This is July 2023, the nation’s economy has witnessed a number of activities both positively and otherwise. Perhaps, the most impactful is the fuel subsidy removal with its attendant consequences on the lives of the people and the country. Agricultural production is not left behind, as farm produce are conveyed from one state to another for consumption, sales and storage. Therefore, the performance of the sector is key alongside other economic areas. It is for this reason that the foremost policy group in the country, the Lagos Chamber of Commerce and Industry (LCCI), has raised an alarm that the agriculture sector has declined by -0.90% in the first quarter when compared to 2.05% in the previous quarter.
The decline was due to lower livestock production and the leftover impact of the severe floods in the third quarter of 2022. In an address on the state of the economy for the Second Quarter of 2023, the President of LCCI, Asiwaju (Dr.) Michael Olawale-Cole, said the chamber’s effort is a traditional model of engaging in public policy advocacy in the quest for a stronger economy and an enabling business environment. Through macroeconomic diagnostics and reviews, the briefing is being done to highlight areas of concern and to make recommendations to the government on policy alternatives that can better empower the private sector to thrive.
Global inflation is projected to decline to 5.2% in 2023 from 7.5% in 2022, mainly due to lower food and energy prices and softening global demand. Amid easing inflationary pressures, the global economy is expected to pick up some momentum in the remaining part of 2023 and 2024. Finally, on global developments, the 2023 World Investment Report, released by the United Nations Conference on Trade and Development (UNCTAD) revealed that global Foreign Direct Investment (FDI) declined by 12% in 2022 to US$1.3 trillion while a significant fall was driven by the global poly-crisis, including the war in Ukraine, high food and energy prices, and debt pressures.
LCCI recommends that the Federal Government needs focus on addressing the security challenges that had plagued the business community and negatively affected investment inflows. The Federal Government needs to sustain its targeted interventions in critical sectors like agriculture, manufacturing, export infrastructure. “We urge the government to keep track of plans to tackle the menace of oil theft to boost oil exports and earn more foreign exchange. We also commend the government for the effort made to date to combat the cartels involved in oil theft. If these efforts had started earlier, the nation would have made huge economic gains. The chamber, therefore, appeals to the government to intensify the efforts.
“Food inflation in May 2023 was 24.82% on a year-on-year basis, 5.33% points higher compared to May 2022 at 19.50%. The inflationary pressures were primarily attributed to high food and energy prices, housing, clothing and footwears, transport and imported inflation. We foresee a further rise in the inflation rate in the near term due to subsidy removal and the floating of the naira exchange rate. Increasing the monetary policy rate has, thus far, proven to be ineffective and insufficient in taming inflation. Therefore, there is a clear need for the government to strengthen its support to critical sectors like agriculture, power, energy, etc. It should also look at ways to improve supply chains as well as cushion the cost of production. The proposed electricity subsidy removal for electricity tariff to reflect the market-friendly pricing system is a call for exploitation of the emerging opportunities in the form of renewable energy and even the traditional energy supply.
“Electricity Act 2023, passed by the present administration, mandates electricity-generating companies to either generate power from renewable energy sources or purchase power generated from renewables. The act promotes the transition to cleaner energy sources. This will contribute to reducing carbon emissions, improving air quality, and mitigating climate change’s effects. It aligns with global efforts to combat climate change and meet sustainable development goals. The act provides for states to issue licenses to private investors to operate mini-grids and power plants within their borders. This opens opportunities for private sector investments in energy, leading to increased generation capacity and improved access to electricity in underserved areas. It encourages competition and innovation in the sector.
“This has created huge new business opportunities in the renewable energy industry for both small and large-scale investors to develop and deploy renewable energy technologies, such as solar panels, wind turbines, and energy storage systems, which require skilled labour and huge investment”, the LCCI President stated further. Going forward, there should be more investment in the agriculture sector for the nation to successfully navigate these trying times. More financial opportunities should be given to farmers at low cost rates. Farm inputs should be highly subsidised, while the prevailing insecurity across the states preventing farmers from working should be addressed without further delay. It is hoped that with the recent declaration of a state of emergency on food security by President Bola Tinubu, agriculture would be accorded the right priority in the country.
