The year 2016, for many Nigerians will go down in history as the year of economic recession. The economic downturn in this outgoing year has had far-reaching impacts on Nigeria and Nigerians.
The seriousness of the situation began to sink in when many of the state governments in the country were unable to meet most of their financial obligations, especially the payment of salaries to workers. Then the acute social and economic distress was exacerbated with the scarcity of foreign exchange for business while the cost of dollar hit the roof in the parallel market where most people in need of dollar for crucial business needs were forced to patronise.
Many businesses suffered huge losses and some even had to retrench staff to stay afloat. Eventually, prices of goods and services increased exponentially as inflation rate hit all-time high of about 18 per cent.
The double jeopardy of this recession is that while the cost of virtually everything has skyrocketed, thus compelling people to part with more money for goods and services, the purchasing power of most Nigerians has actually reduced as they have less money to spend.
The attendant social stress has been huge. Many Nigerians have turned to begging for money to survive. I have been stopped several times on the street of Lagos by strangers asking me for money for all sorts of reasons. Some said they needed the money to buy food, some for transport while for others, it was to buy medicines. I have also been contacted by many acquaintances who need financial assistance. If only these people knew that I also could do with some help as the recession has spared nobody. It has been tough; it is still tough.
There have been different explanations for how we got here. One explanation is that Nigeria, having been a monolithic economy depending on crude oil sales to earn foreign exchange, suffered huge income loss when the prices of crude oil in the international market crashed from over 100 dollars per barrel to as low as 30 dollars. This is said to have been worsened by the activities of militants who continue to disrupt oil exploration and exportation with renewed attack on oil installations.
The present government has also blamed the immediate past government for not saving for the rainy day and wasting the fund in the excess crude account that should have been saved, during boom time. However, critics of the government have blamed the present situation on the Buhari government and especially the current managers the economy for not demonstrating the required level of competence.
Beyond this histrionics, however, the fundamental question is how and when are we exiting this quagmire? I was discussing with a top executive of one pharmaceutical manufacturing company in the first week of November and he lamented that his concern was more about what was being done to solve the problem of forex scarcity. His worry was not about where we were but what we were doing to get out of it.
This is the challenge facing this government. Beyond the semantics of what went wrong that brought the nation to this present situation, the Nigerian government must come up with urgent measures to reflate the economy. The government must equally articulate and communicate what is being done about the situation, so that all Nigerians could be carried along in this important journey out of the woods.
The National Bureau of Statistics (NBS) recently warned that the nation’s economy is at the risk of depression – a sustained, long-term downturn in economic activity. Nigeria must prevent this from happening, as it would only end up increasing the number of people suffering stress, anxiety and depression. This government must start demonstrating it has both the will and the sagacity to take Nigeria out of economic recession and stave off the looming depression.