On October 1, 1960, in the presence of representative of the British Crown, Nigeria’s first Prime Minister, Abubakar Tafawa Balewa made the following declaration, “Today is Independence Day. The first of October 1960 is a date to which for two years, Nigeria has been eagerly looking forward. At last, our great day has arrived, and Nigeria is now indeed an independent Sovereign nation.”
The peculiarity of this 56th anniversary is the recession which currently beclouds Nigeria, a nation which was seen as the jewel of sub-Saharan Africa at independence.
Apart from the civil war, Nigeria faces possible the most daunting of challenges it has ever faced since independence. In the East pockets of secessionists have continued to put pressure on the united of the country which is home to some 180 million people.
In the South, militants have vowed to decimate the oil exporting capabilities of the nation; while a horde of herds men have continued to threaten the civility which has existed between communities for decades.
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But perhaps the most pressing of the country’s problems is the economic challenges which its central bank and finance ministry currently faces. The Federal Government and the Central Bank of Nigeria (CBN) are battling an economic anomaly which has the semblance of what is known in economic lexicon as stagflation.
Stagflation is a condition in which both inflation and unemployment which should have an inverse relationship are rising simultaneously.
Data released by the National Bureau of Statistics (NBS) for the first eight months of 2016 show a gradual increase in inflation, while unemployment has also been on the rise.
Inflation which began the year at 9.62 per cent has risen to 17.61 per cent in August with the possibility of further increases as researchers at FSDH Merchant Bank and ARM predicted inflation number higher than what was eventually released by the NBS. In particular FSDH predicted inflation number of 7.71 per cent for August.
On the other hand, national unemployment rate rose from 10.4 per cent in the fourth quarter of 2015 to 13.3 per cent in the second quarter of 2016.
According to the NBS, “the number of unemployed in the labour force, increased by 1,158,700 persons, resulting in an increase in the national unemployment rate,” in the second quarter of 2016.
The NBS says, there were 26.06 million persons in the Nigerian labour force in the second quarter of 2016 that were either unemployed or underemployed compared to 24.5 million in the first quarter and 22.6 million in the fourth quarter of 2015.
Stagflation occurs when there is persistent high inflation combined with high unemployment rate and stagnant demand. The term which is attributed to a British Conservative Party politician, Iain Macleod was first used in 1965 to describe a condition that faced many western economies in the 1970s.
“A major cause of the current negative growth in output associated with rising unemployment and inflation in Nigeria can be explained by supply-side shocks triggered by changes in the management of the foreign exchange market in response to declining oil price,” Ikechukwu Kelikume, an economist and don at the Pan African University says.
“The immediate effect of a fall in the value of the Naira,” says Kelikume, “was a rise in the price of Nigerian imports which drove up the cost of imported raw materials need by the productive sector.”
Currently, the increase in the general price level is accompanied by declining real GDP growth rate which has fallen significantly from 6.21% in the first quarter of 2014 to 3.96% and -0.36% respectively in first quarters of 2015 and 2016 respectively.
We may not exactly be at the throes of stagflation yet Bongo Adi a professor at the Pan Africa University says. “But if we do not move faster to ameliorate the economic conditions, we may not be far from hitting that negative economic condition.”
But the Federal Government and the Central Bank have kick-started efforts at bringing the country out of recession.
The Federal government says it is on its way to resolve the economic challenges through a number of measures, “farmers in thirteen out of thirty six states are receiving credit support through the Central Bank of Nigeria’s Anchor Borrowers Programme,” President Muhammadu Buhari said in his Independence Day address.
“The country should be self-sufficient in basic staples by 2019. Foreign exchange thus saved can go to industrial revival requirements for retooling, essential raw materials and spare parts.
“Government is introducing Water Resources Bill encompassing the National Water Resources Policy and National Irrigation and Drainage Policy to improve management of water and irrigation development in the country.
In the area of power generation, the President said “government is going ahead with projects utilising alternate technologies such as hydro, wind, and solar to contribute to our energy mix.”
Other priority areas include Rural Electrification, Roads Construction and Rehabilitation, Railways Development, among others.
In the words of Abubakar Tafawa Balewa on that first independence day, “…we shall not fall for want of determination.”And indeed, there have been messages of hope as the country grapples with a recession that has seen incomes halved, jobs lost and living standards eroded.
In the early hours of today former President Goodluck Jonathan twitted “Happy 56th Independence Anniversary Nigeria! Do not ask who will make our beloved country great. Ask instead, how will I make Nigeria great,” former Vice President Atiku Abubakar twitted “Happy Independence Day! Our country shall overcome!”
While commending the Nigerian people for their patience, steadfastness and perseverance, President Buhari twitted, “I wish all Nigerians a Happy 56th Independence Anniversary.”
