How Nigeria slipped into economic recession, by experts

Vice Chancellor, Federal University Oye-Ekiti. Kayode Soremekun

Vice Chancellor, Federal University Oye-Ekiti. Kayode Soremekun

•Warn govt against excessive borrowing
• Classify country as a rental economy.

Running an oil-dependent economy, lack of sustainable developmental strategies, and mismanagement of Nigeria’s petroleum revenues have been identified as some of the reasons the country slipped into recession.

Experts, such as the Vice Chancellor, Federal University Oye-Ekiti. Kayode Soremekun, former Head of Department, Political Science and International Relations, Covenant University, Dr. Duruji Moses Metumara, all blamed successive governments for operating mono-product economy, which is vulnerable to economic challenges.

The Vice-Chancellor, Federal University, Oye-Ekiti, Kayode Soremekun, in an interview with The Guardian declared that Nigeria is not oil producing nation but a rental economy.

According to him, collecting rents from multinationals that are producing the country’s natural resources cannot be used as basis for development.

He feared that Nigeria may forget diversification and return to being mono-product economy once the oil price bounced back and production back on track.
Soremekun said: “Though the country’s is serious about diversification now that oil prices are at the bottom low. But my only fear is that if the oil price should bounce back, Nigeria may probably go back to its traditional slumber. There are chances that the oil price may bounce back.

“Right now, the Federal Government is negotiating with the Niger Delta militants and to that extent, the country might go back to the oil market and when that happens, the oil money will come on board again, and the Yemeni Sydrome will take over again.”

He said that Nigeria got into the economic recession on account of concentration on a mono-product, oil economy.  “I want to say that we did not have economy before. Nigeria economy focused on oil resources and lacked productive base.  Any economy that lacks productive base is a rental economy. That is an economy that depends only on rents and it can never be the basis for development.

“Several scholars have proved that rents can never be used to measure economic growth. But Nigeria wanted to be the trajectory of development because of the money coming from oil. We have had a rental economy that was destined to fail when the oil price dropped. Nigeria is not the only oil producing country; there are other oil producing countries, which have refused to be mono-product and they are doing very well. Examples of such countries are Malaysia and Iran. They did not have to depend on oil alone for development.

“Nigeria is not an oil producing country. The multi-nationals are producing the oil for the country. Nigeria is a mere recipient of providential revenues and that cannot be used as basis of development.”

He stressed the need for the country to be diversified. “The current situation will give us opportunity to diversify the economy. It will spur us to the much-needed diversification. It is not just enough to diversify; we should also ensure full utilisation of the value chain to create jobs in the country.”

Also speaking with The Guardian, former Head of Department, Political Science and International Relations, Covenant University, Dr. Duruji Moses Metumara, attributed the current situation in the country to over-reliance on crude oil resources.

But he warned government against relying on borrowing from international banks to fund the economy.  “I am not totally against borrowing to manage the economy.  But when such money is borrowed it should be directed towards building the economy and should not be stolen. Government, should formulate policies that will enable the private sector contribute significantly to the economic development. We should avoid relying on borrowing that will plunge Nigeria into indebtedness.

Metumara said it is dangerous for a country to base its developmental fundamentals on the international market, which it has no control over, adding that Nigeria has been facing some challenges since the global economic downturn, which grounded world economies.

He accused the government of not being proactive in dealing with economic crisis, adding that to come out of the economic recession, Government needs to invest in infrastructure and build sustainable institutions that will stand the test of time.

He noted that the country might remain in recession for a long time if it refused to take the necessary measure. “We have had countries going into recession for a long time, while others are able to handle it effectively well within a short period of time. Coming out of recession depends on how a government is able to respond to it,” he added.

Sanusi had said in a speech delivered at the 15th meeting of the Joint Planning Board and National Council on Development Planning in Kano, that current economic policies and inconsistency do not favour business and investment in the country.

