Nigeria has been plunged into its second recession in four years and the government has blamed the coronavirus pandemic.
Contrary to the position of the Nigerian government, economist and Faculty member of the Pan Atlantic University, Nigeria, Dr. Austin Nweze says the recession was preventable.
Dr. Nweze, who appeared as a guest on Village Square Africa on News Central TV said the failure of the Nigerian government to save could be partly attributed to what led to the recession.
“It (recession) could have been preventable if we were serious with reserves or savings,” he said.
“Recall that some years ago, when the Sovereign Wealth Fund was set up with about $1bn or $2bn, some governors protested, saying they needed to do some projects. They said they need to take care of today rather than saving for tomorrow. It’s something countries like Norway, Saudi Arabia and other countries that were smart enough to save for the rainy day do.”
While the economist agreed that the COVID-19 pandemic had its bearing on the global economy, he said Nigerian policymakers should be blamed for their poor decisions and inactions.
The second guest on the show, Churchill Ogutu, the Head of Research at Genghis Capital, Nairobi, Kenya said the pandemic has had a towering effect on Africa’s economy.
He said economies like Seychelles’ and Mauritania’s that are largely dependent on tourism are expected to contract by more than 17% according to the projections of the International Monetary Fund (IMF). Another sector facing a cash crunch is the aviation sector, due to the reduction in the number of travellers.
Mr Ogutu described the pandemic as a shock to the economy of African countries and said policies and good recovery plans will help the continent out of the situation.
Messrs Ogutu and Nweze said that Africa’s economy needs to look inwards to drive recovery and see opportunities in its realities. Massive unemployment and underemployment were also blamed for the present condition of the continent.
Mr Nweze in his contribution further added that Nigeria can reverse the trend if there’s a strong political will and commitment in policymaking. He called for the reduction of the interest rate which the Central Bank of Nigeria has maintained at 11.50%.
On his part, Mr Ogutu said African governments need to be driven by data, as it presents factual information for better analyses.
Recall that the IMF projected that Sub-Saharan Africa will face its first recession in 25 years, with an expected GDP contraction of -3.3%.
The major drivers of the economy in the region are facing harsh challenges, with Nigeria and South Africa battling recessions and Ethiopia facing political upheavals. Many other countries in the region are also currently facing security tension.
Mr Nweze said he’s optimistic that Nigeria can set a good example for the rest of the continent if policymakers take better decisions.