EFFECT OF ECONOMIC RECESSION ON THE GROWTH OF CONSTRUCTION FIRMS IN ABUJA, NIGERIA
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ABSTRACT
Economic recession occurs when “economic activity declines, in other words, growth become negative “and it is associated with low- level consumer spending. A recession also known as go-slow in terms of Gross Domestic Product (GDP) or national outputs has led to increase in unemployment, a decrease in wages, a high level of inequality, and an increase in government borrowing. Fall of Nigerian currency, so much reliance on oil, and lack of diversification led Nigeria to two consecutive quarters of negative economic growth, which is recession. Economic recession has badly affected the construction industry so much that there is hardly any new projects coming on stream; cranes are lying idle throughout the country and many newly constructed facilities remain unoccupied. This has resulted into redundancy in Nigeria's construction industry while many construction firms have practically laid off their staff. The aim of the study was to evaluate the effect of economic recession on the growth of construction firms in Nigeria with a view to strengthening them against the effect of economic recession on the Nigerian construction industry. The quantitative research approach was adopted with use of questionnaire survey employed to collect data from 22 construction firms registered with Federation of Construction Industry (FOCI). Archival data were also collected from World Bank and CBN bulletin. Data collected were analysed with the use of Relative Importance Index (RII) and Regression Analysis. It was also shown that “Job Loss” is the most significant effect of economic recession (RII = 0.89). Seven (7) out of the eight (8) measures identified for preventing reoccurrence of economic recession, ranging from “Expansionary monetary policy – cutting interest rates” to “Higher Inflation Target” are very effective (RII = 0.77 – 0.68). Finally, it was revealed that a strong, negative and significant relationship exists between micro variables and number of employees of firms (p = 0.022; R2 = 57%). It was therefore concluded that economic recession has a significant negative effect on the growth of construction firms in Abuja, there was increase in unemployment. It was thus recommended that Government and construction firms should set up a mechanism for the effective implementation of the measures for preventing the reoccurrence of economic recession in the Nigerian construction industry.
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