According to the latest World Bank Nigeria Development update (NDU), the Nigerian economy is expected to plunge into severe economic recession, the worst in almost 40 years due to the collapse of oil prices and the outbreak of the Coronavirus disease.
Though, the report from Nigeria Centre for Disease Control indicates a total of 156 new cases confirmed ͅas at 4th September 2020 shows the lowest in six month since the Pandemic sprung. Experts have opined that economic downturn is imminent and that Nigeria economy contracted by 6.1% year on year in the Q2 of this year. Latest report from NBS (Nigeria Bureau of Statistics) the dip follows 13 quarters of positive but low growth rate wherein the 6.1% is also Nigeria’s steepest in the last 10 years.
As with most other economies around the world, the sharp drop in Nigeria’s GDP growth is largely down to the slow in economic activity after the country resulted to lockdown back in April to curb the spread of the virus. In the wake of the Pandemic the World Bank forecast a decline of -3.2% for 2020 –a 5% point drop from its previous projections.
The recent economic data shows Nigeria’s government continues to fall far short of projections in its ERGP (economic recovery & growth plan) created in the aftermath of 2016 recession to set out aggressive growth targets from 2017-2020. There is also little sign of a quick turnaround in Nigeria’s economic woes as the World Bank predicts Africa’s most populous country is set for its worst recession in four decades.
The details of Nigeria’s economic contraction also come barely a week after a grim report on unemployment rates which showed 27.1% of Nigeria’s labour force which means 27.1 million Nigerians are unemployed (the highest in Nigeria’s history), this revelation is expected to plump up as the Pandemic ravage on.
More so, the Nigeria’s economy has also been crippled by external factors too as the Coronavirus resulted in a near-total shutdown of economic activity around the world. The accompanying steep drop in oil prices amid a drop in global demand left Nigeria drastically shorn of earnings given its dependence on the commodity as its biggest revenue source. To expatiate, the US slashed its Nigerian crude oil imports by 11.67 Million barrels in the first five months of 2020, compared to what it bought in the same period of 2019.
Despite this clear economic conundrum and the concomitant ripple effect on poor masses, the government of President Muhammadu Buhari within a week increased fuel pump price from N145 to N160 per liter at retail market, electricity tariff hiked from N22 to N66 per unit, interest on savings in banks reduced to 1.25 from 3.75%, DSTV subscription increased, staple foods like rice, beans, maize, garri, plantain all increased at all-time high, building material from cement, block, sharp sand, wood all increased too, same with service sector of the economy.
The President Buhari regime haven superintend a ridiculous pump price of N160 per liter in retail market, his handlers have argued on the need to allow market forces (invisible hands) govern the price of commodities in conformity with principle of market economy which no doubt is the best form of economy banning the grouted and corrupt subsidy regime that characterized past administrations, yet it is also the duty of any serious government to protect citizens from the destructive effect of this free-for-all prices at this perilous time as it is the case in other market economies even though the insincerity, policy summersault and inconsistency of this administration is overwhelmingly disturbing.
For emphasis, a sensory look into what informed hike in fuel pump price was to create a window of fund-haven to the government at the expense of the poor masses. To clarify, the cost driver for determining fuel pump price in a market economy is the currency exchange, and available data shows crude oil price in the past six months hovers around $40 & $ 45 per barrel. In the last three months, we have experienced 25% devaluation of naira, hence the government creating more money for itself while passing the burden to Nigerians.
Moving forward, PMB administration must stop holding Nigerians to ransom, and must be seen to be sensitive to the plight of the already suffocating masses. The present fuel pump price of N160 per liter must be reviewed downward while channeling palliatives to SME’s and not this shenanigan of a school feeding program during lockdown.
Atima is a Public affair analyst, wrote in from Ado Edkiti