The Central Bank of Nigeria’s (CBN’s) interventions in the foreign exchange (forex) market last year put pressure on the country’s external reserves, the Lagos Chamber of Commerce and Industry (LCCI) Director-General (DG) Muda Yusuf has said.
According to him, this made the external reserves to drop from $47.5 billion in July to $43 billion as at December 20, 2018.
In a statement on the review of 2018 economic indices, Yusuf maintained that increasing pressures on the nation’s currency may not be unconnected with the sell-off in fixed income securities and equities by foreign investors, resulting from the rising rates in advanced economies.
He, however, contended that the reserves are still robust enough to support the nation’s international trade transactions at this time.
The LCCI boss observed that after 18 consecutive months of decline, inflation rate began to rise in August 2018, with headline inflation of 11.26 per cent in October 2018, compared to 15.13 per cent in January 2018 and 18.7 per cent in January 2017.
He argued that following the diminished high base effect in August 2018, the country is likely to see headline inflation trending up in the early part of 2019.
The LCCI in its review of the economy in 2018 said business environment issues are as critical to the progress of the economy as the macroeco-nomic conditions.
On some of the major business environment issues that impacted on businesses in 2018, he said, included but not limited to the 2018 World Bank Ease of Doing Business report that ranked Nigeria 146 out of 190 countries.
He said the report showed that the country took a step backwards from the 145th position it ranked in 2017.
According to Yusuf, the ranking took into account trading regulations, property rights, contract enforcement, investment laws and availability of credit.
He acknowledged the efforts of the present administration through the Presidential Ease of Doing Business Council (PEBEC) and series of Presidential Executive Orders targeted at improving the business environment. Yusuf said: “In 2017, there was record leap of 24 steps in the ease of doing business ranking for the country, from 169 to 145. However, the government still has enormous task of ensuring much better performance to enhance the productivity of businesses in 2019.
“This calls for a sound and result oriented business regulations and innovative implementation in 2019.”
He further stated that the provision of power remains at the heart of ease of doing business in Nigeria. “We note the efforts of the government in addressing the perennial power supply shortage and deeper commitment to alternative sources of power, including off-grid initiatives.
“However, the power situation continues to pose severe challenges to the private sector operators, impacting adversely on productivity. Throughout the outgoing year, we received complaints across sectors about high energy costs, especially high expenditure on diesel, higher cost of and scarcity of gas, and payment demand by Discos for power that was not supplied.
“These continued to take its toll on the bottom line of investors. SMEs and some real sector companies reported that they spent as much as 20-25 per cent of their total operating cost on provision of alternative power supply and payment to Discos,” he said.
Projecting into 2019, the review said: “The Nigerian economy remained fragile with the high dependence on oil sector for revenue and foreign exchange earnings.
“Although, oil revenues increased with recovering oil prices in 2018, the impact on the economy was subdued by the huge foreign exchange commitments to petroleum product importations and the inherent subsidy.”
The Caption Photo: the Lagos Chamber of Commerce and Industry (LCCI) Director-General (DG) Muda Yusuf