Ways Out Of The Recession

The recent announcement by the Finance Minister, Mrs Kemi Adeosun, that the economy is now technically in recession did not surprise stakeholders. Even the Central Bank of Nigeria (CBN) has repeatedly affirmed that the economy has been sinking, and the trend has held sway for most of 2016 with little prospect of an early rebound. Apart from the gloomy performance of the oil sector, which is a worldwide phenomenon compounded for Nigeria by the renewed militancy in the Niger Delta, the country’s weak production base left the economy without a fallback position when oil prices started tumbling. Nigeria’s near-total dependency on imported manufactured goods,
ranging from the simplest household consumer items to the most complex industrial inputs makes the economy more vulnerable to both internal and external shocks. Nigeria imports at least 70 percent of its refined fuel, despite pumping 1.6 million barrels of crude oil a day in June 2016 according to the International Energy Agency (IEA). This lack of a strong production base has resulted in imported inflation. Successive regimes have paid lip service to the need to diversify the economy and provide credible alternatives to oil as our foreign exchange earner. This recession leaves Nigeria with no alternative than to make good this plan by coming up with a comprehensive, inward-looking policies to boost production and thus mop up the excess labour force in the market. The Federal Government must also focus its policy of massive spending as a way out. As the purchasing power of the citizenry is low at the moment (due mainly to months of unpaid workers’ salaries), government needs to enhance individual liquidity by spending wisely on agriculture, infrastructure and stimulating the manufacturing sector. More efforts must be made to pay the backlog of workers’ wages. We must increase the consumption of locally-made goods and services. We must export more to drive the economy. The federal and state governments should borrow from the capital market to finance revenue-yielding capital projects, ensuring that contractors are faithfully paid to enable them pay their workers. The economic policies of the Federal Government must also be shaped to attract foreign direct investment, not just portfolio investors. But we must warn that foreign investors will only take a chance on our economy when they see that our local investors are also investing. The Federal Government has a duty to start addressing the core issues in the economy frontally, carrying stakeholders along. Nigerians must be reoriented to produce what they consume and discard their unwholesome preference for foreign goods. No country has ever created a great economy by depending on the industrial outputs of other nations. The task of rebuilding the economy is an assignment for all Nigerians.