Tuesday, 19 September 2017

Now that the recession is over, what next?

Now that the recession is over, what next?
Last Tuesday, the National Bureau of Statistics (NBS) gave a lot of Nigerians the news they desperately wished to hear: Nigeria is out of recession. After five consecutive quarters of negative GDP growth that started in Q1 2016, Nigeria’s economy grew by 0.55 per cent in Q2 2017. Predictably, data once again became the hero and villain in a long-running social media battle of bias between the supporters of Nigeria’s president, Muhammadu Buhari, and his critics. The optics of sneaking out of a 15-month recession apart, a 0.55 per cent year-on-year GDP growth is hardly anything to cheer for Africa’s biggest economy. But as the NBS data reveals, the Q2 2017 growth is an improvement, even if marginal, on the GDP performance recorded in the preceding quarter (-0.91 per cent) and the corresponding quarter of 2016 (-1.49 per cent). Beyond the numbers, however, questions persist about the long-term economic recovery prospects of the nation. Questions that demand that all post-recession celebrations be suspended until further notice.

Twenty-seven months into the Buhari administration, the patience of the Nigerian masses on the state of the economy and general standard of living is wearing thin, and understandably so. Inflation rate dropped for the fifth consecutive month in July, but the prices of goods and consumables which skyrocketed during the recession remain exorbitantly high. In reality, the recession persists for the economically dis-advantaged demographic of Nigeria’s 170 million population. Nigeria’s path out of recession is lined with commendable efforts in improving the ease of doing business through the Presidential Enabling Business Council (PEBEC). Chaired by the Vice President Yemi Osinbajo. the Council implemented a 60-day National Action Plan on Ease of Doing Business and was able to tackle some of the critical bottlenecks and bureaucratic constraints that had hitherto defined the ordeal of doing business in Nigeria.

Osinbajo, who assumed the role of Acting President while President Buhari was away in the United Kingdom on medical leave, issued executive orders on port operations heralding a much-needed improvement in the operational efficiency of the nation’s airports and seaports. He also signed two critical bills on improving access to credit, a major stumbling block for businesses in Nigeria. As the NBS data released yesterday show, Nigeria came out of recession the same quarter the implementation of these reforms started. The recession has also proved pivotal to Nigeria’s drive for revenue diversification and a rebalancing of the economy’s over-reliance on the oil sector. The Federal Inland Revenue Service (FIRS) for example recently revealed it generated N2.11 trillion as revenue in the first six months of 2017 and is on course to meet the N4.94 trillion revenue projection for the year. Similarly, the Nigerian Customs Service generated N486 billion as revenue in the first half of the year, surpassing the N385 billion generated for the same period in 2016.