Strategies of reducing the effect economic recession in Nigeria

literature review

Strategies of reducing the effect of economic recession in Nigeria on low income earners in Nigeria a case study of Ebonyi state will focus on providing practical strategies to reduce the effect of economic recession those families that fall within the purview of low income index.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The word economic recession has become a household name in Nigeria since June, 2016. Ever since the Central Bank of Nigeria (CBN) and minister of finance admitted that Nigeria is experiencing economic recession on 3rd of June, 2016, it has become the major concern of all Nigerians (Noko, 2016).  Economic recession according to National Bureau of Economic Research (NBER) (2015) is “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in a real gross domestic product (GDP), real income, employment, industrial production and wholesale-retail sales.”  Economic Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble (Wikipedia, 2011).

Still on Strategies of reducing the effect of economic recession in Nigeria on low income earners.

Economic recession can also be defined as a negative real Gross Domestic Product growth rate lasting for more than two consecutive quarters (first and second quarters) (Noko, 2016). He noted that there’s a drop in the following five economic indicators: real GDP, income, employment, manufacturing, and retail sales. Noko (2016) argued that recession cannot only be determined by negative real GDP growth rate since a recession can quietly begin before the quarterly Real GDP is out.

Udeh (2011) sees recession from the angle of persistent inflation when he noted that, recession is a generalized increase in the level of price sustained over a long period in an economy, that is, a persistent rise in the price levels of commodities and services, leading to a fall in the currency’s purchasing power. In the context of Nigeria, Recession has been attributed to many factors, Noko (2016) argued that Nigeria current recession is caused by poor economic policy, fall in oil output due to activities of the Niger – Delta militants and subsequent fall in oil price, others include over dependence on oil export, inflation due to ban on some basic foods like rise, and infrastructural decay in the country.

Still on Strategies of reducing the effect of recession on low income earners in Nigeria.

It is worthy of note that during the period of economic recessions inflation worsen, unemployment will by skyrocketing – people being displaced out of their job as companies tries to minimize their expenses, naira exchange rate worsen, government and the households curtails their expenses due to low purchasing power, fall in aggregate demand, reduction in social well-being of the general masses – a state of general economic downturn.

Nwuzor (2016) noted that during the period of economic recession, economic hardship knows no limits and boundaries, it affects livelihood of everybody in one-way or the other, and this naturally gives impetus to survival strategies as people work harder and more effective to tackle the new economic situation. Families with little or no investment to resist the effect of recession are most likely to be hit severely – but there are ways this unfortunate condition could be managed. Because reduced income during period of economic recession leads to reduced employment, health care, and social amenities that often leads to general reduction in well-being (Noko, 2016).

Because during economic recession there is slow in economics activities, poor circular flow of money resulting to low earnings by the households. This ultimately reduce their social and economic well-being especially the low income households and as such often led the low income households to starts looking for alternatives sources of income to support their families towards improving their well-being (Nwuzor, 2016).

Low income households is generally referred as those families whose annual income is not sufficient enough to provide the basic family needs of clothing, shelters,  health care and food. The Nigerian National Housing Policy (FGN, 2014) sees low-income group as all employees and self-employed persons whose annual income is N216,000 and below (i.e. the equivalent of salary grade level of 01-18 within the Nigeria civil service). It should be noted that the minimum wage in Nigeria is pegged at N18,000 monthly making the sum of  N216,000 annually. Unfortunately, over 70% of Nigeria population fall within this category of earnings. In order words over 70% of Nigerians falls below the poverty line of $1.5 per day as recommended by the United Nation.

Arguably, the low income households feels the major impacts of economic recession.  One of the most damaging impacts of recession is unemployment, rise in the price of all commodities and financial insecurity. The high inflation rate, unemployment rate, and slow in economics activities often leads to economic instability in the country leading to general reduction in the well-being of the low income households especially in developing states like Ebonyi state.

Still on Strategies of reducing the effect of economic recession in Nigeria on low income earners.

The poor state of Nigeria education especially in the early child education setting was further deteriorated by the current economic recession in the country. The incidence of low education enrollment, high primary school drop-out increased drastically from 5million in 2004 to 9.2 million in 2012 but skyrocketed to 13million in September, 2016 (UNESCO, 2017).

The untold hardship experienced during the period of economic recessions especially the low-income households often lead the policy makers and the government to be constant search of the strategies of resolving the problem of economic recessions as well as strategies towards reducing the impacts of economic recession on the low income households.

Noko (2016a) states that, if the current recession in Nigeria will be solved, it is imperative for the government to invest more in the energy sector, engage the Niger-Delta militants in a dialogue, reduce the tax rate or regulate same to avoid double taxation, borrowing from both domestic and foreign should be invested more on infrastructure, funds should be sourced more from the domestic economy than the foreign investor to avoid the incidence of capital flight, the government should work with the legislative body to ensure speed execution of her project, commodity price and raw material price should be regulated through consumer protection agency, the government should keep price control for other petroleum product like PMS among others.

According to (Nwuzor, 2016) during the period of economic recession there is high job losses as most private sector try to curtail their expenses, and the low income earners are often the major hits. He argued that households who are effected by this scenario should look for alternatives sources of income like engaging in petty trading, engage in factory work pending when they get a better paid job. In reducing the suffering of the low income households he argued that government should provide more job opportunities to the low income earners to reduce pressure on the family.

