Last week, Nigeria, the second largest economy in Africa officially slipped into recession for the first time in two decades.
Recession here means two consecutive quarters of negative growth with the country’s GDP (Gross Domestic Product) dropping by 2.06 per cent in the second quarter of 2016 after falling 0.36 percent in the previous three month.
This came as a result of stuttering currency and the huge losses of crude oil production as a result of vandalism of pipelines by the Niger-Delta Avengers, a militant group in the oil rich south region leading to a sharp drop in oil revenue and export. The low global oil prices per barrel also have its own effect on the recession Nigeria is currently experiencing.
Affecting Investors, Businesses
Following the announcement of the recession, one of the biggest airline companies in Nigeria, Aero Contractors has suspended its flight op - erations indefinitely. The airliner’s CEO, Fola Akinkuotu, said the decision was made as a result of the current economic situation in the country.
Even before the official announcement of the recession, a handful of businesses had been blighted by the shaky growth of Nigeria’s economy. Some businesses and start-ups, especially small businesses have shut down due to low patronage and revenue owing to the economic crisis.
“The patronage I used to have is becoming too low now,” Abua Edward who runs a restaurant in Abuja told the BBC Africa. “It’s as if people have gone on holiday but they’ve not gone on holiday. It’s because they don’t have money to patronise me.”
Nigeria used to be one of the best places for businesses to thrive, also the best destination for investors in 2015 but a recent Nielsen report, which provides ranking of business prospects for leading markets in Africa, disclosed that Nigeria is no longer the top investor destination for investment in Africa, Cote d’Ivoire instead is leading in its latest rankings. The World Bank Doing Business report also shows that Nigeria is one of the countries to do business. Nigeria ranked 169 out of 189 in the world, and 39th among the listed African countries.
Hardship, Hunger is Palpable
Nigerians are feeling the pinch of recession; economic hardship and hunger is palpable among the citizenry. Some Nigerians are finding it quite difficult to eat three square meals per day as prices of food items have increased.
The price of commodities in the last two months have been having a knock-out effect on Nigerians, for example, the price of 50kg bag of rice has risen from N15,000 (47 USD) to N23,000 (72 USD), an amount more than Nigeria’s minimum wage of N18,000 (56 USD). “Things are really bad because people are complaining of hunger, lack of money and to make matters worse inflation is growing, prices of things have suddenly gone up for about 40 percent,” the BBC’s Kaura Abubakar said in Abuja.
Image Credit: TV360 Nigeria