World Bank Projects Worst Recession Ever For Nigeria, Misery Expected To Multiply

Nigeria is heading for its worst recession under President Muhammadu Buhari, the World Bank has revealed in a report titled ‘Nigeria in times of COVID-19: Laying foundations for a strong recovery,’. The World Bank's projection comes after AllNews reported that Nigeria will experience its third recession with Buhari as military head of state and President of Nigeria.

According to the World Bank, there are a number of factors that will drag Nigeria into recession and the effectiveness of President Buhari's administration will determine the impact. The global financial institution stated that oil price crash and the negative impact of COVID-19 are the drivers of the impending recession.

COVID-19 Prevented Initial Growth Projection For Nigeria's Economy

The World Bank said the economy will contract further if the pandemic worsen in Nigeria, but for now, Nigeria’s economy has been projected to contract by 3.2 per cent this year, “This projection assumes that the spread of COVID-19 in Nigeria is contained by the third quarter of 2020,” it said

Before the outbreak of the Coronavirus in Nigeria, the country's economy was projected to grow, but the impact of COVID-19 on global trade and domestic trade has thrown a spanner in the works, preventing the economy from attaining the growth projection.

This has affected affected government revenue at a time the government was trying to expand its revenue base. Now, the Gross Domestic Product (GDP) will fall from a low eight per cent to five per cent, “Before COVID-19, the Nigerian economy was expected to grow by 2.1 per cent in 2020, which means that the pandemic has led to a reduction in growth by more than five percentage points.

“The macroeconomic impact of the COVID-19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus. Oil represents more than 80 per cent of Nigeria’s exports, 30 per cent of its banking-sector credit, and 50 per cent of the overall government revenue.”

Buhari's Effectiveness Will Determine Ecinomic Recovery

While reacting to the economic situation in Nigeria, the Country Director for Nigeria, World Bank, Shubham Chaudhuri, that Nigeria's economic recovery rate is all dependent on the government's responsiveness, “While the long-term economic impact of the global pandemic is uncertain, the effectiveness of the government’s response is important to determine the speed, quality, and sustainability of Nigeria’s economic recovery.

“Besides immediate efforts to contain the spread of COVID-19 and stimulate the economy, it will be even more urgent to address bottlenecks that hinder the productivity of the economy and job creation.”

Misery Of Nigerians Will Multiply This Year

A month ago, the Minister of Finance, Zainab Ahmed, stated that the misery of Nigerians will multiply in 2020, as the economy is heading for another recession - making it the third recession under President Muhammadu Buhari. She made this known while disclosing that Nigeria's economy will decline deeper than projected by international agencies.

Ahmed said Nigeria's economic growth might contract more than the projection made by the International Monetary Fund (IMF) and international credit rating agency, Fitch Ratings. According to Ahmed, the country's economy, which is the gross domestic product (GDP) could contract to as much as –8.94% in 2020.

Nigeria had experienced recession thrice, and on two occasions, President Buhari was leading the country. The first was in 1982 when he was the military head of state. The second was as President in 2016. Considering the projection of the Finance minister, IMF and Fitch, the country now risks two recession in five years.

The 1982 recession has been the worse so far, lasting two years. If Nigeria falls into recession this year, it will be the worst in the history of the country considering the rate of the contraction projected this year. This means for every tenure of Buhari at the helm of affairs, Nigeria had fallen into recession.