Noko (2016b) in his work, “addressing the menace of economic recession on the household in Nigeria” suggest some strategies that can be employed to cushion the effect of recession on low income household in Nigeria. He suggest that government should:

  1. Reduce personal income tax especially on low income earners in the civil service and taxes on micro and small enterprises in Nigeria.
  • Increase the minimum wage salary from N18, 000 to at least N25, 000 monthly.
  • Regulate the price of basic goods in the market like Rice, tomatoes, palm oil, garri, among others through consumer protection agency to curtail the rise of inflation in the country.

According to Adegbite (2016) the effect of no source of income to meet basic family needs and obligation may cause frictions among families, which may lead to long lasting damaged family relationships. He argued that this particular incidence can be reduced by the families jointly pooling their resources together to meet their basic needs while cutting down their expenses in the face of the new economic realities.

This was collaborated by Kelvin (2012) when he states that extravagant expenses for entertainments, social activities are curtailed down during the period of economic recessions. He argued that although the poor families are the most hit during the period of economics recessions, he quickly argued that this low income earners should set priority for their expenses so as to align with their new earnings.

Still on Strategies of reducing the effect of economic recession in Nigeria on low income earners.

Aghirebe (2012) states that one way to fight poverty in Nigeria is to invest more in skills acquisition by the households. He argued that if everyone in the family have at least a skill the burden on the family will be reduced drastically. This led Noko (2016) to states that training the youths on skills acquisition in IT, agriculture, food processing among others can reduce the burden of recession on the families as it increases household competences and the funds available to the families.

In attempt to reduce the impact of recession on low income households in Anambra state the executive governor of the state develop some strategies to cushion the effect. The governor declared tax relief intervention for wheelbarrow pushers, hawkers permit and other low income earners (Vanguard, 2016). He argued that the intervention will be focused on four key areas – tax relief programmes, special intervention programmes for Small and Medium Enterprises (SMEs) and large enterprises and social intervention programme for low income households and finally, intervention in infrastructure-for-jobs.

Given the serious economic impediment that results from economic recessions on the economy in terms of poor economic growth and development, low purchasing power by the households, low standard of living of the poor families due to job losses and high inflation, poverty and whole lot of economic hardship in the family. This research work will focus on the strategies for reducing the impact of economics recessions on the low-income households in Ebonyi state. The choice of the low income household is based on the fact that low income households and the most vulnerable and feels the major effect of economic recession through, loss of jobs, high cost of living, low salary, reduction in their purchasing power and the general well-being. And if these pending issues are not tackled it could leads to serious agitation and destabilization of government policy among others.

1.2 Statement of the Problem

All economic indications have shown that economic conditions are going to be a lot tougher in the coming months. The level of economic uncertainties would gain momentum as recession shock spread across the nation. This is an indication that families and individuals need to brace up if they are to cope through this period. Hence the need to adopt the strategies that will be suggested in this research work.

Ebonyi state is a developing state with no industries, few of her population are in the middle class while the larger population fall under the categories of low income earners. If left unchecked, the crumbling effect of the economic recession could adversely affect the developmental strategies of the present administration. This is because many low income earning families in Abakaliki over time will no longer be able to meet their needs and at such resolve to crime and this could in turn scare prospective investors away. The number of secondary school dropouts has been on the increase over the last one year and will increase as many parents are no longer be able to fund their children education. There has also been an increase in the number of teenage pregnancy according to (Pius, 2017) leading to increase in mortality rate, vesico-vaginal fistula (VVF) cases and human papilloma virus (HPV) which leads to cervical cancer (Agwu, 2016)  and other leading pre- malignant lesions. The number of street hawkers has also increased especially around major area in the town such as Presco, Spera n’ Deo amongst others. The most worrisome part of this particular menace of hawking is that children under the age of ten are now included, thus, every member of the family has to contribute their own quota towards running the family. The number of beggars in the state along the popular Ogoja road has increased, with new begging location at Union Bank round about, the number of locations and beggars will tremendously increase as the day goes by if nothing is done. The presence of the beggars all around major part of the town is a great discouragement for prospective investors. This is because it is assumed that beggars are dirty and also have criminal tendencies. These and other consequences not mentioned above are some of the impact of the economic recession among the low income earners in Ebonyi state, soon the state will hit record as the worst hit state by the economic recession, which is not good a title for a developing state in need of investors.

Still on Strategies of reducing the effect of economic recession in Nigeria on low income earners.

This research work will therefore focus on the strategies for reducing the impact of the economic recession among low income earning households. The choice of the low income household is based on the fact that low income earning household are the most vulnerable and feels the effect of the economic recession through loss of jobs, high cost of living, low salary, reduction in their purchasing power and the general well-being. And if these pending issues are not tackled it could leads to serious agitation and destabilization of government policy among others.

1.3 Purpose of the Study

The main purpose of this study is to identify strategies for the reduction of the effect of economic recession on low income households in Ebonyi State. Specifically the study tends to:

  1. Identifying the use of home gardening as means of alleviating the effect economic recession on low income households in Ebonyi State.
  2. To ascertain the use of government social incentives as means reducing the effect of economic recession in Ebonyi state.
  3. To determine the role of proper meal planning in curtailing the effect of economic recession in Ebonyi state.
  4. To determine the use of skill acquisition program like fashion & Designing, Cosmetology, Bag/shoe making, Hair dressing, catering services and  bead making in reducing the impact of economic recession among low income households in Ebonyi state.

