ABSTRACT
The
study examined the state and management of economic recession in Nigeria. The
objectives set for the study are: to ascertain whether the failure of the state
to adequately manage oil resources contributed to recession experience in
Nigeria from 20142017, to ascertain whether the implementation of economic
recovery plan (EGRP)reduced the hardship caused by recession experience in
Nigeria between 20142017.The rentier state theory was adopted to justify the
hypothesis which are “The failure of the state to adequately manage oil
resources has contributed to economic experience in Nigeria from 20142017” and
“ The implementation of economic growth and recovery plan (EGRP) has not
reduced the hardship caused by the economic recession in Nigeria between
(20142017). Documentary method of data
collection was used to collect data from secondary source of data. Data
analysis was based on content analysis. The findings from the study reveal that
the economy of Nigeria has been badly affected by recession caused by over
dependence on oil revenue, excessive imports and low investment inflows. The
federal and state budgets are experiencing spending difficulties due to
shortfalls in government revenues. As a result, poverty, unemployment, debt
rate, and crime rate have escalated in Nigeria. Based on the findings, the
study recommends that the government at all levels should put in place
sustainable fiscal and monetary policies geared towards economic development
and shift from a mono product economy to a more diversified economy.
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Nigeria
is a nation that is endowed with abundant human and material resources, agriculture
was the main stay of the economy at the time of Nigeria’s political independence
in 1960, accounting for about 70 percent of the GDP and about 90 percent of
foreign exchange earnings manufacturing which contributed 3.9 percent in 1960
to 1961, reached a pack of about 10 percent in 1981 and thereafter stated to
decline progressively to the lowest level of 2.57 percent in 2006(Adelakun, 2008).
Crude oil became dominant in the Nigeria economy, starting from 1970s and
presently accounts for about 40 percent of the GDP, over 95 percent of foreign
exchange earnings and over 70 percent of federal government revenue (Adelakun,
2008). However, due to gross mismanagement, profligate spending, kleptomania
and adverse policies of various government of Nigeria, these resources have not
been optimally utilized, these resources have not been adequately channeled to
profitable investment to bring maximum economic benefit (Agbo, 2014). As a
result of the foregoing, Nigeria has been bedeviled with poverty and
unemployment (Tokunbo, 2005:1).
Nigeria
claims to be giant of Africa but remains among the world’s poorest countries in
terms of gross national product (GNP) and access to social and political life(Agbo,
2014). This is in spite of the fact that Nigeria is the sixth oil producing
nation in the world, yet the poor and unemployed constitute 70% of her population
(Dike, 2006:2, Onobum, Obadan, 2002:186, &Onah, 2006:68). This reflects the
poor management of the economy, irrespective of huge resource injected towards
it eradication (Joseph, 2006:238, & world 1996; 3).
Recession
is generally the slowdown in economic activity. The national Bureau of Economic
Research (2008) defines an economic recession as a significant decline in
economic activity spread across the economy activity spread across the economy,
lasting more than a few months normally visible in real GDP, real income, employment,
industrial production and whole sale-retail sale. During recession, many
macro-economic indicators vary in a similar way production GDP, employment,
investment spending capacity utilization, household income, business profit all
while bankruptcies and unemployment rate rise.
The current recession in Nigeria is as symptom
of monoproduct economic structure, lack of economic diversification and
over-reliance on to global oil price shocks and violality, worsened by oil
pipeline vandalism and depletion of foreign reserves by previous governments
Nigeria recession was triggered by a sharp drop in government revenues and or a
drop in consumer spending. A global oil price (which Nigeria cannot); triggered
a drop in revenue and government not being able to earn what is used to earn
before the drop. The mono product economy structure, heavy dependent on crude
oil export and official corruption are the root cause of economic recession in
Nigeria (Eneji,Dinis,&Umejiaku,2016).
Economic
recession created harsh economic climate in Nigeria which is evidenced by
highly energy lost, high naira exchange to dollar. The horrendous nosedive in
stock manufacturing industries were delisted[in stock exchange there were massive
labour turnover(layoffs) as a result of low capacity utilization and factory
closure, textile industry was the hardest
hit with about 80% of its capacity utilization (Asian, 2005). The
dwindling state of the economy made naira rate of exchange to Us dollar very
unstable and tremendously high, it posed difficulty in importation of spare parts,
equipments and raw materials for manufacturing industries (chukwu,Liman,Enudu&Ehiaghe
2015).
