Nigeria’s Economy to Face the Worst Recession in 40 Years
Dec 20, 2020 20:01:57 GMT 1
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Post by Trade facilitator on Dec 20, 2020 20:01:57 GMT 1
Nigeria’s Economy to Face the Worst Recession in 40 Years: What Is the Implication for Agro-Exporters?
According to the latest World Bank Nigeria Development Update (NDU), Nigeria is about to face the worst recession in four decades. The collapse in oil crude prices coupled with the Covid-19 pandemic is expected to plunge the national economy into a severe economic recession.
In a recent report, “Nigeria in Times of Covid-19: Laying Foundations for a Strong Recovery”, it is estimated that Nigeria’s economy would likely contract by about 3.2% in 2020. This is saying that the national economy will experience a negative growth of about 3.2 per cent.
The Gross Domestic Product (GDP) of Nigeria in the year 2020 is expected to be about $250bn according to Trading Economics Global Macro Models and analysts’ expectation. Some major economists and financial analysts have predicted that the national Gross Domestic Product (GDP) will increase to about $360bn and $450bn in 2021 and 2022 respectively.
But right now, at the end of 2020, the reality is that the economy is shrinking instead of growing due to the effects of Covid-19 pandemic and falling crude oil prices. Recession has set in, and it is predicted to be the worst Nigeria has ever witnessed in the past 40 years.
The pandemic could not allow workers in production and manufacturing industries to go to work. Farmers could not go to farms, so you can see the level of disruption the economy went through due Covid-19 pandemic in the year 2020 alone.
When an economy is growing positively, there will be an increase in commercial activities, and both lenders and borrowers will be in good business to grow the economy the more.
Before Covid-19 set in, the Nigerian economy was expected to grow by 2.10% in 2020, but now instead of growing the economy is expected to decrease by 3.20%. That is what is called negative growth. With this analysis, it means that the economy is expected to contract by more than five percent.
The macroeconomic impact of Covid-19 on the Nigerian economy will still likely be high even if the country is able to contain the spread of the virus because of the volatility of the revenue base that is highly dependent on only crude oil sales.
Revenue from crude oil sales accounts for 80% of Nigeria’s exports, 30% of banking sector credit, and also accounts for about 50% of total government revenue. See the huge gap that exporters are expected to cover, crude oil exports account for more than 80% of the total exports of the country.
Nigerian exporters, both mini and major have a lot of grounds to cover. Agro-allied exporters should cash in on this situation to enter into massive exportation of agricultural commodities to bring in the much needed foreign exchange to support this economy.
The Nigerian government in collaboration with the Central Bank of Nigeria (CBN), have put in place many windows for exporters to access funds for export. We have said it in many of our articles that our exporters, especially mini-agro allied enterprises are not using the opportunities available to them. Government cannot come into your homes to force you to go and take advantage of facilities that have been made available for exporters, especially those in the agricultural sector.
If you are an existing exporter or you want to start, what you need to do is to walk in into any bank of your choice and ask to see the officer of the bank in charge of exports. This position exists in almost all the banks in Nigeria. Explain to them what you are into or what you are planning to go into, they will give you a low down of their products in the export department. Then you take the information to go and do your analysis. The funds are there for exports; they belong to all exporters, go there and take your own.
According to the latest World Bank Nigeria Development Update (NDU), Nigeria is about to face the worst recession in four decades. The collapse in oil crude prices coupled with the Covid-19 pandemic is expected to plunge the national economy into a severe economic recession.
In a recent report, “Nigeria in Times of Covid-19: Laying Foundations for a Strong Recovery”, it is estimated that Nigeria’s economy would likely contract by about 3.2% in 2020. This is saying that the national economy will experience a negative growth of about 3.2 per cent.
The Gross Domestic Product (GDP) of Nigeria in the year 2020 is expected to be about $250bn according to Trading Economics Global Macro Models and analysts’ expectation. Some major economists and financial analysts have predicted that the national Gross Domestic Product (GDP) will increase to about $360bn and $450bn in 2021 and 2022 respectively.
But right now, at the end of 2020, the reality is that the economy is shrinking instead of growing due to the effects of Covid-19 pandemic and falling crude oil prices. Recession has set in, and it is predicted to be the worst Nigeria has ever witnessed in the past 40 years.
The pandemic could not allow workers in production and manufacturing industries to go to work. Farmers could not go to farms, so you can see the level of disruption the economy went through due Covid-19 pandemic in the year 2020 alone.
When an economy is growing positively, there will be an increase in commercial activities, and both lenders and borrowers will be in good business to grow the economy the more.
Before Covid-19 set in, the Nigerian economy was expected to grow by 2.10% in 2020, but now instead of growing the economy is expected to decrease by 3.20%. That is what is called negative growth. With this analysis, it means that the economy is expected to contract by more than five percent.
The macroeconomic impact of Covid-19 on the Nigerian economy will still likely be high even if the country is able to contain the spread of the virus because of the volatility of the revenue base that is highly dependent on only crude oil sales.
Revenue from crude oil sales accounts for 80% of Nigeria’s exports, 30% of banking sector credit, and also accounts for about 50% of total government revenue. See the huge gap that exporters are expected to cover, crude oil exports account for more than 80% of the total exports of the country.
Nigerian exporters, both mini and major have a lot of grounds to cover. Agro-allied exporters should cash in on this situation to enter into massive exportation of agricultural commodities to bring in the much needed foreign exchange to support this economy.
The Nigerian government in collaboration with the Central Bank of Nigeria (CBN), have put in place many windows for exporters to access funds for export. We have said it in many of our articles that our exporters, especially mini-agro allied enterprises are not using the opportunities available to them. Government cannot come into your homes to force you to go and take advantage of facilities that have been made available for exporters, especially those in the agricultural sector.
If you are an existing exporter or you want to start, what you need to do is to walk in into any bank of your choice and ask to see the officer of the bank in charge of exports. This position exists in almost all the banks in Nigeria. Explain to them what you are into or what you are planning to go into, they will give you a low down of their products in the export department. Then you take the information to go and do your analysis. The funds are there for exports; they belong to all exporters, go there and take your own.
