Urgent Call for Economic Recovery Effort
The third-quarter Gross Domestic Product (GDP) data released by the National Bureau of Statistics (NBS), amplified the urgent need for a re-evaluation and re-assessment of the current government’s economic policies. The NBS report showed the country’s GDP growth declined by 3.62 percent in Q3 2020 amid other tailwinds affecting Foreign Direct Investment. With two consecutive negative growth numbers, the Nigerian economy has officially entered into a recession.
Macro-economic indices such as inflation, unemployment, and the currency exchange rates have been negatively affected. The consumer price index has also been affected at the same time putting additional pressures on the current standard of living. The Economic Sustainability plan came at the right time but it would need quick practical interventions by the Federal Government, to provide a social safety net through revised policies. The implementation of these policies remains a critical path to success.
A few recommendations that may support the current policy direction include the following;
- Introducing additional tax cuts to attract capital investments.
- Stimulate aggregate demand to increase economic activities.
- Fast-track the implementation of policies aimed at diversifying the country’s export potentials.
- Robust expansionary fiscal and monetary policy packages considering the shortfall in Government revenue.
- Reduce the current government cost. The Government cannot spend itself out of a recession if it is not willing to reduce expenses on liabilities like new government vehicles.
Additionally, to mitigate the current challenges of inflation, high transport charges, unemployment, etc, the federal government will need to roll out another round of direct fiscal interventions to drive domestic production. These interventions will need to cut across other sectors such as mining, ICT, creative industry, and manufacturing. In conclusion, these policy reforms will not only create an environment that will attract foreign investment but will also encourage long-term economic growth.