Private sector weak as economy declines by $44bn in 2023 – NESG

The Nigerian Economic Summit Group (NESG) stated that Nigeria’s private sector productivity has remained weak amid high cost of production as well as inadequate liquidity in Nigeria’s forex market.

The NESG stated this in its new 2024 private sector outlook report with the theme “Nigeria’s Private Sector in Turbulent Times: Mitigating Risks and Positioning for Economic Transformation”.

While presenting the 2024 private sector macroeconomic outlook, Chief Economist and Head of Research and Development, NESG, Dr Olusegun Omisakin, stated that the macroeconomic performance is affecting business players, noting that Nigeria was previously a 400 billion dollars economy in 2022 which reduced to $356 billion in 2023 and that the private sector productivity remains very weak.

He stated that the major challenge the organised private sector faces is the high cost of production and the ease of doing business across the country. 

Furthermore, Omisakin noted that the organised private sector particularly battled with inflation all through 2023, adding, “The NESG 2024 private sector macroeconomic outlook report highlights strategies such as product diversification, technology for innovative marketing, market research and customer insight, cost optimisation, supply chain diversification, regulatory compliance, edging exchange rate risks and contingency planning as some of the strategies that can be adopted by different sectors to help the Nigerian economy bounce back through a more agile and responsive private sector.”

While delivering the opening remarks, the chairman of the board of directors of the NESG, Mr Niyi Yusuf, said since the Nigerian economy rebounded from the recession induced by the pandemic, its growth has remained fragile and vulnerable to the slightest shock.

He noted that the country’s economic landscape has been marked by a turbulent and uncertain economic environment stemming from a confluence of internal and external factors.

He further noted that in 2023, Nigeria grappled with a multifaceted nature of economic challenges including the cash crunch and economic disruption emanating from the stern implementation of the naira redesign policy which affected businesses and the economy as a whole.

Furthermore, Yusuf stated that the subdued private sector performance in 2023 is evident in the Purchasers’ Manager Index (PMI) fluctuation below the 50-point threshold of expansion and contraction of economic activities, noting that Nigeria witnessed an unprecedented surge in the inflation rate, reaching an 18-year high of 28.9 per cent in December 2023 as a result of amplified constraints emanating from fuel subsidy removal, escalating logistics costs, and naira depreciation, all of which significantly raised business operating costs and impeded overall productivity.

“The private sector has experienced a slow growth due to the tough reforms and policy inconsistencies in recent years; encountering challenges, including regulatory complexities, legislative hurdles, and predatory behaviours from public officials. Also, the inhibiting factors such as pervasive insecurity, inadequate infrastructure, high informalities, proliferation of non-actors, poor human capital outcomes, and weak market and corporate governance have adversely affected the business environment,” he said.

The Director General of Lagos Chambers of Commerce and Industry (LCCI), Dr Chinyere Almuna, said the theme reflects the current economic landscape characterised by its uncertainties and presents a way to understand the multifaceted challenges that have impacted the private sector and their ability to create jobs, generate revenue for the government and thrive.

She noted that Nigeria is at a transformative juncture and we must harness the opportunities in the organised private sector because the sector accounts for 98 per cent of total GDP and are responsible for 80 per cent of annual investment which makes them suitably placed to address the country’s economic challenges.