When United Airline, an American commercial passenger carrier, shut down its operations in Nigeria during the 2016 recession, all its Nigerian staff were sacked, travel agencies and other business partners were also affected.
Till date, some of those employees and many others from other companies that downsized to stay afloat during the 2016 recession are still searching for jobs, while their families suffer due to the economic hardship.
Jerry Oleka, a tricycle (Keke) rider, is one of those who resorted to self-help after several fruitless searches for a job in Lagos.
Oleka, a former staff of Bi Courtney Limited, operators of the Murtala Mohammed International Airport, Terminal 2, now feeds his family of five with earnings from his tricycle business.
But the rider, whose cute dressing and well-mannered disposition differentiates him from the rest of the riders on the route, still prefers white collar job because of the stress, abuses, disorderliness and high risk of running transport business in Lagos.
Sadly, another recession has set in and many from the boardroom are likely going to join Oleka on the road.
While Oleka’s case seems normal, Yakubu Angwe’s story is more pathetic. The young graduate from Nasarawa State University, who lost his job during the 2016 recession, and managed to set up a farm with his savings in Akwanga, his home town, lost his maize and beans farm to herdsmen attack.
Without crops to harvest and money to buy them and replant, the young man left his family of four, to ‘hustle’ in Abuja.
Today, Yakubu hangs out at the Federal Secretariat Complex in Abuja, serving as middleman for anything; from recruitment, contract, filing of documents to arranging meetings with people that matter.
The hustle also comes with risks as he has been arrested on several occasions for possession of sensitive government documents, recruitment fraud, among other allegations.
“My brother, I am from the north, yet I find it difficult getting a good job. But I cannot see my family suffer while I am still alive; that is why I do anything to survive, and I am not the only one here, hundreds of employed people have made the complex a hustling hub,”, Yakubu said.
Many farmers have fled the North-East and North-West due to incessant attacks on their farms and lives by herdsmen, bandits and kidnappers. Many times, the Food and Agricultural Organisation and the United States Department for Agriculture have tapped herdsmen as one of the risks for food security in the country.
“We cannot farm again in Benue. All the investments I have made have been destroyed. Our problem is not Covid-19 but herdsmen. I have lost over N5 million,” a Nassarawa-based rice farmer, who preferred anonymity
Going by the impact of the deadly Covid-19 pandemic, coupled with the current recession, many are going to join the likes of Yakubu to hustle across the country as companies are likely going to downsize once again to stay afloat.
According to some public affairs analysts, already, the suffering for the year has been unprecedented, and adding another recession to it means hell for many Nigerians and even for the government.
“This year has been all pains and suffering for Nigerians; from lockdown, protests, killings and now recession. I think the government has not done well in living up to its promises. There should not be mention of recession in a government that claims to fight corruption, claims to have blocked all leakages in the economy and is singing praises of its steering efforts,” Tumise Akanji, a public affairs analyst, said.
But the suffering is increasing as well. According to Stand For Humanity, a humanitarian organisation based in Abuja, the recession is only going to further the suffering of Nigerians.
“Recession for a country with a staggering 40.1 percent of population living in poverty means loss of jobs, more sufferings, high level of crime, insecurity and low investments,” Rita Magaji, coordinator, Stand For Humanity, decried.
She blamed the government for not handling well the security challenges in the country.
“If the government had acted on time, sincerely and with all the seriousness it required, the security challenge would have been a thing of the past. How can there be food when herdsmen attacks stopped farmers from going to farm, kidnappers along highways discouraged movement of people and goods,” she said.
Toeing the same line, Mercy Ukwu, a lawyer and women rights activists, noted that the government watched kidnappers, bandits and insurgent groups kill the economy with their notorious activities, especially killings.
“After the killing of a foreign tourist at Kajuru Castle in Kaduna, visitors stopped patronising the outfit. Of course, foreigners will not go near our tourism facilities and a lot of us Nigerians will keep patronising foreign destinations all because of government lukewarm attitude to fighting terrorism and insecurity in the country. Then, why will the country not slip into recession when businesses are not being patronised well”, she disclosed.
Decrying the ordeals of many women raped across the country because of insecurity, Ukwu insisted that herdsmen, bandits, and kidnappers’ activities ruined the nation’s economy due to unprecedented threat to lives and businesses.
Also, with the recession, the Federal allocations have tapered off and realisation of some promises may be difficult now, especially the payment of the minimum wage by states.
A former newspaper editor’s investment in farming business last year went down the drain following the activities of herdsmen.
“I had thought that farming, which I had been planning even in my active years in journalism to go into later in life, was going to provide sustenance for me in retirement. I acquired some expanse of land in a part of Oyo State where I planted cassava, maize, yam, etc. But the entire investment was destroyed by herdsmen that moved their cattle into those farms. I nearly suffered heart attack,” the former editor, who spoke on condition of anonymity, said.
“According to him, herdsmen’s activities have negatively impacted Nigeria’s economy big time. Sadly, government has continued to treat the problem of herdsmen with levity. We just slipped into another recession with our eyes wide open,” he further said.
