How the Global Recession Will Affect Nigeria in 2009
Posted on Friday, December 26th, 2008 at 12:37 pmBy Louisa Olubukola Kinoshi
CBN
When Merill Lynch declared Nigeria as one of the safest economies last month, various economic scholars and commentators were quick to challenge the findings. With claims that Merill Lynch skewed facts to protect its interests in Nigeria to allegations that Nigerian banks did not fully disclose critical data, critics dismissed the report. While we are unsure of the severity, it is certain that the global economic crisis will affect Nigeria. Dr. Obidiah Mailafia, Chairman of the Centre for Policy and Economic Research (CEPER), Abuja gave a speech last week at the Annual Dinner Lecture Organised by the Banking and Finance Committee of the Kaduna Chamber of Commerce, Industry, Mines and Agriculture (KADCCIMA). Dr. Mailafia, the former deputy governor of the Central Bank of Nigeria claims that the global recession will have 7 major effects on the Nigerian economy.
- Aggravate the ongoing stock market crisis. As of last week, it was reported that foreign portfolio investors have withdrawn some US$15 billion from our capital markets.
- Dwindle petroleum prices . Lower fuel prices will lead to a severe reduction in foreign exchange earnings. It has been predicted by some experts that petroleum prices may come down to as low as US$30 per barrel over the coming years.
- Affect the national budget. Already, the 2009 federal budget proposals have an inbuilt deficit of 1.09 trillion naira.
- Reduce development funds. Due to lower oil revenue, there will be less funds available for much-needed investment in infrastructures.
- Reduce net capital flows, both in terms of investment and concessional resources.
- Lower growth estimates. Earlier estimates about growth exceeding 10 percent would have to be revised to 7 - 8 percent for 2008.
- Worsen poverty. Lower growth would also mean a slowdown in the fight against poverty.
In order to effectively address the possible slowdown, Dr. Mailafia proposes that the Nigerian government implement cost-cutting measures such as e-governance. He views the current situation as an opportunity “relaunch our development on new and more robust foundations.” Priority should be given to addressing the severe infrastructure constraints, supply-side issues as well as the institutional environment in general. Mailafia also calls for an effective anti-monopolies regime. “Our economy has a fearful symmetry of cartels that are feeding fat on our country and defrauding customers by charging exorbitantly for poor services and products. ”
Read the full speech on AllAfrica.
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Tags: Central Bank of Nigeria, Louisa Kinoshi, Mailafia, Nigerian Economy
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Nigeria is not in recession because of the collapse of the financial systems and markets in London, Europe and Washington. The biggest loss for Nigeria in the past 30 years is the over $300 billion looted by successive Nigerian government with the help of their cronies in politics and banking in Europe and America. Nigerian could have withstood the global financial meltdown if its past earnings were properly invested for the benefit of every Nigerian. Nigerian economy will continue to boom and burst on a spectacular scale until London and Washington help Nigerian to stop Nigerian government and its officials from stealing from the national coffers. London and Washington are to be blamed cos they turned a blind eye for the looted money of the 1970s, 1980s and 1990s to remain stored in their economy to the disadvantage of Nigerian. They should make it impossible for any looked money from African to enter Europe and the America. It can be done. Money laundering is a criminal offence, but how come Interpol still allow previous Nigerian government officials to still enter London and America to enjoy their billions of ill-gotten wealth? The western countries can talk about stimulus package to resuscitate their economy, but Nigerian may need to go back to IMF to further indebt the Nigerian nation. Nigeria is insolvent; in the red, not because of recession, but because of its thieving leaders with no shame, no morals and lack of integrity. I pray for the worst calamity to behalf those (and their children), for a thousand years, who aided, abetted and looted Nigerian treasures and funds. God save Nigeria. Amen.
The most affected countries facing the current depression(including the USA where it all emancipated from) are the countries whose financial institution heavily invested in buying debt bonds from the US financial system especially countries like the UK, China, Iceland etc. Depending on how exposed the Nigerian financial sector is to this would determine how greatly affected it would be by the depression.
Nigeria banker dont understand the complexity of financial shit going on right now cos it is way off their league.
What ar u talking about? This is a joke, nigeria never had an economy. what do u define as economy? 4 u, it is a country run by fools and moneys. u ar seriously saying the recession will affect nigeria!!!! this is a joke. nigeria is already in deflation and recession at the same time since we got independence. As a country we can’t even count our population and u want them to run a country. How can u account for people u dont knw.
NIGERIAN AR HARD WORKING PEOPLE WHO DONT BOTHER ABOUT POLITIES EXPECT U AR IN POLITIES URSELF. WHERE THE ECONOMY STANDS AT THIS POINT IN TIME IS AS A RESULT OF INDIVIDUAL EFFORT AND WILLINGNESS FOR NIGERIAN TO SETUP THEIR OWN BUSINESS
It is so sad that things are not happening the way they should in Nigeria. Yar’dua’s Administration should wake up and do something. The so called 7 point agenda is as good as not being implemented. We need Performers not people that their brains are redundant.
Mary thank you o. I dont know for how long we are gonna put up with all this crap. we need a revolution already. do we think this bunch of our so called leaders are gonna bring any change.I dont think so. A new generation just has to find a way to snatch this country from them cause trust me, they aint ready to let up.
@ Kelly .Yes we will survive!!! but at what expense??? should we continue like this? with only less than one percent of the population living this so called “life”. Nigeria is an eyesore and it will get worse with youths like you embracing the norm.
in my own opinion,i believe that in face of the global recession,the government should bear the burden in terms of high spending on infrastructures to stimulate economic growth,reduce taxes,focus on other income heads (import duties,custom duties etc),encourage consumer spending.Really i dont think the Yar adua Government is ready for the challenges of the nearest future.
taxes are peanuts in naija and a lot of people don’t pay already.
good logic Naija: only those with economies will be affected. Therefore since we don’t have what will qualify as an economy, we will escape the crisis. Halleluyah! hehe.
Freakin’ nice comment, Real!
“The Nigerian government chasing shadows, and witch-hunting the ‘body of corruption’ rather than the head.”
Naija is like the jungle, every man for him/her self. Eat or be eaten. A lot of my friends return home and happily take advantage of the f’d up corrupted system so they can get theirs too.
How will the global recession affect Nigeria in 2009, when the country doesn’t even have an economy? Foolin’ ourselves.
I know I might sound off beat here.. But, with the world economy going bunkers, and the Nigerian government chasing shadows, and witch-hunting the ‘body of corruption’ rather than the head. I wonder when it will occur to them that evil people that crippled that ‘banana republic’ called Nigeria is walking around free and enjoying their loot without qualms. When will Obasanjo, Babangida, Abudusalami Abubakar and host of others be arrested and forced to get back the loot?
Nigeria can never go beyond what it looks like now the evil is not arrested and put in chains. Let us all call for a full justice and respect for rule of law, starting with punishing Obasanjo and co. who violated every known rule in the land!