History, Recession and a Sector in Progressive Decay
By Jerome-Mario Utomi
You cannot bring about prosperity by discouraging thrift. You cannot keep out of trouble by spending more than you earn. You cannot build character and courage by taking away man’s initiative and independence. You cannot help men permanently by doing for them what they could, and should do for themselves. -Abraham Lincoln
Two days after the National Bureau of Statistics announced on Saturday 21st November, 2020, that the Nigerian economy has slipped into its second recession in five years, and the worst economic decline in almost four decades as the gross domestic product contracted for the second consecutive quarter with the nation’s GDP recording a negative growth of 3.62 per cent in the third quarter of 2020, I stumbled at two opposing views about history.
The first emphasized the views that history promotes scepticism, a questioning attitude or doubt towards one or more putative instances of knowledge which are asserted to be mere belief or dogma, and sharpens one’s critical minds which gives room for assessing programmes of development with reference to their historical antecedents. For the other, history is a storehouse of practical lessons in human activities. To drive the argument home, it submitted; If Africans and infact Nigerians could truly retain the knowledge that they were enslaved and colonized, they will strive to be developed and independent so that it will not happen again,
Without a doubt, it is a perfect disclosure. But the example is so ‘horrendous’, in parts, because they are direct opposite of what Nigeria is all about. Here, it is always ‘convenient to forget and uncomfortable to remember’.
In line with the above piece of information, President Muhammadu Buhari on Monday in Abuja said that the downturn(recession) was caused by the Covid-19 pandemic including lockdowns, disruption in global supply chains, business failures and rising unemployment. Mr. President who was represented by Vice-President Yemi Osinbajo stated this while declaring open the 26th Nigerian Economic Summit with the theme: “Building Partnerships for Resilience’’ and jointly organized by the Nigerian Economic Summit Group (NESG) and the Ministry of Finance, Budget and National Planning.
Peripherally, Mr. President’s points look valid considering the fact that oil production fell to 1.67 million barrels a day from 1.81 million barrels in the previous quarter, and according to reports, the lowest since the third quarter in 2016 when the economy last experienced a recession. This is made worse by the awareness that Crude oil accounts for nearly 90 per cent of Nigeria’s foreign exchange earnings.
It is however, significant to underline, before going further the fact that this opinion article is written not to pass judgment against, or wholeheartedly approve and endorse his claim but to consider, and set record straight about how the rise of obnoxious policies/decisions lavishly made since 2015 serve only to exacerbate the decline of the nation’s economy and jeopardizes our democracy.
With the above highlighted, lets focus on, and be guided by some specific comments credited to well foresighted and quietly influential Nigerians that reacted to the latest economic downturn.
To some, it is no surprise Nigeria entered yet another recession. Their argument is hinged on the premise that until Nigeria is led by an intellectually competent leader, with visionary politics backed by sound economic thinking and knowledge, economic transformation will remain a dream. It’s for citizens to do the needful. To others; “Recession didn’t just happen. People looted Nigeria into recession. The same people are regrouping for 2023’’. For the rest, For Nigeria to pull itself out of this economic recession, the 2nd in the last 5 years, there’s a compelling need to cut the pork out of the budget and expenditure at all levels of govt and redirect the economy from a wasteful consumption-based one to a productive economy.
Like faith which is a belief in things not seen, there are accompanying reasons and ingrained truth in the above arguments.
In the opinion of this piece, one silent point fuelling recession and economic stagnation/retardation in the country is the reality that the managers of our nation’s economy have continued to go against the provisions of the constitutions as an attempt to disengage governance from public sector control of the economy has only played into waiting hands of the profiteers of goods and services to the detriment of the Nigerian people. While the nation continues to lie prostrate and diminish socially and economically with grinding poverty, the privileged political few continue to flourish in obscene and splendour as they pillage and ravage the resources of our country at will.
