Thursday, November 26, 2020

Issues that Matter with Isaac Ologbosere: The Implications of Another Recession in Nigeria


      Nigeria as a country is one of the biggest countries in Africa. It prides itself with the title: 'The Giant of Africa'. With its location situated at the gulf of Guinea, it is a beauty and one of the most amazing countries in the world. Its amount of mineral resources and arable land cannot be contested by any other country. It boasts of many natural landmarks and wild life reserves. Areas such as Cross River National park and Yankari National park have waterfalls, dense rain forest, Savanna and rare primate habitats. One of the most recognizable sites is Zuma Rock, a 725m-tall monolith outside the city of Abuja.

            It runs a Democratic system of Government, which takes care of the country by trying to meet the needs of the citizens in the country. But when there is no means to carry out that part successfully by the Government, then it spells a major problem for the country. The Nigerian Economy has been hit with another blow of Economic recession, since its last one in 2016. Lets look at the terms carefully to grasp more of the issue at hand. Firstly, let's begin with what the word 'Economy' means.

Economy refers to the state of a country or region in terms of the production and consumption of goods and services and the supply of money. Conversely, recession refers to a period of temporary economic decline during which trade and industrial activity are refunded generally identified by a fall in Gross Domestic Product (GDP)  in two successive quarters.

Economic Recession can thus be referred to as a negative real GDP growth rate for two consecutive quarters, and this can be caused by different things.  During the Global pandemic, the world was in total fear of the Corona virus and strict measures to curb the virus were implemented by various Governments in different countries including Nigeria. Alot went into the fight against the virus in Nigeria and both financial and Human resources were harnessed and the results that comes in daily shows that the Nigerian Government is winning the War. This is a report worth celebrating but it came at a high cost. The Nigerian Government put a lot of resources especially in the area of finance and this can be counted as one of the causes of this recession that the country is facing right now. There may be other causes which may include:

1) Accumulation of debt servicing especially foreign debts.

2) High interest rates

3) Mass unemployment and others too numerous to mention but the most obvious is the war against the Global pandemic that hit the country early this year.

            The data released by the National Bureau of Statistics (NBS) for Q3 2020 shows a dip of 3.62% in real GDPfor Nigeria which strongly confirms that the Nigerian Economy has officially fallen into a second recession in 5 (five) years since 2016 when the economy contracted by 1.62%. This does not hold well for the Nation as this recession comes with its implications.

            The main costs of another recession in the country would be:

1) Unemployment: This recession would bring about a rise in the number of unemployed graduates in the country which was already a problem beforehand. A rise in the number of unemployed youths in this country is certainly not what this country can look forward to right now as plans were already being made by the government to reduce the number of youths that are not gainfully employed in the country to the barest minimum.

2) Higher Government borrowing: This recession would force the present government to resort to further borrowing of money from foreign countries which has almost been a norm in the government of this country beforehand and it is not healthy for the wellbeing of the country at all.

3) Rise in poverty: As a result of this recession, an unavoidable rise in poverty in the country is most likely inevitable. As little or no money is currently in circulation, the rate of poverty is sure to rise and this is a problem for the government of the day. These are some of the effects that would be brought about by this second wave of economic recession that the country is presently facing. There are others too numerous to mention but these few implications mentioned are of great concern for any government facing economic recession.

   In conclusion, possible solutions that may help in salvaging this situation include the Nigerian government considering enforcing a reduction in tax rate both of individuals and companies whether large or small. There should be effective spending of the nation’s treasury. Also, the Nigerian government should increase her expenditure on skills. The country has this in abundance if we can only look inwards. Furthermore, there should be an increase in Agricultural produce and exports.

   As a country we will get out of this problem as we have always done before. Together we are strong and we remain the 'Giant of Africa'.


Isaac Ologbosere writes from Benin city, Edo State, Nigeria. 08128362829.

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