In a press briefing with newsmen in Lagos on Monday, the Minister of Culture and Information, Lai Mohammed said that Nigeria would exit the current recession sooner than it did in previous times. The economy will start seeing positive growth which will trickle down to people and businesses.
While addressing the issue of the harsh economy, he said that the quick recovery will happen “because of several complementary fiscal, real sector and monetary interventions proactively introduced by the government to forestall a far worse decline of the economy and alleviate the negative consequences of the pandemic”.
The latest recession in Nigeria will be short-lived, and Nigeria will return to positive growth soon, unlike the 2016 recession which lasted five quarters.
What does this mean?
The current recession has affected the oil sector the most, causing it to see a decline of 13.89% year-on-year. Because the country primarily relies on oil for its revenue generation, this drop in performance of crude oil has shaken its economy. The Covid-19 pandemic led to a drop in demand for oil globally because other countries were also affected economically.
Recall that the last recession occurred in 2016 and made a very delicate recovery in the second quarter of 2017. Interestingly, one of the major contributors to the 2016 recession was the overdependence on crude oil for about 90% of its foreign exchange inflows as well as over 60% of government revenue. Other factors that contributed were the trade tensions between China and the US as well as Britain’s move to pull itself out of the European Union.
Oil provides more than 60% of government revenue in Nigeria
Still an oil-dependent economy, history has repeated itself as we ride the waves of yet another recession in the country, also largely caused by a drop in performance of crude oil.
Other alternative sources of revenue abound in the country. They include Agriculture and the emerging Fashion Industry, however, these need to see more innovations, support and strides both from the public and private sectors.
Lai Mohammed’s statement, nonetheless, emphasises the steps that the government is taking to restore the economy back to positive growth, however, entrepreneurs need to put and keep their brands on a path of sustainable growth. Now more than ever, entrepreneurs need to take advantage of all channels to reach clients and stay profitable as the country works to find its way back to economic growth.