Supporting this assertion is the latest Ibrahim Mo Index of African Governance (IIAG) which reportedly scored Nigeria an embarrassing 26/100 for corruption in state institutions and 25/100 for corruption in public procurement.
Whilst the report went head to ranks Nigeria 34th out of 54 for overall governance and highlights “increasing deterioration” in the governance of our nation, it pointed plenty of “warning signs” for Nigeria, including the following scores: 21/100 for a functioning criminal justice system (ranking in the lowest performing quarter of nations); 25/100 for political party financing; 30/100 for disclosure of financial information; 35/100 for law enforcement; 32/100 for equal political power (ranking us 38th out of 54).
Certainly, a striking human tragedy deepened by the awareness that it was avoidable. But more important than all of this regret is the realization of the fact that we were warned with mountains of evidence that recession was coming, yet, our leaders who are never ready to serve or save the citizens ignored the warnings describing it as a prank.
The World Bank gave a forecast that the Nigerian economy will contract by 3.2 per cent in 2020, assuming the spread of COVID-19 is contained by the third quarter. The International Monetary Fund forecast a contraction of 4.3 per cent.
In the same vein, a reputable media organizations in the country in one of its editorial comment early this year drew our attention to the sad reality that Nigeria would be facing another round of fiscal headwinds this year with the mix of $83 billion debt; rising recurrent expenditure; increased cost of debt servicing; sustained fall in revenue; and about $22 billion debt plan waiting for legislative approval. It may be worse if the anticipated shocks from the global economy, like the Brexit, the United States-China trade war and interest rate policy of the Federal Reserve Bank go awry. The nation’s debt stock, currently at $83billion,comes with huge debt service provision in excess of N2.1 trillion in 2019, but set to rise in 2020. This challenge stems from the country’s revenue crisis, which has remained unbaiting in the last five years, while the borrowings have persisted, an indication that the economy has been primed for recurring tough outcomes, the report concluded.
Similarly, the Nigeria Extractive Industries Transparency Initiative (NEITI), a while ago told Nigerians that the nation loses about $4.1 or N123 Billion annually due to poor crude oil production metering, stating that unless government takes appropriate measures, limitations in the metering of crude oil production will continue to pose serious threat to the nation’s revenue target. Regrettably, Nigeria is the only oil-producing country without adequate metering to ascertain the accurate quantity of crude oil produced at any given time, the report concluded.
From the above accounts, we don’t need to be economic buffs to know that a country that services its debt with 50% of its annual revenue has become a high risk borrower. What the above tells us as a country is that the recession did not take the nation by storm. It announced its coming and we read the signs.
And the nation will continue to have its head stuck in recession mud until leaders recognize that as a nation, our economy is in progressive decay not because of our geographical location or due to absence of mineral/natural resources but because they failed to take decisions that engineer prosperity.
As this piece may not unfold completely the answers to these challenges, there are a few sectors that a nation desirous of development can start from. And the first that comes to mind is the urgent need for diversification of the nation’s revenue sources. Revenue diversification from what developments experts are saying will provide options for the nation reduce financial risks and increase national economic stability: As a decline in particular revenue source might be offset by increase in other revenue sources.
In conclusion, as the nation continues to bear the present challenge, it is important to inform Nigerians who witnessed recessions in 1984 but ignored the lessons to wonder in dilemma, that like every other socioeconomic challenge, corruption and lack of creative leadership that breeds recession will be difficult to fight or meaningful changes implemented on the nation’s political shore when the individuals/institutions who are the cause of the problems in the first place are still around. And attempting to engineer prosperity without confronting the root cause of the problems and politics that keep them going in the writer’s views is unlikely to bear fruits. Nigerians need initiative and independent minds to do this as we cannot solve our socio-economic challenges with the same thinking we used when we created it’
Jerome-Mario Utomi is the Programme Cordinator (Media and Public Policy), Social and Economic Justice Advocacy (SEJA), Lagos. He could be reached via; [email protected]. Or 08032725374.