Reliance on FG revenue, dependence on oil exposing Nigerian economy to recession ― NIM president

The President and Chairman of Council, Nigerian Institute of Management (Chartered), Mrs Patience Anabor has said that the Nigerian economy is susceptible to recession because of reliance on federal government allocation and overdependence on oil.

Mrs Anabor disclosed this, on Monday, at the 2021 Annual National Management Conference (ANMC) of the Nigerian Institute of Management (NIM) held in Abuja, with the theme ‘Managing the impact of global recession: The Nigerian Peculiarity.

She said “the economy has been susceptible to recession in the past because it over-relied on Federal Government revenue; over-dependent on crude oil being majorly a mono (product) economy and import-dependent.

She said that the crash in oil price and COVID-19 pandemic slowed the growth of the economy as a result of a lockdown that crippled business activities across the country.

“The collapse in oil prices coupled with the COVID-19 pandemic plunged the Nigerian economy into a severe economic recession in 2020, the worst since the 1980s. According to the latest World Bank Nigeria Development Update (NDU)

“Nigeria in times of COVID-19: Laying Foundations for a Strong Recovery,” estimated, for instance, that Nigeria’s economy contracted by 3.2per cent in 2020. This projection assumes that the spread of COVID-19 in Nigeria is contained by the third quarter of 2020.

“If the spread of the virus becomes more severe, the economy could contract further. Before COVID-19, the Nigerian economy was expected to grow by 2.1per cent in 2020, which means that the pandemic has led to a reduction in growth by more than five percentage points.

“Beyond the recent COVID-19 pandemic induced recession, it is pertinent to note that the Nigerian economy has experienced a recession in the 1970s, 1980s and 1990s,” she noted.

Furthermore, she said the major causes of recession in any given economy as drawn from the great lesson of depression in 1981, 1991, 2004, 2008 and 2009 include high inflation, a general rise in the price of goods and services which led to low purchasing power, accumulation of debt servicing especially foreign debts, high-interest rates which discourage investors.

Others according to her include “fall in aggregate demand, fall in wages and income, mass unemployment and general loss of confidence in government. Poor economic planning and implementation characterised by budget delay and exchange rate policy is another major cause of recession”.

Mrs Anabor said although successive Nigerian governments have at different times promised to diversify the economy, improve manufacturing/mining sectors, raise agricultural output, encourage foreign direct investment among others, but there has not been any deliberate and sustained effort to pursue the strategic plan for growth to a conclusive end.

“No doubt, the government has taken some steps like the elimination of dollar purchase privileges for importers of some items such as rice, cement, toothpicks, private planes, poultry, meat, margarine, wheelbarrows, textiles and soaps as well as the recent stoppage of foreign exchange trading by Bureau de Change (BDC) operators.

“It is not abnormal for a market economy to go through a business cycle of boom, recession, and recovery. What matters is how long the phase of recession is effectively managed to avoid depression.

“In every economy, the economic recession has serious negative impacts on government revenue, employment, income vulnerability, inflation, human health, infrastructural supply, poverty and natural resource management”, she added.

She said regardless of the present realities and the new challenges, the Institute is poised to do more in the coming years towards the advancement of the management profession and the betterment of the Nigerian project.

In her theme paper presentation, the Chairman Access Bank Plc, Dr Ajoritsedere J. Awosika said global recession and depression has become a phenomenon across the world.

She said in Nigeria, the two most recent recessions occurred in 2016 and 2020. While the 2016 recession was localized, the 2020 recession was global in nature following the COVID-19 pandemic.

“Over the years, due to economic mismanagement by the country’s leadership, it is obvious that the country is currently performing below its potential.

“The COVID-19 today is now used as an excuse to cover the poor economic management. COVID-19 only accelerated an already bad situation as the economy was already struggling with sub-optimal growth.”

At the end of the conference, Fellowship Awards were given to the Chief of Naval Staff, Rear Admiral Awwal Gambo and many others.

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