The end of recession?
Acting President, Prof. Yemi Osinbajo’s recent declaration that the current economic recession will soon be history raises question as to authoritativeness. Is Osinbajo’s pronouncement based on concrete facts and figures or is it mere rhetoric? Coming from the highest authority in the land, such statements ought to carry weight and be reassuring. Prof. Osinbajo should not make political statements on a crucial economic matter that ought to be taken serious. Elsewhere, such statement coming from the exalted office would be taken as gospel truth. But I doubt if that is the case here since no specifics were given.
Truth is that nothing has changed, except, perhaps, the little increase in oil price. Saying that the recession is ending soon without facts, is vague. How soon is “soon”? “Soon” in Nigeria could mean any time – one, two, three, four five, 10, or even indefinite years. I am not excited whenever a public official says something is going to happen soon. As a matter of fact, it may never happen. The Acting President should be specific; otherwise, he should not make such statement if he doesn’t have his facts.
As far as the recession is concerned, everyone knows that Nigerians are going through hell that, ordinarily, shouldn’t be there. Since whatever has a beginning must have an end, it is better for Nigerians to believe that the recession will eventually end. But when or how soon that would happen, nobody can say for sure. That is where Osinbajo missed it.
Nigeria slipped into recession at the end of the second quarter of 2016, precisely in June. That was when the Finance Minister Kemi Adeosun, said that Nigeria was technically in recession. But it was obvious, at the time, based on the indicators that Nigeria was already in full blown recession. By August of 2016, Adeosun accepted that Nigeria was actually in recession.
What were the indicators? Millions were unemployed; industrial production declined; banks in dire straits leading to lay-offs; fall in GDP; reduction in the income of the average family; over 60 per cent of the population classified as poor, etc. These same indices characterised the Great Depression in America in the 1930s.
According to experts, seven factors were responsible for Nigeria’s economic recession. They were: Inability of the previous administration (led by Goodluck Jonathan) to save; Nigeria’s over-dependence on foreign products; economic policies of the present administration; the delay and controversies of the 2016 budget; the activities of militants and pipeline vandals; the existence of wasteful and abuse-prone subsidies and the different actions (or inactions) of the Central Bank of Nigeria (CBN) in forestalling recession. To this list I must add epileptic power supply that killed many industries.
Therefore, before anybody could talk about the recession ending, there must be a thorough and unbiased assessment of the economic conditions that led to the recession to ascertain whether or not they have been resolved. Without such an honest assessment, any statement about the recession ending, would, at best, be propaganda.
Based on the foregoing, a cursory look at the issues will give some insight into whether or not the recession would end soon. The inability of the Jonathan administration to save is presented as a leading factor that led to the recession. The question is how far has this problem been solved? The Buhari administration is not earning enough money to neutralize the mistake of the past?
Government ministries, departments and agencies (MDAs), have not cut their huge spending. Politicians are still spending money as if all is well. Rather than earn substantial income, the administration is in debts, borrowing huge sums of money from within and without to augment its budget. The administration is running a deficit budget as the price of oil is still low and unpredictable.
Next is Nigeria’s overdependence on foreign products. Is Nigeria less dependent on imported goods now? Is the country producing much of her agricultural and industrial consumables? The answer to all this is no.
The economic policies of the present administration have been controversial; many Nigerians are not comfortable. Rather than improve the situation, the policies led to the collapse of the naira, scarcity of forex, high inflation and skyrocketing prices of all consumables.
The delays and controversies surrounding the 2016 budget may have been addressed since the same delays and controversies were not witnessed in 2017. The 2017 budget was passed faster than what transpired in 2016.
But the activities of the militants and pipeline vandals are yet to abate. The militants have not stopped blowing pipelines and issuing threats. Although, government is suing for peace with the visit of Osibanjo to the Niger Delta, it is yet to be seen how far those overtures and peace moves would go to assuage the militants.
Finally, the existence of wasteful and abuse-prone subsidies and the different actions (or inactions) of the Central Bank of Nigeria (CBN) in forestalling recession have not been resolved. After it was thought that the subsidy regime ended after the pump price of petrol was jacked from N86. 50 to N145 per litre, government seems to have come back to subsidy as fuel importers face dire challenges due to forex scarcity.
To all of this must be added the lingering Boko Haram war that is sapping Nigeria financially. The unending epileptic power supply persists. The resolution of the power supply issue alone is enough to turnaround the economy through increased productivity. Dead industries would be revived thereby creating employment.
Based on the foregoing, I don’t see how Nigeria would exit the current recession soon when the economic realities remain bleak. Besides, the corrupt public officials who are reaping a windfall from the recession would not want it to end. They will sabotage every policy geared towards exiting.
Interestingly, Osibanjo made his declaration at a time Nigerians were protesting over the recession hardship. One thing Nigeria does not need at this critical time is controversy over the health of President Buhari. Plunging the country into such needless argument will derail whatever economic plans government has on the table.
The recession would end if the government is intact, without distraction and is committed to what it has mapped out to pull the country out of the recession.
Finally, America’s economy during the Great Depression was not confronted with insurgency/militancy and abrasive corruption and looting of the treasury as it is presently in Nigeria. Ours is a special case.