A non-governmental organization, Social Action, says Nigeria’s over-reliance on oil caused another recession.
Lillian Akhigbe, Communications Manager, in a statement on Thursday, noted that successive governments at all tiers neglected Small and Medium-scale Enterprises (SMEs).
Social Action said SMEs account for 96 percent of local businesses in Nigeria and 84 percent of employment of the masses.
After the National Bureau of Statistics (NBS) released the Q3 2020 Gross Domestic Product (GDP) figures, Minister of Finance, Zainab Ahmed, predicted that Nigeria will be out of the slump in a few months.
“While the economy entered into recession in the third quarter, the trend of the growth suggests that this will be a short-lived recession and indeed by the fourth or, at worst, the first quarter of 2021, the country will exit recession”, she assured.
But Social Action observed that her optimism of a quick departure from the economic quagmire was not premised on steps being taken by the government to cause a significant turn-around.
Noting that the current recession is the second under President Muhammadu Buhari administration, Akhigbe lamented that the economy has performed poorly year-in, year-out, within the last 5 years.
“The economic growth rate in recent years has been alarmingly low and too insignificant to translate into positive improvements in the living conditions of the citizens. Between 2015 and 2020, Nigeria’s GDP growth rate oscillated at an average of 2.5%, compared to previous years – 2012, 2013 and 2014 – which saw the GDP growth rate exceeding 5% average.”
The statement regretted that Africa’s most populous nation has failed to diversify its mono-centric economy, despite the drop in global demand for crude oil.
“In 2020, with the advent of the COVID-19 pandemic, there was further reduction in the demand for unrefined and refined crude, owing to the restrictions on movement and the slowdown in many business operations. This led to a crash in oil production volume and global oil price, as a result of which, Nigeria experienced a Foreign Exchange market crisis.
‘With an over-dependence on crude oil as the major source of the nation’s revenue and Forex, the Nigerian economy remains susceptible to the volatility of the oil market. There is no gainsaying that until the economy is diversified, Nigeria will continue to experience economic recessions intermittently.
“Though the current recession, reported to be the worst the country has experienced since 1987, is largely due to the dwindling oil market occasioned by the pandemic, it must be emphasised that Nigeria’s economy was already in a precarious condition, prior to the outbreak of the pandemic.
“The government cannot continue to play the ostrich amidst the growing hunger in a country witnessing a high inflation rate of 14.23% as of October, 2020. The combination of an economic recession and increase in food prices, is a recipé for an unprecedented level of hunger and suffering which will negatively impact the living standard of the majority of Nigerian citizens”, it read.
Akhigbe urged the government to take drastic steps towards addressing the current stagflation, in order to salvage the economy.
The spokesperson added that when more people are able to engage in economically-viable ventures, as business owners or employees, there will be an increase in the production of goods and services.
Social Action said an increase in production will lead to GDP growth and provide more taxes to the government to enable the provision of basic amenities and public services.