Is APC leading Nigeria on the path to recession?

The recent prediction by the International Monetary Fund (IMF) that the Nigerian economy is heading towards recession falls in line with forecasts made by many analysts before now.

But having come from the economic watchdog of the world, perhaps some officials, who had hitherto been reluctant to accept this hard fact, would buckle up towards introducing measures aimed at reversing this slur in growth.

The IMF slashed its growth forecast for the Nigerian economy this year on Tuesday, saying a combination of plunging oil revenues and weakened investor confidence will push it into recession.
This is even as Governor of Nigeria’s Central Bank, Godwin Emefiele, on Tuesday, informed the Senate that the country is facing astronomical inflation rate and economic stagnation.
The CBN governor made the declaration at a closed door session with the Senate, where he gave a comprehensive account of the performance of the Nigerian economy in the last one year.

Of course, no country in Nigeria’s situation could have registered better scenario than is being predicted.

Firstly, here is a mono-driven economy, whose mainstay – oil – has plummeted abysmally in the past one year, negatively affecting every other sector.

But what makes Nigeria’s case seem helpless is the fact that it is undergoing what an economist described as “double economic woes.”

Every other oil producing country was subjected to a down turn in growth as predicated earlier in the year, but Nigeria’s case became hydra-headed.

Even when member-countries in the oil cartel, OPEC, seemed to have been optimistic that with time, their misfortune, tied to the slump in international crude oil price would see them regain some lost grounds, Nigeria’s case wears a different scenario.

As rightly observed by IMF, in its recent review of its earlier projection, the April economic forecast has predicted a 2.3 percent growth, has been declining and had plunged to 1.8 percent as at June. This is a cause for worry.

A combination of factors, including plunging oil revenues, incessant militancy in the north east and South South have largely weakened investor- confidence, a factor not helped by the knack for imported luxury goods, sustained by a pocket of corrupt political class.

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Unfortunately, inability of the country to feed its teeming population, from local inputs, has ironically left it as with a weaker economy, contrary to definition projecting it as the second largest African economy after South African; and the economic hub of the West African sub region.

In its yearly forecast, IMF had said that despite an apparent global economic slush, Nigeria would still be able to achieve between 2.0 to 2.3 percent growth this year.

Like every other monitoring institution had also noted, if the government drive to check corruption is able to curtail wastes, the oil price, which plummeted from $80 per barrel to less than $40 at the beginning of the year continues to improve, a sustainable growth can still be achieved before the end of the third quarter.

But just as there was a sign of putting the Boko Haram threat in check, militancy in the Niger Delta region (the oil producing province) has taken up the centre stage, worse than the situation in 2009 before amnesty came to the rescue.

As at date, the Niger Delta Avengers and other militant group have been having easy way, destroying pipe lines and denying the country’s targeted 2, 6 million barrel per day production as projected.

According to the IMF, a combination of all these factors has been the high cost of living, with inflation that has risen to all-time high in 11-year high hitting 16.5 percent in June, and unwelcoming investment environment for foreigners, recession is in the offing.

This is worsened by the local currency unable to find its bearing, as it dips persistently against the international currencies.

And this is despite government reversal of its early stance not to allow market forces decide the exchange rate. There is no question that the handlers of the country’s economy need to buckle up, or else those seeing a recession in the making may be proved right.

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