The
Nigeria economy slipped into recession between April and June 2016. This means
the country saw two consecutive quarters of declining growth, which is the
usual definition of recession. In other terms, it means that our Gross Domestic
Product (GDP) declined in second quarter of 2016, also there was rise in
currency inflation and food and other product prices inflation.
Economists and analysts has blamed the recession on failure of leadership by previous and present governments and have gone ahead to highlight the salient root cause of the recession. They include: (a) the failure to diversify the economy over the years and a dangerous dependency on one commodity (crude oil) for 80 per cent of our national revenues and more than 90 per cent of our foreign exchange earnings; (b) the failure of the immediate past government of former President Goodluck Jonathan to save when oil prices was high and (c) the crash of oil prices that began in 2014 and reduced Nigeria’s revenue earnings. The immediate causes of the recession lie in the leadership and policy failures of President Muhammadu Buhari and his government as he could not appoint his ministers six months into his administration, as well as in the reduction of revenues caused by the sharp drop in oil production output as a result of the then renewed insurgency and economic sabotage in the Niger Delta.
Economists and analysts has blamed the recession on failure of leadership by previous and present governments and have gone ahead to highlight the salient root cause of the recession. They include: (a) the failure to diversify the economy over the years and a dangerous dependency on one commodity (crude oil) for 80 per cent of our national revenues and more than 90 per cent of our foreign exchange earnings; (b) the failure of the immediate past government of former President Goodluck Jonathan to save when oil prices was high and (c) the crash of oil prices that began in 2014 and reduced Nigeria’s revenue earnings. The immediate causes of the recession lie in the leadership and policy failures of President Muhammadu Buhari and his government as he could not appoint his ministers six months into his administration, as well as in the reduction of revenues caused by the sharp drop in oil production output as a result of the then renewed insurgency and economic sabotage in the Niger Delta.
Away
from the politics and economic blame games, ordinary Nigerians who may not even
have an idea of what GDP is or how drop in oil price concerns them have had to
bear the brunt of the economic hardship and condition brought by the recession.
Nigerians has had to endure myriad of untold hardships through this period of recession
and even till present; though there are indication that the economy is growing
again. What many have lost will take time to be regained. The hallmark of the
hardship was felt most in areas that concerns daily lives of Nigerians. They
include (a) rising food prices and high price in food importation; (b) high
rate of job loss; (c) high rate of unemployment; (d) high rates of currency
exchange rate; (e) surge in immigration of youths out of the country; (f)
poverty; and (g) insecurity.
Evidence
of the recession was felt more by ordinary Nigerians in buying daily food
needed for the sustenance of their body. The recession came with the explosion
of the prices of food item, what people were able to afford with the same
amount of money before became unreachable as the prices of essential food items
rose significantly in connection with the rising level of inflation in the
country as a result of the recession. The rise in food prices was worsened by
the rise in fuel price and the devaluation of the naira by the federal
government. The naira became very weak and could not buy much in the market. Prices
of semolina, vegetable oil, palm oil, fish, spaghetti, macaroni, rice, beans
and garri, among others soared at this period. Prior to the recession a basket
of pepper costs N3,000 but rose to N7,000. A basket of tomatoes that costs
N4,000 or less, rose to N8,000. The price of beans increased from N14,000 to
N16,000; while a bag of rice that was sold from N14,000 rose to N16,000,
N17,000 & N19,000. Most Nigerians could not get value for their money.
Three course meal in a day became big a problem for most family as they could
not afford foods their family needed.
The
exchange rate between the naira against the dollar was so high and dollars were
unavailable. Parents their children were schooling abroad could not source for
dollars for the payment of their children school fees. At a point the naira was
#416 against 1$. This affected business people too. Nigeria
is an import-dependent country; therefore, the prices of most items in the
market was a reflection of the exchange rate of the local currency against the
dollar. For as long as the naira continued to be worsted by dollar at the
foreign exchange market, the prices of imported commodities continued to soar. Importers
and business people could not get a good exchange rate that would help them
import more goods. As from July 2017 to January 2018 most Nigerians were
selling their product at exorbitant prices reason being the unavailability of
dollars. The scarcity of foreign exchange posed a major challenge to businesses.
Lack of foreign exchange meant that since we import almost everything in the
country and there was no money to bring in raw materials, capacity of operations
for most companies dropped.
This
whole scenario resulted in job losses for the ordinary Nigerian. Most companies
in an effort to reduce the impact of loss on their performance and financial
health resorted to cost cutting measures including staff retrenchment,
reduction in lending activities, and reduction in staff salaries. According to
a banking sector analysts, about 3000 bank workers lost their jobs in 2016 due
to the wave of staff retrenchment triggered by the recession. This figure was just in the banking sector
alone. According to another figures obtained from the National Bureau of
Statistics 3.67 million Nigerians lost their job within a one-year period
covering October 2015 to September 2016 pushing them into the unemployment
market. These are fathers, mothers, brothers and sisters that have responsibilities
to carter for. Also during this period, unemployment sky rocketed. Due to the
contracting economy, jobs were not being created. People were graduating
without finding career opportunities to fit into. This created a situation of
job deficit, according to the figure released by National Bureau of Statistics
(NBS) the country’s unemployment rate rose from 14.2% to 18.8% in 2017 alone.
This
dare situation of unemployment resulted in mass exodus of youths out of the
country in search of greener pasture in other countries of Europe, Canada,
United States, Ghana, South Africa and virtually anywhere away from the shores
of the country. This is even as some of them had to go through perilous journey
just to escape the harsh economic conditions in the country. Recently Nigerians
were being traded as slaves for 4 dollars in Libya as reported by CNN. These
youths who crossed through Sahara Desert hoping to get to Libya and probably
jump on a boat and land in Italy were all looking for a better condition.
The
recession also brought with it poverty, which made Nigeria among the world
capitals of poor people. In a recent figure released by United Nations
Development Programme (UNDP) Nigeria’s poverty index stood at 53.7 per cent.
The report by the organisation shows that Nigeria has overtaken India as the
country with the most extreme poor people in the world. When put in
perspective, the figure shows that 86.9 million Nigerians are now living in
extreme poverty. This represents nearly 50% of our 180 million population.
When
all this harsh economic condition is considered. One can only conclude that
Nigerians do not deserve it and never again should her leaders allow the
country go into recession again. The government must be prudent in its
spending, almost every analyst highlights that if previous governments were
saving when oil was being sold at $169 per barrel, Nigeria will not find herself
in recession. The government must move the economy way from oil dependent
economy. The Nigerian climate holds many promises of agriculture. The
government should keep investing in agriculture and encourage youths to go into
agriculture while making funds and machinery available for them. The government
also need to put forward a stable economic and financial policy for period of
ten years and pursue it irrespective of change of government. The staggering
economic policies of previous and subsequent government is chasing foreign
investment away. There should be a campaign dedicated to moving Nigerians out
of poverty through provision of skill acquisition centres. There should also be
a public private partnership in creating new manufacturing jobs for our unemployed
youths. This way the country can start hopping for a bright future away from
the harsh conditions we have been through.