ASSESSING THE PSYCHOLOGICAL EFFECTS OF ECONOMIC STAGNATION ON NIGERIAN POPULACE (A FOCUS ON BOLA AHMED TINUBU ADMINISTRATION)

CHAPTER ONE

INTRODUCTION

Background of the Study

Nigeria like other countries are currently experiencing a significant decline in oil prices. This decline began years ago when the price of bonny light crude oil dropped from $145.00 per barrel to just about $40.00 per barrel.  According to Adams (2023), it is also contended that the current oil price scenario exacerbates the necessity for promptly devising and implementing appropriate measures to establish a sustainable economy and restore economic growth. The Nigerian government relies on oil for more than 60% of its overall revenues and the country depends on oil for over 90% of its foreign exchange gains. Additionally, state governments depend on the federal government for over 90% of their revenues, with the remaining 10% coming from their own created revenues. If not managed appropriately, the decline in oil prices will undoubtedly have an immediate and perhaps catastrophic effect on the budgets of all levels of government in the federation, including local, state, and federal. This is because the nation's economy is not immune to the global economic downturn. According to Uzochi (2023), the Nigerian economy has experienced several significant downturns in the 21st century, notably during the global financial crisis of 2008 and the oil price crash of 2014. The latter had a particularly severe impact, leading to a recession in 2016, the first in over two decades (World Bank, 2017). The COVID-19 pandemic further exacerbated economic challenges, as global demand for oil plummeted, leading to reduced government revenues and increased economic strain on businesses and households (Ozili, 2020).

Consequently, the economic downturns have had profound socio-economic impacts. Unemployment and poverty rates have surged, with the National Bureau of Statistics reporting that over 40% of the population lives below the poverty line (NBS, 2019). With slowed economic activities, businesses are less likely to hire new employees or may even lay off existing staff to cut costs. High unemployment rates contribute to increased poverty levels and social instability (National Bureau of Statistics, 2019). Economic stagnation often leads to a decline in foreign direct investment (FDI). Investors are typically wary of putting money into economies that exhibit slow growth and high levels of uncertainty. This lack of investment further exacerbates the economic stagnation, creating a vicious cycle of low growth and limited capital inflow (Egbetokun, Adeniyi, & Siyanbola, 2020).

Additionally, inflation has eroded purchasing power, making it increasingly difficult for average Nigerians to afford basic necessities. These challenges have contributed to widespread social discontent and instability, as evidenced by the increasing frequency of protests and civil unrest (International Crisis Group, 2021).  Economic stagnation in Nigeria has led to reduced Gross Domestic Product (GDP) growth rates. During periods of stagnation, the economy's overall productivity declines, and growth in key sectors such as manufacturing, agriculture, and services is hampered (World Bank, 2017). This reduction in GDP growth limits the country's ability to generate wealth and improve living standards.

President Bola Ahmed Tinubu assumed office on May 29, 2023, after being victorious in the Presidential election held in February 2023. On the other hand, Nigeria is confronted with numerous social and economic issues, including insecurity in the form of banditry and kidnappings, particularly in the northwest region. Additionally, there is an ongoing insurgency by terrorist groups in the north-east, as well as separatist agitations in the south-east. Moreover, the current administration is now gradually addressing the long-term consequences of previous misguided policies. 

Since the change in administration in May 2023, the country has been actively implementing significant changes to restore stable and favourable macroeconomic circumstances for growth. A portion of the petrol fiscal subsidy has been removed, and foreign exchange (FX) reforms have resulted in the consolidation of FX markets and the establishment of an exchange rate that accurately reflects market conditions. In order to mitigate the inflationary consequences of these reforms on the most susceptible individuals, the government has started executing interim monetary transfers to reach a total of 15 million households. Additionally, there are endeavours underway to enhance monetary policy and reorient the Central Bank of Nigeria (CBN) towards its primary objective of ensuring price stability.  The initial shock of these reforms will gradually dissipate, leading to the stabilisation of macroeconomic conditions. This will result in a steady, albeit sluggish, expansion in the non-oil economy. At the same time, the oil sector is expected to reach a state of stability. Implementing structural reforms will be necessary to achieve higher growth rates. The liberalisation of the exchange rate should have a positive impact on both the fiscal and external balances. Anticipated reductions in inflation are likely to occur gradually due to the implementation of measures to tighten monetary policy and stabilise the currency rate. Consequently, it is anticipated that poverty rates will rise in 2024 and 2025, followed by a stabilisation in 2026. However, Nigeria's prospects face significant risks, particularly if there is a decline in the pace of reforms or if they are reversed. The risks encompass a relatively inadequate implementation of monetary policy tightening, neglecting to rectify imbalances in petrol pricing, and failing to increase non-oil revenues. Economic recovery would be negatively affected by increasing insecurity, unfavourable climate shocks, and public dissatisfaction with inflation. Therefore, a survey will be conducted in order to assess the psychological effects of economic stagnation on Nigerian populace.

