Nigerian Economy : Recession does not start in a day.

Discussion in 'General Forum' started by Izu, Sep 3, 2016.

  1. Izu

    Izu Admin Staff Member

    Truth be told!
    "Recession does not start in a day"
    In most cases, it is like every malaise, it builds over time, and if not halted by deliberate managerial actions, it will become a monster.
    These were the words of three professors of economics, in Enugu today.
    In a way, I decided to walk the lane of ambivalence on issues of the administration of Muhammed Buhari, since the heightening of Herdsmen menace across Nigeria.
    I remain a supporter of President Buhari, but I find it quite absurd that he was like 'oworok'anmi' - wetin consign me' in issues of men who are obviously emboldened by his studied silence to commit more carnage and visit innocent, sleeping, aged and kid Nigerians with the worst of attrocities for mere disagreements over what they do do not even have any reasonable strength of argument.
    But since the Minister openly stated that Nigeria had gone into recession - I think this was the second time - I chose to approach men and women knowledgeable in economics and national finances.
    Their verdict was uniform. "Buhari's economic managers have their blames because they ought to know that Nigeria was ripe for recession at the emptying of the national reserve before the last election.
    "We are not talking about corruption here. We are talking about spending on matters not quite of priority between 2012 and 2015, because the stress signs started even earlier than that.
    "To be fair to Buhari, his administration acted in halting some spending, but because his economic managers were not fast or strong at impressing new measures, it got out of hand."
    This Professor of Economics, former Director of Institute of Development Studies of the University of Nigeria, simply waved me away, indicating he was not going to get involved in joining issues with the present generation of national economic managers.
    He does not want his name in print.

    He was not alone. His former colleague, now of the Enugu State University of Science and Technology, ESUT, also insists his name must be kept out.
    "Economic recession is like a very risky stage of an ailment. It is not like an accident. It's signs are unmistakable and starting from the glabal economic meltdown, in 2007, it's signs were clear. When President Yar'Adua decided to cancel some of Obasanjo's projects, we thought the government had learnt of it and was responding adequately. When Jonathan's administration went into spending spree, we were wondering if the points had suddenly been lost. We confirmed that something was wrong when the national reserve was being emptied."
    He sighed and looked at me in the face and said, "my dear brother, why should peaple cry over the embarrassing weakeness of the national currency when we know there is nothing in the national reserve basket.
    "Look," he continued, now a bit agitated, "this is not rocket science. It is just like your home. You have the foodstuff known and accessible to members of your family. When it depletes, you get to the barn or store, to restock the household. This barn can be your bank account or something. But it is a thing you readily have to avert embarrassment of your household. But when you jump all the conventions and spend from that barn, not giving a thought to what happens if the household stuff runs dry, you shouldn't be surprised when hunger sets in."
    His strong words against the Joanthan managers were not spared the present administration. "Yes, the last administration was simply wasteful, but it is strange that the present managers cry over fall in oil prices. But they know that what can serve as Nigeria's foreing reserve has over 20 per cent personal-fortune-content-of-diaspora-Nigerians'-earnings and remittances. But these remittances also ride some social and political factors as security, stability, etc. Is it when the Cattle rearers are driving some Nigerians from basic economic activities as farming and the government is threatening war against some sections of Nigeria that a person in a secure foreign environment would send home his hard earned money?"

    According to him, "earnings from farm produces as cassava and the like may look negligible to the uninitiated but when in a state of nill-reserve, you begin to value small contributions. In the next five years, many of these cash crops would have gone into extinction due to activities of herdsmen and their cattle. Even the Bible says, 'never you look down on the days of your humble beginning."
    These economists are sure that Nigerians are in for a very difficult time and the earlier they are told and the proper line of recovery laid, it would get worse and the entire social system would colapse.
    But what are these ways out?
    "Hmmmmmmmm," very simple and hard, yelled the old man. "Look for money, either by borrowing, which is mortgaging the future of the younger ones, to build or strengthen the necessary infrastructure to have the system running, even at the most rudimentary state or get foreign capital investment to provide these, as the so called Build, Run and Return, BRR-system. There are many other ways."
    He was now getting angry: "Does anybody claim ignorance of the overbloated overhead in government? For God's sake, what are those so called senators 'senating' for each of them to earn over N360 million annually? Nigeria does not need more than one senator per state and perhaps, just two House of Reps members from each State. Are we really stupid to take this all these while?"

