Opinion: Nigeria’s Recession, So Much Discussed But So Little Understood

Opinion: Nigeria’s Recession, So Much Discussed But So Little Understood
October 14 20:47 2016 Print This Article

By Edwin Iyasele

 “I wish to fill in the gaps which have so far always remained unanswered in the souls of men as burning questions, and which never leave any serious thinker in peace, if he honestly seeks the Truth.”

Does Nigeria political leaders support better tomorrow for Nigerians?

Well! No subject is so much discussed today or so little understood as recession.

The politicians in Nigeria talk of it as if it were some horrible visitation from without, over which they had no control. Like a flood, a foreign invasion or a plague .It is something they always promise to fight. Yet the gospel truth is that our political leaders have brought on recession by their greed, personal interest and fiscal policies. They are promising to fight with their right hand the “conditions” brought on with their left hand.

The cure for this recession, like most cures, is in the removal of the cause. If only our political leaders will give them the weapon or strong law to do the job.

The first question to be asked today is not how we can get out of this recession, but do we really want to get out?

External forces and internal unwillingness.

With these three different cabals – Buhari/Aso Rock Camp (Defense and corruption), Tinubu camp (Finance and Power) and Atiku/Saraki camp (Legislature).

Having dinner in between the line of control and chaos. To the point where it grossly distorts and undermines the mandate itself. It benefits some groups at the expense of others.

The first group acquires a vested interest in maintaining recession. Remember when you pay more for something; the person on the other side of the register is also getting more.

Too many of us continue under the delusion that we can beat the game. So there is a great deal of hypocrisy in the outcry against recession. Government is the worst offender in this hypocrisy.

Many of us are shouting in effect “hold down” everybody’s price and income except my own. It is a surprising complete work of value for anyone trying to understand — and looking to resolve the issues of our recession honestly.

It is an awful parent who suffocates his own children for the sake of few naira.

“The fight against corruption”.

Nigeria politicians dancing the dance of a spirit but little did they know that the drummer doesn’t actually have them in mind.

The solution to this recession is within not outside. Don’t borrow to finance consumption but for production, review IMF/World Bank conditionalities.  If more than one third of all goods are imported and there is devaluation then import prices will become expensive leading to an increase in inflation and a decline in productivity leading to recession.

Walk with me on providing a nice approach toward investigating the economic situation that has led to our current state of affairs. The economic situation is not easy to understand or deal with the dilemma we have placed ourselves in.

The purpose of government is proper decision making, yet Nigeria Executives, Economists and Legislatures do not use proper problem solving methods.

Our nation is in the hands of individuals who are either strongly influenced by lobbyists or jump right to the solution without root cause analysis. All these are interrelated facts that contribute to our unreliable economy. Therefore, the modern recession will linger until real economic change occurs.

Monetary policy and system, mal investment, cooperative and productive decisions between fiscal and monetary authorities, trade liberalization. Apply the boxing rules; heavy weight Vs light weight in championship competition.

Converting the size of our economy in Dollar terms (Petro Dollar deal) and then look at the growth rate with the recent strength in the USD, we are seeing a huge global dollar nominal cost push inflation and GDP recession.

Gross Domestic Product (GDP) is not the best gauge of any economic health. There are potential problems when starts using a gross index. An index like the Gross National Product GNP is a gross figure which makes no distinction between purchases and is merely a measure of reported transactions. In addition it isn’t necessarily a measure of growth, but rather, a measure of what we spend. Economic growth and GNP are not always interchangeable. Because GNP doesn’t distinguish between expenditures, GNP includes those expenditures that are direct result of economic contraction.

Let borrows the same methods used by industrialists to make products reliable, and applies these methods to our economy.

Honestly, First of all, government fiscal policy can be in the form of government spending and tax regulation.?In order to bring economy out of recession, government can do two things. It is either increase the government spending and/or cut the tax.?By increasing government spending, government saves the idle production outputs and hence sustains the production activities.

The continued production benefits people by giving them wages, interest, rent, and profits. In the end, people’s income and buying power increase.?Secondly by reducing the interest rate and cutting the tax, government let people have more disposable income. Disposable income is an income after tax. The intention for a more disposable income is that people are able to spend more in the markets and hence sustain the economy. Make financial institutions people oriented. Create a new tax structure to create a more equitable way of taxing the ultra-rich. Hoarding, wealth accumulation and the effect of lobbyists on our economic system deserve strong attention from our government representatives.

Nigeria Government should try and stimulate the economy with several forms of fiscal tools. Depending on where the pressure is most significant the focus could be on our trade partners, business incentives, consumer centric policy, federal spending cuts, or a combination of those. People often misconstrue economics with the working economy, when in fact economics is a set of tools used to make an economy viable.

Edwin Iyasele

eddyiyasele@yahoo.com

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