WHY ECONOMIC RECESSION IN NIGERIA MAY NOT END IN 2017 OR 2018.

There is recession in Nigeria!!!! Hunger in the Land!!! Famine in Nigeria!! Are some of the headlines that I have come across on some portals and websites describing the  malaise currently impacting the average Nigerian on a negative level. The prices of crude oil has not risen to where it used to be,militants have not backed down on destroying oil infrastructure, investments in the oil and gas sector has reduced as investors are scrambling for escape routes, multinationals are downsizing, job loss is a reality in the private sector, no ray of hope in sight for the average opulent Nigerian whose source of income has been threatened or closed down in the face of harsh economic reality.

The heat is real in the Nigerian socio-economic sphere because of rising cost of good and services with no significant rise in disposable income of the average Nigerian. This is as a result of the means that the value of the Naira against its foreign counterparts has weakened in terms of purchasing power. I have been a keen observer of the events for almost a year now and I have witnessed policy somersaults, overhaul, and outright reversal inconsistent with a serious drive to end currency depreciation.
The challenge facing the Nigerian economy is hydra headed including  fiscal, trade, instability, etc.

What do I mean by fiscal? Fiscal policy of a nation  is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nations money supply(Investopaedia.com)  A Fiscal policy refers to all monetary policies guiding government spending and borrowing. In the face of dwindling business and enterprise activities, it means lesser tax will come to the government than expected; 

 The economic direction is usually amplified by the direction in which major fiscal policies of government is headed. For example, recently, the monetary policy rate was jacked from 11% to 12% and from 12% to 14% within a space of 3months(12% in March, 14% in June 2016).If from 11 to 12% the interest rate is increased by 100 basis point(100%) then your guess will be as good as mine considering the 12%-14% increment.

 This is the rate at which the CBN lends money to deposit money banks operating in the country.    which means that up from interest rate on fixed instruments like the treasury bills and bonds rose to a record high of 14-18% depending on various tenor and 22-25% which means that people with spare cash will rather go and keep their money in banks to yield interest rather than produce or manufacture.

The following are the reasons why I am sure Nigeria may not come out of recession in 2017 and 2018

• Low refining capacity: According to Ifeanyi Uba, heavy demand for dollars are from  petroleum marketers who need to import petrol, diesel and  aviation fuel(kerosene inclusive) into the country. Research has shown that crude oil has about 5,000 fractions that can be gotten from it after fractional distillation and it is from these fractions that majority of indstries in Nigeria get their raw materials: Plastics, textiles, polymers, polyesters, petroleum wax, grease, petroleum jelly, lubricants for automobiles and earthmoving equipment, packaging materials for sachet water, bottled water, foot wear, clothing, fertilizers, etc are some of the by products obtained from crude oil and most Nigerian companies import most of these items at the moment.

• Low electricity generation for Industrial and manufacturing purposes: One of the main operational costs of most manufacturing industries operating in the country is in power generation. These businesses spend as much as 60% of their operational costs on power generation. Diesel is a major fuel used by these companies. Rising cost of diesel will  mean production will be halved,cut or out rightly discontinued.

• Fiscal and monetary policy: Many manufacturing companies depend on forex for their raw materials and if they don't have access to the official window at the appropriate time, time value of money would have eroded their expected profits.

• Low Agricultural production; There is a lot of noise about agriculture yet little has gone into creating a value chain for agricultural products to ensure all year round availability. Ever year thousands and even millions of tonnes of perishable goods are wasted due to poor infrastructure for a sustainable agricultural production and storage. The Nigerian state officials on highways do not help matters either- Bad roads+ road block+ extortion+ time wastage+ arrest are some of the ills bedevelling agriculture in modern Nigeria. Export potential of agricultural commodities can never be realised until these bottlenecks are addressed and removed.

• Farmer- herdsmen clash: Boko haram has successfully rendered the vast land of NE Nigeria to  fallow  as a result of the death and displacement of thousands of farmers. Herdsmen and farmers clash has resulted in countless loss of lives with its attendant effect on Agricultural output.Examples abound in Southern Kaduna, Plateau State. Benue State, Taraba State, and south Eastern States.

Solution: 

Government is responsible for the welfare of her citizens and the people must hold her government responsible for that sacred duty as laid down by law. If need be, every Nigerian farmer must be able to bear arms for protection against intruders and marauders into farmands. In Switzerland, land tenure system permits agriculture in homes and they exchange proceeds after harvest which is one of the reasons swtizerland has unparalleled standard of living and a healthy population. Small scale agriculture can boost communal participation, it is capable of eliminating poverty and making food available of reasonable costs.