Friday, September 30, 2022

Manufacturing, agric sector to suffer shocks in Q2 due to Ukraine war: LCCI

“Job losses are also very likely due to constrained production and disrupted supply chains.”

• April 12, 2022
Micheal Olawale-Cole
Micheal Olawale-Cole [Photo Credit: Punch Newspaper]

The Lagos Chamber of Commerce and Industry says the persistent Russia-Ukraine war will trigger shocks in Nigeria’s manufacturing and agricultural sectors in the second quarter of 2022.

Michael Olawale-Cole, the president of LCCI, said this at the industry’s quarterly press conference on the state of the Nigerian economy on Tuesday in Lagos.

He said the ongoing war triggered a positive oil price shock with spillover effects on operating costs, raw materials, and inflation in countries not directly engaged in the war.

“Going into the second quarter of 2022, the manufacturing sector will likely suffer some shocks from the rising cost of diesel, logistics, foreign exchange illiquidity, domestic inflationary pressure, weakening purchasing power, poor public infrastructure and port-related challenges,” he said.

Mr Olawale-Cole pointed out that Nigeria was not an exception as prices of goods and services were moving northwards with the potential implication of shrinking production of goods and services.

The LCCI president stressed that should the conditions persist, production volumes would be impacted by the raw materials supply chain disruptions, the rising cost of diesel, and other internal security crises.

“Job losses are also very likely due to constrained production and disrupted supply chains, and all of these will likely depress growth potential in Q2 2022.

“These may continue to present as headwinds to the sector’s performance,” he stated.

He also noted that the ongoing war had affected supply chains of raw materials such as wheat, corn, soybeans, etc.

He said Nigerians should expect headline inflation to remain elevated when looking forward to the second quarter.

Mr Olawale-Cole urged the government to adopt the most sustainable solution of boosting local production of food staples to levels that met local demands.

In addition, the industrialist tasked the government to resolve the lingering fuel supply crises by increasing importation to meet growing demand, putting pressure on diesel and fuel prices.

In the energy sector, the LCCI president noted that the national grid could not continue to supply sufficient power to meet the country’s electricity demand.

To this, Mr Olawale-Cole recommended that the government invests more in technology to fight pipeline vandalism and fund critical infrastructure and special purpose intervention in the power sector.

(NAN)

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