Image Credits: AfDB.
Like many governments, the Nigerian government has identified industrialisation as the tool to generate tangible nonoil revenue, increase employment opportunities, and contribute maximally to GDP.
As part of government’s efforts at engendering sustainable economic recovery, some fiscal and monetary policies were rolled out, particularly to benefit Micro, Small and Medium Enterprises.
In spite of the policies, the manufacturing sector contracted by 0.43 per cent in the first quarter of 2020; by -8.78 per cent in the second quarter and by -1.51 per cent in the third quarter of the year.
Dr Muda Yusuf, Director-General, Lagos Chamber of Commerce and Industry listed the major challenges faced by the business community in the outgoing year to include liquidity crisis in the foreign exchange market, sharp exchange rate depreciation, high energy and production cost.
“Others, are ports congestion, cumbersome and burdensome customs processes, insecurity, inconsistent government policies, regulatory uncertainties, land border closure and the Apapa, Lagos, traffic gridlock,” he said.
2020 in review
N2.3 trillion Economic Sustainability Plan
The Federal Government initiated the Nigerian Economic Sustainability Plan expected to run between July 2020 and June 2021 as a policy response to the impact of the COVID-19 pandemic.
It was envisaged that the plan would stimulate the economy by preventing business collapse and ensuring liquidity.
The stimulus package, equivalent to 1.5 per cent of GDP includes massive agricultural programme, mass housing, survival funds for MSMEs, digital technology, social safety nets, and the installation of solar energy systems, amongst others.
On Aug. 7, 2020, government signed the Company and Allied Matters Act 2020 into law to create efficient means of regulating businesses and minimising regulatory burden on small and medium enterprises.
The law also aims at promoting transparency and shareholder engagement, foster the ease of doing business while also encouraging investment flows to the domestic business landscape.
Applauding the law, Mr Bode Ayeku, President, Institute of Chartered Secretaries and Administrators of Nigeria, said it would create a more conducive environment for businesses to thrive.
He noted, however, that publishing unclaimed dividends in two national dailies as stated in the law exposed shareholders’ information to criminals.
“We must be mindful of the implications of making public the details of shareholders because fraudsters would now have the opportunity to capitalise on the availability of the information and hijack the system or create a menace.
Land Border Closure
The closure of land borders between August and December had its positive and negative outcomes, even as it was meant to curb banditry, smuggling, illicit migration, drug trafficking and proliferation of light weapons.
While the closure strengthened demand for domestic agricultural products, especially rice and poultry, it impacted negatively on manufacturing as industry players could neither import nor export to the West and Central African markets.
Mr Segun Ajayi-Kadir, Director-General, Manufacturers Association of Nigeria noted that even before the border closure, manufacturing had been hindered for years by trade malpractices, smuggling, counterfeiting and cloning.
He noted that trade malpractices were prevalent because of the absence of clear and enforceable legal and regulatory framework, ineffective enforcement of regulations, and poor co-ordination amongst regulatory agencies.
“The border reopening is a welcome development. However, necessary framework must be put in place to monitor the borders effectively and to make Nigerian products competitive locally and internationally.
“Going forward, government should establish joint border patrols with neighbouring countries. Necessary infrastructural facilities like reliable power supply, good road/rail transportation network to reduce production cost must be provided.
Africa Continental Free Trade Area (AfCFTA)
The Federal Government ratified Nigeria’s membership of the AfCFTA in November.
The AfCFTA, scheduled for implementation by Jan.1, 2021was designed out of the need to boost intra-regional trade in Africa through the removal of tariff on 90 per cent of goods.
Amb. Ayoola Olukanni, Director-General, Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture said the government’s decision to ratify the AfCFTA was a reflection of the nation’s commitment to be part of the African trade and economic agreement.
“This ratification now gives us the status of a State Party to the Agreement which also gives us a leverage to be an effective player in the scheme of things.
“It will boost our position at the forthcoming Feb 2021 Meeting of the State Party and also strengthen Nigeria’s position during negotiations in the outstanding areas such as services and investments among others,’’ he said.