Now that we are in recession

NIGERIA has reportedly slipped into a second recession, the worst in four decades, with the GDP contracting in the third quarter of this year. Though the economy’s managers represented by the Minister of Finance, Zainab Ahmed, promised that the country will exit the recession early in the first quarter of 2021, many informed observers are justifiably cynical about this absurd optimism. If anything, the prostrate position of Nigeria’s real sector doesn’t seem to support this claim at all, in large part because of the buffeting which the economy is currently receiving from the Covid-19 pandemic and the vagaries of the international oil market. For decades, it was suggested that the Nigerian economy be diversified, but the government serially opted for the comfort of loans. It shunned the more realistic choice of proactive investments.

As it is now, debt peonage has worsened the country’s economic prospects. The infrastructure deficit is huge. With poor economic management, the chances of getting out of the recession quickly are really only comparable to that of a snowball surviving the heat of Venus. Yet the country must do all it can to exit the recession, and indeed early enough. Much as economic recession is arguably universal, the Nigerian economy didn’t have to feel its impact so acutely. Surely, Nigerians would not be in the current mess if it had been frugally managed by successive governments. The country’s huge potential ought to have staved off the deleterious effects of this recession.

As it is now, the continued closure of borders, especially in the southern part of the country, bodes ill for the expected exit from recession. Also, the real sector of the economy needs to be awakened with proactive measures and deliberate investments in areas that will stimulate growth and development, and increase employment opportunities for the teeming youth population. Despite the forlorn outlook of the economy, experts still consider it as an emergent market because of its potential and population. This invariably means that Nigeria can still price something valuable from its present dilemmatic conditions if its management is targeted at defeating the daunting challenges ahead.

We certainly don’t expect that the country will easily exit the current recession without deliberately taking decisive steps to stimulate growth and development. The government should speedily reopen the borders, especially in the southern part of the country. Increasing the volume of trade and  the generation and distribution of electricity and related infrastructure will help a great deal.

It is apposite to note that the last time Nigeria exited recession, the feat was fortuitously facilitated by the improvement in the prices of oil in the international market, not by deliberate economic management efforts. This partly explains experts’ scepticism about the Finance Minister’s posture. There is scanty evidence to suggest that the government has the political will to drive the economy out of recession in record time. This will only happen if President Muhammadu Buhari and his team can muster the political will to institute the correct responses to the economic challenge.

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