A CRITICAL EXAMINATION OF THE ECONOMIC DOWNTURN UNDER THE TINUBU ADMINISTRATION AND THE WAY FORWARD.

CHAPTER ONE

INTRODUCTION

Background of the Study

Nigeria is among the world’s largest producers of oil globally, with the diverse resources available in Nigeria, one could arguably say that Nigeria is a country blessed beyond measure. With the increasing population and growing corruption and embezzlement rate by the Nigerian political class, it is of no wonder why the country is grappling with economic downturn. This economic downturn has led to low economic growth, widespread unemployment, and high inflation rate (World Bank, 2022). The country’s economic woes have been exacerbated by declining oil prices, political instability, and poor economic management (OPEC, 2022). 

Conceptually, an economic downturn is a period of slowed economic activity marked by declining GDP, reduced global demand, sluggish job growth, increased borrowing costs, and reduced credit availability. An economic downturn can occur within a nation, a region, or on a global scale4. An economic downturn can last for a few months or longer, and is usually followed by a recovery. An economic downturn that lasts for at least six months is called a recession (Market Business New, 2024). Economic downturn has negative connotations for Nigerians, as it affects their standard of living, and also the purchasing power of its citizenry. The country’s economic woes have been exacerbated by declining oil prices, political instability, and poor economic management (OPEC, 2022).

According to the National Bureau of Statistics, Nigeria's inflation rate reached 22.8% in June 2023, driven by rising food prices and currency devaluation (NBS, 2023). The rising unemployment rate has further worsened the economic woes of Nigerian, with the National Bureau of Statistics reporting an unemployment rate of 33.3% in the first quarter of 2023. The economic downturn has exacerbated job losses, particularly in sectors like manufacturing and services, which have been hit hard by reduced consumer spending and investment (NBS, 2023). According to a report by the World Bank, approximately 40% of Nigerians live below the poverty line, and the economic crisis has pushed more people into poverty (World Bank, 2023). Also, the education sector has suffered, with many schools lacking the necessary resources and infrastructure to provide quality education (UNICEF, 2023).

Before the incumbent administration took over power on May, 29, 2023, the Nigerian economy has already experienced significant economic strains. The Tinubu’s administration has repeatedly said it inherited a dead economy characterized by high inflation rate, a devalued currency, and significant public debt (Guardian, 2024). Coming on board, the administration of President Bola Tinubu, has implemented several economic policies to mitigate the current economic challenges facing the country. Some of these policies include: Monetary Policy Adjustment, this policy was aimed at curbing inflation and stabilizing the Naira, which included, increasing the monetary policy rate and introducing measures to control the money supply. Fiscal reforms were also introduced to increase government revenue and reduce budget deficits. Social development programs as well as diversification efforts were also introduced by the Tinubu administration to help improve the economic situation in Nigeria (Daily Trust, 2024)

Despite these policies, the Nigerian economy still suffers greatly, the Naira continues to depreciate, the inflation rate is still very high and there is a gross increase in the unemployment rates in Nigeria. It is therefore necessary to critical examine the economic downturn rate and proffer solutions to improving the economic situation in Nigeria (ThisDay, 2023).

Statement of the Study

The economic woes facing the nation of Nigeria is as a result of past administrations poor economic management framework, in previous administration, the Nigerian economy has been plagued with malpractices ranging from embellishments, corruption, political racketeering, and a total disregard for the plight of the common man (World Bank, 2023). Economic downturns often lead to significant declines in living standards, characterized by reduced purchasing power, job losses, and strained public services (World Bank, 2023).  In a study by Hoseni (2023) an economic downturn significantly erodes the standard of living. Rising prices for essentials like food, housing, and transportation outpace stagnant or declining wages, leaving individuals with less disposable income. Zaki & Samantha (2023) highlighted that job losses due to the hard time affecting organization thus retrenching their staffs has exacerbate financial strain on common man. The impact extends beyond finances, as reduced access to healthcare, education, and social services becomes a reality. This creates a vicious cycle where people are forced to make difficult choices, often sacrificing necessities for survival. Moreover, the psychological toll of economic hardship cannot be overstated. Increased stress, anxiety, and depression become prevalent as individuals struggle to cope with uncertainty and financial instability. This can lead to further deterioration in physical and mental health, creating a ripple effect throughout society.

