The Impact Of Economic Recession On The Nigerian Populace
It is pertinent to say that the objective of the study is to ascertain the impact of economic recession on the Nigerian populace, other sub objectives include to ascertain the effect of economic recession on the productivity of Nigerian; to ascertain the impact of recession on economic growth; to ascertain the relationship between recession and economic growth and to evaluate the role of recession on economic development. The instrument of data collection that was used for this study is the questionnaire, and the questions was adequately structured to obtain the needed information from the respondents, and the method of data analysis was the chi square in which adequate hypotheses was adequately analyzed and relevant conclusion and adequate recommendation was maid by the researcher.
1.1 Background to the Study
Nigeria as a nation started enjoying economic buoyant before and after independence despite the fact that her economy was a primitive one. Oyewole (2016) noted that Nigeria economy is a primitive one which its fundamental production tools remain among others hoe, axe and cutlass, and production depended on energy stored in muscles. Not long to the independence oil was discovered and continues booming till 1970s. As a result of this, the agriculture which had been the mainstay of Nigeria economy was abandoned due to the discovery of crude oil in large quantity. It is obvious that every Nigerian has now realized the dangers of an economy that is largely based on oil revenue which its price is dwindling in the global market. The dependence coupled with the huge cost of running and maintaining our political structure was always a recipe for disaster. Consequent upon this, Nigerians have finally been confronted with the stark reality that the economy is in recession. The effects of this economic downturn are already being felt by all and sundries in the form of unpaid salaries, inability to pay rent, inability to pay children school fees and even inability to feed. The word recession according to Wikipedia in Afe (2016), is a state of negative economic growth for two consecutive quarters. It is also a business cycle contraction which results in a general slowdown in economic activity. Macroeconomic indicators such as GDP (gross domestic product), investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble. NDE (2004) affirmed that the emergence of global economic recession in 1980s has led to the galloping state of Nigeria economy. Conversely, Oyewole (2016) observed that about 57 percent of Nigeria citizens are living below $1 per day and live very poorly in all development indices. The factor behind this is over population. National Directorate of Employment NDE (2010) said Nigeria has a population of over 150million people and an average annual growth rate of 2.5 percent. The challenge brought by over population and standard of living below $1 per day is diverse socio-economic ranging from inflation, unemployment, poverty, lack of access to potable water and medical care, lack of basic amenities and high level school dropouts among the youths (FRN, 2004). The above mentioned diverse socio-economic are challenges of economic recession that Nigeria is battling with since 1980s despite the fact that the country was ranked among the 50 richest countries in the world in the early 1970s (FRN, 2004). Unfortunately, Nigeria has retrogressed to become one of the 25th poorest countries at the threshold of the 21st century. Igbuzor (2006) noted that Nigeria is the sixth largest exporter of oil and at the same time hosts the third largest number of poor people after China and India and currently challenged with economic downturn. Hornby (2006) described challenge as a demanding task or situation. It is an act or statement that calls something into question. The author further stated that it is the act of raising doubt as to whether something is true or genuine. Challenge is a problem that someone face to attain the set objectives. It is a problem of implementation. Therefore, the challenges of economic recession are the problems that arose as a result of short term economic reduction in the country. The challenges of economics recession ranging from insecurity, inadequate payment of salaries and wages, child abuse, scarcity of food supply, improper education, loss of job, unemployment, high cost of production, embezzlement, poverty, lack of access to portable water, high level of school dropout, inflation and stagnation. Ogbimi (2007) asserted that most government began to spend huge sums of money on military projects and abandoned the old tradition of balanced budget which resulted into inflation and stagnation.
1.2 Statement of the Problem
It has been observed and with reports from various quarter that Nigeria’s economy is under renewed tension, as reports on key fundamentals, including Gross Domestic Product, GDP; inflation, employment/ unemployment, capital importation, among others, were worse than expected. According to National Bureau of Statistics (2016), Nigeria’s GDP at constant basic prices, contracted in the second quarter of 2016 by 2.06 per cent after shrinking 0.36 in the first quarter. Technically, given that Nigeria’s GDP has now showed a decline for two consecutive quarters is evidence that the economy is in recession. According to the report, the continuing decline in the value of capital imported into the economy was symptomatic of the difficult period that the Nigerian economy is going through. The recession had brought about an undeniable feeling of disappointment in the economy, affecting the naira and generating series of discussions.
1.3 Objectives of the Study
The main objective of the study is to ascertain the impact of economic recession on the Nigerian population; but for the successful completion of the study, the researcher intends to achieve the following sub objective
- To ascertain the effect of economic recession on the productivity of Nigerian;
- To ascertain the impact of recession on economic growth;
- To ascertain the relationship between recession and economic growth
- To evaluate the role of recession on economic development
1.4 Research Hypotheses
For the successful completion of the study, the following research hypotheses were formulated by the researcher;
- H0: economic recession does not have any effect on the productivity of Nigerians
H1: economic recession does significant effect on the productivity of Nigerian.
