It is important to give analysis of what the term “economic recession” means to enable Nigerians to understand the implications and adjust to their daily economic activities and lifestyle. There are various reasons why countries enter into recession and it all depends on the economic framework of that country.
Recession could be triggered by a dip in government revenues and /or a drop in consumer spending. In Nigeria for example, a drop in oil prices, has triggered a drop in government spending due to its inability to earn what it used to earn before the dip
National Bureau of Statistics (NBS) has confirmed that Nigeria is in its worst economic recession in 29 years.
Below are seven reasons why Nigeria has now found itself faced with serious economic challenges.
1. Inability of the previous administration (led by Goodluck Jonathan) to save for the rainy day
Minister of Finance, Dr. Ngozi Okonjo-Iweala, has blamed the country’s present economic situation on the zero political will of the immediate past government to save for the rainy day. Also, President Muhammadu Buhari and the All Progressives Congress have blamed the Peoples Democratic Party for the current challenges facing the nation.
2. The activities of militants and pipeline vandals
The implication of oil pipeline vandalism vis-a-vis Nigeria’s security has been vividly demonstrated by its nexus with economic, environmental, and humanitarian losses and consequences. In effect, oil pipeline vandalism has been associated with consequences which hold negative implications. Pipeline vandalism has reduced the country’s oil production from 2 million to less than 800,000 barrels per day. This has reduced the amount the country generates from oil exportation and consequently its financial stability.
3. Tightening of Foreign Exchange Transactions
The policy has made it difficult to acquire dollar to purchase foreign goods for local consumption. This has thrown thriving businesses into turmoil which led to massive sacking of workers and manufacturing slowdown.
4. Unguarded Utterances During Foreign Trips
The utterances which the president made recently gave the impression that Nigerians are corrupt which may be one of the reasons foreign investors are hesitant about coming into Nigeria to invest. These foreign investors have not only decided to stay away but have also discouraged others from investing. They have also encouraged those that were already in Nigeria to pull out funds.
5. Elimination of some the policies made by previous administration
It is on record that even though the PDP-led governments were corrupt, they made some major strides in diversifying Nigeria’s economy. For example, agricultural export came to life under PDP. Buhari has focused on bedeviling and antagonizing every single policy made by the PDP. In the process, he has thrown out good policies and progress that were made in the past. He is almost starting afresh, and this has rebooted Nigeria and thrown us years backwards.
6. Budget signing delay hurting economy
The delay in signing the 2016 Appropriation Bill into law by President Buhari has worsened the economic crisis currently facing the nation, economists and analysts have said. According to them, by the time the National Bureau of Statistics will release the economic growth data for the first quarter of this year, many Nigerians will realise that the delay in signing the budget has caused tremendous harm to the economy.
7. Nigeria’s over-dependence on foreign products
One of the factors that has led Nigeria into economic slavery is because it feeds on imported food, lives on foreign finished homes, clothe with imported garments. This factor has made Nigeria to spend more than it generates into the economy.