Hello folks, thanks for joining us on Ibadan Insider business today. Today we are talking about the Nigerian economy and we have an Opinion Piece from Maureen Alisiobi on The current economic recession in Nigeria and its solutions.
Recession: is defined as a significant decline in economy activity visible in the real Gross Domestic Product (GDP)
Is also a general downturn in any economy recession is associated with high unemployment, slowing GDP and high inflation.
So how did Nigeria’s recession happen?
- Many factors contributed to Nigeria’s fall into economic recession, but the major cause is inflation. Inflation refers to a general rise in the prices of goods and services over a period of time. It is measured as an annual percentage increase in the price of goods and services. As inflation goes up, every naira you own buys a smaller percentage of goods and services.
The price of oil and the volatile state of oil production in Nigeria, as well as bad debts gathered over time, has led to lower purchasing and foreign exchange scarcity.
- The high-interest rate in the Nigeria’s banking sector is also part of what caused the country’s recession because there was a limit to liquidation or the amount of money available to invest in the country’s economy.
So how has the economic recession affected Nigeria?
- Two consecutive quarters of negative growth in gross domestic product led to the recession in the first place, the result is that large and small business are affected negatively as sales of products slow down because of the inability of buyers to buy them due to inflation.
- Furthermore, Nigerians consumers live under the belief that the economy is not stable. That way they become less likely to spend money. When people are not spending money the way they should because of inflation, The economy will not grow and it perpetuates recession further.
- Large and Small businesses are reducing wages because workers’ pay is part of the increasing costs caused by inflation. Workers are making the same amount of money even though their purchasing power has steadily reduced.
Nigeria is currently facing a huge recession because the major source of income which is crude oil is no longer valuable in the world market. Our Governments both present and past, did not diversify (or are not doing good jobs of diversifying yet) the economy into other areas where revenue can be generated. The over-dependence on the crude oil which has gone on for so long in the past has done the nation more harm than good.
Since the huge fall of oil price in the OPEC market, things are no longer the same and the centre can no longer hold in the country.
There is a fall in the GDP (Gross Domestic Production), high rise of unemployment, in the country, the cost of living is very high as even those in the labour market are being laid off in thousands every day.
The Country’s leaders past and present cannot be exonerated as part of the causes of the country’s recession, because of their lack of consistency in awarding contracts and government projects. More often than not, money meant for economic development is wrongly channeled into the private pockets. That causes untold hardship for the poor and unsuspecting masses.
Nevertheless, there is still hope for Nigeria. Our leaders can still help this country get back on the right track by channeling their attentions into other areas that can help increase gross Domestic product and not focusing only on crude oil which seems to be going to an early grave in terms of value. Agriculture for one can be a major source of revenue for Nigeria if all hands were to be on deck to support it, and the required attention paid to it.
Finally, apart from diversifying its major revenue sources and creating employment for the masses, the government could reduce interest rate both on borrowing and lending for businesses and investors.
Also, revenues meant for development and infrastructure should be properly utilized and projects can go around to alleviate the suffering of the masses and galvanize them work harder to bring the country out of recession.
Maureen Alisiobi writes in from Bashorun, Ibadan
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