SOLUTIONS TO THE CURRENT NIGERIAS ECONOMIC RECESSION
Mustapha Muktar, Ph.D
Department of Economics
Bayero University Kano
Economic recession are Short run fluctuations in output, income, employment and prices of goods and services that countries may found itself. It is mainly a product of poor macroeconomic policies and mismatch of government policies. The current Nigerian recession can be attributed to overdependence on oil revenue and its subsequent crash in the world market which makes it difficult for government to meet its budgetary obligations. Other factors that contributed to putting the country into recession include but not limited to inability of the nation to diversify its economic base and over dependence on imports, high interest rate and deterioration of exchange rate.
It is pertinent to know that a country does not enter into recession overnight so also going out of it will not be overnight, however to get of the recession I recommend the following short term and long term measures;
In the short term, the government as a matter of urgency should
- Enlarge its economic management team to include all stake holders and charged them with the task of brainstorming and coming with solid and workable solutions that are feasible and sustainable. A broader consultation is needed to tackle the problem.
- There is the need to further reduce the cost of governance by all tears of government in order to get surplus income to finance the budget. A rider to this is prioritization of expenditures that are contained in the budget in order to achieve the most pressing.
- Government should revisit its trade policies and give concessions to local manufacturers especially small scale industries. Products in which government deemed as not necessary should attract heavy taxes so that revenue can be realized and their importation discouraged, these products may include, alcoholic drinks, perfumes, furniture materials and others in which Nigerians can produced locally. However necessary support and concessions should be given to the local producers of the substitutes for these products at the same time the relevant regulatory bodies should ensure strict compliance to standard and quality of these locally produced goods in order to make them competitive and meet the demand of consumers.
- Government should try to stabilize the exchange rate to stop Naira from further deteriorating relative to foreign currencies.
- State and local government should be charged with the task of coming up with their immediate and short term measures of improving their conditions not necessarily depending on the allocation from the federation account which has already been declining.
- An effective Public Private Partnership (PPP) is needed in order to stimulate the economy and bring it back to the path of sustainable growth and development, therefore as a way of raising the required funds, an effective PPP may be an option.
In the long term government should;
- Diversify the economic base and empower non-oil sectors like manufacturing, agriculture, transportation, construction and others. The enabling environment and concessions that will attract the private sector and business men should be put in place. This diversification policy should be well conceived, designed, planned and implemented based on the forecasted domestic and global macroeconomic indices.