The country (Nigeria) is currently facing economic problems as a result of the recession. Basic commodities that are highly needed has become too expensive and it’s a big problem to the average Nigerian man. As the recession continues to bite hard in Nigeria, it is quite disturbing to know that many still do not even totally grasp how a recession works, or even what it really means. Though, fingers are being pointed towards the federal Government as the main cause.
Interestingly, the increasing price of foodstuff and other commodities would make one to ask, What truly does a recession mean? When exactly is this recession going to stop and what is the Government doing to get rid of this hardship in this perilous times? These are the main questions every Nigerian should be asking.
Recession is known to be the “significant decline in economic activity that is spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production and wholesale-retail sales”. The Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific period. Yes! In times of recession, businesses cease to expand, the GDP diminishes for two consecutive quarters, the rate of unemployment rises and housing prices decline. This is the major reason why price is high in the commodity market.
About the causes of Recession, it’ll be pleasing to know that many factors contribute to an economy’s fall into a recession, but the major cause is inflation. Inflation refers to a general rise in the prices of goods and services over a period of time. Inflation is the sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every Naira you own buys a smaller percentage of a good or service. You should also know that the Naira is loosing its value as it can’t stand against other ‘notable’ currencies.
Other factors like the low prices of oil, the volatile state of oil production in Nigeria, bad debts gathered over time, has led to lower purchasing power and foreign exchange scarcity. This is a huge problem! Economists stated that, two consecutive quarters of negative growth in gross domestic product (GDP) leads to a recession. Large and small businesses are affected, as production slows down.
Believe it or not, Nigeria has sank into loss of jobs, decline in real income, slowdown in industrial production and manufacturing and slump in consumer spending. Things generally get more difficult and firms publicly traded on major stock exchanges may ultimately be hurt if something is not done.
ADVICE ON WHAT NOT TO DO IN THIS TIME OF RECESSION
As an average Nigerian, there are a number of things that should not be done during a recession period like this. The underlying principle to all of them, should be to cut back heavily and reduce spending. This would be the worst time to take a loan, invest in a risky business expenditure, or buy a new car. This would also be the wrong time to stand surety for someone as the case may be.
Understand that one major effect of the recession is downsizing. Companies are laying off workers, so this would be the wrong time to take a leave from work or show your employers in any way that they do not really need you. One cannot really predict when this economic recession will end as it all goes back to the Government. Only the Government can take a bold move with wisdom to tackle these issues.
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