The Lagos Chamber of Commerce and Industry (LCCI) has described 2012 as very poor for business environment in the country, despite the huge opportunities offered by the economy.
This is the conclusion of the chamber in its review of the business climate in the outgone year, released by Muda Yusuf, its director-general.
“The business and economic environment was typically characterised by upsides and downsides, but the latter seem to have outweighed the former”.
Yusuf observed that 2012 offered huge opportunities to investors, especially indigenous entrepreneurs, but said they were constrained by challenges that prevailed in the operating environment.
He explained that the opportunities were in the country’s robust natural endowments, youthful demography, large coastlines, and largest population in the continent.
"Nigeria is the seventh largest oil exporting country in the world, a large enterprising population, an innovative banking sector, a GDP growth of 6.6%, which is one of the best globally; rising foreign reserves which was $44.5 billion, as at November 2012, excess crude account of $9.6 billion and a stable polity, bolstered by increased credibility of the electoral process. All these form the major components of the upside in the economy in 2012" he said.
However, Yusuf said the downside was more overwhelming, as the operating environment was generally adjudged to be unsatisfactory by many investors.
This, he said had profound impact on returns on investment and profit margins.
“The challenges included weak consumer demand, cost and access to credit, cargo clearing processes, transportation costs, especially the collapse of the rail system; institutional problems, corruption, especially in relation to public sector transactions”.
“Other concerns were the uncertainty and inconsistency in the policy environment, growing insecurity, manpower issues and the relevance of educational curriculum to the needs of the economy; high level of receivables across sectors, power supply challenges, poor sectoral linkages and weak commitment to the development of indigenous enterprise.
He lamented the security concerns in the country which was a major concern to investors during the year, with direct consequences for the economy.
“The security situation had profound effect on the perception of the country as an investment destination. The security problems did not abate during the year. If anything, it has worsened”.
Yusuf stated that the economies of the affected states, especially the North, suffered setbacks following the closure of companies and relocation to other states, with job losses.
The chamber commended the government in the area of power supply which improved slightly mid-year, but declined in the last quarter.
“This scenario created sustainability concerns over the celebrated improvement in the power situation. High energy cost was thus a major issue for investors during the year. This of course had implications for productivity and profitability of investments’.