Nigeria’s economy at critical juncture — World Bank

The World Bank said yesterday that Nigeria was at a critical juncture, following the recession of the economy declared weekend by the National Bureau of Statistics, NBS. This came as the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the recession in the country would not last long.

In his remarks during a panel discussion at the Nigeria Economic Summit (NES#26) organised by the Nigerian Economic Summit Group, NESG, in concert with the Federal Ministry of Finance, Budget and National Planning, in Abuja yesterday, the World Bank’s Country Director in Nigeria, Mr  Shubham Chaudhuri, said that the country faced great challenges. He stated:  “Crisis like this is often what it takes to bring a nation together to have that consensus within the political, business, government, military, civil society to say, ‘We have to do something that departs from business as usual.’

“For Nigeria, this is a critical juncture. With the contraction in GDP that could happen this year, Nigeria’s per capita income could be around what it was in 1980 – four decades ago.” Nigeria’s per capita income in 2019 was about $ 2, 230 while in 1980 it was about $874 with an annual growth rate of about 32.03 per cent. Chaudhuri said, however, that he was “hopeful that given what the government has done, that this crisis will also provide an opportunity for that national consensus,” He said there has been some form of recovery in the economy but that it has been quite slow to meet the pressing revenue needs of the nation.

The National Bureau of Statistics, NBS, had reported last weekend that the nation’s Gross Domestic Production, GDP, sustained negative figures reading -3.62 percent in the third quarter 2020, and lunching Nigeria into its second recession in five years. The GDP had crashed to -6.1 percent in the second quarter 2020.

Addressing the summit, Mrs. Zainab Ahmed said that the nation would exit the current recession early next year. The trend of the growth, though still negative, she argued, suggested “this would be a short-lived recession, and indeed by the fourth or, at worst, the first quarter of 2021, the country will exit recession,” adding that “the Federal Government expected the recession to be shallow and recovery to be V-shaped.” She said the recession was occasioned by COVID-19 pandemic which ravaged the entire world. According to her, many other countries were also forced into recession because of the virus, stressing that before the outbreak of COVID-19, the Nigerian economy was experiencing sustained growth.

She stated: “Following the traditional definition, this second consecutive contraction in GDP means the Nigerian economy officially entered a recession at the end of Q3 2020, as the impacts of the COVID-19 pandemic, and the national response to contain its spread, manifested across several sectors of the economy. “While the decline of -3.62% (for 2020 Q3) and -2.69 percent (for the first 9 months of 2020) are unfavourable, it was better than the -6.01% earlier forecast by the National Bureau of Statistics, and outperformed outturns from several domestic and international forecasts.

“Furthermore, this COVID-19 induced recession follows the pattern across the world where many countries have entered similar economic recessions. “Recall before the impact of COVID-19, the Nigerian economy had been experiencing sustained growth which was improving every quarter until Q2 2020 when the impacts of COVID-19 started to be felt.

“Other countries already in recession like Nigeria include: Austria, Belgium, Canada, Denmark, Estonia, Finland, Hungary, Ireland, Italy, Latvia, Lithuania, Mexico, Netherlands, Norway, Romania, Russia, Spain, UK, and USA. “Most of these countries have recorded contractions much deeper than the Nigerian economy.”

Declaring the submit open, President Mohammadu Buhamadu Buhari, who was represented by the Vice President, Prof. Yemi Osinbajo said the country slipped into the current recession as a result of the severity of the global downturn caused by the COVID-19 including lockdowns, disruption in global business failures and rising unemployment  after 12 successive quarters of positive growth.

“It is no longer news of course that the economy officially entered into recession with the release of the 3rd quarter figures on Gross Domestic Product by the National Bureau of Statistics which showed a decline in growth by -3.62% in that quarter.

“  We must bear in mind that this decline was after 12 successive quarters of positive growth and came about as a result of the severity of the global downturn caused by the COVID-19 pandemic including lockdowns, disruption in global supply chains, business failures and rising unemployment.

“We can all recall of course that during the lock-down, farming did not take place, businesses were closed, schools were closed as were hotels and restuarants. “Also, airlines stopped flying while inter-state commerce was disrupted..  the economy only began to recover when these activities resumed and if we are able to sustain the nearly three percentage point increase from the second quarter decline of   —6.1% the performance in the 4th quarter could take us into positive territory.

“It was to mitigate this impact that the Federal Government introduced the Economic Sustainability Plan.   All the programmes in the ESP are reliant on the private sector playing a key role in creating and conserving jobs and the production and delivery of services in agriculture, housing, solar power, and digital technologies to mention just a few of the sectors.  

To take the example of agriculture, with the support of the banking sector, the Federal Government is working to organise finance for farmers and we are also guaranteeing uptake of produce.  

On its part, the private sector is responsible for the desired local production, provision of services and associated logistics across the agricultural value chain.” Osinbajo, who recommended partnership with private sector panacea to the current economic challenge, said: “We expect that the larger companies and firms operating in all sectors of the economy will also build on this spirit of partnership by supporting small businesses especially by including them in value chains as suppliers, distributors, contract manufacturers, and service providers amongst other things.”

Adopt Chinese model, NESG tells FG

Earlier in his remarks, the Board Chairman of the Nigerian Economic Summit Group (NESG),  Mr. Asue Ighodalo urged the government to desist from explaining away and blaming the current economy decline on “global pandemic,” adding that China has recorded economic growth despite the fact that COVID-19 pandemic started from China. Still on China’s economic feat as a result of long-term planning and consistency in policy implementation, Ighodalo said, “And, as easy as it would be to explain away our continuing decline with the words “global pandemic”, I would challenge us to bear in mind that while the Nigerian economy is expected to contract by nearly 5%, the Chinese economy is on track to grow by over 1%, this year.”

“This is despite China being the epicentre of the pandemic, with almost twice as many cases and four times as many deaths as we experienced.

“The Chinese economy, in fact, has not contracted since 1976.   Its growth streak has lasted for over four decades, through the global financial crisis, trade wars with the United States, and now a pandemic that tore through their country first, before splintering out to others.

“China has shown us what a serious nation can do when it looks back on its history, resolves “never again” to fail its citizens, and forges forward with a sense of urgency, discipline and purpose.” “It is essential to note that this comparison with China is not misplaced.

“In 1983 Nigeria’s per capita income was double that of China, and today, despite its population, China’s per capita income is over five times that of Nigeria. “So while there are many plausible rationalisations for the state of our economy, I would urge us to engage throughout this summit with the example of China etched firmly in our consciousness.

“They put behind them the failed “Great Leap Forward” policy that caused tens of millions of Chinese deaths and fixed their eyes forward on the task of becoming a global superpower. “There was audacity to their vision. It is also time that we put audacity to our vision.

“Please note that this is not an argument for us to copy and paste the Chinese model. Far from it, however, we must copy the Chinese spirit. “A plan that worked for China four decades ago is unlikely to offer a viable blueprint for our own development today.

“The world has changed. However, if China can consistently grow and pull millions of her people out of poverty, why can’t we?”

Source: Vanguard News Nigeria