1.4 Significant of the Study

Still on Strategies of reducing the effect of economic recession in Nigeria on low income earners.

The importance of the finding of this study cannot be overemphasized. This study will be important as it will explore the strategies for reducing and cushioning the effect of economic recession on the household in Ebonyi state and Nigeria as whole. It will benefit:

  1. Government and policy makers: Government and all policy makers would find this study useful especially in area of policy formulation in developing social welfare policies to address the high poverty level in Ebonyi state especially among rural dwellers.
  2. Low income households: It will explore the best strategies to cope with the impact of economic recession like home gardening, proper meal planning, skills acquisition, taking up low paid jobs among others.
  3. NGO’s: The non-governmental bodies will find the piece relevant in responding to humanities as they will know the area to focus their attention during the period of economic downturn.
  4. Students and teachers of home economics: This study will be useful to all students and teachers of home economics and others who wish to carry on a study on the same subject matters to have a background knowledge of the situation. In fact the study will be useful to the general public in solving the problem of economic recession and also coping with economic recession in the country.

1.5 Scope of the Study

This research work on strategies for reducing the effect of recession on low income households in Ebonyi state will focus on providing practical strategies to reduce the effect of economic recession those families that fall within the purview of low income index. The research will also be limited to the resident of Ebonyi state urban and rural dwellers.

1.6 Research Questions

Four research questions are formulated to guide the study:

  1. How can home gardening be used as means of alleviating the effect economic recession on low income households in Ebonyi State?
  2. How can government social incentives be used as means reducing the effect of economic recession in Ebonyi state?
  3. What is role of proper meal planning in curtailing the effect of economic recession in Ebonyi state?
  4. What is the role of skill acquisition program like fashion & Designing, Cosmetology,  Bag/shoe making, Hair dressing, catering services and  bead making in reducing the impact of economic recession among low income households in Ebonyi state.

If you need other project click on Project materials.

To download the full project work

click here  

 

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Conceptual Framework

A recession is when the economy declines significantly for at least six months. That means there’s a drop in the following five economic indicators: real GDP, income, employment, manufacturing, and retail sales. People often say a recession is when the GDP growth rate is negative for two consecutive quarters or more. But a recession can quietly begin before the quarterly Gross Domestic Product reports are out.

Noko (2016) noted that the first sign of a recession is when there are several quarters of slowing but still positive growth. Often a quarter of negative growth will occur, followed by positive growth for several quarters, and then another quarter of negative growth. For instance, Nigeria fourth quarter for 2016 is 0.8% growth rate this is still an indication of recession. The country cannot say it have conquered recession because of the positive value.

Udeh (2011) sees recession from the angle of persistent inflation when he noted that, recession is a generalized increase in the level of price sustained over a long period in an economy, that is, a persistent rise in the price levels of commodities and services, leading to a fall in the currency’s purchasing power. A fall-off in consumer demand is normally the culprit behind slowing growth. As sales drop off, businesses stop expanding. Soon afterward they stop hiring new workers. By this time, the recession is usually underway. A recession is destructive as it causes most families to lose their family members who commit suicide (Nweze, 2015). It creates wide-spread unemployment, sometimes as high as 10% Nigeria unemployment rate stands at 38%. That’s when it affects most people. As the unemployment rate rises, consumer purchases fall off even more.

Low income households is generally referred as those families whose annual income is not sufficient enough to provide the basic family needs of clothing, shelters,  health care and food. The Nigerian National Housing Policy (FGN, 2014) sees low-income group as all employees and self-employed persons whose annual income is N216, 000 and below (i.e. the equivalent of salary grade level of 01-18 within the Nigeria civil service).

During the period of economic recession income inequality set in forcing the poor to become poorer and the rich to become richer. According to Jared (2001) during the period of recession unemployment increases, job insecurity increases and poverty escalate among the citizens. He demonstrated the disparity between the low, middle and high income earners during the period of recession as shown in the figure below.

The first bar in each time period represents the percentage-point change in the unemployment rate, which rises in a recession and falls during recoveries. The other bars in the figure represent the percent growth in income for low-, middle-, and high-income families (corresponding to the 20th, 50th, and 95th percentile in the income scale).

As unemployment increased in the recessions that occurred in the early 1980s and 1990s, real income fell most quickly for the lowest-earners. Note also that over the recovery of the 1980s, low-income families gained less than middle- or high-income families (giving rise to the sharp increase in income inequality over these periods).

If history is any indication, the onset of the current recession will certainly lead to lower incomes for those at the bottom and middle of the income scale. Relative to the wealthy, these families are most vulnerable to swings in the market economy. Helping the low income families with some social investment packages, free transportation, free education among others that will increase their living standards should be a focus of the economic stimulus package (Nwuzor, 2017).

Fendlin (2013) argued that during recessions, people sell their houses, cars and other properties to take care of their families, most children drop from school during the period of recession. Young people can’t get a good job after graduation thereby increasing youth unemployment in the country. Even if the recession is short lived (nine months), its impact can be long-lasting sometimes its impact last for three to five years on the low income household in the society.