He attributed the current economic recession to the failure of past administration to diversify the economy, saying: “The problem is that there is nothing that we are facing today that we did not know would happen. That is the truth. We made mistakes. Many of them deliberate. We ignored every single word that pointed otherwise. Economics is a science. It is not a perfect science. But over decades and decades and centuries, people have seen that there are certain things that, when you do, will lead to certain consequences.

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  • Okoro Tonye

    Our copy and paste economists are hard at work. It was the IMF that informed us that we are in recession. By the way, how many tons of yam, garri, cow, crayfish, and smoked fish did Nigeria produce last year ? These are our staple foods. If our so-called economists cannot answer these questions, then, they should jump out of that IMF bandwagon and do their homework

    • Tosin Otitoju

      Good critique. Indeed we need to collate some basic measurements, but we have no institutions for that.

      • Adams

        Nigerians need to change the ”if you can’t beat them join them”slogan employed since the 80s. It’s the main point of our leadership philosophy and it has completely destroyed the country.

        • Okoro Tonye

          You need to clarify what you mean by “if you can’t beat them, join them “.

    • William Norris

      The statistics that judged Nigeria to be in recession were compiled by the NBS, a Nigerian government agency.

      They have a website. Ngozi Iweala put a fairly robust economic management sytem in place during her tenure.

      • Okoro Tonye

        You seem to emphasise “Nig govt agency”, and “they have a website” as if those are credentials for credibility. You did not address my concern about quality of your data, which is: Why did your robust economic management system inform us recession only after IMF informed us? Furthermore, is NBS charged with economic management rather than economic data collation, compilation and maybe analysis? I just want to be clarified .

        • William Norris

          See my last post to LagLon and then do your own research on the agencies mentioned.


          • Okoro Tonye

            So, how do i know your last post on Laglon? The way you are jumping into the fray as though you are a staff of NBS, while you are not.

          • William Norris

            Hmmmm. My bad.

            Everyone should be concerned. APC seems to have a particular knack for propaganda. The government has been dragged through the mud just because of stupid numbers generated by some Civil servants. APC will react. The more I think of it the more convinced I am.
            The economic bureaucracy like NBS, CBN and DMO and the Pensions offices were greatly strengthened under Ngozi Okonjo-Iweala. It will be terrible if all that professional and intellectual credibility is lost on the altar of political expediency.

  • udofiapeter

    Nigeria economy was growing as at two years ago. We failed to understand that government policies can cripple any economy no matter how vibrant it is especially when it not manage effectively to beat deadline. In the inception of the present government, it was very serious to fight corruption even when cabinet was not there failing to understand that we are running capitalist economy, having deaf ears on declines of economic indices that could have been tackled on time. Now people are not ready to invest their money in the economy especially those with investible capitals for fear of policies that may not argue well with their businesses. They where telling us that fighting corruption is one of their election promises not economy. But why are we crying now, let us continue to fight corruption, forget about the economy and see if fighting of corruption without good home work will put the economy on foot.

    • Adams

      Yeah you said it. The APC stepped in with the wrong foot because just like many of us in the country we don’t care about how our institutions are been managed. All we want is pockets full of money without minding the mechanism that produced the money. The APC didn’t care about what indices were working for the economy so didn’t even care about what policies to apply or not. Its been a general problem with successive governments.

    • netset

      If there is ever a beautiful time for Nigeria to retrace it’s step on the development program is now,we have always pretended over the years that our economy is in good shape.Can you imagine a giant of Africa that can not feed it population with abundant fertile land every where? It is truly that nigeria is “rental economy” we only collect dues from our rent “oil” which ends up in private pockets and on re-recurrent expenditures.The recession pose a great opportunity for us to create a better atmosphere for investors,retake our solid mineral sector,ingest more money in to basic infrastructures most especially the power sector,reshape our educational system for self reliance and easily accessible loan for the small scale industries.

  • akeebaba

    Professor KAYODE, aptly described the Nigeria situation very well, what is happening to nigeria is what is happening in Venezuela, and happened in Russia

    • Okoro Tonye

      Please spare me any references to any of your professors.