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Friday, December 9, 2022

As Nigeria Enters Another Recession

THE economy of any nation determines to a large extent, her health, wealth and the capacity to attract development partners. Therefore, the news of Nigeria, entering into economic recession, and the worst in the history of the great nation is not only disheartening, but also unsettling. More worrisome is the fact that experts have opined that she has more than depression to tackle with in this auspicious time in the nation’s economic history.
THE Nigeria’s economy is in dire need of intervention as the naira plummets to an all time low in exchange to American dollar. The Hope observes that the Nigeria economy has been built on the idea of consumerism rather than industrialization. Thus, even the crude oil that has many derivatives of economic value is exported rather than being processed. Therefore, the nation imports refined petroleum, diesel and kerosene at high prices, and also loses the income she could generate from other crude oil derivatives. Coupled with these are extravagant and unnecessary expenditure of funds on projects, programmes and appointments that have little or no contributions to income generation in the country.
ALTHOUGH, government blames the recession on COVID-19 and fallen oil revenue, as the oil sector recorded a 6.63% contraction given the reduction in the average daily oil production from 2.02mbpd to 1.81mpdpd, THE HOPE is also of the opinion that if the corruption index ranking Nigeria as the 146th least corrupt countries out of 180 is anything to go by, and given the wastes, and the non supportive business environment, we are less surprised that the nation’s Gross Domestic Product has fallen abysmally by 6.10% representing a drop of 8.22% points in comparison to 2.12%, in the second quarter of 2019 and 7.97% points decline when compared to the first quarter of 2020. Within this period too, the unemployment rate in Nigeria has risen to 27.1%, while the inflation rate has risen to 14.123%.
WITH the high cost of doing business in Nigeria, the insecurity and the underdevelopment of the manufacturing sector, the recession may well last longer than expected. While government’s intervention of trader moni, farmers’ moni, and injection of intervention funds into the economy is commendable, however, these interventions may not deliver the expected economic turn around except government changes its economic ideology and her investment environment is rebuilt. With an interest rate of 1.25% on deposits, at an inflation rate of 14%, savings is discouraged, and less money is available for entrepreneurs who seek loans for their businesses.
COVID-19 rather than being a culprit has opened the eyes of government and people to the fragility of over dependence on oil. Given the lessons learnt, we admonish government to tackle the issues that hinder the establishment and growth of manufacturing companies, import substituting and other export producing industries. We also need to warn that laying off workers, reducing health care, education, and other social welfare spending would further aggravate the existing hardship faced by the people.
IF the refineries are beyond repairs, then privatizing them in order to gain from the benefits of local distillation and export would not be a bad idea. The Federal Government also needs to tackle headlong the rising cases of insecurity, high cost of living and reduce its extravagant expenditure in order to boost local productions, attract foreign investors and stabilize the economy.
IN order to secure the continuous production of agricultural goods, government must of a necessity establish farm settlements, provide adequate support for the provision of shelter and accessible educational facilities in those areas. Furthermore, fortified security posts and men must be provided in these areas, so that farmers can provide food for the teeming population without fear of molestation. A reduction in the cost essential commodities would help to alleviate the pangs of the economic depression.
IT would also not be out of place for the various state governments to organize economic targeted conferences where experts could congregate, discuss and proffer solutions for the problems at hand. Finally, there is no better time to tackle corruption than now. The nation needs to be more transparent, accountable, faithful and prudent in the expenditure of the little resources available.

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