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‘Now is time for Nigeria’s post-pandemic economic rescue plan’

Deserted Marina road during the lockdown. PHOTO: FEMI ADEBESIN-KUTI

Worried about the effects the COVID-19 pandemic has on economic sustainability and business continuity, the Lagos Chamber of Commerce and Industry (LCCI) has urged economic managers to begin to set agenda for the nation’s economy after the health crisis.

According to the LCCI, the pandemic has derailed business projections and several risks have crystallized. Businesses have been grounded by the lockdown; supply chains disrupted, and aggregate demand depressed. Investment assumptions have collapsed across sectors. Businesses are faced with a force majeure and the shocks are profound and unprecedented. The mortality of SMEs is set to heighten as they have tenuous capacity to absorb shocks, especially of a scale that we are currently witnessing.

The Chamber in its propositions made available to The Guardian and signed by the Director-General, Dr Muda Yusuf, noted that though digital platforms have become more vibrant, they are not enough to generate the desired momentum of economic activities, as interactions and connectivity among economic agents are at the lowest ebb.

To save the economy from collapse, the LCCI urged the need to salvage investments across all levels – micro, small, medium and large enterprises.

“Without investment, we cannot have jobs; aggregate demand would remain weak; government revenue would be in jeopardy as tax revenue plummets; and economic sustainability will be at risk. This underscores the imperative of an urgent rescue package for business to enable investors ride out the storms”, it added.

Some of the proposed measures include, tax breaks and concessions for investors, fiscal policy palliatives for the real sector, commercial banks loan facilities, aviation sector palliatives and deregulation of the downstream sector.

Specifically, the chamber advocated the suspension of all forms of taxes for health sector investors, agriculture and agro-processing, aviation and hospitality sectors for at least one year; extension of filling of annual returns, including payment of due amounts to 30th June 2020; unconditional waiver of penalties and interests of all outstanding tax payments; temporary suspension of recently introduced 50% increase in VAT till year end; and 50% reduction in all taxes currently being paid by companies in manufacturing for one year.

In terms of fiscal policy palliatives, the LCCI said manufacturing raw materials and intermediate products should attract import duty waiver for six months, adding that one key lesson of the COVID 19 is the imperative of domestic production and building capacity for self-reliance.

“The global supply chain disruptions took a heavy toll on the manufacturing sector. To accelerate a rebound of the sector, this incentive is necessary. Greater commitment of government and its agencies to the patronage of made in the Nigerian products. Government should create a strong monitoring framework to ensure compliance with the relevant executive order. Import duty waiver on machineries without need for any bureaucracy, for at least 12month. This would facilitate the completion of ongoing projects by industrialists. The country needs growth as this would be key to project completion to encourage job creation”, the chamber added.

Though the CBN unveiled several intervention facilities, the LCCI noted that the bigger issue of private sector indebtedness to the commercial banks.

According to the chamber, banks’ credit claims on the private sector stood at N15.2 trillion as at December 2019.

The LCCI noted that the way the exposure is managed will be very crucial to the realization of the economic and business continuity outcomes in the Nigerian economy.

“We would like to see windows of opportunities for loan moratorium, restructuring of facilities, refinancing, and interest rate concessions in the light of the unprecedented downturn in the economy. These times call for sacrifice from all stakeholders in the economy – the banking community, the depositors, the government, the financial system regulators and the business community.

“We call for an urgent engagement between the Bankers Committee, the Central Bank of Nigeria and the business community to discuss the monetary component of the rescue plan for business at this critical time. This is an important economy wide issue as all sectors of the economy are impacted.

“The LCCI welcomes the full deregulation of the petroleum downstream sector of the economy. We request that complementary legal framework be expeditiously put in place to avoid truncation of the process”, Yusuf added.

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