Federal government’s lack of sectoral policies and weak institutional reforms in addressing the economy, alongside poor reforms in addressing multiple foreign exchange concerns are some of the factors that hastened Nigeria’s slump into the latest recession,industry experts said.
It is official that the Nigeria, Africa’s largest economy had entered it’s second recession in five years as official figures published on Saturday by the National Bureau of Statistics (NBS) .
The National Bureau of Statistics in its Gross Domestic Product report for Q3, said the GDP, the broadest measure of economic prosperity, fell 3.62 in three months to September.
Economists consider two consecutive quarters of shrinking GDP as the technical definition of a recession.
For the first time in more than three years,the Nigerian economy shrank in the second quarter of this year as the GDP fell by 6.10 per cent,compared with a growth 1.87 percent in Q1.
The Nigerian government had as part of covid economic stimulus through the office of the Vice President Yemi Osinbajo injected N2.3 trillion to lift the economy from inflation which failed to lift the economy away from inflation.
Experts say without institutional and sectoral reforms, such intervention won’t deliver the economy from vagaries of recession and sky-high inflation.
“We don’t have a holistic approach that addresses our institutional and economic problems.We don’t have a sectoral appraisal to our economic diversification. We need a long term approach for instance in Agricultural sector itemising key problems that we want to solve,steps in solving them and the time line to solve them”Celestine Okeke, an Associate consultant on small and medium enterprise development to the British Department for International Development,DFID told BusinessDay.
Already some analyst have warned about the impending danger of the recession to the ordinary Nigeria in addition to a sky-high inflation concerns that had worsened investor’s confidence on the Nigerian economy, alongside putting serious pressure on food prices with its attendant rising poverty.
“For the average Nigerian,there will be loss of jobs,and reduction in income which will affect the already low standards and quality of living,”said Tony Ejinkonye.Business Development Director Africa,Esilkroad Network, and immediate past President of Abuja Chamber of COmmerce and past Nation Vice President of NACCIMA told BusinessDay.
“Debts will increase with savings and investments practically vanishing. Our public schools might get a new influx of students as parents might probably withdraw their children and wards from private schools.
According to Ejinkonye, “Entertainment and leisure places like hotels and restaurants are likely to face drastic drop in patronage equally worsened by the COVID-19 pandemic.
Government emphatically not helping matters he said, pointing out that,”Constant increment in the prices of petrol and electricity coupled with multiplicity of taxes which haven’t been addressed, would widen the gap of inequality and put more people further down economically.
“We should also also anticipate an increase in societal vices,crime and domestic violence occasioned by pressure on family income pressures,”
Nigeria’s recessed economy is further boxed to the corner as the economy continues to grapple with the adverse effects of rising prices of goods and services.
Also,armed banditry forcing negotiated with farmers before they could harvest their foods in Nigeria’s food belt of mostly North Western parts of the country.
Chijioke Ekechukwu, an Economist and a former director general of the Abuja Chamber of Commerce and Industry told BUSINESSDAY that the Nigerian economy has been on a free fall since the beginning of the year.
“Although it does not look as bad as what the country experienced in 2016 to the second qauter of 2017.”Ekechukwu said.
“What this means to the common man is that the Nigerian economy is not growing and it is dwindling. It means that with the population growth of above 2.5 percent annually and with a negative GDP,our per capita income will further reduce,indicating an increase in poverty level.
“Unemployment level will remain high and crime will increase.
On steps the government needs to take, Ekechukwu said, “Government should cut down drastically, unnecessary expenditure on governance and curb corruption which still remains a bane in our economic development.
“The various sectors of the economy should be stimulated. State government’s should be allowed to drive their own income and expenditure, and should seize to be funded from the federation accounting.
On the concerns of worsening inflation and how it is worsening the economy ,Kalu Aja, a financial expert said,”Inflation is sky-high and dollar not assured for investors who seek to repatriate profits.
Infrastructure is yet to be fixed,the business capital of Lagos is not tax friendly nor are parts of the North safe to drive.A lot of work has to be done.
Speaking on how sub national government should drive the economy, Tope Fasua, an Economist and a former Presidential Aspirant told BusinessDay, “The first thing is for the states to reorder their priorities.There is still too much focus on the conveniences of political office holders especially the governors.”
No other country spends on political officer holders and appointees the way we do and this bears out in our general misery and inability to do right by our people,Fasua said.
