Opinion

Recession: Not yet uhuru for Nigeria

Recession

The National Bureau of Statistics (NBS) latest overview of Nigeria’s economy between April and June 2017 has shown that the economy
recorded a 0.55 percent positive productivity growth rate during the quarter and that Nigeria has exited from the recession it slipped into in the first quarter of 2016.

Many Nigerians heaved a sigh of relief that the worst was over for the country and its economy.

Many others, especially those at the corridors of power were exhilarated by the news forgetting that it was not yet uhuru for the country as a mere 0.55% limp by Nigeria out of recession was not something to celebrate especially because it will take another quarter of positive and significant performance by the economy for the results to positively impact on the wellbeing of Nigerians.

As things are, the Nigerian economy is tied to the ups and downs in the oil market.

Nigeria’s crude oil has stabilised at 2.2 million barrel per day. But, if Organisation of Petroleum Exporting Countries (OPEC) decides to cut Nigeria’s oil production, or if there is a crash in the price of oil globally, or the militants in the Niger Delta decide to continue with their militarisation, thereby cutting the nation’s oil supply, the country could slip back into recession again.

The implication for Nigeria is that until the country successfully diversifies its economy away from the volatile oil and gas, its productivity growth will continue to be tied to the unreliable oil and gas sector.

Agriculture played a major part in the recovery of South Africa from recession whereas in Nigeria agricultural growth showed a downward trend for four consecutive quarters since Q3 2016 when the sector grew by 4.54% to 4.03%, 3.39% and 3.01% by the second quarter of 2017.

Apart from oil and gas, the country must aggressively develop its agriculture so that it can wake up and take its rightful place in the economy. While the country should retain peasant agriculture, it must be noted that peasant farming is anachronistic and can never propel agriculture to greater heights.

Therefore, the government at the state and federal levels must rapidly develop a new corps of large scale farmers who could aggressively propel agribusiness to greater heights.

Also, the manufacturing sector, especially the Small and Medium Scale Enterprises (SME) must be encouraged to grow so that they can employ more people and keep the economy vibrant.

They must have access to loans at affordable rates. The rates of interest on bank loans in the country are too choking for businesses to survive. That is why many banks are recording huge unpaid loans.

Then, there must be stable exchange rate that will enable businesses and others who need to import machineries, spare parts and necessary raw materials to plan ahead.

An unstable exchange rate leads to chaos in the economy and such instability breeds rent seeking and sharp practices by sellers of foreign exchange whether in the banks or at the Bureaus de Change across the country.

Above all, the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance must ensure that both inflation and interest rates are brought down.

The duo of high interest rates and high inflation must be adequately tamed so that industrial production can increase across the economy, prices of goods, particularly food items and agribusiness raw materials can rapidly come down and the economy can be stimulated again.

Nnachi is a member of the Editorial Board at The Daily Times Newspaperand can be reached via nnachieddyugbor@gmail.com

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Ihesiulo Grace

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