‘We need to focus on real sector growth’

 Dr. Muda Yusuf is the Director General of the Lagos Chamber of Commerce and Industry (LCCI). In this interview with Charles Okonji he makes a projection on the shape of things to come in 2021 economic-wise. Excerpts:

 

In summary, can we know your position about 2021?

What we are about to see is an economy that is going to be much more competitive  than what it is now and for that to happen, some of the issues that we have always raised about the investment environment  needs to be taken more seriously in 2021. For our operators in the service sector, they seem to be a lot more competitive than our investors in the real sector. Already some of our investors in the service sector such as the financial services for instance, the telecoms, distributive trade, and transportation they are already doing fairly well especially in the West African sub-region and even in some parts of Africa, the same in our entertainment industry.

How do you evaluate the real sector performance?

The service sector appears to be well ahead of the real sector. What we will like to see in 2021 is more attention to support the real sector of the economy, so that they can be more competitive locally, sub-regionally and continentally because the real sector is very critical when you talk of value addition.

How can we tap into backwards integration and value addition?

Value addition is very critical when we are talking about building an inclusive economy because it is through value addition we can do backward integration and it is through backward integration we can achieve what we call multiplier effect in an economy and if you do not have production, it will be very difficult to get that kind of thing done and this is why you see our investors in agriculture, agricultural processing, manufacturing and the rest they will need to sit down and examine the constraints that they are facing and whatever we need to do very quickly, we should do it that is one way to recover very fast as an economy and another way in which we can be more competitive under the AfCFTA so that we do not regret signing the trade deal.

What are the measures you want government to put in place?

The reforms that the government is undertaking the government should also show more commitment to those reforms. They are talking of reforms in the oil and gas sector, but we are not seeing the investment we should see in that sector. We have been in the oil business for over 50 years, if you compare the period we have been in that sector and the amount of investment invested in that sector, you will know that we have not performed well at all.

In terms of policy, will the existing ones move the economy to the next level?

We are still operating at the primary level and unless we have the right kind of policy reforms the sector will not bring the right kind of value it supposed to bring to the economy, so I am talking about sustaining the deregulation that have started in the downstream sector, I am also talking about ensuring that we pass the Petroleum Industry Bill (PIB) and before the passage of the bill, we should properly engage our upstream oil sector investors so that we do not pass a bill that will discourage investment in the oil and gas sector, because that sector is now becoming very difficult to sell as it were. Globally, there is a shift of emphasis on fossil fuel into renewable. When you go to many countries, they have even set deadlines in which they will terminate the use of any vehicle that is powered by either PMS or diesel. People are migrating into electric so it is becoming less attractive, so if you go and pass a law that will make it difficult for people to invest in the sector  it will not be in the interest of our economy so the PIB requires proper consultation with the stakeholders so that we have the right version of the PIB to take advantages of the opportunities that we have between now and 18 years, because increasingly, the fossil fuel as a source of energy is gradually loosing relevance across the world.

What are your fears about investment?

Security is very critical to investment, we seem to be losing grip of the security situation. The government needs to have a very good handle of the security situation, because without security, we cannot build investor’s confidence either small, micro and large businesses because security is key and what is happening across the country is very saddening and if we are not careful, it could lead to an incalculable damage to the economy.

In which areas do you think the economy has gotten it right?

Of course, there are some bright sides in the economy in terms of liquidity. Interest rates are coming down and a number of investors are happy about it particularly those in production. We are talking about interest rate coming down to around 13 per cent time lending rate which is good.

What is your assessment about the capital market?

The capital market is bubbling now especially the stock market and a lot of investors are also smiling because they can now raise capital, some cooperate are already issuing commercial papers which is also an instrument of raising funds and some of them are able to raise funds at single digit, so that liquidity in the real sector is a very good thing that we have seen in the economy which we hope would also be sustained.

Though, there are some of the silver lining and we need to deal with issue of foreign exchange liquidity which is a very big problem so that there could be more certainty and confidence in the foreign exchange market and there is also the need to review the current management in forex management because it will also help to improve the supply of foreign exchange outside of oil.