Saliu ABUJA Nigeria (Xinhua) --
With its economy officially entering
recession, Nigeria is left with little choice but to
urgently deal with a bevy of recalcitrant problems head
on, which range from surging inflation to depleted
foreign reserves and weaker Naira.
African country entered a recession on Wednesday, when
figures released by the National Bureau of Statistics (NBS)
showed the second quarter Gross Domestic Product (GDP)
fell 2.06 percent year on year, after slipping 0.4
percent in Q1.
Recession, which is a major decline in
sector-by-sector economic activities lasting more than a
few months, is technically indicated by two consecutive
quarters of negative economic growth as measured by the
For the oil sector, which is Nigeria’s mainstay, the
NBS report indicated that the vagaries of global oil
price, the drop in local production of crude oil and the
violent activities of militants in the southern region
of the country had made a dent in the money-spinning
Most businesses in Nigeria are connected to
government and 80 percent of government resources or
cash flow comes from the oil sector.
Positing that the oil and gas sector accounts for
about 25 percent of the GDP and the doom and gloom in
the industry can have an inordinate effect on the rest
of the economy, local financial experts have called on
the Nigerian government to declare a "state of
emergency" on the economy.
Nigeria’s present economic situation has already been
described, both by government and financial experts, as
"the worst possible time ever", with many predicting
that this recession may take up to three years before
the country can come out of it.
Financial expert Tony Ejinkeonye said without a
stimulus of adequate scale and proper management, the
economic situation would be more precarious than its
To come out of the present situation, the Nigerian
government must create valuable economic motivation plan
to stimulate growth, he said, noting "sadly, the
nation’s GDP has been on the decrease since the last
quarter of 2015."
"This is not really a good time for the country,"
said Ejikeonye, the current president of the Abuja
Chamber of Commerce and Industry.
He pointed out that the recession has already led to
unemployment, lower wages and incomes, as well as lost
He said with time, more economic opportunities,
private capital investments and education are likely to
suffer in the current economic blues if nothing urgent
"The effects will be long-lived if not properly
managed. Economic recession can lead to long-lasting
damage to individuals’ economic situations and the
economy more broadly," the expert said.
The recession might take a heavy toll on citizens in
the aspect of income losses or unemployment, thereby
threatening educational achievements by way of reducing
families’ abilities to provide a supportive learning
environment and forcing delay or abandonment of school
plans, he noted.
Besides, it will cause poverty and the increase in
poverty, for instance, will have lasting consequences on
children who might be largely threatened by early
childhood nutrition, the expert added.
According to the latest data, over four million
Nigerians have lost their jobs since 2015. Many citizens
have now taken to subsistence or small-scale farming and
others opting for additional jobs in the informal sector
to augment their means of livelihoods.
Many continue to hold on to the opinion that the drop
in crude oil prices specifically caused the damage,
together with other factors including a forced
devaluation of the local currency and surging inflation.
Commenting on the way forward, President of the
Chartered Institute of Bankers of Nigeria, Segun Ajibola
said the country needs to draw solutions from what
mainly caused the recession.
"We must go back to the root of the crisis and that
is oil economy and pattern of consumption. We are
exposed to external shock and it can be tamed as well,"
A seasoned economic analyst, Bismark Rewane said all
hands must be on deck for a solution to the problem.
"Although the challenge of this recession is deeper
than what was earlier envisaged, what the country needs
now is basically the confidence of investors more than
"We must woo the investors now, but it’s
not a magic wand. We must first do our work," he said.
Another economic analyst, Victor Ndukauba, said the
way out was for government to think outside the box,
improve governance and fiscal policies.
Ndakauba said lack of spending from the public sector
and no-dollar inflow policy on the part of government,
with little investment, all contributed to the economic
"There are no silver bullets. The only solution is
for the government to spend its way out on
infrastructure investments—education, healthcare, power,
transportation, etc.," he said.