1.2 Statement of the Problem

In recent times, Nigerian population are experience increased levels of stress, anxiety, depression, and several other mental health problems due to extended economic uncertainty, hardship and stagnation. several socio-economic difficulties, the psychological impact of economic stagnation has been especially severe. The presence of income volatility, precarious employment, and the challenge of fulfilling essential demands engenders a pervasive feeling of insecurity. In addition, the combination of the apprehension of job loss or inability to secure employment, along with the increasing expenses of living, exerts significant strain on individuals, resulting in persistent stress and anxiety (Eze et al., 2023). Adegoke & Olowookere (2023)asserts that the societal disapproval linked to being unemployed and impoverished result in isolation and reduced social support systems, intensifying mental health problems. The prevalence of high unemployment rates and restricted possibilities has resulted in a pervasive sense of disillusionment and frustration among the youths.  Furthermore, insufficient constructive channels for their energy and aspirations render youths more susceptible to adverse influences, so creating substantial threats to both national security and social stability (Ogunleye, 2023).

However, in response to the economic stagnation, the Tinubu administration enacted various policy measures with the objective of stabilising the economy and fostering growth. These encompassed fiscal measures aimed at enhancing income collection, endeavours to attract foreign investment, and initiatives to improve the business environment. In addition, the administration aimed to tackle infrastructure deficiencies by utilising public-private partnerships and making strategic investments in crucial areas (Vanguard, 2024).  Hence, it is in the light of these that the study seeks to assess the psychological effects of economic stagnation on Nigerian populace.

 1.3  Objectives of the Study

The main purpose of this study is to assess the psychological effects of economic stagnation on Nigerian populace. Specifically, the study will;

Investigate on the level of economic stagnation experience by Nigeria citizens.

Investigate whether economic stagnation has a significant impact on the psychological well-being of Nigeria citizens.

Investigate the factors associated with economic stagnation in Nigeria.

Evaluate the psychological impact of economic stagnation on Nigerians.

1.4  Research Questions

The following questions have been prepared for the study:

What is the level of economic stagnation experienced by Nigerian citizens?

Does economic stagnation have a significant impact on the psychological well-being of Nigerian citizens?

What are the factors associated with economic stagnation in Nigeria?

What is the psychological impact of economic stagnation on Nigerians?

1.5 Research Hypotheses

H0: Economic stagnation has no significant effect on Nigerian citizens.

Ha: Economic stagnation has significant effect on Nigerian citizens.

1.6 Significance of the Study

With the help of the study findings, policymakers will have enhanced capabilities to formulate economic policies that not only strive to promote growth but also take into account the psychological well-being of the population during times of economic stagnation. This approach will aid in developing all-encompassing solutions that tackle both economic and psychological well-being, ultimately resulting in more resilient communities. 

This study will provide mental health practitioners with valuable insights into the specific pressures experienced by Nigerians during periods of economic stagnation, enhancing their understanding of the subject. Acquiring this knowledge will empower individuals to create and execute more efficient therapy methods and community-centered mental health initiatives that are customised to meet the unique requirements of those impacted. Furthermore, community leaders and non-governmental organisations (NGOs) will find the findings to be of great value in their endeavours to assist disadvantaged populations.

 Nevertheless, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to the  psychological effects of economic stagnation on Nigerian populace.

1.7 Scope of the study   

The scope of this study is boarded on the psychological effects of economic stagnation on Nigerian populace. Empirically, the study will investigate on the level of economic stagnation experience by Nigeria citizens, whether economic stagnation has a significant impact on the psychological well-being,  the factors associated with economic stagnation and evaluate the psychological impact of economic stagnation.

Geographically, the study will be delimited to residents of Lagos state.

1.8 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.9 Definition of Terms

Economic stagnation: refers to a prolonged period of slow or negligible growth in an economy.

Economic:  relates to the economy, which is the system of production, distribution, and consumption of goods and services in a particular country or region.