AN ASSESSMENT OF THE FACTORS ASSOCIATED WITH ECONOMIC STAGNATION EXPERIENCE OF NIGERIA

CHAPTER ONE

INTRODUCTION

Background of the Study

Nigeria's significant dependence on oil exports is a major issue that contributes to its economic stagnation. Following the identification of oil reserves in the 1950s, Nigeria's economy has progressively relied more on oil profits, which constitute a substantial share of government income and foreign exchange earnings. The reliance on this factor has rendered the economy exceedingly susceptible to swings in global oil prices. The oil price fall that occurred from 2014 to 2016 had a significant impact on Nigeria, resulting in a recession in 2016 (Adeniran & Sidiq, 2018). However, the absence of diversification in the economy has impeded the progress of other sectors, such as agriculture and manufacturing, which are crucial for achieving sustainable growth (Ajakaiye & Ncube, 2019).

Nigeria's economic stagnation has been significantly influenced by political instability and governance concerns. The nation has a record of military coups, political turmoil, and ethnic clashes, which have interrupted economic operations and discouraged international investment. For instance, the Boko Haram insurgency in the north eastern region has not only resulted in humanitarian problems but has also had adverse effects on economic activity through the displacement of communities and the destruction of infrastructure (Oladapo, 2016). Furthermore, the presence of corruption and inadequate governance has eroded public confidence and impeded the successful execution of economic programmes (Amaefule & Umeaka, 2020). Poor governance of public funds and resources has resulted in inefficiencies and hindered economic growth.

Nigeria's economic stagnation is significantly influenced by insufficient infrastructure. Although Nigeria is one of the greatest economies in Africa, its infrastructure is still underdeveloped, particularly in the areas of transportation, energy, and telecommunications, where there are significant deficiencies. Likewise, inadequate infrastructure has escalated the expenses associated with conducting business and has constrained the country's capacity to allure and maintain investment. Ayodele & Alabi (2018) asserts that the industrial productivity and competitiveness have been negatively impacted by the frequent power outages and unstable electricity supply. Insufficient transit networks have hindered the smooth flow of goods and services, therefore limiting economic activities.

Additionally, Nigeria's economic stagnation influenced by external economic shocks, including volatility in global commodity prices and shifts in international trade policies. Due to its status as a prominent oil exporter, Nigeria is extremely vulnerable to fluctuations in global oil prices, which have a direct influence on government revenues and foreign exchange reserves. Furthermore, alterations in global trade policies, such as the implementation of higher tariffs and trade limitations, have an impact on Nigeria's capacity to compete in exporting and its overall economic stability (IMF, 2017). However, in order to cope with external shocks, Nigeria must enhance its ability to withstand them by diversifying its economy and bolstering its domestic economic policies, given the interdependence of the global economy (Ikhide and Alawode,2022).

Furthermore, the economic stagnation's negative effects have resulted in a decline in people's quality of life and standard of living as well as a rise in the poverty rate (Benjamin, 2017). Benjamin further looked into and evaluated the primary causes of Nigeria's present economic downturn in his research. According to his study's conclusions, there are three primary variables that can be used to group the primary reasons of the economic recession that emerged in Nigeria: three factors: political/security, policy, and legacy. Among other things, the paper suggested that as a means of escaping the recessionary phase, the government should effectively intervene through the synchronisation of monetary and fiscal policy measures in order to increase the economy's liquidity, lower interest rates, boost employment and investment, raise the income of economic entities, and ultimately increase aggregate demand. 

Additionally, Dickson and Ezirim (2017) believed that the Nigerian State, which had seen uninterrupted expansion at previously unheard-of levels for the previous 25 years, had fallen victim to an extraordinarily huge and vicious stagnation. However, efforts at economic change have been impeded by the numerous issues the Nigerian economy continues to face. First, the economy still hasn't undergone the fundamental adjustments needed to spur rapid and long-term growth and development. Apart from a narrow and disjointed productive base, the economy's sectoral links are weak. The nation's output is dominated by primary production, which includes mining, quarrying, and oil and gas extraction. In contrast, the manufacturing sector contributes very little to GDP, growth, foreign exchange profits, government revenues, or the creation of jobs. 

Beyond that, the economy also faces enormous obstacles in the form of deteriorating and persistently non-functional infrastructure. The nation's deteriorating infrastructure is a result of decades of inadequate upkeep and a shaky technological foundation. Similarly, the lack of R&D activities and the gap between research discoveries and industry are the causes of the inadequate technical foundation. Likewise, the private sector responds poorly to industrial incentives and is thus dispersed and weak (Joseph, 2019). 