The administration of President Tinubu has implemented policies and programs in an attempt to stabilize the economy, these policies and programs include; include monetary tightening measures by the Central Bank of Nigeria to control inflation, fiscal reforms to increasegovernment revenue, and social investment programs to support vulnerable populations. Critics argue that some measures, such as the removal of fuel subsidies, have had adverse short-term effects on the poor and middle class, exacerbating the economic hardship (Financial Times, 2023). It is by examining these problems which lead to Nigeria’s economic downturn critically, we would be able to come up with relevant solution to salvage the dwindling economy.

Objectives of the Study.

The primary objective of this study is to critical exam the Economic downturn under the Tinubu administration and the way forward.Other specific objectives include;

The factors contributing to the economic downturn in Nigeria under the Tinubu administration.

The measures implemented to mitigate the economic downturn in Nigeria under the Tinubu administration.

The effectiveness of the current administration in boosting the Nigerian economy under the Tinubu administration.

Relevant solutions necessary for improving the Nigerian economy under the Tinubu administration.

Research Questions.

What are the factors contributing to the economic downturn in Nigeria under the Tinubu administration?

What measures have been implemented to mitigate the economic downturn in Nigeria under the Tinubu administration?

How effective is the current administration in boosting the Nigerian economy under the Tinubu administration?

What are the relevant solutions necessary for improving the Nigerian economy under the Tinubu administration?

Research Hypothesis

H0: The measures implemented by the Tinubu administration in mitigating the economic downturn in Nigeria is not effective.

H1: The measures implemented by the Tinubu administration in mitigating the economic downturn in Nigeria is effective.

Significance of the Study

For the government, it provides crucial data to inform policies aimed at mitigating the negative effects of economic crises. By understanding the specific challenges faced by citizens, policymakers can design targeted interventions, such as social safety nets and economic diversification strategies. Businesses can leverage the study's findings to develop robust risk management plans, adapt to changing market conditions, and ensure business continuity during downturns.

Furthermore, the research benefits individuals and households by raising awareness about financial management and providing coping strategies for economic hardships. On a broader scale, the study contributes to knowledge advancement, informs policy recommendations, and ultimately contributes to improving the overall quality of life for Nigerians. By understanding the complex relationship between economic downturns and living standards, stakeholders can work collaboratively to build a more resilient and equitable society

The study will shed more light on the impact of economic downturn on the standard of living in Nigeria (evidence from the Tinubu administration), The result from this study will contributes immensely to the body of academic knowledge and serve as a reference for student and scholars who wishes to conduct further studies in related field.

Scope of the Study 

The study focuses on critically examining the economic downturn under the Tinubu administration and the way forward. Empirically, this study will examine the factors contributing to the economic downturn in Nigeria under the Tinubu administration, the measures implemented to mitigate the economic downturn in Nigeria under the Tinubu administration, the effectiveness of the current administration in boosting the Nigerian economy under the Tinubu administration, and the relevant solutions necessary for improving the Nigerian economy under the Tinubu administration.

This study will be carried out in Nigeria.

Limitation of the Study

The study may not be carried out for an extensive period of time to critically examine the economic downturn under the Tinubu administration and the way forward. The sample size is also limited to the current administration which may not reflect the overall role past administration has played in the current economic downturn facing Nigeria.

The study relies of self-reported data, which is subject to biases, errors and inaccuracies.

Definition of Terms

Economic downturn:  An economic downturn is a period of slowed economic activity marked by declining GDP, reduced global demand, sluggish job growth, increased borrowing costs, and reduced credit availability.

Inflation: It is a situation of rising prices in the economy.

Administration: Administration in government refers to the management of a government or large institution. In American usage, the term generally refers to the executive branch under a specific president or the term of a particular executive. It can also refer to the period when a President is in office. Administration can also refer to the people who are in government.