These are certainly not the best times for millions of Nigerians now grappling with the combined misery of living and operating in an economy hobbled by high inflationary pressures (officially at 14.23% although informed sources said the figures are much more higher than what official sources present), weakened naira (the naira- Nigeria’s official currency has lost an estimated 153% of its value against the US dollar in the last 5 years), sky-high unemployment rate (27.1% according to the Nigerian Bureau of Statistics- although the figure could hit around 50% if you factor in underemployment), extreme poverty levels, (40.1% according to statistics aggregation group Statistica, however, the World Poverty Clock estimated in 2018 that over a hundred million Nigerians live below the poverty threshold of N900 in a day) and critical dearth of low infrastructure; power supply, quality road networks and public water supply are in very short supply in most Nigerian communities.
Combine the nightmarish picture painted above with the revelation last week that Q3 GDP fell by 3.62%- the second consecutive decline in national output levels as captured in the GDP tabulation thereby plunging Nigeria into a second recession in five years and then you get a picture of the state of gloom currently rocking many across the country.
Many informed commentators opine that Nigeria’s passing through its worst economic cycle in 40 years with several manufacturing outlets and businesses either closing shops completely or transferring their resources to more stable and predictable markets where economic policies are driven by objectives metrics and not the whims and caprices of a few unintelligent bureaucrats and their lackeys in and out of power corridors.
According to Nairametrics, an online economics and finance resource channel, food prices in Nigeria rose by over 110% in the last five years. Economic analysts project that Nigerian household in 2019 spent 57% of their entire earnings on food items. With food prices rising by more than 40% between June and October this year, the average household expenditure on food would only rise higher leaving families with little or nothing for other expenditure items such as rent, medical bills, education, household furniture and family vacation.
Business are shutting down at an alarming rate as a result of low patronage, rising operations costs (fuel prices have been jacked up five times since June) and unhelpful government policies such as the stubborn refusal to reconsider the closure of the land borders which has placed the country at a serious disadvantage in terms of trade involving Nigeria and its neighbours.
It is expected that many would try to explain away the recent downturn in our economic fortunes on the tragedy of the COVID-19 pandemic, the ensuing global lockdowns and the fall in oil prices. The minister of finance, Zainab Ahmed has already done this and it is expected that many senior government officials would maintain that line of argument in the next few weeks and months. What they would never tell us is why the country also went into recession in 2016 since there was neither COVID-19 nor economic lockdown at the time.
Where do we go from here? What does the present recession entail for businesses and households?
Let us start with the obvious. More Nigerians will return to the labour market as manufacturers and other businesses wind down operations or scale things down until economic realities improve; individual and family income levels would decline and basic food would continue to be beyond the rich of millions.
Nigerian youths would drop out of schools in droves as many parents would fall short in meeting the academic demands of their children and wards and what happens next? Crime rate already at intolerable levels would soar as youths drop into the labour market and out of schools with nothing productive to engage their hands and minds.
Economic watchers, commentators and experts believe that the government have not been proactive enough
Dumebi Kachikwu, the Chairman of ROOTSTV NIGERIA believes that much of the economic and social problems besetting Nigeria could have been avoided if and only if the communities now ravaged by various criminal groups in the northern and southern parts of the country had been secured to enable farmers go into the farm and produce food to feed the nation and the West African region at the very least.
He opined that if the government had been smart enough to tap into the abundant agricultural resources of the land, the crippling problems we face today be it unemployment, rising food prices and hunger could have been kept under control.
Speaking on the recent #ENDSARS campaigns and the attempts by the federal government to punish those it believed were arrowheads of the protests, the outspoken commentator on national issues warned the government against chasing shadows.
Kachikwu posited that the federal government would be naïve to think that the popular nationwide protests which gained the attention of international media organisations and politicians were just targeted at stopping police brutality.
In his consideration, the #ENDSARS protest was a mass movement against irresponsible governance which seeks to add to the burden of the people through increased taxation, higher fuel prices and hiked electricity tariffs at a time when other nations of the world are actively seeking ways of ameliorating the pains and hardship inflicted on the populace by the COVID-19 pandemic still ravaging the world.
The ROOTSTV CEO submitted that unless and until the government realises that it owes it as a duty to seek the improvement of the life of the ordinary citizens, the protests will only become more persistent and could consume the country itself unless the government realises soon enough that it can no longer play the ostrich as the news of another recession hits home.
An economist Michael Obieze believes that the problem with the economy rest squarely with the political authorities. He cited the apparent lack of direction on the part of the economic managers. He questioned the competence of the finance minister who is rarely seen in public and often sounds out of sync with reality the few times she appears before TV cameras.
In his opinion, things will continue to deteriorate under the Muhammadu Buhari presidency and his economic management team whom he said are only knowledgeable in borrowing and spending on consumption. He does not see any light at the end of the tunnel because in his estimation, Nigeria has consistently made terrible political and economic choices over the last few years.
Will Nigeria recover from this recession in time to rebuild? How will the present downturn in our economic fortunes effect the 2021 budget proposal presented to the National Assembly? Will the story still be creditworthy to be able to borrow from countries and multilateral donors?
Only time will tell.