An Analysis of Nigerian Recession

Abstract

Over the years, Nigeria depends on crude oil proceeds as the major source of national income, foreign exchange and external reserves. This dependence coupled with the huge cost of running and maintaining the political structure among other factors prove disastrous by leading the economy to the worst recession in decades. We therefore, chronicle the origin, effects and way out of the recession via trend analysis and desk review. Having analyzed the remote and immediate causes of the recession, we observed that the dependence on crude oil whose price is highly volatile made the Nigerian economy susceptible to shocks. Hence the oil price and output shocks coupled with high cost of governance, excessive importation, corruption, sudden implementation of Treasury Single Account (TSA), insurgency and Niger Delta Militancy among other factors destabilized all macroeconomic variables and threw the economy to the worst scenario of recession (stagflation). Thus, diversification of the Nigerian economy by prioritizing agriculture and manufacturing, massive fiscal stimulus plan to enhance domestic infrastructure and production, re-injection of recovered loots, resolution of Niger Delta militancy among other policies are recommended to ameliorate the effects of current recession and strengthen the structures of the economy in order to prevent reoccurrence of economic recession in the country.