Rising insecurity, energy crisis deem prospect of strong economic growth in 2022, LCCI warns

The rising wave of insecurity across the country and persistent crisis in the energy sector have deemed the prospect of achieving economic growth projections for 2022, Lagos Chamber of Commerce and Industry (LCCI) has warned.

Giving this warning at a quarterly briefing on the state of the nation, yesterday, in Lagos, President, LCCI, Dr Michael Olawale-Cole  said: “The worsening security challenges in many parts of the country are another serious threat to the agricultural and manufacturing value chain, which is capable of reducing production and contracting these sectors.

“If the above conditions persist, production volumes will be impacted by the raw materials supply chain disruptions caused by the war in Ukraine, the rising cost of diesel, and other internal security crises. Job losses are also very likely due to constrained production and disrupted supply chains. All of these will likely depress growth potentials in Q2 2022.”

The LCCI boss also lamented the crisis in the energy sector, saying,  “It is becoming clearer that the national grid cannot supply sufficient power to meet our electricity demand. We have had issues with a disrupted gas supply, distribution companies lacking the capacity to take up power generated by the power generating companies, and the challenges of achieving 100% metering for power consumers.

“On the back of these challenges, businesses have had to deal with the rising cost of manufacturing, exorbitant logistics, and constrained production. 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 as output is constrained due to the unbearable cost of production. If not quickly tackled, these challenges will likely subdue the GDP growth potentials and projections for 2022.”

PIA in a state of limbo

Speaking further, Olawale-Cole noted that the growing uncertainties in the oil sector have left the PIA in a state of limbo.

“The menace of oil theft has become a rising cost to the economy as it deprives us of much-needed oil revenue. The position of the government that the problems of the oil and gas sector are the push back against investment in fossil fuels and decreasing investment inflows into the sector, is quite debatable when we consider the inability of the government in stopping oil theft in the sector.

“The weak regulation and systems in the oil and gas sector are a reason for divestment and low attraction of new investment. The PIA 2021 was meant to create a more standardised sector that foreign investors would be comfortable playing in, but unfortunately, the Act is in a perceived state of limbo amidst growing uncertainties,” he added.

READ ALSO: 2023 Election:UN worries over voter apathy in Nigeria