A recent study conducted by Lagos Business School (LBS, 2016) revealed that the greatest hit during economic recession is the poor and middle income families and argued that government should rather increase budget on social incentives to assist the low income families rather than reducing salaries or delay in salary payment. Sanusi (2016) argued that during the period of economic recession government should increase investment in agriculture sector to ensure food security and as well increase expenditure on education in order to subsidize the fees paid by the household. This measure according to him can reduce the effect of recession on the low income households.

History of Economic Recession

One of the most severe recessions was the Great Depression which started in 1929 in the USA with the collapse of the USA stock market prices. It quickly spread over the world because the USA invested and loaned substantial amounts of money to Europe to recover from World War I. Although the Great Depression started in the USA, Australia, Canada and Germany were the countries which were most severely affected by this crisis. Recovery started in most countries in 1933 although they did not fully recover until the beginning of World War II, when governments increased their spending to produce war materials.

In 1945, recession lasted for only eight months where GDP continued to fall until it reached -10.6% in 1946. This was a natural result of the demobilization from world war II, as the huge demand for military weapons were no longer needed. Government spending dropped, although business spending was robust. (Source: NBER, Business Cycle Expansions and Contractions)

In 1949 an 11-month recession began in November 1948 and lasted until October 1949, when unemployment reached a peak of 7.9%.  It was a mild adjustment as the economy continued adjusting to peace-time production.

Another recession which had a great impact world-wide was the 1973 oil crisis. As a response to the re-supply of the Israeli military by the USA during the Yom Kippur war, the Organization of the Petroleum Exporting countries (OPEC) brought an oil embargo into force. As a consequence the price of oil increased by 395%. This price increase of crude oil had a negative impact on industrial production. In March 1974 the embargo was lifted and the recovery began.

In 2004 Nigeria experience recession for two quarter when the economy witnessed contraction in its real Gross domestic product. It was not until 2008 when the global economic crisis hit every country in the whole world. Between 2008-2009 aggregate demand fall down relative to 2007. The financial crisis of 2007 hit the financial institution and the stock market mostly. Adegbite (2016) noted that during the financial crisis of 2008-09 Nigeria recorded over 20 cases of suicide from individuals who lost their saving from the stock market.

In response to the impending recession during this period, government establish a number of programme to ameliorate the impact of the economic recession on the household. Noko (2016) argued that 2008-09 recession didn’t last much because government took appropriate measure of spending in strategic areas – agriculture, education, health care among others. The current economic recession in Nigeria has been attributed to many factors. While some argued that recession was caused by fall in oil price and oil production (Nwuzo, 2016) while others argued that Nigeria recent recession was caused by policy conflict, poor economic planning, corruption fight among others.

Causes of Current Economic recession in Nigeria

Policy actor and analyst has attributed the cause of the current economic recession in the country to so many factors depending on their own perspective and information available to them. The causes of economic recession in Nigeria is inter woven and dynamic in nature. The major causes of economic recession in Nigeria includes:

Poor economic Planning: Poor economic planning and no concrete implementation of her economic planning is the major cause of Nigeria current recession (Noko, 2016). He argued further that although the government has proclaimed his economic policy option of: Diversifying the economy, Improving manufacturing/mining sector, Raising agricultural output, Encouraging foreign investment, among others, yet no concrete evidenced strategic plan for growth was developed by the government.

Ogberon (2017) argued that, it is either government policy are not implemented or that the policy is sabotaged by the government adviser to their own selfish interest. No doubt, the government has taken some steps like the elimination of dollar purchase privileges for importers of 40 items such as – rice, cement, toothpicks, private planes, poultry, meats, margarine, wheelbarrows, textiles, and soaps but the implementation is not properly carried as it has escalated inflation in the country.

  1. High Inflation rate: Government banning the importation of certain essential agricultural products like Rice without considering gestation period combined with removal of fuel subsidy simultaneously escalated inflation in the country. The fall in naira value combined with the banning, and removal of subsidy caused the inflation in the country. Ogberon (2017) argued that government inability to regulate the activities of transporter, the declining nature of the exchange rate caused inflation to become worse causing lots of hardship and poverty especially in the low income households. A survey of some market product as compared between May 2015 when president Buhari took over power and May 2016 after one year in power revealed that household items went as high as 275% increase.
  2. High-Interest Rate: Sanusi (2016) believed that high interest rate between 26.77-27% discourages investor leading to low employment and slow in economic activities is the cause of the current economic recession. The poor investment culminate into high rate of unemployment in the country. The FDI crumbled by at least 6.5% between 2015 and 2016 which is an indication that the country has serious economic fall-out.
  3. High Taxation: The tax system in the country was not properly handled and conflicting. During the period of economic recession the tax system ought to be regulated and ensure the case of multiple taxation is reduced. Noko (2016) argued that small businesses are slaughtered with high interest rate. He suggested that government at all level should reduce tax rate at least by 10% and in some cases give tax holiday to small business owners to encourage the sustenance of the business and the family.
  4. Fall in oil price and Production

The fall in oil price and production contributed to decline in economic activities leading to economic recession in the country. The sharp fall of government revenue from oil by 39.6% from 2014 peak year and fall of oil price 56.3% from 2014 peak largely due to global oil market fluctuation and the activities of the Niger Delta has significant impact on the economy. Oil export contributes about 80% to Nigeria government revenue and a fall of the revenue by about 50% surely will have drastic effect on the economy of Nigeria.