Despite the economy growing at a decent rate—more than 6.5 percent annually on average between 2006 and 2010—neither employment nor poverty decreased as a result of this expansion. Furthermore, the growth rates of the non-oil output continue to be inadequate. In parallel, the Nigerian economy has gradually gotten less competitive to the point where it is now among the least competitive in Africa. The economy has additional difficulties due to the limited base of government revenue and the nearly homogenous nature of exports. Lastly, the global financial crisis that swept the globe in 2008–2009 and the COVID-19 pandemic added even more challenges to the management of the Nigerian economy by having a negative influence on macroeconomic aggregates in the country. 

The degree of progress the Nigerian economy makes in the upcoming year will be largely determined by how successfully the aforementioned challenges are addressed, particularly the decreased government revenue, foreign exchange earnings, and depletion of external reserves resulting from the decline in crude oil fortunes in the global oil market. Therefore, a survey will be conducted in order to assess the factors associated with economic stagnation experience of Nigeria.

Statement of the Problem

The current economic crisis Nigerians are going through is taking its toll on almost every sector of the economy. Both the rich and the poor are adversely affected by the economic stagnation. According to Famakinwa (2018), mismanagement of funds by the previous administration was one of the main reasons for the recent economic stagnation in the nation. Additionally, the money from excess crude oil was distributed to a small class of citizens rather than being invested. Thus, it is abundantly evident that the country's current economic recession was mostly caused by the previous administration's mishandling of cash.  But if this cash had been set aside for a rainy day, Nigeria wouldn't even be aware of an economic crisis. Furthermore, research from all around the country shows that the state of the economy is deteriorating daily as the cost of food and other necessities has skyrocketed to alarming levels. Food prices have skyrocketed, with vegetable oil prices rising 100%, and cement going from N2600 to N7000. These are just a few examples of the many commodities whose prices have doubled with declining quantity and quality. 

Nevertheless, the current economic stagnation has resulted in widespread extreme poverty and misery; children's rights to a good education and access to inexpensive, comprehensive healthcare are violated, and the cost of living has skyrocketed for both the core poor and the middle class (Kamar, 2019). Additionally, as living conditions worsen and more people (the poor) find life more difficult, crime rates have increased. This has led to an increase in kidnappings, robberies, petty theft, human trafficking, and other financial crimes as well as fraudulent Ponzi schemes which have made matters worse for some Nigerians who are trying to escape the economic stagnation's financial hardship. 

Nearly 85% of Nigerians have not met their fundamental necessities. Poor aggregate infrastructure, an epileptic power supply, a scarcity of portable water, and expensive transit are all present. As oil revenue continues to decline, social indices are rapidly falling (Agri, Maliafia, and Umejiaku, 2017). Hence, it is in the light of these that the study seeks to assess the factors associated with economic stagnation experience of Nigeria.

 1.3  Objectives of the Study

The main purpose of this study is to assess the factors associated with economic stagnation experience of Nigeria.  Specifically, the study will;

Find out whether economic stagnation have a significant influence on the workforce productivity  in Nigeria.

Find out the factors influencing economic stagnation in Nigeria.

Find out the impact of economic stagnation on the livelihood of Nigeria citizens .

1.4  Research Questions

The following questions have been prepared for the study:

Does economic stagnation have a significant influence on workforce productivity in Nigeria?

What are the factors influencing economic stagnation in Nigeria?

What is the impact of economic stagnation on the livelihood of Nigerian citizens?

1.5 Research Hypotheses

The following hypotheses will evaluate this study;

H0: There are no significant factors associated with economic stagnation in Nigeria.

Ha1: There are significant factors associated with economic stagnation in Nigeria.

1.6 Significance of the Study

The study results will help the government in tackling the root causes of economic stagnation and striving to establish a more inclusive and prosperous economy. Non-governmental organisations (NGOs) and social activists will have the ability to promote policies that safeguard vulnerable communities from the detrimental consequences. Additionally, 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 factors associated with economic stagnation experience of Nigeria.

1.7 Scope of the study   

The scope of this study is boarded on the factors associated with economic stagnation experience of Nigeria. Geographically, the study will be delimited to residents of Enugu 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.

Recession: A recession is a significant decline in economic activity that lasts for an extended period, typically recognized as two consecutive quarters of negative Gross Domestic Product (GDP) growth.

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