    He was soon through with me: "Young man, please do not say I am being rude, you must start." (Meaning I had to leave).
    I whistled as I strode across his expansive living room (?), which furniture had seen better days, promising to be back soon!
    He did not respond!
    So, somebody, by wasteful spending did things that deepened the foundation for a monstrous recession?
    And somebody is so amateurish to think that it is only by selling crude oil at higher rates that the economy can be fixed.
    Wow!
    We are in deep mess!

    By Igbonekwu Ogazimorah.
     
  2. Izu

    Izu Admin Staff Member

    Some interesting comments -

    I think your two professors are wrong in their diagnosis of the current recession. Recession is not a historical trend, it is usually event-induced - the collapse of the subprime mortgages is the US, earthquake in Japan, commodities price bust, war, famine, epidemic (crops and animals) you can name them.
    Recession simply is negative GDP growth over a period of 6 months, which means reduction in the rate of production of goods and services. A system that has experienced over 242 companies shut down, with several labour hands laid off, unpaid salaries of the remaining workers from 6 - 18 months across the states (thereby seriously constraining their spending propensity), industries struggling to source fx to import raw materials for manufacturing, banks shying away from availing loans because of their liquidity challenges certainly have more than enough triggers for recession.
    You see, if we are not able to pin point cause and effect, proffering likely solutions is an effort in futility. When the banks started laying off workers owing to their adverse liquidity positions arising from the Big Bang introduction of TSA (over 20,000 workers affected), the Minister of Labour threatened to withdraw their licenses in response, without bordering to understand the reasons for those decisions across banks. The rest is now history.
    In all fairness, this government inherited huge problem on assumption of office. However their policy solutions or more appropriately, lack of it and some administrative blunders is what pushed the economy into recession. Any professor trying to spin this is simply being disingenuous.
    The antidote to recession is to pump money back into the economy. Encourage spending and consumption, public and private; encourage investment by lowering interest rates and increased lending by the banks, support real productive ventures and the easiest, reduce waste and spendings on trivialities. These don't look like rocket science.
     
  3. Izu

    Izu Admin Staff Member

    I don't think anything can done now rather than to prepare for the worst of the heat. I don't think there is quick fix for this.
    The two things I am think now that may help is restructuring the country to give regions autonomy. Through this some regions may get out of it quicker than others, thereby supporting those regions that may still be battling to survive.
    Secondly, There should be a change in government. This will give hope that a new good things is about to come. This will help stimulate the economy a little and as well, it is an opportunity for those that feels aggrieved by the present government to soften their mind and make some sacrifice that may be of help. In some foreign countries their President will just resign when he noticed that he is becoming unpopular in this kind of situation. Buhari government has lost peoples confidence both home and abroad simple. Even IDPs are protesting over hunger.
     
  4. Izu

    Izu Admin Staff Member

    Well, Looking at d situation from d analytical point of view of an economist, Nigeria is in a deep ocean.
    But I want us to deliberately focus less on the economic truth and believe God for a positive turn around that is beyond human understanding: A divine intervention that God alone can take the Glory.

    Remember the demise of two great Nigerians years back , two of them passed on within a week! Am talking of late Chief MKO Abiola And Late Sanni Abacha.It was Gods Intervention to avert war betwwen two ethnic group in Nigeria.
    D demise of these two persons flushed out from the people d venom that calls for war and were left with no strength to war or write inciting articles on d pages of newspapers .
    That ended the seemingly ethnic crises.
    Thanks to interim govt that brought back democracy and we had peace, at least, that was our thought: that peace has finally settled in Nigeria before the upsurge of this dilemma after years.
    That same God who intervened before the emergent of this presence Democratic dispensation will rise again.
    Nobody knows how but HE WILL SHOW UP FOR OUR GOOD AGAIN IJN.
    So, let's keep faith. Good morning all
     
