Stimulus Packages to Counter Recession: Nigeria
Politicians are expected to make promises they can fulfil but some make unrealistic promises that soothe the mind of voters. Some clearly do, partly because they have a tunnel vision of running the economy with revenue from crude oil only. While the current Government has been working assiduously to build a strong and virile economy with less dependency on crude oil revenue; achieving this lofty goal has been impeded by challenges posed by the sudden fall in the price of crude oil with attendant disruption in the country’s oil production by the raging militants in the Niger Delta region. Consequently, the economy plunged into recession as it aggregate output recorded two consecutive negative growth in first (GDP = -0.36% year-on-year) and second quarter (GDP = -2.1% year-on-year) of 2016 leading to massive job losses and significant economic stress.
As highlighted in our last edition that the country needs to analyse its strengths, weaknesses and focus on the opportunities that the current economic challenge presents (e.g. bolstering policies on importation, scaling up rice production, blocking fiscal leakages in the economy and reducing wastage to mention but a few). We are however optimistic that stimulus packages of the Federal Government would eventually help get the economy going. One of such is the welfare package (intervention fund) which is under current plans to transfer stipends to the poorest and vulnerable households (especially the caregivers, women in particular) in the country. The second area of focus should be spending on critical infrastructure development and other key government projects. Others are providing assistance to Small and Medium Scale Enterprises (SME), internship for unemployed graduates and increasing efficiency of public jobs while making them competitive.
It would also be a sound economics to consider the landless poor and other vulnerable groups through different public works. The State of Osun was able to record substantives achievement in alleviating poverty of 40,000 households through this effort. Public works can protect households’ consumption, while at the same time promote savings and investments in productive assets. Additionally, through the generation of public goods and the provision of training, public works can lead to the accumulation of community assets and the development of skills, which may play an important role in alleviating local productivity constraints and fostering economic growth.