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Taking The Economy Out Of Recession In 2021

Against the backdrop of the global COVID-19 pandemic, both local and international experts had predicted in early 2020 that the Nigerian economy would slide again into recession, long before the country recorded two consecutive negative growths in the second and third quarters.

Already, oil market experts are predicting that oil prices might average $50 per barrel in 2021, thus suggesting Nigeria still has to gird its loins to be able to get out of recession in 2021. According to the recently released debt figures by the Debt Management Office, the country currently owes N32.233 trillion with the debt profile rising in three months by N1.21 trillion.

The DMO said, “Compared to the total public debt stock of N31.009 trillion as at June 30, 2020, the debt stock in 3rd quarter 2020 increased by N1.214 trillion or 3.91 percent. The FGN, State Governments and the FCT all recorded increases in their debt stocks due to borrowings to enable them to respond appropriately to the COVID-19 pandemic and to meet revenue shortfalls.”

Thus with the rising debt, Nigeria needs to look inwards to develop other sources of revenue. It is unfortunate that in spite of sloganeering on diversification, Nigeria still depends on oil revenues for about 90 per cent of total export earnings and 65 per cent of total government revenue. Indeed, this shows that successive Nigerian ruling elite have not learnt any lesson from the boom and bust cycles of the oil market and from the fact that a country desirous of real economic growth cannot depend on a single commodity.

Thus, there is an urgent need to fast-track the development of the country’s potential in other sectors, such that oil receipts would just be one of the sources of foreign exchange for Nigeria rather than the major source.

Even before the onset of COVID-19, the economy has been battling with low output growth, high unemployment rate and rising inflation. Sadly, failed attempts to achieve any meaningful economic diversification have been exposing the economy regularly to external shocks, particularly fluctuations of prices in the global oil market. Judging from the vulnerability of the oil sector, we still hold the view that there is an urgent need for a reappraisal of the thrust and contents of the country’s development policies and commitments to their implementation.

A change in policy focus and paradigm shift in the industrialisation strategy should be of utmost priority, if the federal government is to return the Nigerian economy to the path to sustainable growth and viability. The focus should not just be about getting out of recession, it should be about getting out of recession in a sustainable way because if the nation does not develop other commodities for export, the party seems to be over already in the global oil market.

The days of $100 per barrel oil are gone and the reality is that the world is gradually moving away from oil. In this vein, we urge government at all levels in the country as well as stakeholders to do more in rebounding the economy and in developing other sectors, especially agriculture, with a view to building a resilient economy that can withstand headwinds that may still come in the future. Furthermore, we share experts view that ‘‘policy implementation needs to move quickly and comprehensively to facilitate economic recovery and help the country reap its longer-term potential.’’

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