STABILIZATION POLICY AND THE NIGERIAN ECONOMY.

BY:

MUDASSIR ALIYU YUNUSA

mudassiray@gmail.com

     The four (4) macroeconomic goals in Nigeria are in serious crisis which requires crucial economic attention in order to offer solution and prevent the economy from recession as well as stabilizing the implication that might cause economic stagnation and backwardness in the country.  For any country to reveal improvement or to take a forward step on the trend of development, certainly it must have power to control its economy effectively and attain satisfaction in relation to the macro economic objectives which are:

·      To maintain a relative stability in the general price level in order to prevent the economy from inflationary or deflationary circumstances.

·      To maintain and provide a stable level of employment and reduces the level of unemployment at its natural rate.

·      To have a favourable/satisfactory Balance of Payment (BOP).

·      And, to maintain a high rate of economic growth which will eventually bring sustainable economic development.

     However, in Nigeria the deterioration of the above 4 goals of macroeconomic policy is responsible for the economic hardship the people are seriously facing. It is believed that this happened as a result of failure of our government to implement effectively the policy instruments to stabilize the economy of the country effectively.

     Nigeria as a matter of fact is blessed with abundance wealth capable of providing anything viable to assists in building the nation and compliment the economy towards the attainment of growth and development, but with all this the nation is still chained with abject poverty caused by higher income concentration in the hand of small group of people in the society. Unemployment and under capacity utilization hampered the production efficiency along side with over dependence on one commodity as a source of country’s revenue i.e. crude oil is the main source of revenue to the country neglecting other powerful and important economic sectors like agriculture, commerce and industry. Furthermore, the over dependence on foreign products which in some cases are substandard commodities are also among the factors responsible for the prevailing crises in the Balance of Payment which accelerates inflation in the economy. All these are bottlenecks that hampered the attainment of the four macroeconomic goals and it also served as significant predicaments that undermine the development of the country economically.

     As earlier highlighted, the economic problem of Nigeria is caused by inability of economic policy makers to employ the most appropriate economic stabilization tool or measure to revive and resolve any economic challenges that is displeasing the development of the country. To me, Fiscal and Monetary policy are the most powerful instruments capable of stabilizing the economic crisis of recession and save it from economic meltdown. So government needs to employ certain Fiscal and Monetary policy instruments to diagnose the immense problem of poverty, unemployment, inflation, unfavourable BOP etc.

     For instance, poverty is a state of being where one is highly incapacitated to provide himself with even the basic life requirement per day.  According to the United Nation (UN), it is a situation where one is living below $1(N159) per day; however in Nigeria by considering the serious economic hardship caused by high unemployment rate coupled with abnormal inflation rate even $2 (N318) will not be enough for an average Nigerian to cater for his/her basic needs on daily basis. Indeed, considerable number of Nigerians are in a state of hunger and starvation so much so that they are unable to think positively and come up with a new thing that may eventually lead to development of the country, you can believe in me if you see how people are desperately and blindly looking for any means that may guarantee their survival, and this no doubt is responsible for economic and social suffering the people are seriously facing.

     Unemployment in Nigeria is another alarming setback especially when people are qualified for the work and have willingness and the ability to do the work but are unable to secure the jobs in any sector of the economy, though unemployment must exist in any economy no matter how powerful it is (i.e Natural Rate of Unemployment), nevertheless, the one in Nigeria is artificial one that certainly could be reduced to the lower level by government.

     To accomplish these four goals of macroeconomic economy, there is need to have a favourable and a satisfactory Balance of Payment, which has to do with the relationship between the amount of money a nation spend abroad and the income it receives from other nation, it is otherwise or officially Known as the ‘Statement of International Transaction’. BOP is very important, it served as an indicator that shows up how powerful and how stable the economy is, it also affect the exchange rate of a country’s currency hence any economy that is aspiring for sustainable economic development and to escape from the trouble of currency devaluation should pay careful attention to its BOP.

     Moreso, in Nigeria to apprehend the economic problem the stabilization policies must be giving a greater priority in the sense that all the instruments of Fiscal and Monetary policy should be put in accordance with the proposed economic impediments to usher a solution by the government, for example, inflation is a serious problem and can be solved by applying any but appropriate policy prescription from both Fiscal and Monetary policy options suitable for confronting it, like Open market Operation(Monetary Policy) through contracting the money supply and decreasing the aggregate demand in the economy through the selling of government securities to the public. Or government can embark on contractionery/discretionary Fiscal policy in order to solve the problem of inflation. The application of proper stabilization tool by our government will provide jobs for our teaming unemployed youths, this will automatically correct BOP problem since provision of employment will increase income – saving – investment – productivity in the country, and as such economic growth and development will be attained.

     Therefore, owing to this, I am appealing to our dear government to apply and implement the stabilization policy tools effectively to the respective economic problems that our dear country is seriously facing in order to accomplish the four goals of macroeconomics which will eventually liberate our economy from the dangerous effect of economic depression. And hence sustainable development can be achieved.

MUDASSIR write from NTA Zonal Network Centre Maiduguri.

this article was published in ‘The Triumph’ in 2010