Already, Niger State has declared it would not be able to pay full salaries to workers. It is settling for a 30 percent pay cut.
Ahmed Ibrahim Matane, secretary to the Niger State Government, said the reduction was not a slash but the state’s inability to meet 100 percent salaries due to a reduction in its federal allocation.
Many states are going to follow the Niger example, meaning more sufferings for the people as the slash may cut across not only salaries but even welfare projects.
Nigeria’s grim realities
The painful reality of a second recession filled Nigerians with serious foreboding because the citizens are already in deep crisis. Before the second recession the National Bureau of Statistics (NBS) had announced that inflation had reached 14.23 percent in October, while unemployment is now more than 27.1 percent and threatening to hit 33 percent by the end of December 2020.
According to the World Poverty Clock, Nigeria remains the poverty capital of the world with nearly 105 million people out of an estimated 200 million population, said to be living below the poverty line.
Six people plunge into poverty every minute according to the World Poverty Clock even as the World Bank in December last year warned that if drastic measures are not taken, a quarter of the World’ poor will reside in Nigeria by 2030.
While inflation hit 14.23 percent in October 2020, the monetary policy rate is 11.5 percent, with foreign direct investment falling 78 percent in the second quarter of 2020. Foreign investments slumped 78 percent in the second quarter to $1.29 billion, from $5.85 billion in the preceding quarter. Nigeria earned $823.06 million (N296.3 billion) from export to ECOWAS countries and $2.72 billion (N978.21 billion) from shipping out products to Africa in the first quarter of 2020. In the second quarter of 2020, export to the whole of Africa was estimated at N401.4 billion, while goods worth N149.3billion were exported to ECOWAS member states, which was 82 percent decline from export in the first quarter. Though this may be attributed to Covid-19, manufacturers said the border closure was a critical factor.
These grim realities are at the root of the youth unrest, which have snowballed into uncontrolled criminality, terrorism, insurgency and banditry as economic options are limited amid growing population said to be at 3.2 percent per annum especially of the youth.
The consequences are legion beginning with a surge of criminality and other forms of social vices in the coming days that are better imagined than experienced.
Buhari’s leadership style may hinder efforts to exit recession – Expert
The news that Nigeria has been hit by another recession in five years, probably worse than the former, has jolted even the most lethargic citizen as the stream of anguish and pain now fill the land, especially with the skyrocketing prices of basic food items and commodities in the market.
Although, the Muhammadu Buhari administration, through the Minister of Finance, Budget and National Planning, Zainab Ahmed, assured that Nigeria will exit the recession in the first quarter of 2021, a public affairs analyst, Katch Ononuju, has raised fears that Buhari’s style of leadership on the basis of alleged nepotism may hinder such efforts and make the situation perhaps, worse.
The Minister during the just concluded 26thNigerian Economic Summit (NES) organised by the Nigerian Economic Summit Group(NESG) and the Federal Ministry of Finance, Budget, and National Planning, blamed the Covid-19 pandemic for the plunge into recession.
Ahmed said the current recession followed the pattern across the world where many countries had entered an economic recession due to the pandemic.
“Nigeria is not alone in this, but I will say that Nigeria has outperformed all of these economies in terms of the record of a negative growth,” Ahmed said.
NBS in its Gross Domestic Product report for third quarter on Saturday, November 21, said the GDP, the broadest measure of economic prosperity, fell by 3.62 percent in the three months to September.
Nigeria has suffered two consecutive quarters of shrinking GDP, which is defined technically by economists as a recession.
Despite the optimism expressed of the possibility of exiting the recession very soon, a PhD holder in Business Administration, who spoke with our correspondent on condition of anonymity, said Nigeria was in a situation worse than being in chains.
“I hear government consoling itself, saying that other countries are also in recession, but they pretend they did not know the difference between when a rain beats a lizard and a rabbit. It is a popular saying in my place that when a rain beats a lizard and a rabbit, the body of the lizard would dry first before that of the rabbit because of the nature of their bodies. Government should go and learn what that means. We are in for a long-drawn problem; nobody should be deceived by the false hope they are giving themselves that they had a magic wand to take us out of it in first or second quarter of next year. If you look at where we are now, there is nothing to support that optimism,” he further said.
According to him, “You asked me if Nigeria was in bondage. I will rather use a word that depicts bondage to make everybody appreciate the seriousness of the matter. Nigeria is in serious problem worse than being in chains. It cannot free itself from the stranglehold of a few individuals and foreign influences. Look, no leadership of any country would elect to mortgage the future of its country through excessive borrowing. When you are tied to the apron string of anybody the way Nigeria is tied to China and other creditor-nations; that country is simply in chains. It is as simple as that,” he said.
Speaking to BusinessDay SUNDAY on Wednesday, Ononuju, who is an economist, said Nigeria never really got out of the 2016 recession but merely playing with the numbers even as be blamed the current recession on the absence of economic planning by the President Buhari’s administration.
