How the Global Recession Will Affect Nigeria in 2009

By Louisa Olubukola Kinoshi, BN International Scene Editor
CBN

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.

  1. 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 As of last week, it was reported that foreign portfolio investors have withdrawn some US$15 billion from our capital markets.
  2. 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.
  3. Affect the national budget. Already, the 2009 federal budget proposals have an inbuilt deficit of 1.09 trillion naira.
  4. Reduce development funds. Due to lower oil revenue, there will be less funds available for much-needed investment in infrastructures.
  5. Reduce net capital flows, both in terms of investment and concessional resources.
  6. Lower growth estimates.  Earlier estimates about growth exceeding 10 percent would have to be revised  to 7 – 8 percent for 2008.
  7. 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.

20 Comments on How the Global Recession Will Affect Nigeria in 2009
  • Stacey Derbinshire December 26, 2008 at 1:00 pm

    Nice writing style. I look forward to reading more in the future.

  • Temi December 26, 2008 at 1:16 pm

    God help us. Seems there’s nowhere to hide in this world anymore.

  • Kelly December 29, 2008 at 3:00 pm

    I think it wouldn’t make much difference anyway. Where did all the oil revenue go when a barrel of oil sold for , I think, 70 bucks? So even if a barrel sells for 1 dollar, Nigerians will (go) survive. For Sure!

  • Real December 30, 2008 at 2:42 pm

    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!

  • Naija December 30, 2008 at 2:56 pm

    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.

  • NaijaBoy December 31, 2008 at 11:58 am

    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.

  • hamza January 2, 2009 at 9:50 am

    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.

  • tatafo! January 3, 2009 at 11:28 am

    taxes are peanuts in naija and a lot of people don’t pay already.

  • mary January 7, 2009 at 3:23 pm

    @ 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.

  • daniel January 10, 2009 at 6:23 pm

    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.

  • Deji January 12, 2009 at 7:24 am

    a barrel of oil sold for over $130 last year what did the gorvenment do nothing,well like someone said earlier 9ja is like a jungle eat or get eaten it is sad seeing all these things go on. I pray for my dearly beloved country

  • olatunde January 15, 2009 at 8:43 am

    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.

  • KELVIN February 16, 2009 at 7:47 pm

    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

  • KELVIN February 16, 2009 at 7:56 pm

    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.

  • SECRET DIARY February 26, 2009 at 8:22 am

    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.

  • bature August 27, 2009 at 10:28 am

    what is economy recession with the current, how can Nigeria as a nation survived under current global economy recession around the world?

  • cornel October 8, 2009 at 1:44 pm

    The predictions of gloomy days have come into reality.Nigeria is on her knees because of the avidity,proclivity and avarice of our RULERS to amass wealth.what we are into is not global eco recession but local leadership thiefry.

  • Jenykel Nkechi Ezeike October 21, 2009 at 5:36 pm

    NIGERIA MUST BE REVIVED BEFORE 2020!
    Nigeria which has embarked on several comprehensive reformation plans to improve the macroeconomic state of the country, pursue structural reforms, strengthen public expenditure management, and conduct institutional and governance reforms, has to reach out now for a more strategic and attainable measures in order to combat the back-ward trend of the economic progress in the country. it is assumed that all citizens of Nigeria should engage in the full sense of this reform seeing themselves as actors and not spectators.

  • ‘gade December 2, 2009 at 11:52 am

    I know that Nigerians by now must have realized the danger our so-called
    leaders have caused us.But my utmost fear is that no one is ready to do what it takes for reforms.What we are used to seeing is “faint promises” from all and sundries.May be we should also adopt Tailor’s Approach in this issue.As far as am concerned,Nigeria has more than enough resources to survive and withstand any form of depressions.After all,we don’t invest much in war like others(hope you all understand).And no facet of our economy is vibrant,talk of real or service industries.I see no reason why we should be putting a square peg in a round bowl.This administrators should stop deceiving the populace at the expense of doing the right things.

  • Needom innocent ledisi February 22, 2010 at 1:54 pm

    yes it is so because our science and research industry is not working.

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