- H02: economic recession does not have any significant impact on economic growth of Nigeria.
H2: economic recession does have a significant impact on the economic growth of Nigeria
1.5 Significance of the Study
The study will be of great importance to the government of Edo state as the study will help them to formulate policy that will aid productivity amidst recession. It will contribute immensely to the exploration of the effects that have led to the backwardness of industries in the area of study and suggested possible solutions to those effects identified and it will be of significant value to the three tiers of government which are federal, state and local in the allocation of resources so as to cater for potential and aspiring industries that are on the rise.
Furthermore, it will be of significance to manager existing and potential entrepreneurs and directors of subsequent industries in Edo State. Knowledge about its significant finance will equip incoming and aspiring investors who tends to invest in the industrial sector so as to ensure efficiency and maximum prosperity towards development. The study will also be beneficial to researchers who intend to embark on study in similar topic as the study will serve as a guide to their study. Finally the study will be beneficial to academia’s students and the general public.
1.6 Scope and Limitation of the Study
The scope of the study covers the impact of economic recession on the Nigerian population. But in the cause of the study, the researcher encounters some constrain which limited the scope of the study;
(a) Availability of Research Material:
The research material available to the researcher is insufficient, thereby limiting the study.
The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover
1.7 Definition of Terms
Oil glut simply refers to a situation where there is excessive supply of oil by the various oil producing in a countries.
Economic recession is a period of well lightening a period that is characterized by drastic cut down on aggregate demand for goods and services.
These are materials needed by new and existing industry to have effective and smooth running of the firm in order to ensure maximum profit and the firms actualizing it’s objectives.
It simple means the manufacture outputs (goods and services)
1.8 Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows
- Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.
- Chapter two highlight the theoretical framework on which the study its based, thus the review of related literature.
- Chapter three deals on the research design and methodology adopted in the study.
- Chapter four concentrate on the data collection and analysis and presentation of finding.
- Chapter five gives summary, conclusion and also recommendations made of the study.
Summary, Conclusion and Recommendation
It is important to ascertain that the objective of this study was to ascertain the effect of economic recession on the Nigerian population.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the impact of economic recession in Nigeria.
Recession is a business cycle contraction, referred to as a general slowdown in economic activities. During recession, there is usually a decline in certain macroeconomic indicators such as GDP, employment, investment spending, capacity utilization, household income, business income, and inflation, with attendant rising unemployment rate. Recession could be caused by two broad factors: internal (endogenous) and external (exogenous), and that recession has impact on the economy through its effect on business, financial markets, stocks and dividends, product quality, credit conditions and socio-political structures. Instruments of monetary and fiscal policies can be used to counter recession and bring about economic growth. Monetary authority can pursue accommodating/easy monetary policy to stimulate economic activities. This is a situation where monetary authorities lower the cost of credit. This can be achieved by lowering interest rate, and lowering of eligibility conditions for banks to access the monetary authority’s window. When monetary authority lowers interest rate, it is to encourage individuals and businesses to borrow more funds to finance consumption or expand productive capacity. Individuals and businesses pay less interest on borrowing thereby making it possible for them to repay the interest and the principal amount borrowed.
When consumption increases, companies produce more, hire more workers and buy more raw materials for production, and in the process stimulate economic activities that would end recession. At other times, monetary authority can also embark on unconventional monetary policy or quantitative easing (use of things other than interest rate and market forces to affect money supply) to stimulate the economy. This is done when monetary authorities inject money into the banking system to shore up banks‟ balance sheet or by buying government securities from the secondary market (market where securities like bonds are traded), thereby injecting money into the economy to stimulate activities. Fiscal authority can pursue loose fiscal policy to bring economy back to growth from recession. Government can lower taxes on individuals and businesses thereby freeing additional resources to the household and businesses for consumption and investment. Another instrument at the disposal of government is to increase their spending in real activities during recession to bring about growth. When taxes are lowered for individuals and businesses, extra money is made available for consumption or investment. If consumption rises, businesses spend more to produce additional goods and services, which would result in more employment and results ultimately in increased economic growth. Government could also embark on essential structural reforms in order to improve transparency and stability of both financial system, and fiscal activities to restore confidence in the economy during recession.
Based on this study it was concluded that economic recession highly affected the economic recession on the Nigerian population. Specifically, poverty level which is the mother of all socio-economic problems like unemployment, social crime and reduction in the national income. Furthermore, reduction in the price of crude oil in the world market be the major factors that affecting economy of Nigeria but if adequate measure could take place in promoting agriculture as substitute to oil product certainly the economy of the country would improve.
The following recommendations were made based on the findings of the study: Federal government must see that the price of crude oil is gear up in the world market. Both local and external investors must be encouraged to invest in Nigeria. Agriculture farm settlements must be revived by government in the rural areas. Consumption of locally produced goods and services must be encouraged. Government at all levels must provide enabling environment for domestic investment in terms of loan grant to local investors , provision of adequate infrastructural facilities, organizing entrepreneurial skills training, market for locally produced goods etc.
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