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LCCI berates GDP figures, says it does not reflect reality

The Lagos Chamber of Commerce and Industry has reacted to the latest Gross Domestic Product figures released by the National Bureau of Statistics on Sunday.

According to Muda Yusuf, Director-General, the growth in the first quarter is a good surprise, but it does not represent the current reality in the manufacturing sector.

NBS on Sunday revealed that Nigeria’s economy grew from 0.11 percent in the fourth quarter of 2020 to 0.51 percent in the first quarter of 2021, translating to a 0.40 percentage point increase.

While the manufacturing sector also grew by 3.40 percent in the first quarter from a negative growth territory of 2.75 percent recorded in Q4 2020.

However, Yusuf said it is surprising as the sector has been grappling with an unprecedented foreign exchange illiquidity crisis over the past few months.

He also added that the structural, irregular policies, institutional and macroeconomic challenges had also bedeviled the sector and create a tough experience for most manufacturers.

He, however, welcomed the expansion of 2.28 percent in the agricultural sector, 6.31 per cent of the Information and Communication Technology (ICT) sector and 8.66 per cent of the electricity sector.

In his words, “Evidently, the economy is still struggling to recover from the shocks of the pandemic and related slip into recession.

“However, the first-quarter GDP data contained a few pleasant surprises.

“The agricultural sector expanded by 2.28 percent despite the ravaging effects of insecurity, farmers-herders clashes, and the displacement of many farming communities.

“Most foreign exchange dependent manufacturing sectors have not had a good experience over the past year.

“Admittedly, segments of manufacturing with high levels of backward integration had lesser degrees of shocks from the forex illiquidity and exchange rate depreciation in the economy.

“The growth of 6.31 percent recorded in the ICT sector was expected given the opportunities created for ICT in the new normal.

“The cost-reflective tariff appears to have impacted positively on the electricity sector which recorded 8.66 percent,” he said.

The DG also stressed that the continued contraction of the trade sector which recorded negative growth of 2.43 percent in Q1 2021 and the transportation sector at 21.9 percent was worrisome.

He said that the hospitality and entertainment sectors that were still down needed more government attention.

“We note with concern the continued contraction of the trade sector grappling with headwinds arising from exchange rate depreciation and forex illiquidity, high inflationary pressures, and weak purchasing power.

“Yet the sector is one of the biggest sources of employment, especially in the self-employment space.

“It is equally worrisome that the transportation sector experienced the worst contraction at 21.9 percent in the first quarter of 2021.

“This may be as a result of the growing insecurity on our roads and this goes to demonstrate the multidimensional impact of insecurity on the economy.

“The hospitality and entertainment sectors have been in recession for over a year and the government needs to do a lot more to salvage the sector from complete collapse,” he said.