The Economic recession is majorly caused by loss of business and consumer confidence. As confidence reduces, so does demand. This is the tipping point in the business cycle. It’s where the peak, accompanied by irrational exuberance, moves into contraction. A decline in the gross domestic product growth is a sign that a recession may be underway, but it is rarely a cause
Solving the current economic recession of the country requires thinking out of the box. The Economic recession is one of the main issues in Nigeria, the economic recession has been defined by economic statistician as a period of general economic decline and is typically accompanied by a drop in the stock exchange market, increase in unemployment, and a decline in the real estate market.
The problems of economic recession normally fall under the leadership of a country, it is often either by the president himself, the head of the Federal Reserve, or the entire administration. The National Bureau of Economic Research (NBER) has defined an economic recession as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in a real gross domestic product (GDP), real income, employment, industrial production and wholesale-retail sales.
Major Causes of Economic Recession in Nigeria
High Inflation Rate: The Nigerian government banned the importation of some essential commodity into the country without consideration for the country’s period and fuel subsidy removal. Speculation in the stock market due to budget delay is another major cause of the economic recession which led to a rise in the domestic oil price resulting from the oil subsidy removal.
The Country Poor Economic Planning: According to a Muslim Cleric, Oloriomokewu said “The current government has proclaimed the usual generalities that every government indulges itself in year in, year out, diversifying the economy, improving manufacturing and mining sector, raising agricultural output, and encouraging foreign investments among others, yet no concrete evidence of strategic plan for growth,
The Nigerian government has caused serious poverty in the country, the government policy has widened the gap between the rich and the poor which has created more economic hardship. The poor in the country paid the price of the devalued currency in the country and the rich were the one profiting from this.
The country currency was devalued when the crude oil price in the international market was very low and crude oil export was largely affected by the activities of the Niger Delta militants. Read a detailed interview of Sanusi Lamido on How the Nigerian Government Caused the Economic Recession
Economic Recession and Poor Embrace of Planning Policies
The most planning law in Nigeria is the Urban and Regional Planning Law of 1992 which further gave necessity to planning at all levels of governments i.e. Federal, State and Local. However, the position of all tiers of governments has shown less acceptability hence, the apparent malfunctioning of the law under reference. When there are Planning Authorities at all level of governments different spatial plans would have been evolved such that there will be the optimal utilization of available space with conforming land uses.
In other words, areas of natural endowment can be safeguarded. In other words, areas of natural endowment can best be used for industrial purposes which would increase the revenue through taxes, been pay by employees and employers and create employment which will further decrease the rate of unemployment, (decrease in dependency ratio) and cumulatively increases the well-being of the nation.
Possible Ways for The Country to Resolve the Economic Recession Problem
The causes of economic recession in the country can be checked or tackled by concentrating on the agricultural domestic products revenue-generating process instead of capitalizing on revenues generated from crude oil. The need for infrastructure and effective developments for the agricultural process is non-negotiable; this calls for a review of Urban and Physical Planning policies.
Review of allocation policies for agricultural production: Agriculture in the ’90s is the mainstay of Nigeria, in terms of GDP, foreign exchange earnings, and employment. Today, Nigeria spends billions yearly on the importation of agricultural products. There are lands lying fallow, the government should start allocating for farming on those fallow lands and assessment should be at very low and cheap rates, available for everyone made available unconditionally across social strata.
Encouragement and fast approval process for Agricultural land use: Sanusi Lamido (2016) during the economic summit on “The Search For A New Growth Model,” noted that Nigeria should learn from a country like Ethiopia and then Meles Zenawi, the late Prime Minister. Instead of taking their leather and bringing back shoe.
He advised that they should bring their factory to Nigeria opined that such streamlined to our physical planning instead of collecting approval for farmlands at the high side there should be a need to review our assessment fee especially on approval of farmlands so that it could be readily available to everyone. Visit the NITPNG Website for more details.