Nigeria recently experienced the worst economic recession in 29 years according to Finance Minister Kemi Adeosun. In 2016, the National Bureau of Statistics revealed an inflation rate of 17.1%. The GDP also declined by 2%. Therefore, Nigeria experienced one of the biggest challenges in 2016! It`s important to know the history of recession in Nigeria if Nigerians do not want to repeat the same mistakes!
What is Economic Recession?
The National Bureau of Economic Research provides the following meaning of recession: ”The economic recession represents a significant decline in economic activity. It lasts more than two months and visible in the wholesale-retail sales, gross domestic product, real income, and employment”.
In other words, a recession is the negative growth of GDP which lasts more than two months. The unique features of the recession can be found in the USA depression in the 1930s. It led to a decline of GDP of up to 10% and the highest unemployment rate in the history of USA – 25%.
Recession in Nigeria
What about the history of economic recession in Nigeria? According to the CBN Governor Mr. Godwin Emefiele, the first signs of the recession started in 2009 with the mortgage crisis in the USA. It influenced almost half of the economies of the world.
The economic recession in Nigeria started in 2014 when several international and domestic problems occurred together! Nigeria did not face the problem at the time, and this only made things worse for us.
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According to the National Bureau of Statistics, Nigeria is already finding its way out of economic recession. In the second quarter of 2017, the GDP of Nigeria showed positive growth. Nevertheless, Nigeria still has to deal with the oil prices. It now goes for less than $50 per barrel. Niger Delta Region also has troubles with restoring the productivity of barrels per day!
In 2016, Nigeria experienced the downfall of oil barrels’ production. We could only provide 1.69 million barrels daily at the end of 2016, while at the beginning of 2016, we were producing 2.11 million barrels per day.
Nigerians experienced the greatest Naira downfall in 2016. The lowest rate of Naira in 2016 was N463 in the black market!
The unemployment rate was extremely severe! About 4.5 million people lost their jobs in 2016!
Causes of Economic Recession in Nigeria!
Once again in the history of recession in Nigeria, the international factor played a major role. Nigeria is the country that is highly dependent on oil production. Therefore, a new Cold War between Russia and USA provoked the decline of oil prices.
Also, the Federal Government of Nigeria also played a major role in the recession. The Government made the move to ban the importation of some agricultural products in 2014. It also removed the oil subsidy which became an additional factor in the recession. Therefore, the prices for agricultural products became unbearable high!
The high-interest rate of 27% keeps scaring investors all around the world. In addition to this, there is the increased taxation rates in Nigeria which does not help small business to grow. Another problem is that of corruption which has led to a lot of problems for Nigerians.
Nigeria has shown a positive GDP rate in the second quarter of 2017. Optimists would like to believe that this tendency will prevail in future!
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