Nigeria Has Officially Entered Into Recession

The British Broadcasting Corporation, The Cable both quoted figures released by the National Bureau of Statistics (NBS) to prove that the country, one of Africa’s largest economies, has officially gone into recession. Reuters quoted that Nigeria approves plan to borrow more.

This is the first time it is happening in 29 years, the report by The Cable claimed adding that the NBS figures showed that in the gross domestic product (GDP) for the second quarter of 2016, Nigeria’s economy contracted by 2.06 percent.

The country has now seen two consecutive quarters of declining growth, the usual definition of recession.
Its vital oil industry has been hit by weaker global prices, according to the Nigerian Bureau of Statistics (NBS).

But the government says there has been strong growth in other sectors.
Crude oil sales account for 70% of government income.

The price of oil has fallen from highs of about $112 a barrel in 2014 to below $50 at the moment.
Outside the oil industry, the figures show the fall in the Nigerian currency, the naira, has hurt the economy. It was allowed to float freely in June to help kick-start the economy, but critics argued it should have been done earlier.

The government, however, has found some positive news in the figures.
"There was growth in the agricultural and solid minerals sectors... the areas in which the federal government has placed particular priority," said presidential economic adviser Adeyemi Dipeolu.

Nigeria in recession, how do the country got here

Nigeria, which vies with South Africa for the mantle of Africa's biggest economy, is also battling an inflation rate at an 11-year high of 17.1% in July.

"A lot of Nigeria's current predicament could have been avoided," said Kevin Daly from Aberdeen Asset Management.
"The country is so reliant on oil precisely because its leaders haven't diversified the economy.

Read also, 4.58 million Nigerians became unemployed.

"More recently, they have tried, and failed, to prop up the naira, which has had a ruinous effect on the country's foreign exchange reserves and any reputation it might have had of being fiscally responsible."

In a latest development, the Finance Minister Kemi Adeosun said Nigeria's government has approved a three-year plan to borrow more from abroad after the economy slipped into recession for the first time in 29 years.

Nigeria Finance Minister, Kemi Adeosun

The government has so far disbursed more than 400 billion naira in capital expenditure this year, part of a record 6.06 trillion naira ($30 billion) budget for 2016, Adeosun said last week

But with lower oil prices and attacks on oil facilities, it has struggled to fund its budget, aimed at averting the recession.