The inability of the government to properly handle the Niger Delta crisis has further deteriorated the issue causing more hardship, hunger and poverty on low income households. Government at all level has resulted into cutting down people salaries, taxing them more, increasing school fees making life to become unbearable for most low income families. It is on the basis of the impending hardship ravaging Nigerians especially low income households that this research sought to examine some strategies to reduce impact of economic recession on low income households in Ebonyi state.

Strategies for Reducing the Effect of Recession on low Income Household in Ebonyi State.

Home Gardening: The problem of high cost of living resulting from high inflation, low purchasing power can readily be solved by the households especially in the urban areas embracing the practice and culture of home gardening in this period of recession. Home gardening contributes to nutrition and household food security by providing quick and direct access to different foods that can be harvested, prepared and eaten by family members daily thereby reducing their spending in household foods during this period of economic recession (Agwu, 2012). The low income household can practice home gardening in their backyard, with small pots, cans, homestead land, roadsides, and edges of field, vacant plots or in containers. Home gardening can be done with little or no money, by the use of locally available planting materials, green manures, life fencing or indigenous methods of pest control (UNDP, 2006).

During economic recession, home gardening should readily come to mind if one is to greatly reduce the impact of the recession. This is because home gardening helps families that practices it to spend less on purchasing foodstuffs from the market while maintaining a healthy and nutritious lifestyle. Agwu (2012) argued that the low income household in the urban region should learn from the rural dwellers survival techniques by adopting the strategy of home gardening to increase their food security, increase in their nutritional intake for healthy living and reduce their spending on foods. If the households adopt this strategies the impact of the current wave of economic recession will be reduce drastically on them instead of depending on government always to solve their problem. This is in collaboration to Noko (2016) statement that the period of economic recession should be seen as the period of improvisation for the households to cope with the menace.

The most fundamental social benefit of home gardens stems from their direct contributions to household food security by increasing availability, accessibility, and utilization of food products. Home gardens are maintained for easy access to fresh plant and animal food sources in both rural and urban locales. Food items from home gardens add substantially to the family energy and nutritive requirements on a continuous basis.  For low income families unable to afford expensive animal products to fulfill their nutritional needs, home gardens offer a cheap source of nutritive foods (Ali and Ahmed, 2008). Through gardening, households can have better access to a diversity of plant and animal food items that lead to an overall increase in dietary intake and boost the bioavailability and absorption of essential nutrients Talukder (2012).

As stated by Marsh (2008), home gardens provide easy day-to-day access to an assortment of fresh and nutritious foods for the household and accordingly those homes obtained more than 50% of the vegetables, fruits, tubers, and yams from their garden. Supporting this premise, different studies conclude that, while adding to the caloric quantity, home gardens supplement staple-based diet with a significant portion of proteins, vitamins, leading to an enriched and balanced diet particularly for growing children and mothers (Alvarez, 2009). Additionally, plants from the gardens – especially spices and herbs – are used as flavor enhancers, teas, and condiments prinz (2012) e.g, lemon grass. Recently, countries like Bangladesh have been successful in increasing the availability and consumption of vitamin A-rich food items through national home gardening programs (Talukder, 2012).

Food Security through proper meal planning: Food security has been described as an important aspect in any consideration of the sustainability of the wealth of a nation. This is in view of its role as a critical factor in economic development, peace and stability (Adegboye, 2004). Food is of high importance in matters of human wellbeing and economic productivity. Hence, the need for food security in Nigeria, like other parts of the world, has become a policy issue.

Adegboye (2004) stated that proper meal planning by the household will help in achieving food security in Nigeria. He argued that most household waste resources in foods purchases, some even waste the prepared meal including the low income household because of poor or lack of meal planning. To be food secure, sufficient resources are usually required to produce or purchase adequate food as well as proper meal planning by the households (FAO, 2005). Even though eating well is vital for a healthy and active life, many people in virtually all countries do not eat well because of improper meal planning and a lack of nutrition education. The impact of economic recession can be reduced on the household through education on the importance meal planning. Proper meal planning will save the household from irrelevant spending, irrelevant wastage and generally improve their overall well-being.

Free or Subsidized Health and Nutrition education services: Nutrition has a powerful influence on growth, development, and the productive life of every individual. Optimal nutrition at each stage of the lifecycle is therefore a fundamental human right with malnutrition being viewed as a denial of that right. Furthermore, nutrition is linked to most of, if not all, the Millennium Development Goals (MDGs) and the right to food, adequate nutrition, and healthcare are fundamental to every Nigerians.

As part of efforts to address the nutrition situation of Nigeria, a National Strategic Plan of Action for Nutrition (NSPAN) has been devised that builds on other strategic documents such as Vision 20:2020 and the National Strategic Health Development Plan (NSHDP) for 2009 to 2018. It is in view of comprehensively addressing these problems that the NSPAN has been formulated as a guide for action to implement the Health Sector component of the National Food and Nutrition Policy (NFNP). The design of the NSPAN was guided by the following principles:

  1. Lifecycle approach to nutrition that recognises the multifaceted and often changing nature of nutrition problems
  2. Community ownership and participation
  3. Evidence-based and cost-effective interventions
  4. Effective partnership and collaboration between various stakeholders within and outside the Health Sector
  5. Commitment to global, regional, and national goals relating to food and nutrition such as MDGs, the Scaling up Nutrition (SUN) initiative, and the African Regional Nutrition Strategy.

