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Finance Minister admits that 2020 recession will be worse than 2016 – what this means

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Finance Minister admits that 2020 recession will be worse than 2016 – what this means

Nigeria’s Minister of Finance, Zainab Ahmed, has validated a prediction by the International Monetary Fund (IMF) that the country’s economy will go into another recession – four years after the last one – with a predicted negative growth of over 4%.

Why this matters: For the economy to shrink by 4% is a huge deal. At the height of Nigeria’s last recession in 2016 which aggravated conditions of poverty, unemployment, and loss of productivity, the economy tumbled by 2.4%. The current situation based on these projections is expected to double that.

The Big Picture: Nigeria’s economic woes are part of a global economy shrinkage that’s expected to last until 2022 as the world snaps back from the devastating effects of COVID-19.

What’s next: The Finance Minister, Zainab Ahmed, expressed optimism that planned stimulus packages could help cushion the effects of the recession on the economy.

  • An emergency economic stimulus Bill passed by the House of Representatives is expected to provide temporary relief through tax rebate, deferral on mortgage payments, and import waivers. But as this piece argues, the House Bill does not pay attention to details and will likely be sufficient.
  • Funding for the stimulus is expected to come from external borrowing sourced from foreign institutions to support Nigeria’s revised budget.
  • Further, Zainab Ahmed says a $1.5bn cash windfall from the World Bank through an Emergency Locust Response Programme (ELRP) would go to state governments that are already struggling badly. The fund is meant to provide assistance for rural households.

READ: Nigerian states are broke again. It is really bad this time

One-step deeper: One way to guard against oil price volatility that leaves Nigeria scampering for foreign exchange at intervals is to develop other areas of export.

Peter Adeshina is a journalist who reports politics, policy and governance.

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