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8 ‘sins’ that led Nigeria into economic mess called recession

On Wednesday August 31, the National Bureau of Statistics (NBS) released official Gross Domestic Product (GDP) figures for the second quarter of 2016, confirming that the Nigerian economy is in recession.

During this recession, Nigeria will continue to descend into loss of jobs, a decline in real income, a slowdown in industrial production and manufacturing and a slump in consumer spending. Things generally will keep getting very difficult.

Among the several mistakes of successive administrations, which may have led Nigeria to the present recession mess, eight major ‘sins’ stand out.

How did Nigeria get to this?

1. Failure to save for the rainy day- It is essential to point out that the failure to save, or better said, invest in the future, is one of the sins that brought recession to Nigeria. The immediate past administration, rather than save, reportedly spent $18 billion out of over $20 billion excess crude oil revenue handed over to it on inception, only to leave in that account about $2 billion.

President Goodluck Jonathan noted in a recent interview with Bloomberg TV, that the state governors, were always on his neck to draw from the reserve fund to augment revenue allocations from the federation account and never failed to remind him that there is no place in Nigerian Constitution which said that the Federal Government should maintain the reserve.

Former Minister of Finance, Ngozi Okonjo-Iweala, had revealed that 36 states of the federation received a total of N2.92 trillion from the Excess Crude Account between 2011 and 2014. She made this revelation in reply to Rotimi Amaechi’s, then governor of Rivers State, claim on behalf of the governors, that the Federal Government mismanaged funds in the Excess Crude Account.

2. Slow start to governance – Nigeria is also at the moment suffering from sins emanating from slow start to governance that marked the inception of President Muhammadu Buhari of the All Progressives Congress (APC) led Federal Government.

Read also: PDP to APC: Great leaders turn recession around, not cry like babies

President Buhari had before his inauguration in an interview on April 19, 2015, promised he would assemble a small cabinet that might be active before the official ceremony. It was not until November 11, that a cabinet of 36 ministers from each of the 36 states of Nigeria was inaugurated.

In essence, it took President Buhari about 134 days to form his government. And when the ministers were appointed, rather than have technocrats and experts as promised by the President, many of the ‘new faces’ were same old politicians, a good number of them recycled.

3. 2016 Budget of fraud – The present administration had to contend with an unprecedented budget scandal, as its first budget proposal was full of controversies, intrigues, nasty revelations and laden with all manner of error.

First, soft and hard copies of the document were declared ‘missing’ at the National Assembly after President Buhari submitted it to federal lawmakers on December 22, 2015. Then, it emerged there were at least two different versions of the proposal before the National Assembly, a disclosure that stunned Nigerians.

The budget proposal of N6.08 trillion received insertion of different strange items and padded figures, a situation the Presidency blamed on a cartel or “Budget Mafia” in the federal civil service and latter sacked 24 heads of Federal Government agencies and parastatals.

At last, the budget that was submitted to the joint session of the National Assembly on December 22, 2015, was finally passed by the lawmakers on March 23, 2016. Controversy still trails the budget with the Appropriation Committee Chairman of the House of Representatives, Jibrin, seeking the ouster of the Speaker, Yakubu Dogora.

4. Global oil price collapse– The drop of oil price to $30 per barrel for the first time since April 2004, in January 2016, helped in worsening the dwindling resources of the country. And, that the price has remained below $50 per barrel has not helped matters.

5. Poor handling of threats by militants – As if the fall in oil price was not enough, the resurgence of militancy in the Niger Delta region and government approach to it became another issue. Initial failure to take the militants serious resulted in the destruction of oil installations in the oil region, leading to loss of huge revenue in the already embattled oil sector, the main stay of the country’s economy.

The 2016 budget of the Presidential Amnesty Office was slashed to N20 billion from N68 billion as planned, oil pipeline monitoring contracts to the former militants cancelled, stipends delayed, if not suspended, and militancy returned in the Niger Delta.

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6. No clear economic direction – Despite the President’s acclaimed economic team led by Vice President Yemi Osinbajo, the administration is accused of not having a clear economic direction on which government policies are framed. President Buhari’s aversion to private sector inclusion in the economic team and hydra-headedness over the devaluation of naira have also been pointed at by many analysts.

The implementation of Treasury Single Account (TSA), hit many banks below the belt, as huge sums of money were moved out of banks and deposited at the Central Bank of Nigeria. The situation has left many banks struggling. Again, the tightening of foreign exchange transactions, was a policy that shattered many thriving businesses, consequently leading to massive sacking of workers as well as slowdown in manufacturing.

7. Nepotism – A lot has been said about President Buhari’s appointments being tailored towards the North. Some argue that the North, believed to be less schooled compared with the South, are the ones in major departments that matter, breeding low morale, in-fighting and unnecessary distractions in the march to nation building.

8. Corruption – There is the belief that the President has focused more than enough attention in fighting ‘corruption’ and forgot that fighting graft without paying attention to the economy and other important sectors comes with terrible consequences.

By Ebere Ndukwu …

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Ripples Nigeria

We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.

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Ripples Nigeria

We are an online newspaper, very passionate about Nigerian politics, business and their leaders. We dig deeper, without borders and without fears.

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