Nigeria’s economy will exit recession First quarter 2021 – Minister
NEWSMAN, Abuja – World Bank has said that Nigeria’s per capita income could fall in 2020 to its lowest level in 40 years.
The bank also raised concern about the debt service cost being incurred by the Nigerian government.
The Country Director for Nigeria, World Bank, Shubham Chaudhuri on Monday, noted that the decline in crude oil prices had dramatically impacted government finances, the balance of payments and remittances from Nigerians living abroad.
According to him, Nigeria’s public debt to GDP is currently somewhere between 20 per cent and 30 per cent.
“Nigeria’s problem is that the debt service takes a big part of the government revenue,” he said.
Chaudhuri, who spoke during a panel session at the 26th Nigerian Economic Summit organised by the Nigerian Economic Summit Group and the Federal Government also noted that the country was still recovering from the last oil price shock of 2014-2016 before the COVID-19 crisis hit the economy.
He said between 2015 and 2019, 15 million young Nigerians came of working age but only about four million really found the kinds of jobs and opportunities they aspired for.
“Crisis like this is often what it takes to bring a nation together to have that consensus within the political, business, government, military, civil society to say, ‘We have to do something that departs from business as usual.’
“And for Nigeria, this is a critical juncture. With the contraction in GDP that could happen this year, Nigeria’s per capita income could be around what it was in 1980 – four decades ago”, he said.
Nigeria’s per capita income, which stood at $2,229.9 in 2019, was around $847.40 in 1980, according to data from the World Bank. It hit a record high of $3,222.69 in 2014 but fell to $1,968.56 in 2017.
Per capita income is a measure of the amount of money earned per person in a nation or geographic region.
The Federal Government has said the country will emerge from the current recession in the fourth quarter of this year or the first quarter of 2021.
Nigeria entered its second recession in five years in the third quarter of this year as the Gross Domestic Product fell for the second consecutive quarter.
The GDP dropped by 3.62 per cent in Q3 and 6.10 per cent in Q2, according to the National Bureau of Statistics.
“There is a speedy pathway out of the current recession if we quicken the implementation of the Economic Sustainability Plan,” the Vice-President, Prof. Yemi Osinbajo, said.
He said in addition to what the government had done for Micro Small and Medium Enterprises, the increased jobs and local production from agriculture, housing and solar installations would serve to boost the economy.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, said the COVID-19-induced recession Nigeria slid into followed the pattern across the world where many countries had entered economic recession.
“Let me remind us that before the impact of COVID-19, the Nigerian economy was experiencing sustained growth, which had been improving quarter by quarter until the second quarter of 2020, when the impact of the COVID-19 was felt,” she said.
“Nigeria is not alone in this, but I will say that Nigeria has outperformed all of these economies in terms of the record of a negative growth.”
Ahmed said, “While the economy has entered into recession in the third quarter, the trend of the growth suggests that this will be a short-lived recession, and indeed by the fourth or, at worst, the first quarter of 2021, the country will exit recession.
“Our expectation of a quick exit, which will be historically fast, is anchored on the several complementary fiscal, real sector and monetary interventions that have been proactively introduced by government to forestall a far worse decline of the economy and alleviate the negative consequences of the pandemic.”
The Chairman of the Board of the Nigerian Economic Summit Group, Asue Ighodalo, said lower government revenue and rising expenditure had resulted in a significant increase in the country’s fiscal deficit, which rose beyond the three per cent stipulated in the Fiscal Responsibility Act.