Health education will not increase the nutritional intake of the low income households but will also increase their ability to adopt home gardening as measure to increase their nutrition intake as well as measure of coping with current recession.

Also health care services may be provided free or at low cost by the government to low income households throughout Ebonyi state.  In addition to these direct services, development agencies may support the improvement of local commercial services, training traditional birth attendants to improve the quality of service offered or providing new teaching material for the schools.

Kelvin (2012) stated that development agencies should train community leaders to use existing municipal services more effectively and to work with those services to ensure improved access for low-income residents.  For example, government should provide free medical care to the children and women, scholarship should be given to the poor in the societies. Noko (2016) noted that during the period of economic recession the low income family income are reduced drastically such that they cannot afford some basic care facilities. In the light of his assertion it is worthy to state that health education can help in improving the health lifestyle of the poor during this period of economic hardship.

Training and Skills Acquisition Programmes.  According Development Education Centre (DEC, 2015) “Skilled person can survive in any environment.” As water is very essential to human life, so is skill training and acquisition needed in the life of every serious minded human being. Skills can do a lot of great work in the life of every living soul. Lack of entrepreneurial skills is one of major causes of corruption and unemployment in the country- a leading contributor to the current economic recession.

Training helps to increase the capacity of unskilled workers, thereby enabling them to earn higher wages, and helps micro-entrepreneurs to secure higher rates of return.  Many NGOs have provided training both for workers and for micro entrepreneurs. This collaborated with the suggestion of Noko (2016) that economic recession can only be overcome with investment in skills. Uwate (2001 cited in Adegbite, 2016) stated that investment in skill is the greatest investment as it leads to capacity development.

To reduce the effect of the current recession on low income households the youth should enroll for skill acquisition in computer literacy, fashion & Designing, Cosmetology, Catering & Hotel management, Bag/shoe making, Hair dressing, bead making among others which will increase their capacity development and ample opportunity to have more to spend during this period of economic recession.

The importance of Entrepreneurial skill development  in our society today cannot be over emphasized because gone are the days when jobs were available everywhere both in the private and public sectors of the economy and employers go about looking for potential graduates for employment. The question of choice of job or the type of employer the one would like is now a story after graduation is now thing of the old. White collar jobs are scarcely available. Hence many graduates are desperate to get any job to keep body and soul together. Indeed there is paradigm shift in the labour market (DEC, 2015).

Therefore, the need to acquire and develop specific entrepreneurial skills cannot be neglected because entrepreneurship is vital to creating employment and indeed a special form of employability for graduates. Empowerment helps individuals or groups to fully access personal/collective power through knowledge, skills and motivation for proper functioning in their society and ability to solve their own problem independently especially during the period of economic recession.

 

 

OTHER STRATEGIES INCLUDE:

Jobs and Employment:  During the period of economic recession there is high job losses and insecurity. According to Fendlin (2013) job loss affects the stability of low income households and individuals during recession. Our status, self-worth, health, and well-being is drastically impacted by the loss of a job. While many who lose their jobs use the time for growth and exploration, many suffer with depression, alcoholism, and denial.

Noko (2016) argued that the inability to find work can be frustrating, terrifying, and depressing, and can lead to even more problems. In response to this Fredline (2013) argued that the families instead of waiting for the perfect job should consider taking up part-time job, taking low paid job like teaching, engaging in petty trading and also engage in factory work pending when they get a better paid job. Adegbite (2016) argued that during recession government should increase investment in creating more jobs, salaries should be increased to take care of inflation.

In similar reaction, Noko (2016) noted that government should increase investment is skill acquisition for the youth to become employers of labour rather than being job seekers, the youth should be trained in agriculture and manufacturing industries. Solving the problem of unemployment will go a long way in reducing the effect of recession on the low income household.

One way the issue of unemployment can be solved in Nigeria is training and re-training of the youth in the acquisition of skills. Today, there are many unemployed graduates in the country. This is partly as a result of our long system of education that is more of grammar and not much practical learning.  It is evident that the highest number of unemployed is found in the African Continent. The truth remains that the major causes of the unemployment among these vibrant youths is lack of skill to back up what they learnt from their institutions of learning. When these graduates were still in school, they did not border to learn at least one single skill, maybe that which is related to graphic designing, typing, hair dressing, electrical maintenance and others (EDC, 2015 cited in Noko, 2016).

High cost of living: During the period of economic recession cost of living rises largely due to high inflation, low purchasing power, high unemployment and fall in aggregate demand. Earlier analysis revealed that basic food stuff price rose by 275% within 2015-2016 making so many goods unaffordable for the low income households. Palmer (2008) noted that during recession people adjust their life style in the area of spending going for lesser quantity, inferior quality, higher rationalization and economizing.

A survey by LBS (2016) revealed that the low income families started by cheap meat, less of fast food, women visit up to five shops before they can order for a product, and some family no longer eat three times a day.

In addressing this, Noko (2016) suggested that government should regulate the price of basic goods in the market like Rice, tomatoes, palm oil, garri, among others through consumer protection agency to curtail the rise of inflation in the country. He equally argued that the minimum wages should be increased from N18, 000 to N25, 000 monthly.

