THE CAUSES AND EFFECTS OF ECONOMIC MELTDOWN ON THE NIGERIAN ECONOMY
The cardinal focus of this study were the Causes, Effects of Economic Meltdown and Possible Suggestions for the improvement of economic growth and development of Nigerian economy. Three research questions were formulated for the study. A structural questionnaire was administered to 200 bank staff and 10 managers for data collection. Frequency tables mean and percentage statistics were the tools used for analysis the study revealed many causes and effects of economic meltdown in the nation’s economy with recommendations, thus:
1. Training and retraining on information and technological appliances should be undertaken.
2. The provision and adequate supply of manpower resources thus will help in the development and facilitation of the activities in Nigerian economy.
3. There should be reduction in the rate of birth in Nigeria.
4. There should be a sustainable political and economic stability in the country.
Background of the Study
Economic challenges may have different meanings to different people. For our collective purpose, let us take the liberty to define economic challenges as those unpleasant factors which have negative effects on the economic betterment of the individual person. Such factors that readily come to the mind in today’s Nigeria include: unemployment, inflation, loss of income, insufficient food provision, inadequate clothing and dilapidated shelter.
However, if we look out a little into the wider society, we find additional factors, which pose serious economic challenges to the welfare of the society as a whole. These include non-functional healthcare system, inadequate funding of the education sector, poor sanitation, and bad drainage, absence of public convenience, highway potholes and erosion gullies.
Moreover, the rising prices of currently produced good and services are now factors in the market because total production has become grossly inadequate. Factors of production are said to include: labour, land, capital and management. For total output to be more adequate, labour and capital must be combined in a productive ratio. It follows that now that we are experiencing large scale unemployment and automatic cut back the level of investment has occurred in the economy. Managers have adopted an attitude of wait and see before risking their capital into future and it is this same attitude of “wait-and-see” that aggravates the already existing inability of the economy to produce more adequately. Thus, raw materials lie waste and land previously “earmarked” for certain kinds of production cannot be easily used. Reflect that each day wives or housekeepers return from the market, they go through their budget against their sloping bag to check if they have lost some money.
According to Momoh (2009), in Nigeria there are 8,000 law makers at the local council level and that these law markers “earn about N316 billion in allowance per annum”. What about the National Assembly? These are public officers of about 17500 in number (less than 2% of the national population) of our national budget each year in the absence of satisfactory production level, where do our leaders spend these huge sum of money? Of course, they spend their money on foreign goods to maintain a high consumption profile at home. The truth is that they have had to pay more money for the same item than before or come home with less quantity of it. A total statement has set in and such jargons as recession, depression and lately “meltdown” have been deployed to more fully describe the extent and the nature of our existing state of poverty.
According to His Excellency, Goodluck Jonathan as reviewed by Udeme (2010), the most profitable ways of achieving growth and development in Nigerian economy is by embarking on economic reform which should center mostly in the energy sector and infrastructural development.
Statement of the problem
The task of achieving economic recovery and sustainable growth is rather daunting as Nigeria appears to be sucked into the vertex of interlocking vicious circles, which have interacted to keep it in a low growth equilibrium trap. The progress of Nigeria’s economic direction may be made in the content of the prevailing situation including the global economic environment, as well as the current policy thrust of the government intended to address the various products of the economy.
Obviously, growth outcomes would depend on initial conditions, the policy stance and its implementation and the interplay of various stake holders forces. To form a meaningful view of the prospects for development in Nigeria over the next few years, a question may be
Asked thus: is economic development in Nigeria an impossible task? Put more specifically, what are the prospective for achieving much higher GDP growth rate of 7-10% per annum, massive employment over the next 10 years, which will be needed to reverse the poverty trend and to cope with rising population? These problems have been instructional to the low productivity that characterize the activities of the Nigerian economy and these of course are the major factors that motivated the selection of the topic of study by the researchers.
Purpose of the Study
The main purposes of this study were to determine the causes and effects of economic meltdown and advance the ways for the growth and development of the Nigerian economy. Specifically the study was undertaken:
1. To determine the major causes of economic meltdown in the nation’s economic sector.
2. To determine the effects of the economic meltdown to economic growth and development.
3. To determine the way forward to achieve economic recovery and sustained qualitative growth in the nation’s economy.
Significance of the Study
The finding of this study should be beneficial to both students and teachers of economics and subsequent researchers who might be interested in this and other related areas of this study.
The study is knowledge enriched and therefore would be of immense
help to the present and prospective economic policy makers in the Nigeria, economic system/sector especially in the area of economic planning, growth and development.
It will also be of immense help to the government. This is because the type of economic system by a country can be determined by the ruling government of such nation.
Potential students and professors economics in and within our institution of higher leaning will be prepared academically, politically, socially, economically and professionally to face the economic challenges to ensure quality production equitable distribution and the consumption of goods and services by the Nigeria’s citizens.
The following research questions were answered:
1. What are the major causes of economic meltdown in the nations economy?
2. What are the major effects of economic meltdown in Nigerian economy?
3. What are the possible strategies for improving the economic status, growth and development of the Nation?
Delimitation of the Study
The study was strictly carried out to determine the causes and effects of economic meltdown to the Nigerian economy.
The researchers focused on banking sector such as the central Bank of Nigeria (Enugu Branch) and Union Bank (Okpara Avenue Branch) etc for them to help in finding of the meanings of the economic meltdown in Nigeria economy, major causes, effects and possible strategies to it.
The research was delimited to some factor such as:
Finding out the major causes of the economic meltdown in Nations economy sector; the effects to economic growth and development; and the way forward to achieving economic recovery and sustained qualitative growth in the nation’s economy. The researcher used the banking sector because they have more knowledge of the economic, situation at hand which would contribute positively the findings.
Limitation of the Study
The researchers were confronted with a number of obstacles during the course of this study. Some of this obstacle included:
a) Financial constraints and time as the greatest limiting factors to this study especially time. This can be seen in the case of the respondents when we find it difficult to achieve our purpose because of accumulated works in the their offices.
b) Problem of getting accurate statistical data. It was difficult for the researchers to get dependent and accurate statistical data since them were of different level and categories in position of office and authority.
c) Some of the respondents who were made up of Bank staff top officers and managers from the central Bank of Nigeria (CBN) Garden Avenue, Enugu bluntly refused to fill our questionnaire or answer basic questions posed on them. Some of them had reservation and maintained that they were not in the best position to respond when actually they were.
Definitions of Terms
a.)Economic meltdown: is a downturn in a nation economic activity.
b.)Economic planning: Economic planning is the allocation of resources by the government in such away that growth is smooth as rapid as possible leading to an overall improvement in the standard living of the people.
c.)Devaluation: Devaluation is the fall in value or lowering of the exchange rate between a country currency and other nation’s currency.
d.)Inflation: Inflation refers to a state of economic affair in which too much money constantly chases too few currently produced goals and services in a country.
e.)Unemployment: Unemployment means the existence in our economy of a large number of able bodied men and woman who are seeking for jobs but are unable to find any.