“The President does not have idea because he does not want to choose anybody who does not come from his circle of ethnicity. So, the good people are outside and he does not want to use them. As for finding experts to do the job, Buhari should retrace his steps abandon nepotism and then you will see champions that will do it,” he said.
Governance deficit, excessive borrowing play negative role
Blaming the current government for the ugly development, Peter Obi, a two-term governor of Anambra State, said: “Who do you blame it on? You blame it on the people who are in charge. The reason why we are in this mess is that the country is borrowing money and throwing at consumption. We must borrow strictly for production. The economy is not productive; that’s why it is not creating jobs; it is not putting food on people’s table.”
“As a businessman, the more you borrow money and invest properly, the more your business grows. Nigeria is borrowing money, the economy is not growing; our GDP is not growing, then there is something wrong. We now have a debt of almost a quarter of our GDP, of about $100 billion.
“So, where is investment for $100 billion? If you invest one hundred billion properly, I assure you, we won’t be where we are now,” he further said.
While describing the management of resources under the current dispensation as wasteful, Obi, who was the vice presidential candidate of the People’s Democratic Party (PDP) in the 2019 general election, said: “I can tell you, it is wasteful. They preach about prudence but I have not seen it. It is not something you preach, it is something you must see. I have been campaigning for cutting of cost of governance. It is something that I know; something that I have practised. The cost of governance in Nigeria is unacceptable anywhere in the world.”
By the same token, Afolabi Aiyela, managing director/chief executive officer of Welbeck Electricity Distribution Limited, in an interview with BusinessDay SUNDAY, put the blame squarely on government’s profligate borrowing and expenditure.
Aiyela said: “We have just received from the Federal Government, the overview of 2020 budget implementation and while they earned a total revenue of N2.83 trillion, it has gone ahead to spend N7.09 trillion, meaning that in order to fund its budget deficit, the government had to borrow more than it has earned. No business would be able to survive a situation where it borrows more than what it earned year after year, it would go into liquidation!”
According to him, “When one scrutinises government’s spending for the period of January to September, 2020 in light of these borrowings, it seems the majority of it is being spent on personnel cost and debt servicing, being N2.43 trillion and N2.54 trillion, respectively. Funds released for capital expenditure during the same period was only N873.9 billion. This has to be addressed and turned around in order to increase government revenue and ensure they are able to service their loans.”
Lai Omotola, group managing director, Masters Reality International Concepts Limited (MRICL), also blamed excessive borrowing by government for the current economic situation of Nigeria.
“The current government has been borrowing. It borrowed from World Bank; borrowed from China for railway projects, borrowed or about to borrow from Brazil. Now, government continues to borrow. When you have an N8 trillion budget and you have a deficit that government is saying that they are going to borrow; the impact of this on businesses is that at the end of the day many of them will suffer,” Omotola said.
‘Nigeria must focus on capital expenditure, manufacturing’
Katch Ononuju, a public affairs analyst, suggested that for Nigeria to get out of the recession, there should be massive investments in the small scale businesses to stimulate growth in the economy. He however, doubted the willingness of Buhari to do so as he alleged that most of the owners of the small scale businesses may not get help because they do not fall within the ethnic circle of Buhari.
“You come out of a recession by stimulating the economy into aggregate action. Unfortunately, what the government thinks about is consumption, they borrow and spend, and there is no attempt to encourage productivity in the economy. They don’t spend money on visible areas that could help to form a stimulus.
“Investment should be made on small scale enterprises. Nigerian economy is like that of Germany, what make an economy big is not the big companies, it is those small scale enterprises, and the aggregation of them is what keeps the economy. But then it turns out that the people who own the small scale industries are not in the ethnic range of the people Buhari may want to help,” he said.
The Economist further said: “Buhari does not want to embrace Nigeria; he will not give money to Nigeria to get out of the crisis. The small scale enterprises are in big trouble and they have not seen government help right from the very first recession till now.
“The character of the government is the reason during the first recession there was nothing done to help the small scale enterprises. So, if you don’t help them where will the growth come from?”
On the question of cutting costs, Ononuju suggested that the government implement the Steve Oronsaye report, which recommended drastic reduction in the cost of governance.
He said: “if you want to start the cut in the cost of governance you go to the Oronsaye’s report, not the white paper on it but the report proper,” adding that the government does not have the political will to do it.
Also speaking on cutting the cost of governance, another Economist, Paul Alaje, during a radio programme, posited that the country has to focus more on implementing more of capital expenditure in the budget instead of the usual focus on the recurrent expenditure. He added that the government must “invest more in productivity and manufacturing to boost the economy and look inwards so that we can solve this problem.”
He lamented that the prices of food items have gone up, stressing that the grim reality is that Nigerians will have less money to buy goods as their disposable income will be affected by growing inflation, which is going to reduce their purchasing power. He added that there is palpable fear that many people could also lose their jobs.
He also advised government officials to ‘cut their jumbo salaries and allowances significantly’ even as he expressed confidence that with the right policies and proper implementation Nigeria will exit the recession as soon as possible.
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