Nigerian Economy struggles to Survive #EventsoftheYear2018

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The weak state of the Nigerian economy throughout the year 2018 drove many people into  malnutrition, causing the country to be rated the poverty capital of the world

By Emeka Ejere

On December 14, President Mohammadu Buhari, confirmed what many Nigerians have felt for a very long time – the economy is in a bad shape.  Buhari met behind closed doors with the 36 state governors, where he lamented the poor state of the economy which has been wobbling all through the year 2018, leaving the masses suffering acute hunger and malnutirtion with the sad development that Nigeria is now the poverty capital of the world.

Figures from the Brookings Institution’s World Poverty Clock show that Nigeria  has the highest number of poor people in the world, overtaking India, with over 87 million people living in poverty. The report released in June 2018 adds that six Nigerians become poor every minute.

Briefing State House correspondents after the meeting, Abdulaziz Yari, chairman of Nigeria’s Governors Forum, NGF, said that President Buhari challenged the governors to redouble efforts to address infrastructural deficiencies in their respective states in order to revamp the nation’s economy.

Yari, who is the governor of Zamfara State, said, “Mr. President, as usual, responded by telling us that the economy is in a bad shape and we have to come together and think and rethink on way forward.”

This comes less than three months after the Monetary Policy Committee of the Central Bank of Nigeria, CBN, issued a warning (Tuesday, September 26) that the weak fundamentals currently being shown by the economy were putting the country’s exit from recession under threat.

Godwin Emefiele, the CBN governor, told newsmen shortly after a two-day meeting of the MPC members held at the headquarters of the apex bank, that the economy had started showing signs of weakness.

Recall that the Nigerian economy exited recession in September 2017 after suffering contraction for five consecutive quarters.

But the CBN governor stated that the committee was concerned that there was a fresh threat of recession as the economy slowed to 1.95 and 1.50 percent during the first and the second quarters of the year, respectively.

In his explanation, Emefiele disclosed that the slowdown emanated from the oil sector, with strong linkages to employment and growth.

For instance, Emefiele said the late implementation of the 2018 budget, weakening demand and consumer spending, rising contractor debts, and low minimum wage were some of the risks to output growth.

He said, “In this regard, the committee urged the government to take advantage of the current rising oil prices to rebuild fiscal buffers, strengthen government finances in the medium term and reverse the current trend of decline in output growth.

“The MPC also called on the fiscal authorities to intensify the implementation of the Economic Recovery and Growth Plan, ERGP, to stimulate economic activity, bridge the output gap and create employment.”

Other important developments in the weak economy is that on Wednesday, June 20, President Muhammadu Buhari signed the 2018 Appropriation Bill into law at the Presidential Villa in Abuja. The National Assembly had eventually passed the 2018 budget on Wednesday, May 17, six months after President Buhari submitted the estimates to both chambers of the assembly.

The President had on November 7, 2017, submitted a proposal of N8.612tn for the 2018 fiscal year, but lawmakers passed N9.12tn as the budget, increasing it by N508bn.

Buhari, however, criticised the National Assembly for reducing allocations for some projects and including thousands of projects into the budget without consultation with the executive.

He said, “The National Assembly made cuts amounting to N347 billion in the allocations to 4,700 projects submitted to them for consideration and introduced 6,403 projects of their own amounting to N578 billion.

“Many of the projects cut are critical and may be difficult, if not impossible, to implement with the reduced allocation.

“Some of the new projects inserted by the National Assembly have not been properly conceptualised, designed and cost and will, therefore, be difficult to execute.”

Also, on Monday, December 10, the National Bureau of Statistics, NBS, released the country’s Gross Domestic Product report for the third quarter with the economy recording a growth rate of 1.81 per cent year-on-year.

The bureau, in the report, which was posted on its website, said the growth rate of 1.81 per cent represented an increase when compared to the growth rate of 1.5 per cent which the economy recorded in the second quarter of the year.

In nominal terms, the report put the value of the country’s economic output during the period at N33.36 trillion. This, it stated, was higher when compared to the third quarter 2017 GDP output of N29.37 trillion.

Similarly, on Friday, December 14, the NBS said the Consumer Price Index, CPI, which measured inflation increased to 11.28 per cent (year-on-year) in November from 11.26 per cent recorded in October.

According to the bureau, the figure is 0.02 per cent points higher than the rate recorded in October.

On a month-on-month basis, the NBS said the headline index increased by 0.80 per cent in the period under review by 0.06 per cent points from the rate recorded in October (0.74 per cent).

According to the NBS report of September 14, the first increase in Nigeria’s annual inflation rate for 2018 was recorded in August. The report had disclosed that Nigeria’s annual inflation rate rose to 11.23 percent in August, driven by increases in food prices in the country.

This was 0.09 percent points higher than the rate recorded in July 2018 (11.14 percent) and represents the first year-on-year rise in headline inflation following eighteenth consecutive disinflation.

Committed to pursuing downward movement of inflation, the CBN maintained tight monetary policies all year long, keeping the monetary policy rate, MPR, at 14 per cent, even when some experts advised that reducing cost of funds would help address the issue of alarming unemployment.

On November 6, the Nigerian Labour Congress, NLC, called off a nationwide industrial action initially scheduled to commence same day to further press for workers’ demand for new national minimum wage of N30, 000.

Ayuba Wabba, president of NLC, who disclosed this to journalists in Abuja, said the strike was suspended following agreements reached at the meeting of the tripartite committee set up by the federal government.

Organised labour had threatened to commence nationwide strike on November 6, should government fail to accede to its N30,000 minimum wage demand. The federal government had offered to pay N24,000 while some state governments even offered less.

On Monday, September 24, global crude oil price got to $80 per barrel, reaching a four-year high. Oil trader, Trafigura, forecasts that the price could hit $90 by December and $100 in 2019.

The jump in price was after Saudi Arabia and Russia ruled out any hike in production in the face of calls by the United States to raise global production.

“The market’s still being driven by concerns about Iranian and Venezuelan supply,” said Gene McGillian, director of market research at Tradition Energy in Stamford.

“The failure of the producers to address that adequately this weekend is creating a buying opportunity.”

– Jan. 1, 2019 @ 00:35 GMT |

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