Economic Instability and Financial Meltdown In Nigeria
The crisis afflicting this oil-dependent nation, which has the world’s largest reserves, is of the direst kind.
Before the Industrial Revolution, economic downturns frequently resulted in famine and death. Modern economic crises are a tale of market collapse and crippling debt — but food spending generally remains constant.
Sadly, things are so bad in Nigeria:
-Inflation is out of control in Nigeria’s economy.
-Consumer prices rose 13.7 per cent in April, 15.6 per cent in May and 16.5 per cent in June, the Nigerian National Bureau of Statistics reported.
-Nigeria’s central bank recently announced it will de-peg the naira from the US dollar, allowing it to float freely. In the short term, this may drive up inflation further.
-But the higher currency was arguably a cause of the problem. It turned away foreign investors and made its (non-oil) exports unattractive.
-The underlying cause is that Nigeria is dependent on oil exports, and thus has been crippled by lower prices.
Impacts of the Crisis:
The crisis has produced or exacerbated serious, wide-ranging yet differentiated impacts across Nigeria. Negative impacts are reported and the following are noted:
*Increasing unemployment (About 50 million jobs lost this year and no job opportunities-encouraging youths to engage in several nefarious acts), poverty and hunger
*Deceleration of growth, economic contraction
*Negative effects on trade balances and balance of payments
*Dwindling levels of foreign direct investment
*Large and volatile movements in exchange rates
*Growing budget deficits, falling tax revenues and reduction of fiscal space
*Contract action of world trade
*Increasing volatility and falling prices for primary commodities
*Inadequate power supply
*Non-payment of workers salaries
*Reduced public confidence in financing institutions
*Reduced ability to maintain social safety nets and provide other social services, such as health and education
*Increased infant and maternal mortality
*Collapse of housing markets.
Today’s economic and financial crisis originated in the rich world particularly in the USA. It has been called a financial meltdown, storm or credit crunch. Credit crunch is an economic condition in which investment capital is difficult to obtain. It meant that there was hardly any credit available for investors. Of course this condition is a chronic problem in poor countries and this is why when we speak about the current financial crisis to a poor person, the question he or she will ask is “what crisis?” The poor, on the other hand, have been living in crisis for centuries. For the rich citizens, it created panic and was seen as the worst in recent years and was compared to the 2014 great depression. In other words it was a big crash or a bust...
Reformative:
*Stabilizing the financial markets and restore confidence in them and counter falling demand and the recession.
*Counter the impact of the crisis on the most vulnerable populations and help to restore strong growth and recover lost ground in their progress towards Millennium *Development Goals.
*Focus on creating jobs, correcting imbalances, designing and implementing environmentally and sociable development paths and having a gender perspective.
*Safeguarding economic, development and social gains.
*Rebuilding trust in the financial sector and restoring lending
*Strengthening the role of the government in responding to the economic crisis and its impact on development.
*Fostering good governance at all levels, including the international financial institutions and financial markets.
*Addressing the human and social impacts of the crisis.
*Helping the poorest areas.
Close observation reveals that the impacts on inflation depend on the degree of changes of commodity prices and the accompanying changes in the terms of trade.
Owing to the commodity price boom, inflation rates rose strongly.
Officially, Nigeria started experiencing a two-digit inflation rate from the third quarter of 2008. With falling commodity prices, inflationary pressures should subside to some extent as well. A strong and extended downward movement of the exchange rates will keep inflation levels high, most especially since Nigeria is import dependent and has no more foreign earnings to maintain this flair.
While citizens complain bitterly about the crisis, pastors urge citizens to remain calm and be prayerful, for that is the only way out in this time of hardship.They insisted that this hardship will ignite the strength we need to look for the Good in the worst situations.
