Economics recession in Nigeria, meaning, causes, solution, and precautions dominates economics discussion in Nigeria and Africa at large today. Recall, Nigeria has plunged into economics recession after witnessing -1.7 and -2.06 in the first and second quarter of 2016 (NBS).
The common question Nigerians and others have been asking include:
- What is the cause of current economics recession in Nigeria?
- What is the solution to the economics recession in Nigeria?
- What should individuals do and should not do during the period of economic recession?
- Should one invest in stock, bond, business or save one money in banks among others?
All these question often asked by residents of a country during a recession is what I want to address in this article. If you have not read my post on Causes and Solution to Economics Recession in Nigeria, then read it now, that alone have answered the most often asked question.
Let start be understanding what economic recession means. Economics recession to an economist simply meant a period of more than two-quarters of negative real gross domestic product growth.
To a non-economist, economics recession means a period of more than six months that witness a serious decline in economics activities – high inflation, high rate of unemployment, fall in the exchange rate, low investment, high tax, and high rate of poverty/hunger in the land.
Having understood what economics recession is, the causes and solution to economics recession. I assume you have read my post on causes and solution to economics recession. Let analyse the do’s and don’t during economic recession.
What you should do during economics recession
- Create value and look for means to solve people real problem: You must have understood that people spend less during economic recession in order to save more for the raining day. To be on the safe side create value/service that people can’t primarily do without. That way you remain valuable during economics recession.
- Spend less on irrelevant things: We all knows that during the period of boom you can actually afford to buy things you don’t even need. Yes! People do it. To cope and never run a deficit during this period of economics recession spend only on the things you need.
- Invest in a business that solves real problem: Investment in things like food, shelter, telecommunication, transport are good during the period of economics recession. During this period people mind less of things that are not necessities. So investing in a luxury business like car might not have high ROI during the period of economics recession.
- Invest in landed property: During economics recession, people would want to sell their landed property to solve their basic needs. That is an opportunity, buy the asset, the recession won’t last forever. American witnessed economics recession in 1981, 1991, and 2009 yet recovered from all.
- Go and acquire new skills: Instead of sitting down there and complaining how bad the economy is why not go and acquire new skills that will give you an edge over others. Despite economics recession everywhere, there individuals who their pays are rather skyrocketing instead of reducing. It is all about value!
What you should not do during economics recession
Just as there is good habit of displaying and adopting during economics recession, there are also one that you must avoid not to be a victim of economics recession. The habits may include:
- Don’t Lend out your money: During economics recession, lenders lose their money because of rising inflation that normally accompanies the recession. If you must lend out your money the interest rate on it should be greater than the prevailing inflation rate. Except if the person involved is family and friends.
- Don’t leave your money in savings account: You are aware that Nigeria inflation is currently at 17.6% and is still increasing. Leaving your money in saving account where they pay you less than 2% interest is not advisable. Your money in saving account is losing value daily. So be wise, if you don’t know what to do with the money fix the money.
- It is not the time to leave extravagant life: I recently interviewed some consumers on their spending habits since May 2016. I discovered that over 70% have substituted from expensive products to cheaper ones. About 20% simply avoid buying some products that are expensive while only 10% didn’t change their spending habits. So, spend wisely only on things you need not on your want except your earning never changed.
- Don’t rely on the government to solve your problem only: This is not a time to fold one’s hand and wait for the perfect job, perfect contract, perfect and I don’t know. The slogan is “do something, no matter how small.” Look for needs around your locality, reflect on how you can solve the problem.
- Don’t buy stock for short time purpose: Stock and bond however bad they may appear is good investment even during economics recession. But don’t go for stock for short time purpose. The reason is because people are very cautioned during recession – causing the market to fluctuate during this period so, go for long term investment in stock and bond.
I have given you some tips to survive the period of economics recession in Nigeria and to make it count for you. So, now is your turn, tell me what you think about Nigeria economics recession and what you think people should do and don’t.