Uche Usim and Isaac Anumihe, Abuja
True to earlier experts’ predictions, Nigeria has officially slipped into its worst economic recession in over 30 years.
The development was catalysed by the devastating COVID-19 pandemic, which further eroded the little economic gains the country had recorded after its shaky exit from the 2016 episode.
The gross domestic product numbers released yesterday by the Director-General of the National Bureau of Statistics, Dr Yemi Kale, showed a contraction of 3.62 per cent in the third quarter of 2020.
This makes it the second consecutive quarterly GDP decline since the recession of 2016.
The cumulative GDP for the first nine months of 2020, therefore, stood at -2.48 per cent.
The last time Nigeria recorded such cumulative GDP was in 1987, when its GDP declined by 10.8 per cent.
World Bank and NBS figures indicate that this is also the second recession under President Muhamadu Buhari’s democratic reign – and his fourth as Head of State.
The COVID-19 pestilence led to unprecedented crash in crude sales, coming down to less than $10/barrel earlier in the year. For an oil-reliant nation like Nigeria, government’s revenue horrifyingly nosedived, exposing the economy to global shocks and vulnerabilities.
Another reason experts adduced for the recession is the blooming insecurity, which has led to a huge slump in agricultural production and the attendant high food prices.
Again, the poverty gap is widening, just as unemployment.
Recall that early this year, International Finance Corporation (IFC) predicted that Nigeria and other countries will slip into recession because Coronavirus pandemic will lead to losses as high as $79 billion in the sub-Saharan region, where economic growth is expected to fall from 2.4 per cent in 2019 to between -2.1 and -5.1 per cent in 2020.
“Nigeria, Africa’s largest economy and a major oil exporter, will be negatively impacted, especially in light of its slow recovery from a 2016 recession,” the corporation said.
According to the report, the petroleum sector is a central pillar of Nigeria’s economy, contributing about half of the government’s revenue and 90 per cent of Nigeria’s export earnings.
So, in 2016, Nigeria experienced a double shock as a result of fall in global oil prices and supply problems owing to crisis in the Niger Delta region of the country, so plunging millions more people into extreme poverty.
With the ravaging effect of COVID-19, the report, said, Nigeria (and numerous other countries around the world) is projected to fall into recession.
“The World Bank estimates that the number of poor people in Nigeria is likely to increase by several million by 2022. This will make the goal of lifting 100 million Nigerians out of poverty in 10 years more of a challenge.
“Nigeria faces the stubborn challenges of income inequality, insufficient infrastructure, insecurity, unemployment and an over-dependence on imports and raw material exports, especially oil. IFC has been engaged in Nigeria for over 30 years, helping the country lay the foundations for inclusive, sustainable, private sector-led growth. We have done this through direct investment, upstream advisory work, including the International Development Agency (IDA) Private Sector Window, and an expanded Environmental, Social and Governance (ESG) advisory programme to increase support for market development and capacity building. IFC’s portfolio in Nigeria stands at $1.3 billion, within IFC’s global top 10 country exposures, in sectors, including manufacturing, financial services, infrastructure and technology. IFC is also exploring opportunities in the gas, healthcare, and power sectors,” IFC said.
However, a professor of Capital Market in Nasarawa State University, Keffi, Uche Uwaleke, has said that although Nigeria has plunged into recession, the Q3 real GDP number is better than the Q2 result which was –6.10 per cent.
Reacting to the negative growth, Uwaleke said that though Nigeria has plunged into recession with another negative growth in the Q3 GDP, the latest result was better than the Q2 result.
“The NBS Q3 real GDP number is a confirmation of the fact that in terms of economic contraction occasioned by COVID-19, Q2 2020 represents the worst experience for Nigeria.
Compared to a contraction of -6.10 per cent in Q2 of this year, it is actually an improvement reflective of the ease in lockdowns and movement restrictions, the reduction in the cases of COVID-19 and the gradual return of investor confidence in the economy.