr. Michael Omolayole, the first Nigerian Chairman/Managing Director of Lever Brothers Nigeria Plc. (now Unilever Nigeria Plc.) and the only African to sit as a member of the Board of Advisors of AIESEC International in Brussels.

Speaking ahead of the event, Olubunmi Abejirin, the event convener, and President of the AIESEC Alumni Nigeria, said that the OML series is held annually in honor of Dr. Michael Omolayole in recognition of his numerous contributions and selfless service toward the development of the indigenous managerial leadership in multinational companies across Nigeria and the exemplary roles he played towards nation building through management and education. 

“Dr. Michael Omolayole was the first Nigerian Chairman/Managing Director of Lever Brothers Nigeria Plc. (now Unilever Nigeria Plc.); he is also the first and only African to seat as a member of the Board of Advisors of AIESEC International in Brussels. As a Consultant to the World Bank, Chairman/Director (past and present) of numerous multinational companies, former Member Presidential Advisory Committee, and Member, The Committee of 25 on Higher Education in Nigeria; his contributions through service to humanity are invaluable. Dr. Omolayole imbues the core values of AIESEC, such as striving for excellence, demonstrating integrity, activating leadership, acting sustainably, enjoying participation and living diversity”, she noted.

The lecture will have in attendance guests from diverse sectors of the economy, including CEOs of top corporations, management gurus, related government agencies, and financial institutions, and a keynote speech from Dr. Muda Yusuf, the Chief Executive Officer of the Center for the Promotion of Private Enterprise (CPPE).

The event, which is being sponsored by the Bank of Industry (BOI), will host other local and international speakers and holds at the NECA Auditorium on Thursday, September 29, 2022.

Abejirin stressed that the lecture continues OML’s focus on promoting best management practices and corporate governance, as well as the 38th edition of the conference and its focus on food security.

She mentioned that the annual lecture is a brainchild of AIESEC Alumni Nigeria in partnership with four other institutions where Dr. Omolayole played a significant role.

The partners include the Chartered Institute of Personnel Management (CIPM), Nigeria Institute of Management (NIM), and Nigeria Employers’ Consultative Association (NECA). “AIESEC Alumni Nigeria (AAN) is a nonprofit organization and the world’s largest youth-run leadership organization that helps university students explore and develop their leadership potential. It has a presence in over 1,700 universities across 110 countries and territories. AIESEC aims to promote social understanding, management skill development, entrepreneurship, and transformative youth leadership through its core values which are striving for excellence, demonstrating integrity, activating leadership, acting sustainably, enjoying participation, and living diversity”, Abejirin said.