Forget that the minister of finance prevaricated sometimes ago about the state of the nation’s economy at the Senate and also disown her well-known twitter handle over it, it is now official: Nigeria has moved from ‘technical’ to ‘real’ recession.
Last week, the National Bureau of Statistics (NBS) helped her to assert what she was uncomfortable to mouth. One of these things would have happened to Adeosun. She most likely lacks confidence to stand by her efforts or she feels a sense of collateral complicity in the southward journey of the economy to recession from being the most robust in the continent in the last couple of years. Better still, she does not see recession more than a 9-letter word.
If I were the minister, I would have devised a strategic communication framework to break the sad news and more importantly, outline a remediation agenda by not incensing the ordinary people who would feel the impact more.
For the government generally, the blame game has boomeranged and not a few are pissed off by its attribution of all the calamities in the land to the past government. Excuses don’t buy goodwill for long. It wanes with hopelessness and helplessness swathed on the citizenry. Needless to say, the state of affairs is a big slur on a leadership that came to power on the shoulder of integrity. The glitches are self-evident. Dwindling oil fortunes, battered naira and inability of the government to implement ‘changes’ after the rebased economy, which earlier placed its ahead as Africa’s largest economy and made it a candidate for world’s best 20 economies in the next four years, caused the chaos. The grim statistics marked a symbolic reversal of fortunes to more than a decade of robust growth.
If the 2.per cent contraction in gross domestic product from a year earlier follows a 0.4 per cent annual decline in the first three months of the year, meeting the shorthand definition of a recession as two consecutive quarters of economic contraction, what are PMB’s contingency. The most violent hit to the economy came from the oil sector, where income plummeted by more than 17 per cent from a year earlier.
It is clear that the indexes reflect higher prices across the economy, weighing upon a slower increase in three divisions of Health, Transport, and Recreation and Culture divisions. It is also without dispute that there is a disconnect in the thought process of the government finance managers. Unlike the Central Bank of Nigeria (CBN) which envisioned that inflation would oscillate between 6 and an upper limit of 9percent this year, NBS, has consistently been in tandem with street economics and it has shot close to 20 per cent.
CBN needs to factor in the debilitation realities of our current experiences and do the needful.
While high inflation is bad for an economy because of its adverse effect on economic performance. I am not oblivious of the fact that zero inflation is equally harmful because it will lead to eventual stagnation of the economy since its presence at a mild level is needed for economic growth. The problem of inflation is not peculiar to Nigeria. But the redeeming features must also be sought within our borders. Nigerian policy makers only need to align with global best practices by tweaking the economy towards industrialisation and empowerment of small and medium scale businesses. What’s happening to the abundant solid minerals, human capital for services and agriculture?
Since the challenges of inflation also has embedded it prospect for economic growth, fiscal discipline become a desideratum for public procurements and other expenditures. The “bad era of double digit inflation rate” could be effectively utilised to erode the country’s debt profile. Instead of spending billions of naira in servicing debt, the government should “inflate away her debt”. America did the same during the Great Depression, Second World War and in the 1970s debilitating recession. There is no better time than now to redenominate the naira and save it from the vagaries of market forces and foreign imposed conditionalities.