BEVERLY HILLS, August 18, (THEWILL) – A scary and most unpalatable news broke in the country last week. The news actually sent a shock wave down the spines of most Nigerians. This time, it could not be denied or passed off as just one of those ‘fake news’ or ‘false alarm’ as it came from official quarters.
That another recession is looming large in Nigeria is a bad warning signal. The fact that it’s already starring us all in the face, in fact, calls for great concern, more so, as it is going to be the second recession for the country in four years.
Minister of Finance, Budget and National Planning, Zainab Ahmed, dropped the news most Nigerians are still finding difficult to fathom, saying the country might slip into yet another recession in the fourth quarter of the year if the current economic indices persist.
“Nigeria is exposed to spikes in risk aversion in the global capital markets, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market.
“Nigeria’s Q2 GDP growth is in all likelihood negative and unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into a second recession in four years with significant adverse consequences,” Ahmed, who was represented by the Minister of State for Finance, Clement Agba, revealed.
The minister made the disclosures at an interactive session organised by the Finance Committee of the House of Representatives on the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper in Abuja.
With less than two months into the last quarter of the year, it would simply be a miracle if the country escapes the looming economic crisis, given the current trend.
This, no doubt, is not the kind of news most Nigerians would want to hear now, especially coming at a time the economy is just opening up after almost five months of partial and total lockdown occasioned by the need to contain and control the spread of the rampaging COVID-19.
There is no doubt that the present times are not indeed the best for the economy of the country. While the gloom in the international oil market, early in the year, posed a serious challenge to the revenues accruing to the Federal Government, the global health challenge that set in towards the end of the first quarter also compounded the problem.
The lockdown that was imposed by the Federal Government across the country only succeeded in dealing more blows on the economy that was already on life support.
Unfortunately, as bad as it is, the Nigerian situation is part of the larger Africa’s economic downturn in which the World Bank had already painted a gloomy picture.
According to the Bretton Wood institution, in a report on the effects of COVID-19 on the continent, an estimated 13 million Africans are expected to fall below the poverty line at the end of the year in the best-case scenario with 50 million at the worst because of the Covid-19 pandemic.
The World Bank maintained that from the prevailing indices, Africa might likely experience its first recession in 25 years, a situation that might be likened to a double jeopardy for most vulnerable countries such as Nigeria.
According to the World Bank, prevailing gross domestic product per capita growth in Africa is now forecast at 3-5 per cent lower. This translates to the fact that the number of Africans living on less than $1.9 might likely increase by 2 per cent from the estimated 41.6 per cent at the end of 2018 to 43.9 per cent at the end of 2020.
Already, the situation in Nigeria is already pointing to that gloomy future.
Latest reports from the Nigerian Bureau of Statistics indicate that hard times are already here with unemployment rate increasing from 23.1 per cent in the third quarter of 2018 to 27.1 per cent in the second quarter of 2020.
According to the reports, while the number of people in the labour market was estimated to be 80,291,894, just about 58,527,276 were employed. The figures were a far cry from what obtained some two years ago when 90.5 million people were in the labour market and 69.5 million were employed.
The loss of jobs by many Nigerians has many implications for the revenue projections of the government in the areas of tax collection.
Also, the various interventions and palliatives offered to cushion the effects of the crisis brought about by COVID-19 all come at special costs and extra burden to the government that is already struggling to fund its normal annual budget.
THEWILL believes that Nigerians don’t deserve to go through two recessions within just four years. If it happens as all indices are showing now, then something should be done, and urgently too, to drastically reduce not only the architecture of government but the cost too.
Nigerians should not be made to suffer through multiple taxation only for some government officials to be stealing the money. Subjecting Nigerians to the heavy burden of taxation in a bid to generate revenues for the government is also not the way to go.
Nigerians cannot continue to pay for the flamboyant and extravagant lifestyles of so-called leaders who do not have the interest of the ordinary Nigerian at heart.
The shambolic handling of the various palliative funds and COVID-19 interventions are all evidence of the calibre of those parading themselves as leaders. The recent discoveries of massive looting and blatant stealing across almost all the government agencies are enough to cripple the economy of any country.
While we are happy that President Muhammadu Buhari is not resting on his oars in his bid to bring sanity back into the system, we urge him to seriously work in concert with the Economic Advisory Committee and the Central Bank to see how Nigeria could avoid sliding into another recession as the consequences might just be too grave.