CHAPTER ONE
INTRODUCTION
Economic recession can be said to be an all-round slowdown or meltdown in economic activity for two sequential years. During this period of recession, there is often times a rejection in certain macroeconomic pointers such as GDP, employment, investment spending, capacity utilization, household income, business income, and inflation, with the attendant increase in the rate of unemployment. Naturally, if an economy has two years sequential record quarters of negative growth in real GDP, the country will be said to be in recession. GDP is the market value of all legitimately acknowledged final goods and services produced in the country in a given period of time, usually one year.
Small and medium scale enterprises have been in a pitiable situation as a result of economic meltdown that befell the economy. Up until now, most of them including business organizations, firms have not recovered from the effect of economic recession despite of the fact that most workers have small and medium business. The ripple effect of economic recession on Small and medium scale enterprises includes, poor growth, lack of effective take off grants by governments, etc. The collapse of the existing companies, firms as a result of the economic meltdown has a maximized effect on the Nigerian workers. A good number of small businesses have folded up while some that didn’t fold up were poorly performing. Economic recession created an unfriendly and harsh economic weather in Nigeria, especially among Nigerian workers, which is shown by high energy cost, high bank interest rate and high naira exchange to dollar and a host of others.
The issue of the economic meltdown in Nigeria and its effect on Nigerian workers has triggered much argument in modern literature. Howbeit, it is important to evaluate how the problems took most economic workers by surprise. Globally, economy have experienced the most unpleasant moments over the years. The issue on its own has been described as probably the worst financial crisis that has never been experienced since the great depression of the 1930s. When it comes to Nigerian economy, it has experienced stagnation for almost two years or more now.
One of the causes of the economic breakdown was practically as a result of fight against corruption. A number of reasons for economic breakdown have been pointed out. Hence, scholars/researchers believe that it can be attributed to a number of factors in both the housing and credit markets, which enhanced over an extended period. Some of these include: homeowners are unable to make their mortgage payments, poor judgment by the borrower and/or lender, gambling and overbuilding during the boom period, risky mortgage products, high personal and corporate debt levels, financial innovation that beget and covered existing risks, central bank policies, and regulation. Another cause of recession is meltdown in underwriting standards for subprime mortgages; flaws in credit rating agencies’ assessments of subprime mortgages; residential mortgage backed securities (RMBS), other complex structured credit.
An investigation from different markets suggests that the consequences of the recession in Nigeria are credit crunch, currency dislocations, job losses, reduction in wages, unemployment, retrenchments and falling demand.
Nigeria has been an economically slavish neocolonial state. The present economic recession in Nigeria is a manifestation of long-term ills in the structure of the economy that became full-blown under the present government. The recession seems to affect socio-political structures, Nigeria’s credit condition, general living standard, imports, production and employment as well as consumption demand in Nigeria. Fast developing economies like China, India, Brazil, including Vietnam and Thailand depend on exports to drive their economies. Nigeria cannot afford to do otherwise. 80 percent of Nigerians still lack access to electricity, decent housing, portable water and good healthcare. This figure is growing as a result of increasing unemployment caused by the recession. For many years, The importation of petroleum products covers 30 percent of Nigeria’s GDP, importation of toothpick, rice, fish, cassava starch, sugar and processed tomatoes take 20 percent; importation of garments and fabrics 15 percent, importation of cars and electronics 20 percent; resulting to sky-rockets inflation of 17.8 percent in 2016.The demand for foreign exchange and imports (including imports of petroleum products) remained high in the face of dwindling oil revenue. Nigeria is faced with the twin problems of reduced volume of exports and reduced price of crude, resulting to reduced revenue. The implications are that the federal and state budgets cannot be funded adequately resulting to external borrowing and debt financing. These have negative implications on foreign exchange and imports of raw materials, low absorptive capacity, job losses, increased tax evasion and avoidance, low purchasing power, low standard of living caused by economic recession. The question is that why the performance of the Nigerian economy always should be determined by industrialized external powers, if not for the internal structural deficiencies working against self reliance? The Nigerian economy is now in the intensive care unit where America and Thailand’s agribusinesses have collapsed Nigeria’s agriculture, China’s garments and fabrics business has collapsed Nigeria’s textile industries, Japan and Germany’s automobile businesses have collapsed Nigeria’s Ajaokuta steel company.
The major aim of the study is to examine the impact of economic management in the era of economic recession towards quick recovery by small and medium scale enterprises. Other specific objectives of the study are;
H0: There is no significant relationship between economic recession and workers welfare in Nigeria.
H1: There is a significant relationship between economic recession and workers welfare in Nigeria.
The study would be of immense importance to government at all levels, small and medium scale enterprises and related stakeholders as it would reveal the impact of economic recession on SMEs and proffer avenues for quick recovery. The study would also be of immense importance to students, researchers and scholars who are interested in developing further studies on the subject matter.
The study is restricted to the evaluation of the impact of economic management in the era of economic recession towards quick recovery by small and medium scale enterprises using Lagos state as a case study.
LIMITATION OF THE STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
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