How Nigeria Can Avert Looming Recession—Minister

July 14, 2020
zainab ahmed finance minister

By Dipo Olowookere

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has disclosed what can make Nigeria escape the imminent recession staring at the country.

Mrs Ahmed, while addressing a stakeholders’ meeting last week, said the present situation indicates that the nation may witness an economic crisis in the last quarter of 2020.

However, she stressed that this can be averted if the Gross Domestic Product (GDP) can record strong numbers in the current third quarter of the year.

According to her, Nigeria is exposed to spikes in risk aversion in the global capital markets, which will put further pressure on the foreign exchange market as foreign portfolio investors exit the Nigerian market.

She then noted that, “Unless we achieve a very strong Q3 2020 economic performance, the Nigerian economy is likely to lapse into a second recession in four years, with significant adverse consequences.”

In 2016, Nigeria, the largest economy in Africa, fell into recession following a decline in the prices of crude oil in the world market and reduction in the level of production caused by attacks on oil installations in the oil-rich Niger Delta region of the country.

The nation was able to find its way out of the economic crisis a year later after production improved and the youths in the region were prevailed on to stop the bombing of oil assets in the area.

Last week, President Muhammadu Buhari signed the revised budget of N10.8 trillion into law, higher than the initial N10.5 trillion.

The crude oil benchmark was pegged at $28 per barrel with output set at 1.8 million barrels per day including condensates and the exchange rate fixed for N360/$1.

In the first quarter of 2020, the GDP slowed to 1.87 per cent from 2.55 per cent in the fourth quarter of 2019, reflecting the earliest effect of global disruptions caused by COVID-19 pandemic, especially the oil price crash and restricted international trade.

According to the National Bureau of Statistics (NBS), the GDP is now projected to contract by 4.2 per cent in 2020, as against the previously projected growth of 2.93 per cent.

The GDP numbers for Q2 and Q3 of 2020 are expected to be negative, which means that the economy will slip into a recession.

Already, Nigeria’s rival, South Africa, has fallen into a recession.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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