Officially, Nigeria is in another recession.
This is following the latest Gross Domestic Products (GDP) data released by the Nigerian Bureau of Statistics (NBS).
Equally important, this is Nigeria’s second recession in four years. The latest figures show that Nigeria has endured two consecutive quarters of contractions. In simple term, a year is divided into four quarters: January-March, 1st quarter; April to June, 2nd quarter; July to September, 3rd quarter and October to December; 4th quarter.
A recession is more of a technical issue. Where you have two consecutive negative GDP growth, technically and officially you are in a recession. For instance, in January to March, say, GDP growth is -2%, and April to June, another -1.2%, then officially you are in a recession.
According to the report for Q2, Nigeria recorded a negative growth of 6.1%. Also, it followed that up by recording a growth of -3.62 in Q3. So, technically and (borrowing the words of a smooth talking, former Finance Minister, Kemi Adeosun); we are in a recession. The figures for recession are retrospective, that is, the negative growth already happened. The data is showing that there is a reduction in productivity as a result of an underlining variable.
Unlike most recessions, this current recession is a shock caused by the global pandemic. Indeed, the unprecedented N13.08trillion 2021 budget proposal shows that the government intends to spend its way out of the recession. So, no need to panic.
But while we are at it, here are some tips that can help you cope with the expected difficulties occasioned by the recession.
Stick to a budget
Now is the time to develop a household budget. Plan every single kobo you spend. This budget could be monthly or weekly, depending on your type of income.
If you have a family, plan this budget with your family and explain the economic situation to your kids. You will need to show leadership by making sacrifices as you demand the same from your kids. Have a family or personal balance sheet and a copy of the budget available for everyone to monitor progress. Even your charity should be in that budget, say money for grandpa and family members which you can adjust accordingly.
No panic selling
As stated at the beginning of this piece, a recession is a temporary issue and also a technical issue. Resist the urge to engage in any form of panic selling.
This is not the time to sell that land unless you have to. Don’t sell things to cope. The doomsday analysts on social media only care about contents, not to sell reality. Only sell things if there is a need to sell. It’s a temporary thing and also a technical thing.
Since we have agreed to no panic buying, if you have some excess cash; now is the time to buy assets from those that will do panic selling (keep good savings).
Some will sell home appliances to meet short term needs. Without being a mean person, you can get a good bargain if you can bargain hard. However, don’t get carried away.
Also, cut down on frivolous spending. Now is the time to be thrifty. This is not the time to keep up with the Joneses. Buy things only if you need them, as we are in an uncertain time. Being strategic is a matter of survival.
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Buy preserved food instead of fresh
Why buy fresh tomatoes when you can buy dried ones? Why buy fresh fish with the epileptic power supply when you can buy dried fish?
For most low-income families, a higher percentage of the spending is on consumption. Food items are skyrocketing, hence there is a need to adjust your expenditure. Whatever you can save from your expenditure is important. Learn how to preserve food items. Also, cut down on wastage. If you have space, make a little garden and plant some vegetables.
Avoid miracle investments
Now is not the time to invest in forex and other high yield investments. Ponzi schemes will be floating around this period. No matter how tempting, this is not the time.
A reputable Cooperative society is a better option. Emphasis on “reputable.” If you have the opportunity to join the cooperative society of any Federal Government Ministries, Departments and Agencies, please do.
The reason is simple, it’s rare for the federal government to owe salaries (currently owing the month of October though). However, your money will be safer and you also have access to interest-free loans.
A recession is tricky, but since it’s not a depression, we should be fine.