Global Economic Crisis and Nigeria: Policy Responses and Agenda for Long Term Growth

This paper examined the impact of global economic crisis on the Nigerian economy from macroeconomic perspective. It traced the origin of the crisis to the collapse of Sub-prime mortgage lending in the USA following complex banking problems that developed over time from housing and credit markets mismatch, poor judgement by borrowers and lenders, and over speculation of very risky mortgage products regarded as financial innovations. The paper provided the highlights of what the global economic crisis meant for Nigeria, the channels through which the crisis spread to the sectors thereby affected the domestic economy, the strategies adopted by Government to counter and mitigate the effects on the populace, among others. Some of the immediate effects were dwindling government revenue occasioned by sharp drop in commodity prices, particularly crude oil which is the main source of government revenue, decline in stock market valuations leading to loss of financial wealth, depreciation in Naira exchange rates, capital flight, etc. The paper also discussed Nigeria‟s policy response to the crisis starting with the inauguration of a Presidential Steering Committee on the Crisis and a package of incentives designed to ginger production, increase domestic demand and generate employment opportunities. To facilitate economic recovery and long term growth, the paper recommended strengthening the Sovereign Wealth Fund to accumulate foreign reserves during high oil prices, improved mobilization of domestic non-oil resources for development and the need for vertical cooperation among the three tiers of government. Finally, the paper suggested strategies to counter the effects of the global economic crisis in Nigeria.