AN EVALUATION OF THE IMPACT OF ECONOMIC STAGNATION ON THE SURVIVAL OF POOR SOCIOECONOMIC HOUSEHOLDS IN KADUNA STATE

CHAPTER ONE

INTRODUCTION

Background of the Study

Nigeria, which is Africa’s most populous country and largest economy has faces numerous economic challenges as a result of its dependence in the exploration and exportation of crude oil, making it a mono-economy. Despite efforts to diversify the economy, progress has been slow, and non-oil sectors have not developed sufficiently to buffer against external shocks (OECD, 2023). This economic downturn has led to low economic growth, widespread unemployment, and high inflation rate (World Bank, 2022). 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).

Economic stagnation is a term used to describe a long period of weak or minimal economic growth, typically accompanied by high levels of unemployment and stagnant earnings. It is distinct from a recession in that it entails a prolonged period of limited growth, which may not necessarily involve a decrease in economic activity but leads to a lack of economic vitality. During times of economic stagnation, the rates of growth in Gross Domestic Product (GDP) remain at a consistently low or stagnant level for a prolonged duration. However, the stagnation  arises from various sources, including structural problems within the economy, such as obsolete infrastructure, ineffective regulatory frameworks, and a dearth of innovation.  Moreover, exogenous factors such as global financial crises, political instability, and pandemics can worsen stagnation by interrupting economic activities and diminishing investor confidence (Kayode, 2019). Unemployment is a significant aspect of economic stagnation. Businesses frequently exhibit reluctance to hire owing to unclear economic outlook, resulting in high and persistent unemployment rates. This hesitancy creates a harmful loop in which decreased consumer expenditure continues to suppress economic expansion, leading to a decrease in job prospects (Adebamowo, 2021). Long-term unemployment often results in a decline in skills, which further hinders persons from finding jobs, thus continuing the state of stagnation. Wage stagnation is strongly linked to economic stagnation. During periods of stagnant economic growth, salaries tend to remain stagnant, failing to keep pace with inflation. The lack of growth in wages diminishes the ability of consumers to buy goods and services, resulting in a decrease in demand (Mishel, Bivens, Gould, & Shierholz, 2022). As a result, businesses see a decrease in their earnings, which subsequently hinders their capacity to make investments and grow. This, in turn, adds to the overall state of economic stagnation. The increasing disparity in wealth distribution can lead to societal turmoil and political instability, as marginalized communities advocate for fairer economic measures and increased government involvement to foster economic growth and enhance quality of life.

According to the OECD (2020), implementing structural changes that focus on increasing market efficiency, expanding flexibility in the labour market, and promoting innovation is essential in tackling the underlying reasons for stagnation. In addition, central banks may utilise non-traditional monetary measures, such as quantitative easing, to enhance liquidity and stimulate lending and investment (Bernanke, 2019). Therefore, a survey will be conducted in order to evaluate the impact of economic stagnation on the survival of poor socioeconomic households in Kaduna state.

Statement of the Problem

The economic stagnation in Nigeria, specifically Kaduna State has a complex and deeply rooted influence on households with inadequate socioeconomic status. Aaccording to Food and Agriculture Organisation (FAO, 2021), a considerable proportion of the population in Kaduna State lacks access to sufficient food, and it is mostly the impoverished households who are most affected by this critical situation. Oluwatayo (2008) asserts that the field of education is significantly affected by economic stagnation. Impoverished households frequently give higher importance to immediate survival rather than long-term investments, such as education.However, the absence of education sustains the cycle of poverty, as persons lacking education have limited employment prospects and reduced earning capacity (Teshome, 2018).

Furthermore, poor socio-economic households in Kaduna State encounter multiple obstacles when it comes to obtaining high-quality healthcare, such as exorbitant expenses, long distances to health facilities, and insufficient healthcare infrastructure. The National Demographic and Health Survey (NDHS, 2018) revealed that maternal and child health indices in Kaduna State are significantly subpar, characterized by elevated levels of maternal mortality and children diseases. 

On the other hand, economic stagnation results in a rise in both unemployment and underemployment. Due to a scarcity of employment options, a significant number of individuals, especially young people, are unemployed or involved in low-wage, unregulated sector occupations. This not only curtails their capacity to earn income but also heightens the probability of involvement in illicit activities or recruitment by extremist organizations, which are widespread in the area (World Bank, 2019). The absence of economic opportunities thus perpetuates a destructive circle of poverty, instability, and underdevelopment. In addition, Fatukasi (2022) emphasized that a substantial rise in inflation rates can lead to notable economic disparities, such as a shortfall in the balance of payments, depreciation of the domestic currency, and a decline in the buying power of the working class. As a result, this frequently results in labour union protests advocating for increased salaries. The frequent strikes by workers in Nigeria have a deleterious impact on the economy, as they result in decreased productivity and the immobilization of services, particularly in the educational and health sectors (Abbasov & Karimov, 2020). If the health and educational sectors repeatedly fail to operate effectively, the function of human capital will suffer setbacks, ultimately hindering the pace of economic development in the country.

Bizarrely, insufficient social safety nets and government aid programmes sometimes fail to adequately address the needs of impoverished households during periods of economic stagnation. The efficiency of these programmes is limited due to budget limits and mishandling of resources. As a result, numerous households depend on informal support networks, such as extended family and community groups, in order to sustain themselves (Nigerian Bureau of Statistics, 2019). Nevertheless, these networks are also burdened by prevalent economic adversity, diminishing their ability to offer substantial aid. Hence, it is in the light of these that the study seeks to evaluate the impact of economic stagnation on the survival of poor socioeconomic households in Kaduna state.

 1.3 Objectives of the Study

The main purpose of this study is to evaluate the impact of economic stagnation on the survival of poor socioeconomic households in Kaduna state. Specifically, the study will;

1.Determine the extent to which economic stagnation has affected households in Kaduna state.

2. Determine whether economic stagnation has an impact on access to basic infrastructures in Kaduna state.

3. Determine the factors contributing to economic stagnation among households in Kaduna state.

1.4 Research Questions

The following questions have been prepared for the study:

To what extent has economic stagnation affected households in Kaduna State?

Does economic stagnation impact access to basic infrastructures in Kaduna State?

What factors contribute to economic stagnation among households in Kaduna State?

1.5 Research Hypotheses

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

Ha1: Economic stagnation has significant effect on Nigerian citizens.

1.6 Significance of the Study

The study findings will assist the government in addressing the underlying causes of economic stagnation and work towards creating a more inclusive and prosperous economy. NGOs and social activists will be able to advocate for policies that protect vulnerable populations from the adverse effects of inflation. 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 impact of economic stagnation on the survival of poor socioeconomic households in Kaduna state.

1.7 Scope of the study   

The scope of this study is boarded on the impact of economic stagnation on the survival of poor socioeconomic households in Kaduna state. Empirically, the study will determine the extent to which economic stagnation has affected households, whether economic stagnation has an impact on access to basic infrastructures and the factors contributing to economic stagnation among households.

Geographically, the study will be delimited to residents of Kaduna 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.

Socioeconomic: refers to the combination of social and economic factors. It encompasses the way in which an individual's social status (including education, occupation, and income) and economic conditions influence their overall quality of life and opportunities.