The initial response of policy makers in
Nigeria was meek, either they did not understood the crisis or underestimated
its magnitude and insisted that the fundamental of the financial system look
impressively strong even when the capital market capitalization had dropped
from12 trillion to less than 9 trillion (Abdul, 2009). Base on the foregoing,
this study examine the link between the state and the management of economic
recession in Nigeria between 2014-2017
1.2 STATEMENT OF
THE PROBLEM
Nigeria
is a country blessed with abundant of human and natural resources. However
these resources are not put to good use As a result, majority continue to
wallow in poverty. Basic amenities such as water, food and shelter are in short
supply. According to NBS data the Nigeria economy recorded two consecutive
quarter of economic contraction, in Q1 2016,GDP growth was negative(-0.36%) and
recently revealed Q2 data reflects a larger contraction of situation .the
situation Nigeria masses have been battling with for quite something. the
antecedent in the country provided justification economic woe, also the present
situation substantiates the effect of absence of clear policy direction of the
government . the international monetary fund (IMF) as well as the central bank
of Nigeria (CBN) have all agreed that the Nigeria economy has plugged into
recession. They asserted that the Nigeria economy may not regain stability until
early 2017 with low rate of 1.5%
The
impact or danger of the consequences of recession may lack visible team of management
to sustain productivity as a result of layoff. The standard of living of people
dependent on wages and salaries are more affected by recession than those
wholly on fixed incomes and welfare benefit, the loss of job is known to have
negative impact on stability on families and individuals’ health and well being
(Vaililigan, 2009). The recession in Nigeria and the effort to manage it has
attracted attention of writers. Some scholars have failed to investigate on how
the government invests in education and empowerment and how research and
innovative activities are not encouraged by the government. According to
economic researchers the countries with least enterprising spirit are amongst
the poorest in the world, Schumpeterian sense, the entrepreneurs are agents of
change and economic development who anticipate and maybe even trigger economic
booms (Koellinger&Thunks, 2011).
Again,
some other scholars asserted that the government should encourage small scale
business. Increase domestic production, domestic trade and employment. This
will boost income and increase produce and improve macroeconomic variable in
this business cycle of recession.(Fuphunda, 2012; Eneji, Malifia, &Umejiaku,
2016) these scholars failed to explain how Nigeria export raw materials only to
end up importing finished products. This is because they either do not have adequate
processing industries (disjointed industries without product linkage) or fail
to meet international standard in the processing of raw material into finished
product.
The
effort or the contributions of writer in the extant literature reveals that the
link between the state and management of economic recession has not been properly
articulated. This form the gap or lacuna this study attempt to fill based on
the foregoing, the study investigate the following research questions:
1. Did
the failure to adequately manage oil resources contribute to recession
experience in Nigeria from 2014-2017?
2. Has
the implementation of economic growth and recovery plan (EGRP) reduced the
hardship caused by the economic recession in Nigeria between 2014 -2017?
1.3 OBJECTIVE OF THE STUDY
This study examines the state and management
of economic recession in Nigeria from 2014-2017.However, the specific
objectives for this study are:
1. To
ascertain whether the failure to adequately manage oil resources contributed to
recession experience in Nigeria from 2014-2017.
2. To
ascertain whether the implementation of economic growth and recovery plan
(EGRP) reduced the hardship caused by the economic recession in Nigeria between
2014 -2017.
1.4 SIGNIFICANCE
OF THE STUDY
This
study has both theoretical and practical significance. Theoretically the study
will add to existing body of knowledge on the management of economic recession
in Nigeria, it will also bring to light those factors that militate against
effective utilization and mismanagement of resources meant for alleviation of
economic growth and eradication of economic recession in Nigeria.
Practically,
this study will provide information and empirical evidence that will enable the
government, policy makers, donor agencies and stakeholders to redesign and
adopt sustainable, effective and efficient policies and strategies for the
realistic management of economic recession in Nigeria
More
so, the finding will also be of immense benefits to non-governmental
organization (NGOs) and civil society by exposing them to economic recession in
Nigeria. It will be serving as a guide towards a more pragmatic and result
oriented approach to curtail recession and also help in building programs there
by creating opportunities for the poor and unemployed in Nigeria to gain
control over their lives
Finally,
this research work serves as a spring board for continuation of research and
information for the state and management of economic recession in Nigeria.
1.5 HYPOTHESES
The hypotheses put towards empirical
investigation include:
1. the
failure of the state to adequately manage oil resources has contributed to
recession experience in Nigeria from
2014-2017
2. the
implementation of economic growth and recovery plan (EGRP) has not reduced the
hardship of economic recession in Nigeria between 2014-2017
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