Nigeria’s dwindling economy

Nigeria’s economy, like many others in the world, has been hit by the COVID-19 pandemic. The country had to declare total lockdown in some states for several weeks in order to halt the spread of the disease before it finally settled for the gradual reopening of the economy.

Sadly, within the period that economic activities were shut down, poverty and unemployment worsened, while inflation rose exponentially. The Minister of Finance, Zainab Ahmed Shamsuna, expressed fear that the country could go into recession. She stated this during the recent National Economic Council (NEC) meeting presided over by Vice President Yemi Osinbanjo.

The minister said the country’s economy had contracted by -4.4 per cent and government was doing everything possible to reabsorb the shock arising from the crash in crude oil price following the global coronavirus outbreak. Due to the fall in revenue, political office holders have started cutting their salaries and allowances. For instance, the Kano State government reduced salary of political officers by 50 per cent while Enugu State abolished allowances for former governors and deputies. In Kaduna State, Governor el-Rufai directed the deduction of 25 per cent from the salary of its personnel which began in April. In addition to these measures, both federal and state governments reviewed their 2020 budget to reflect the economic realities.

During its first tenure in office, the Buhari administration faced recession that lasted from the first quarter to the end of the second quarter of 2015.The recession affected cash flow and slowed the level of development in the country. Many states struggled to meet up with their financial obligations. The Federal Government quickly intervened to save the cash-starved states from imminent financial embarrassment. This was done through dishing out of financial bailouts to states which were in financial distress and could not pay salaries.

However, while the government’s prompt response assisted tremendously towards salvaging our battered economy, there is a difference between what had caused the recession in 2015 and the current one. They share the same pattern of solutions depending on how the government reacts.

Amidst the dwindling revenues staring the country in the face, the government should borrow from the report of the Steven Orosanye’s Committee on rationalisation of public service by streamlining the operations of government’s institutions and agencies. The committee suggested mergers of some institutions or agencies that have overlapping functions. I think there is no better time. Merging agencies with similar functions is the best way to cut or reduce the cost of governance in the country. Besides, the government should reduce the salaries and allowances of political office holders, block revenue leakages and diversify the economy. The reliance on crude oil as the main source of revenue has proven to be unrealistic and also a costly error.

 

Ibrahim Pambegua, Kaduna

 

 

 

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