Nigeria’s Economy Is In Recession

Every Nigerian now has to bear the brunt of a mismanaged economy courtesy of the Jonathan administration. If only we knew we wouldn’t be better off now than we were four years ago. We are on the verge of making another choice as regards who will lead the country for another four years. It’s a choice between continuity which President Jonathan represents and change which Rtd. General Muhammadu Buhari promises to bring to bear if elected. Many Nigerians are torn in between these two choices which the New York Times editorial referred to as miserable. Regardless of this, we have to weigh our options.

recessionDr. Okonjo-Iweala’s recent allusion to the lack of institutions, systems and process as the reason for persistent corruption and the current state of the Nigerian economy is an after-thought. Though institutions, systems and processes are needed but what has been done under the coordinating minister to address this problem and avoid this economic mess? Nobody has come out to tell Nigerians that the economy is in recession. Worst still, what the economic management team can tell us is that we need to start diversifying the economy in order to cope with the current fall in oil prices. Nigeria’s economy is finally in recession.

Former CBN Governor, Professor Chukwuma Soludo in his much criticized article titled ‘Buhari versus Jonathan: Beyond 2015’ which was published in most newspapers stated that ‘’at a time of oil boom, Nigeria again went on a consumption spree such that the budgets of the last five years can be best described as consumption budget with new borrowing by the federal government exceeding the actual expenditure on critical infrastructure. Not one penny was added to the stock of foreign reserves at a period Nigeria earned hundreds of billions from oil.’’

Professor Soludo said ‘’President Obasanjo met about $5 billion in foreign reserves and the average monthly oil price for the 72 months he was in office was $38 and yet he left $43 billion in foreign reserves after paying $12 billion to write-off Nigeria’s external debt. In the last five years, the average monthly oil price has been over $100 and the quantity also higher but our foreign reserves have been declining and exchange rate depreciating.’’

The CBN’s further devaluation of the naira after the initial one in 2014 is a pointer to this fact as well as the statement by Dr. Okonjo-Iweala that tough time awaits Nigerians. According to Professor Charles Soludo: the naira exchange rate to the dollar is $210 at the parallel market. Sadly the government’s economic team is very weak, dominated by self-interested and self-conflicted group of traders and businessmen and so-called, economic team meetings have been nothing but showbiz time. The very people government exist to regulate have seized the levers of government as policy makers and most government institutions have largely been privatized to them.’’ All the indices for measuring government performance on the economy have been poor for Nigeria according to reputable statistical organizations. This has been the case for many years now and past administrations have done little to improve these indices thereby improving the standard of living of Nigerians.

The reasons for these are quite obvious. Leaders of government and politicians have failed to address the fundamental problems. They have refused to reduce the cost of governance as well as the salaries and emoluments of public office holders. Besides, the citizens have not forced their representatives at the National and State Assemblies to work on cutting down government spending by at least 50 per cent. Also, corruption, lack of respect for the rule of law and impunity have not been effectively tackled since the return of democracy in 1999 and that is why holding a public office in Nigeria is the most lucrative job.

Countries that do not have as much natural resources like we do are managing their economy in such a way that the citizens are not made to suffer untoward hardship besides our over-reliance on crude oil as the major source of revenue has resulted in undermining the agricultural and mining sectors which are capable of solving most of our economic problems. Now, the current economic management team is looking at diversifying the economy as a result of the fall in oil prices but this should have been done a long time ago.

Professor Soludo further stated that ‘’so far, government’s response to the self-inflicted crisis is, at best, laughable. They blame external shocks as if we did not expect them and say nothing about the terrible policy choices they made. The National Assembly had described the 2015 budget as unrealistic. The fiscal adjustments proposed in the 2015 budget simply play to the gallery and just to pander to our emotions.’’ Now that the Nigerian economy is in recession due to economic mismanagement, corruption and insincerity on the part of our leaders, ordinary Nigerians have to bear the brunt of our leader’s failure to manage our common wealth with attendant high inflation rate, rising public debt, high exchange rate, high unemployment rate, growing poverty and budget deficit. ‘’The seeming crisis is not destiny but self-imposed’’ says Professor Soludo. ‘’However, we must see it as an opportunity to be seized to fundamentally restructure Nigeria’s political economy including its fiscal federalism and mineral rights. The current system guarantees cycles of consumption loo and I cannot see sustainable long term prosperity without major systemic overhaul.’’

Nigerians can only hope for the best as they make a choice in the upcoming general elections. Achieving a strong economic growth at all times, month by month and year by year is not rocket science, we only need leaders who are ready to make sacrifices and support fiscal discipline. These are some of the solutions to our economic problems. Leaders of government should seek the advice of people with the initiatives and expertise to improve the Nigerian economy. We have a lot of them.

IMAGE: via Flickr


Written by
Bolaji Aregbeshola
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