Nigeria: Recession knocks on the door

Nigeria may be headed for another economic recession according to projections by  economic and financial experts.
This is due to the negative impact of the COVID 19 pandemic on the global economy. Oil is Nigeria’s major revenue earner, but its price on the spot market has crashed.
Efforts to keep Nigeria out of the economic danger zone haven’t really worked despite fiscal and monetary policies that are being put in place by the country’s Central Bank.
This situation has led to strong speculation that the country might be headed for an economic recession in the third quarter.
Britain has already announced, its economy has slipped into a recession. Many more countries hit by the impact of the global pandemic are expected to follow.
Nigerians may have to brace up for more hard times ahead. The economic outlook doesn’t appear promising.
The Buhari administration had managed ahead of time to get Nigeria out of recession in the early days of its assumption of office. Can it do it again?
Nigeria’s debt profile rose to $68.74 billion in the first quarter of 2019, meaning it rose by 2.3% to $68.74 billion (N24. 947 trillion) as at March the same year.
“As of June 2019″, the Debt Management Office revealed, the country’s  “debt profile was N25.7 trillion.
“This includes the Federal and State Governments and the Federal Capital Territory. We call it the total public debt.
“Out of this total, the Federal Government is responsible for 80% of the debt,” Patience Oniha, DMO’s Director General disclosed at the time.
A breakdown of the debt profile of N25.7 trillion shows that domestic borrowing accounts for 68% or N17.48 trillion of the total debt.
32% or N8.22 trillion represents the country’s total external debt, according to the Debt Management Office (DMO).
Those figures released by the DMO show Nigeria has resorted more to raising funds through borrowing to finance major developmental programmes.
The country’s debt profile may have may have climbed to N27 trillion in 2020.
But experts suggest that the volume of debt may pose no threat the nation’s future if borrowed funds, are properly applied.

Statistics also show that over 20,000 jobs have been created through rail development.
Agriculture is gradually reducing food imports and improving food security while the manufacturing sector is receiving a shot in the arm.
Banks are being encouraged to reduce interest rates, with some banks taking steps to lend between N5 million and N7. 5 million to SMEs with out collateral.
Somehow, Nigeria’s foreign exchange earning has marginally improved, but the continued importation of refined petroleum products is placing a huge burden on such reserves.
Experts are however optimistic that the Dangote refinery which is still under construction may point the future of Nigeria’s economic recovery.
The Federal Government is backing the development of the refinery through sovereign national guarantees.
Although the NNPC has emerged as the greatest importer of petroleum products, the Federal Government’s support for Dangote has given rise to hopes that the oil cartel that has controlled the importation of fuel may not be in a position to undercut the benefits which may be derived from the refinery.

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