In its 56-year history, Nigeria has gone through five recessions, which had damaging economic consequences. But it is an incontrovertible fact that among the recessions that had taken place none had been too disastrous like the current one.

Of the economic downturns, four were caused by the drop in global crude oil prices, while the 30-month civil war birthed a period of economic decline.

A Word Bank report said the last time the country experienced a recession was in 1991, during the regime of military president, Gen Ibrahim Babangida (retd). The National Bureau of Statistics (NBS) also stated that there was a prolonged one that started in 1982 and lasted until 1984.

Available World Bank and NBS data also maintained that in 1987, the country experienced an economic meltdown similar to the current one, as the economy recorded consecutive decline of 0.51 per cent and 0.82 per cent in first and second quarters. While these had their respective negative impacts on the economy, the current experience has been termed the worst in the country’s history.

The magnitude of the current crisis was evident in the report by the NBS, revealed that Nigeria’s economy contracted by 2.06 per cent to record its lowest growth rate in three decades. In the first quarter of 2016, the NBS said the economy shrank by 0.36 per cent to hit its lowest point in 25 years.

The NBS noted: “In the second quarter of 2016, the nation’s Gross Domestic Product (GDP) declined by -2.06 per cent (year-on-year) in real terms. This was lower by 1.70 per cent points from the growth rate of –0.36 per cent recorded in the preceding quarter, and also lower by 4.41 per cent points from the growth rate of 2.35 per cent recorded in the corresponding quarter of 2015.

“Quarter on quarter, real GDP increased by 0.82 per cent. During the quarter, nominal GDP was N23,483,954.78 million (in nominal terms) at basic prices. This was 2.73 per cent higher than the second quarter 2015 value of N22,859,153.01 million. This growth was lower than the rate recorded in the second quarter of 2015 by 2.44 per cent points.”

With this report confirming fears of most experts who had in the past argued that Nigeria’s economy was headed for the rocks, the country’s economy has been recording a significant decline in activity across the line, which has lasted longer than a few months. The effects of these are visible in industrial production, employment, real income and wholesale-retail trade.

Irrespective of the magnitude of the current crisis, the economy has continued to survive and even show prospects of recovery. Indeed, the depth of the meltdown is such that could bring down even the most resilient global economies, but a combination of key economic players and factors produced the synergy that had kept the economy going.

One of such factors is the profound role the Debt Management Office (DMO), has been playing to ensure that the country emerges from the recession stronger. In understanding this, the appreciation of the role debt plays in a troubled economy becomes imperative. While some countries would have latched on such ground to go on a borrowing spree the DMO, through constructive handling of the challenges thrown up, has ensured that Nigeria remained on the path of solution without a bloated debt profile. The DMO had, last year, unveiled a strategy to manage Nigeria’s debt by capturing the current issues in the economy in line with President Muhammadu Buhari’s commitment to reviving every sector of the economy.

As an expert, I will say that the new strategy is the best for the Nigerian economy as the government is presently making sustained efforts on diversifying the economy. Instructively, Nigeria’s Debt Management Strategy (2016-2019) as initiated by the DMO, has been broad-based, thereby making it possible for Nigerians to have confidence in the management of the country’s economy. One of the major aspects of this strategy is that over the medium-term, Nigeria will strive to remix the public debt portfolio from 84 per cent domestic and 16 per cent external, to 60 per cent domestic and 40 per cent external.

At the moment, the country is re-mixing between external and domestic, and also between short and long-term. Interestingly, the package has developed a debt management strategy that has ensured that in the face of macro-economic and other financial constraints, the cost and risk profile of the public debt portfolio remains within acceptable limit, over time. This is particularly good news for the nation, as many had feared that the country’s debt profile will rise astronomically, as a result of the recession.

Founded in 2000 - to coordinate the management of Nigeria’s debt which was hitherto being done by a myriad of establishments in an uncoordinated fashion - the organisation has articulated various initiatives to ensure that Nigeria refinances maturing domestic debt with cheaper external debt, instead of domestic debt.

To ensure that the economy did not succumb to the pressures of the recession, the DMO, in a remarkable move, initiated plans to finance the 2016 budget deficit, through external borrowing. The beauty of this is that it is not a carefree borrowing. The organisation has carefully monitored the process to the extent that things are currently looking up.

One of such remarkable achievements of the DMO, at a time like this, was its facilitation of the approval of the issuance of $1 billion Eurobond and appointment of six transaction parties for the bond, by the Federal Government.

The bond is part of the country’s plans to borrow a total of N1.8 trillion ($5.8 billion) from abroad and locally to fund an estimated 2016 budget deficit of N2.2 trillion. Through this measure, the DMO succeeded in preventing the country from crowding out local investors. Today, Nigeria has the realised $1 billion in the Eurobond market and, as well, has inspired confidence in the economy. The feat was generally hailed as a testimony that the DMO’s strategy was an effective tool at ensuring that Nigeria’s economy survives the recession.

Those familiar with the path the organisation had taken would agree that the DMO defied all known predictions by international financial and capital market analysts to prove that Nigeria’s economy remains resilient and robust in the international capital market during the issuance of the nation’s first 15 years’ maturity $1 billion Eurobond.

With these, one can boldly say that Nigeria has commenced the walk towards economic recovery.

Little wonder the Director-General of DMO, Dr Abraham Nwankwo, before now, at different for a, expressed confidence that things can only get better.

His words: “In the next five years or so, Nigeria’s economy will have substantially moved to a position of diversified exports and public revenue, the maximum domestic satisfaction of aggregate demand and, self-sustainability. Under that condition, the appropriate public debt management strategy, with particular reference to the relative weights of the domestic and external components of the public debt portfolio, will be quite different from what it is today.”

•Samir, an economist, writes from Banawa, Kaduna.

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