  5. Izu

    Izu Admin Staff Member

    You right my brother because recession does not happen by accident cos the tell tell sign like diabetes builds up over the years & if the economic managers or the patient decides to play the ostrich by living in denial then, the result will come either as recession or diabetes as the case my be.
    It should therefore however be noted that recession is a precursor to depression which may happen if we keen applying the voodoo economic policy that brought us here in the first place. Our insatiable quest for conspicuous consumption of foreign luxurious products is a major contributory factor to getting us here! We must Imbibe the culture of consuming our local products & stop exporting our scarce job opportunities overseas for the betterment of our economy.
    The most painful part is that we re not about to change the lazy & unpatriotic behaviors that got us into this mess. Praying for the exchange rate to come down when the price of oil is low coupled with a consumption pattern that is oriented in favour of foreign products is the worst kind of self deception in recorded history! Let us begin to put round pegs in round holes by appointing our bests to manage our critical national economy & learn how to consume the food prepared by ourselves and our economy will surely but steadily begin to bounce back.
     
  6. Izu

    Izu Admin Staff Member

    ...And you did not consider the unreasonable bailouts offered to states by Buhari for mere payment of salaries, part of threw us into this current mess. Was that an amount that should have been extended to productive sectors to retool the economy? Was the waste, going by the time you situated your analysis, limited to the federal level? What did the states do to halt the drift? How many of the governors put up industries as the likes of Mbakwe, Ambrose Alli, Nwobodo, did in readiness for the hard days ahead? By the time Obasanjo embarked on liquidating the country's debt with the Paris Club so as to be a good boy before the international community in a bid for his third term ambition, instead of using the money to industrialise the country, was he not preparing the stage for the current mess?
    And even as you expectedly labour to absolve the present leadership of the situation, what economic blue print would you credit it with in refloating the national economy? Ozo, we are in this, we are in it. Any man that continuously laments his father's failure as reason for his inadequacies or inability to confront his challenges, needs his head reexamined. Frederick Delano Roosevelt (FDR ) inherited an American economy in its worst form after the second world war. He did not blame any body. He rather rolled up his pants, admitted that the "buck stops on his table ", came up with the now famous New Deal through which incentives were extended to productive sectors, among others, to revive the economy.
    Much recently George Bush jnr left American economy flat. When Obama took over, he went to work offering bailouts in realistic terms to organisations that would boost the economy. General Motors (GM) is one of the beneficiaries. That accounts for the resuscitation of Ford ranges of vehicles you are seeing on our roads today. Mbakwe inherited a three year old Imo that was totally lacking in infrastructure but four years later, he took it to an iconic height. What precisely would you credit this your usually infallible Buhari in repositioning the economy, 15 months after being in power other than blaming his predecessors - exactly the same thing we saw when he was military head of state for 20 months between 1984 and 1985?
     
  7. Izu

    Izu Admin Staff Member

    That the present Administration seems to be lost in this predicament doesn't totally absolve those that led it into this mess of all guilt. It's plain and simple in lay man's terms. You cannot lead me into a new house to manage it telling me I'm in safe hands when I can't even find common food in the store house to at least eat and fuel the body. It's not proper. Yes this admin is failing due to some of its policies and the sit tight no sack approach to governance, but will u just stand and expect them do magic all the same?
    My Oga this is economics we are talking about here and not some stroll around Ogbette Main Market. That the states got the bailout funds is not what I call a waste of money, cos if they hadn't gotten it, you would still be complaining. Mind you they had already started watering the ground when they started sharing proceeds of the excess crude account and stopping it had its repercussions as well. Now is the time for individuals to join hands and save the situation.
    I saw a post yesterday of one new Poultry business in Anambra and the post buttressed the point of it being risky to start a business in this hard times but all the same you cannot castigate him/her for trying. That's the conducive atmosphere the Government of Anambra state has laid for him/her and other states should follow suit. The solution to the problem doesn't necessary lie at the Centre, it can start by each and everyone of us taking action. Good Morning and have a blessed weekend
     
  8. Izu

    Izu Admin Staff Member

    There is nothing more to say.."In all fairness, this government inherited huge problem on assumption of office. However their policy solutions or more appropriately, lack of it and some administrative blunders is what pushed the economy into recession. Any professor trying to spin this is simply being disingenuous."...In addition,Shortage of funds within the populace(Backlog of Unpaid Salaries) , Impostion of additional taxes,levies and import duty in a bid to raise the revenue base,Prioritzation of Forex to Pilgrims at the expense of Geniune Manufacturers are all pointers to the fact that this administration is not an "ECONOMICALLY RESPONSIVE" Government.
     

Share This Page