May 30, 2024

Hike in prices of petroleum products, persistent power failure, insecurity may shrink Nigeria’s GDP further by 2023 – Dr. Olawale-Cole, President LCCI

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Oredola Adeola

The Lagos Chamber of Commerce and Industry (LCCI) has warned that significant spike in the price of diesel, and other petroleum products as well as the increasingly inconsistent power supply caused by frequent national grid collapse have produced far-reaching consequences on the cost of running businesses in Nigeria, thereby forcing investors in the country to be running commercial and industrial activities on unsustainable costs and producing at uncompetitive prices.

Dr. Michael Olawale-Cole, President, LCCI made this known in his remark at the 134th Annual General Meeting of the oldest Chamber of Commerce in Africa, on Thursday.

According to him, high energy costs,  foreign exchange scarcity, and worsening security challenges in some parts of the country may shrink Nigeria’s Gross Domestic Product (GDP)  growth and further deepen the country’s recession in the coming quarters going into the new year 2023.

He said, “This emerging threat has created a  wrong perception about the country, consequently,  foreign investors are not interested in bringing in Foreign Direct Investments (FDI) to Nigeria at this time, until after the 2023 General election.

The industrialist further noted that the frequent collapse of the national grid showed that the existing Nigeria Electricity Supply Industry(NESI) does not have the right capacity to supply sufficient power to meet the growing electricity demand of Nigerians.

The LCCI President also listed the power sector challenges including issues of frequent vandalism of electricity infrastructure, disruption in gas supply to the power plants,  distribution companies’ (DisCos’) lack of capacity to evacuate generated power, and the challenges of achieving 100 percent metering for power consumers.

He said,“With the cost of diesel at record levels and persisting poor power supply, businesses are running on unsustainable costs and producing at uncompetitive prices.

“This can lead to job losses if the output is constrained due to the unbearable cost of production.

“If not quickly tackled, these challenges will likely subdue the GDP growth potential and projections for 2022.

“The most sustainable solution to Nigeria’s power shortages is the transition to renewable energy and the decentralisation of the national grid,” he said.

In his statement, while reviewing the Nigerian economy and business environment in 2022, Dr. Olawale-Cole, disclosed that the 1.78 percent year-on-year decline recorded in the country’s GDP for the third quarter of 2022, was reflective of the energy crisis and other related challenges including insecurity.

He further noted that the country’s growth statistics per quarter have exposed the effect of recession and inflation on slowing down the national economy.

The LCCI President blamed the declining growth on the persistent security threats, oil theft, and other vices on the national economy, and the possible effect of the new monetary policy of note redesigning on the same.He also noted that other critical factors including the debt profile, fiscal development plans, foreign trade, and capital importation, and Nigerian multidimensional poverty of 2022 were used to make insightful statements about the overall business environment in the 2022 business year.

The Industrialist further projected that inflation would sustain its double-digit level in the short to medium term, but promised the commitment of the Chamber to further engage with the government in creating an enabling business environment where the private sector is empowered to create jobs and generate revenue for the government.

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