Addressing The Current Economic Recession

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President Buhari

In Nigeria today,
Nigerians seem to know economic recession by the experience of their living standard in the past one and half years than by textbook definition of the concept.
Be that as it may, an economic recession is one characterized by a decline or general reduction in the gross domestic products of a country for two or more quarters consecutively.
The decline in the gross domestic products has to be consistent over a period of time ranging from a quarter, half a year or a year to attract attention of concerned citizens and economic planners.
It is important to state that gross domestic products are the sum total of economic activities of a nation measured over a given period of time.
In other words, gross domestic products are measured by finished goods and services in monetary value within a stipulated period of time. Thus, gross domestic product is largely identified as monetary value of all finished goods and services.
The measurement of gross domestic product remains sine qua non to all independent nations on earth because it is an indicator of the economic wellbeing of any nation.
This means that GDP as it is commonly referred to, can be used to measure or gauge the standard of living.
The sum of the over all finished goods and services in monetary terms against the total population of a nation would lead to the per capital- income of an average working citizens.
This process of ascertaining the health of a nation’s earning through the GDP measurement is a pointer to identifying whether a nation’s economy is facing recession or not.
At this juncture, it may be pertinent to identify high interest rate, inflation, unemployment, reduced consumer confidence in an economy and fall in real wages of workers as some of the causes of economic recession.
Sporadic outbreak of war and crises such as terrorist attacks and natural disasters can also cause a recession.
For instance, the economic recession that characterised pre-Obama administration in the United States of America was induced by this condition.
The administration of George Walker Bush witnessed terrorist attacks on the Pentagon and World Trade Centre followed by natural disaster in form of flooding in coastal states and cities, then came the collapse of real estate business and finally the fall of the Wall Street (stock exchange market).
In trying to identify America’s enemies, the government of George Walker Bush further identified Iraq, Iran and Syria as axis of evil and went to prosecute two wars – on Iraq and Afghanistan. The aftermath was that America went into full blown economic recession.
The recent economic recession experienced in Nigeria particularly under the administration of General Muhammadu Buhari is traceable to the fall in crude oil price in international market.
For instance, crude oil price slumped from over one hundred U.S. dollars per barrel under President Obasanjo’s administration to less than fifty dollars per barrel at the later part of President Jonathan’s administration and the fall in price persisted till General Mahammadu Buhari was elected in 2015.
Since the Nigerian economy is monolithic, one based on mono product known as crude oil, the shock arising from the fall in crude oil price permeated the nerves and economic spines of states of the federation resulting in inability to pay worker’s salaries while some states witness delay in salary payment. In fact, banks and most oil servicing companies have laid off staff to worsen the unemployment rate.
Presenting an inaugural Lecture at the University of Port Harcourt in July 2016 entitled: “War of Supremacy between Unemployment and Inflation in Nigeria: Who is the Actual Loser?”, Professor Okay Onuchukwu posited that the Nigerian economy characterlzed by stagflation which he described as a situation of high level of unemployment and inflation existing at the same time.
According to Professor Onuchuku, these two macroeconomic problems have increased the level of poverty and misery (Onuchuku 2016, P.2). Worse still, available statistics at the National Bureau of Statistics shows inflation rate in the country has consistently been on the increase.
I t is on record that inflation rate rose from 17.5 percent in July 2016 to 18.3 percent in October and 18.45% in November 2016 and there is the fear that it may rise to 20% before the end of January 2017.
Because Nigerian federalism is predicated on selling crude oil and sharing the revenue to federating units, the solution to economic recession in Nigeria is not in sight.
To address the ongoing economic recession many have advocated the return to agriculture at least to provide enough food to the teeming population and in turn generate employment.
One way forward that the political class and indeed the leadership should consider is the view of Professor Onuchuku of the Department of Economics in University of Port Harcourt who opined that the leadership should go beyond criminalizing illegal refining in the Niger Delta region to identifying the technology behind the criminal act with a view of harnessing the technology for the overall development of the nation.
Professor Onuchuku in his inaugural lecture cited above contended that perhaps if the technology is harnessed, the government could see the need to give such technologists certain quantity of crude oil to refine; pointing out that this would generate employment rather than mere arrest of affected militants.
This is in line with stepping up the production of goods and services not only in the agriculture and manufacturing but in the petroleum sector.
Addressing the 2016 World Youth Convention of Salvation Ministries with the theme “Youth Empowerment”, the presiding Pastor David Ibiyeomie challenged the Nigerian government from selling primary products alone to manufacturing by­products of petroleum; adding that there are about 6,000 by­products of crude oil alone.
Pastor Ibiyeomie explained that what has fallen is the price of crude oil and not the price of by-products, emphasising that the panacea to the ongoing economic recession should be increasing the manufacturing of by-products of petroleum. In addition to the plethora of solutions offered by experts, there is a distance to cover to fast track recuperation. It is not the distance from states to the Federal Capital Territory, Abuja to share oil revenue but the distance of 18 inches.
Nigeria must, therefore, take advantage of knowledge economy ruling the world today by demonstrating the head – knowledge of not only the economy but by harnessing the economic potentials of by, products inherent in petroleum or crude oil alone to produce at least 50 by – products out of 6,000.
Nigeria must shift and migrate from the mindset of what Deputy Senate President, Ike Ekweremadu, once called “Feeding Bottle Federalism” where states apparently do nothing but race to Abuja for a share of their part of national cake-oil revenue. The distance between the head and the heart often referred to as mind is an average of 18 inches. Unfortunately, as short as the distance of 18 inches, Nigeria has not covered the distance as far as managing oil revenue is concerned since independence in 1960.
President Buhari recently presented the 2017 Appropriation Bill of N7.298 trillion Naira to the National Assembly with the benchmark price of $42.50 per barrel with an estimated output of 2.2 million barrels per day. There is no target of manufacturing by-products and agro-processing.
The question is when will Nigeria cover the distance of 18 inches and move from consumer nation to a productive economy?
Sika is a Port Harcourt-based journalist and public affairs analyst.

 

Baridorn Sika