When Nigeria was officially announced to have got into an economic recession in August 2016, I ran a study on all economic recessions in the history of Nigeria and the United States of America. One thing was striking: the US has had more recessions on the average than Nigeria has. Nigeria has been through seven economic recessions in its 56-year history, and World Bank data show that the current economic recession is raising that tally to eight.
According to National Bureau of Economic Research (NBER), the private firm known for monitoring recessions in the United States, the world’s largest economy has been through recession, at least 49 times in 240 years. In context, US has had at least, one recession in 5 years, while Nigeria, on the average, records one in seven years.
This goes on to show that recessions are normal phenomena, even for the best economies in the world. But the reason for every recession must be well understood, and avoided for in years to come. When in period of boom, countries with foresight prepare for the days of bust. They save, they build, the invest in the kind of infrastructure and fiscal buffers that can keep them afloat when the rainy days come.
WHAT HISTORY TEACHES ABOUT NIGERIAN RECESSIONS
According to World Bank figures, Nigeria’s first economic recession is what everyone will call a pardonable recession; the nation experienced an economic crunch between 1966 and 1968, which was as a result of the tensions around the nation’s civil war which ran through 1967 to 1970.
After the war, which claimed between one to three million lives, Nigerians returned to their quarters, everyone knew the next thing for a nation as this was to build up itself from the relics of war. By 1970, the economy recorded growth of 25 percent – the highest in the country’s history throughout the 20th century. Within these period, oil prices declined by over 12 percent (1966 to 1970) yet the economy grew massively. A nation was riding on the wings of her industry and the brains of a teeming youth population.
From 1970 to 1973, oil prices soared from $3 per barrel to $11 per barrel on the global market. Petrodollar began weaning Nigeria off Agriculture. In 1975, oil prices dropped by a few cents, from $11 to $10.43, but Nigeria could not weather the storm, which was accompanied by some political undercurrents. The nation fell into its second recession.
Within 1978 and 1983, Nigeria was at the mercy of falling oil prices and political instability. The country therefore recorded five annual gross domestic product (GDP) decline. Some economist argue that the country plunged into a depression at the time.
From 1984 to 2016, Nigeria’s economic recessions had always been tied to one oil slump or the other. Once, there is an oil slump, a recession is just a few months away — with the exception of 2008, which was averted by the fiscal buffer built by the Olusegun Obasanjo administration. This is the story of Nigeria’s recession. Continue reading from source