Reduction in Taxation: Many low-income household face a heavy state and local tax burden. In 2016 most state government increase personal income tax rate, issues of multiple taxation was rampant. Noko (2016) suggested that government should reduce personal income tax especially on low income earners in the civil service and taxes on micro and small enterprises in Nigeria by at least 10%. Akande (2015) suggested that three basic features of a standard income tax structure to reduce or eliminate the income tax burden on low-income families.

Increasing personal and dependent tax exemptions. This will reduce the amount the low income families will pay as tax, Reduction in income tax rate for all tax payers, Reduction of the incidence of multiple taxation which is rampant in Ebonyi state currently. This led Anambra state governor to recently declared tax relief intervention for wheelbarrow pushers, hawkers permit and other low income earners (Vanguard, 2016).

Free Internal Transportation: In recession family income is low and therefore government should provide free or subsidized transportation within the state to the low income families in the state. The incumbent governor of Ebonyi state, Lagos state, Enugu state are good example in this area, who have provided internal subsidized transportation bus for the masses. Commercial transportation fees should be regulated to curtail the deterioration of inflation in Nigeria (Nwuzo, 2016).

Increase the Minimum Wage: The minimum wage policy should be adjusted regularly to fight poverty among the low income household (Sharon, 1998). While Noko (2016) categorically stated minimum wage should be at least increased from N18,000 to N25, 000 to help the low income families during the period of economic recession.

The image above indicate the social indices of Nigerians, government should invest more on the well-being of the masses. Well the government programme on Npower and N5000 stipends paid to most vulnerable Nigerians is a welcomed development but more needs to be done to curb the ravaging effect of recession in the low income households.

Re-orientation of the Family: During economic hardship most families’ relationship grows sore, sometimes leading to divorce. According to Adegbite (2016) the effect of no source of income to meet basic family needs and obligation may cause frictions among families, which may lead to long lasting damaged family relationships. He argued that this particular incidence can be reduced by the families jointly pooling their resources together to meet their basic needs while cutting down their expenses in the face of the new economic realities.

Uwade (2009) argued that government and the clergy men should re-orient the families on the needs to stay together during recession as it is a temporal situation in the country.

Increase in Unemployment benefit and Social incentives to the Poor: The government and NGO’s are advised to increase expenditure on social incentives like paying the poor some cash stipends, unemployment benefits or insurance. This will help in putting food on the table of the poor in the society.

Housing Loans.  During recession most low income families are unable to meet with their house rents, government should therefore build accommodation with subsidized price to assist these families, loan can be given to them to pay their house rents. Loan programmes to assist both upgrading and incremental housing development may be provided to enable low income families to obtain capital and therefore optimize their asset management strategies (Mitlin, 1997).

Infrastructure Development.  In the case of infrastructure such as sanitation, roads and drainage, other strategies may also be used.  Government should invest more in power generation to reduce the incidence the incidence of dark night in the low income households.  NGOs may be concerned with ensuring that municipal investments are made in the lowest-income settlements.  They may also be anxious to ensure that the communities themselves can participate in the construction, planning and management of the programmes (Mitlin and Thompson, 1995).

In conclusion, if the menace of economic recession ravaging the economy including our educational system will be curbed down, it is imperative for the government to invest in the energy sector, engage the Niger-Delta militants in a dialogue, reduce the tax rate or regulate same to avoid double taxation, borrowing from both domestic and foreign should be invested more on infrastructure, funds should be sourced more from the domestic economy than the foreign investor to avoid the incidence of capital flight, the government should work with the legislative body to endure speed execution of her project, commodity price and raw material price should be regulated through consumer protection agency, the government should kept price control for other petroleum product like PMS among the host of others measure that can be taking to resolve the current situation at hand.

2.2 Review of Related Study

There is a general agreement from empirical evidence that the most hit during the period of economic and financial crisis is the poor or low income households in the society. This stem from the facts that their income is relative low compared to the new economic realities. Literatures on strategies for reducing the effect of recession on low income households are few, some of the related literatures available will be reviewed in this section.

Noko (2016) carried a research on “addressing the menace of economic recession on the low income household in Nigeria”. He sampled six states, three of the Northern part of the country and three from southern part of the country. Using descriptive survey methodology with a population of 510 households from the low income cycle. He argued that the low income households is the most vulnerable during the period of economic recession and therefore suggested that government should:

  1. Reduce personal income tax especially on low income earners in the civil service and taxes on micro and small enterprises in Nigeria.
  • Increase the minimum wage salary from N18, 000 to at least N25, 000 monthly.
  • Regulate the price of basic goods in the market like Rice, tomatoes, palm oil, garri, among others through consumer protection agency to curtail the rise of inflation in the country.
  • Individuals should minimize their expenses during the period of economic recession to adjust to the changes in the economic situation at hands.

In a similar study carried by Nwuzor (2016) on “solving economics recession in the household among resident of Nkanu North area of Enugu State.” using questionnaire as his instrument. The design of the study carried out through descriptive survey and the population of the study was two hundred and ten (210). Its also used frequency distribution table and simple percentage and chi-square to analyze to analyze the data collected to arrive at the following view points:

*          Economic recession creates job losses and job insecurity among the low income households.

*          Government should invest in social security package like unemployment benefits, free health care and free education to reduce the effect of recession on the households.

*          Affected households should engage in petty trading, engage in factory work pending when they get a better paid job.

He therefore recommended that since economic recession is a macroeconomic issues, the government should invest more in the agriculture, more in energy development, adopting floating exchange rate to reduce further deterioration of exchange rate.

