Economy

Experts express doubt over Nigeria’s exit from economic recession

Access Bank

Economic and financial experts have expressed doubt over claims that Nigeria has exited recession.

According to the Vice President of Highcap Securities, David Adonri, the euphoria that Nigeria has exited economic recession “resembles a fairy tale.”

He said: “There might be serious questions about this quick turnaround, considering that, unlike in the past, the agricultural and manufacturing economies were seriously in limbo during Q4 2020 (4th quarter of 2020 – October to December 2020), due to the intensified farm insecurity and shortage of forex respectively.

Also: “Escalated costs of production due to increase in prices of fuel and electricity were downside factors in disfavour of growth.”

Another expert, Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University, Ago Iwoye, Ogun State, stated: “Nigeria is still currently in recession, but recent increase in price of crude oil may reduce the stress if the improved finance is well managed. Professionalism should not be sacrificed for politics.

“The National Bureau of Statistics (NBS) should know all these and report accordingly, so that policy makers will know they have much to do to bring the economy out of recession.”

Another expert, Dr. Olalekan Aworinde, Public Policy Economics & Senior Lecturer at the Pan African University, Lekki-Lagos, said: “I personally do not want to believe this GDP (Gross Domestic Product) result considering the economic downturn in the country.

“The GDP result is in respect of the period between October to December 2020 when we witnessed the #EndSARS protest that particularly crippled economic activities in the country, so how then did we report positive GDP growth?

“Is it FDIs (Foreign Direct Investments) or Portfolio Investments that has suddenly increased and transformed into growth?”

The above are some of the many experts who have cast aspersions on the figures released by the NBS that the nation’s economy recovered from recession in the last quarter of 2020.

”The reality on the ground does not suggest that the economy was in anyway better than when it slide into recession.”

Recall that the nation’s economy slipped into a recession in November 2020 after its GDP contracted for the second consecutive quarter. But figures released by the NBS on Thursday, 18th February 2021 showed that Nigeria’s GDP grew by 0.11 percent (year-on-year) in real terms in the 4th Quarter of 2020, representing the first positive quarterly growth in the last three quarters.

This sounds like a fairy tale, a made-up story usually designed to mislead.

“For the year 2020, the economy grew at -1.98 percent, so we are still in recession”, according to Prof. Akpan Ekpo, former Director General of the West African Institute for Financial & Economic Management (WAIFEM). He is currently the Chairman of the Foundation for Economic Research & Training.”

In his analysis, Chief Blakey Okwudili Ijezie, Executive Chairman of I & I Investments Limited, observed that it took Nigeria over one year to recover from 2016 recession when GDP fell to minus 1.73 percent, adding that it is most improbable that it has suddenly recovered from this 2020 recession as the NBS wants us to believe. The GDP had declined by 6.10 percent and 3.6 percent in real terms in the second and third quarters of 2020 respectively.

He said: “GDP is a composition of consumption, investment and governance. And it’s a known fact that consumers, investors and governments were disrupted by the emergency of COVID-19 pandemic, banditry, Fulani Herdsmen, etc. Even the Diaspora Remittance which is a factor of growth, was disrupted since global economy is shrinking at a fast rate.

“As noted by members of the Organized Private Sector (OPS), including the Lagos Chamber of Commerce and Industry (LCCI): “Apart from declining growth, the economy is currently confronted with several challenges, including rising consumer prices (inflation now at 16.47 percent in January 2021), weak employment level, persisting liquidity concerns in the foreign exchange market, high poverty incidence, weak investor confidence and insecurity, among others.

”These challenges, which had been part of the country’s economic narrative prior to the pandemic, were amplified by the COVID-19 induced disruptions.

“The economy is slumping into a Depression, rather than the fairy tale by the NBS that it has exited a recession.”

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