The Lagos Chamber of Commerce and Industry says the 2021 first quarter 0.40 per cent Gross Domestic Product increase, though good news, does not reflect the manufacturing sector’s current realities.

Muda Yusuf, Director-General of LCCI, stated this in reaction to the National Bureau of Statistics GDP Q1 2021 report on Sunday in Lagos.

According to the report, the nation’s GDP rose from 0.11 per cent in the fourth quarter of 2020 to 0.51 per cent in the first quarter of 2021, translating to a 0.40 per cent increase.

Mr Yusuf noted that the manufacturing sector’s recovery from a negative growth territory in Q4 2020 to a positive growth level of 3.4 per cent in Q1 2021 was a pleasant surprise.

The sector has been grappling with an unprecedented foreign exchange illiquidity crisis for some months.

The LCCI director-general explained that structural, irregular policies, institutional and macroeconomic challenges had also bedevilled the sector. As a result, Mr Yusuf stressed that the NBS data did not reflect the reality of the experiences of most manufacturers.

He, however, welcomed the expansion of 2. 28 per cent in the agricultural sector, 6.31 per cent of the information and communication technology sector, and 8.66 per cent of the electricity sector.

“Most foreign exchange-dependent manufacturing sectors have not had a good experience over the past year. Admittedly, segments of manufacturing with high levels of backward integration had lesser degrees of shocks from the forex illiquidity and exchange rate depreciation in the economy.

“The growth of 6.31 per cent recorded in the ICT sector was expected given the opportunities created for ICT in the new normal. The cost-reflective tariff appears to have positively impacted the electricity sector, which recorded 8.66 per cent,” explained the LCCI boss.

Mr Yusuf added that the continued contraction of the trade sector, which recorded negative growth of 2.43 per cent in Q1 2021 and the transportation sector at 21.9 per cent, was worrisome.

He further stated that the hospitality and entertainment sectors still down needed more government attention.

“We note with concern the continued contraction of the trade sector grappling with headwinds arising from exchange rate depreciation and forex illiquidity, high inflationary pressures, and weak purchasing power,” Mr Yusuf pointed out.

(NAN)