Kelvin (2012) collaborated his view when he stated that extravagant expenses for entertainments, social activities are curtailed down during the period of economic recessions. He argued that although the poor families are the most hit during the period of economic recessions, he quickly argued that this low income earners should set priority for their expenses so as to align with their new earnings. He argues further, without the availability of functional infrastructures in the sociey, the skill-based programmes of the youth will not be implemented. This is because, youth lack the ability to carry out some meaningful work due to lack of acquisition of basic skills that promote effective work performance (Puyate, 2006).

Levine (2013) carried a study on strategies to improve the economic prospects of low-income households in USA. Using survey and graphical illustration, it was discovered that low-income households are disproportionately female, minority, and young. Most of these households have minor children at home, and many are headed by single parents. Their low incomes are partly due to their low wages, but even more to a lack of employment. Sixty percent of bottom-third household heads don’t work at all or work less than full time, while only 40 percent work full time (40 hours a week for 50 weeks a year or 2000 hours in total). In the upper two-thirds, 86 percent of household heads work full time. Another reason for the greater success of the upper two-thirds is that they are more likely to have two earners in the family. In short, and not surprisingly, a scarcity of second earners combined with a shortage of work hours and low pay rates keep the bottom third out of the middle class. However, the most important reason by far for the low incomes of these households is a lack of work. They are less likely to be employed and work fewer hours when they do hold a job.

In a study carried by UNICEF (2014) on the impact of economic recession on the Spanish, their findings revealed that the great recession has not affected everybody in the same terms. Mid-low income households, and specifically children and youth, have suffered bigger impacts and consequences than the rest of the population. The victims again: children and youth. When children and youth are deprived from their rights our society welfare is at stake. What has been named as a crisis of sovereign debt now has another much longer-term type of debt – one that affects the childhood and youth of a whole generation of Spaniards.

Naomi et al (2011) the impact of the global economic downturn on communities and poverty in the UK. Their findings revealed among others that local businesses and employers were affected in all three areas, with major employers integrated into global and regional markets hit particularly hard. There was some evidence that businesses able to develop diverse global links were better able to cope. Work was affected differently in each area, depending on how the global downturn had hit areas and groups within them, and on how the sector was exposed to the effects of the global economic crisis. Job losses were not the only changes to work patterns: people were travelling more and feeling less secure about their jobs and, among self-employed and trades people, experiencing uncertainty around earnings. It was widely expected that the public sector cuts would mean a further hit to employment in these areas. Changes in everyday life included adapting to the rising cost of living by economizing on food and fuel, shopping and cooking more economically, and spending more time and effort on managing tighter household budgets, particularly among women. There was a mixed picture of personal debt: some people with mortgages were struggling, but many people in these areas had enjoyed less access to credit before the recession.

Adegbite (2016) studies the impact of economics recession among low income families in Ogun State. Three research questions and two hypotheses were formulated to guide the study. Data were collected through questionnaire designed by the researcher. Mean score and grand mean were sued to answer the three research questions while t-test statistic was used to test the two hypotheses at 0.05 level of significance cronobach’s alpha method was found to be 0.79 indicating high reliability of the instrument. The result of the data analysis revealed that low income families in Ogun state are frustrated by the impact of recession in the areas of family frictions, job insecurity, unfavorable working conditions and inadequate infrastructures among others. It was recommended among other things that this particular incidence can be reduced by the families jointly pooling their resources together to meet their basic needs while cutting down their expenses in the face of the new economic realities.

Omotesho & Mohammed (2010) carried a research on optimal food consumption plan for the low income households in Kwara State, Nigeria. A two-stage simple random sampling technique was employed in collecting data used for the study between October, 2005 and January, 2007. The main tools of analysis used in this study are the Food Security Index and the Linear Goal Programming (LGP) Model. This study reveals that 65.45% of the rural households are food insecure. Rice, maize, cowpea, gari, fish and palm oil consumed at 4.17, 18.59, 2.92, 2.66, 8.53 and 3.10 Kg per week respectively constituted the least-cost food plan for the rural households. With an average household size of eight male adult equivalents, this plan has a cost implication of N73.73 per person per day. This shows that the cost of meeting this least-cost food plan was 38% lower than the one U.S. Dollar World Bank poverty line per person per day. And therefore recommends that food security should be increased through home gardening, proper meal planning and the need for government to educate the household on the importance of nutritional intake.

2.3 Summary of Reviewed Literature

From the foregoing analysis, one thing is clear the poor or low income families are the most vulnerable during the period of economic recession. From the work of Noko (2016), Kelvin (2012) and Adegbite (2016), it is clear that during economic recession there is high job loss, high family friction, poor standard of living, high cost of living, high inflation in the country and poor medical care.

From the empirical work reviewed a number of strategies were suggested by the researchers on in curbing the effect of recession on the low incomes families including reduction in taxation on personal income and small businesses, increase expenditure in providing free education and health care, proving more job opportunities to the low income households, providing housing loans to aid accommodation problem during the period of economic recession. Adegbite clearly stated that the family has lots to do during this challenging period by spending less on irrelevant things like entertainment, jointly pooling their resources together among other.

 

Click download above to access the remaining chapters

Facebook Comments
(Visited 2,596 times, 2 visits today)

Add your comment here