Economy in Focus: Nigeria Goes into Recession, Will Africa Suffer?

News that the economy of Nigeria has slipped into recession is worrying. Nigeria, one of the largest economies in Africa as well as the most populous, its negative deviating economy spells doom to the country itself and other countries too.

Recent economic figures have indicated that the economic growth of Nigeria has contracted 2.06 percent between the month of April and June according to British Broadcasting Cooperation BBC. Nigeria plunged into an economic turmoil early this year coupled with the prevailing low global oil prices according to the statistics in the Nigeria Bureau of Statists. This has seen the country’s economy declining on two consecutive quarters fitting her on the recession.

It all begun with the inflation rates increasing to the highest levels in almost a decade. During the month of June, the inflation in Nigeria stood at 16.5 percent further deepening the economic woes of the Africa’s largest economy. This was an increase from 15.6 percent recorded during the month of June. This was said to be the highest inflation rate since the year 2005 according to the National Bureau of Statistics.

What hurt the economy most was the blasting of the oil fields by the Boko Haram Militants who have been roaming freely in the South of Nigeria. Boko Haram started blasting oil fields and pipes, the main revenue earner of the country. The government has been trying to root out the militants without success and the results of the oil blasting have now started being seen clearly. The first people to be affected with the blasting of oil fields and pipes were the Nigerians themselves as the oil prices increased for more than 40 percent despite the fact the globally, the oil prices were down. The selling of crude oil in Nigeria accounts for more than 70 percent of the country’s income and the dropping of global prices from 112 US Dollars to 50 US Dollars really affected the country.

The Nigerian currency, naira has been tumbling for the past few months. This has greatly affected the economy of the country. According to the report by Reuters, Nigeria’s Naira slumped 30 percent against the dollar after the central bank removed its currency peg in an effort to alleviate the chronic foreign currency shortages further choking the growth of the Africa’s biggest economy.

Nigeria further lost her glory when South Africa overtook her as the Africa’s largest economy as the South African rand continued to maintain its superiority. The size of South Africa’s economy now stands at 301 billion US Dollars comparing to that of Nigeria which is now at 296 billion US dollars.

Many Nigerians, however, have not been shaken with the recession news with most of them noting that their country has been through hard economic times and that the expected that to happen.

The leadership of President Muhammadu Buhari, however, maintains that all is well and that Nigeria will soon reclaim her position. Boko Haram still remains a challenge in the south, oil prices are still dwindling, prices for goods are rising and the inflation is likely to go a little higher than it is currently.

On Wednesday, Aero Contractors, the largest and the oldest airline in Nigeria suspends its operations indefinitely. According to a statement by the Chief Executive Officer, Mr Fola Akinkoutu, the management decision was part of the strategic business realignment to reposition the airline and return it back to profitability. One day later, another airline, First Nation, also announced the suspension of its operations without giving specifications on when the operations will resume.

With Nigeria going down, given the fact that it is the largest economy in Africa, what is at stake? Will Africa as a whole be shaken? What about Kenya? What is at stake for Kenya? The Kenyan government is yet to comment on the matter.