Despite the divergent views on the future of the
Nigerian economy, there is a school of thought that the
country may experience growth during its recovery
period, but putting into consideration the long-term
damage that the recession might cause, this may prevent
the recovery from reaching its full potential.
The Nigerian government said it is not losing sleep
and is fully aware of the challenges and effects of the
present economic situation.
Speaking to reporters in Abuja Wednesday, the
Minister of Finance, Kemi Adeosun admitted that Nigeria
was in its possible worst time with the latest GDP
figures, saying the country had a long way to go.
"It’s the worst possible time for us. Are we
confused? Absolutely not!" she said, adding "we are not
deceiving ourselves that everything is rosy, it’s not".
Adeosun said, however, Nigeria is in the right hands
as government will stick to its strategy and seek more
ways out of the current situation.
Apart from the economy diversification plan of the
government, she added one of the ways forward is to
adjust the current monetary policy.
In addition to its solution-seeking plans, Adeosun
disclosed the Nigerian government had approved an
external three-year rolling plan to seek loans from the
African Development Bank (AfDB) and the World Bank to
meet the country’s current development needs.
The concessional loans sought by Nigeria, she added,
will go to the strategic sectors that will help to
revive the economy, and would be at only 1.25 percent
interest rate from the creditors.
Nigeria vows to
grow non-oil economy as recession bites
by Bosun Awoniyi LAGOS
Nigeria (Xinhua) -- Nigeria is
working hard to grow its non-oil economy as a
2.06-percent decline year on year in second quarter GDP
indicates reliance on oil as the bulwark of its economy
A report released by the National Bureau of
Statistics (NBS) on Wednesday showed that the economy
had nosedived following rising inflation for years.
Over a month ago, the government said the economy was
in a "technical" recession.
But the NBS data Wednesday confirmed the nation’s
worst economic recession in over a decade. Consumer
Price Index (CPI), which measures inflation, rose to
17.1 percent in July from 16.5 percent in June.
Speaking after the Federal Executive Council meeting
in Abuja, Finance Minister Kemi Adeosun described the
country as being in its "worst possible time", but
stressed there is a silver lining.
"We know that if we can just bear and get through
this difficult period. Nigeria is going to be better for
it," she added.
The minister dismissed the insinuation that those
managing the nation’s economy were running out of ideas
"We are not confused; the time is confusing but we
are not confused.
"We are extremely focused," Adeosun
said in reaction to the NBS report.
"If we rely on oil, and the price of oil remains low
and the quantity of oil remains low, we can’t grow.
have to grow our non-oil economy," she told reporters.
Tony Ejinkeonye, President of the Abuja Chamber of
Commerce and Industry, said this is really not a good
time for the country, as economic recession has led to
unemployment, lower wages and incomes, as well as lost
Education, private capital investments, and economic
opportunity were all likely to suffer in the current
downturn, Ejinkeonye said.
Ejinkeonye said with the credit crunch and the
reduction in consumer demand, small businesses were also
likely to suffer deficit within the period of recession.
He said this was especially worrying given the role
of small businesses as a key driver of growth and job
The chamber’s president stressed the need for
government to act urgently to create a valuable economic
motivation plan to stimulate growth.
The diversification of the country’s productive base
remained the long-term solution to weak Naira, with
agriculture and solid minerals holding vast promises in
this regard, an economic expert, Uche Uwaleke said.
Uwaleke said the weak infrastructure such as power
and transport as well as high cost of petroleum products
combined with the citizens’ penchant for foreign goods
were factors pushing up commodity prices.
On his part, Peter Eson-Ozo, General Secretary of
Nigeria Labor Congress (NLC), emphasized the urgent need
for an overarching policy that would address the
"As of now, we do not seem to have a policy response
that shows where we are in the economy," he said.
"Today you talk of foreign exchange management policy
response, tomorrow you talk of interest rate, and you
know economic isolation will not address this problem,"