The impact of economic recession on adolescent criminality in Nigeria

Table of contents

ABSTRACT

CHAPTER ONE
INTRODUCTION
STATEMENT OF PROBLEM
OBJECTIVE OF THE STUDY
SCOPE OF STUDY
OPERATIONAL DEFINITION OF TERMS

CHAPTER TWO
LITERATURE REVIEW
INTRODUCTION
MEANING AND NATURE OF RECESSION
ECONOMIC RECESSION: HISTORICAL PERSPECTIVE
REASONS WHY RECESSIONS OCCUR
CAUSES OF RECESSION IN NIGERIA
IMPLICATIONS OF ECONOMIC RECESSION ON THE SOCIETY
YOUTHS AND CRIMES
UNPACKING THE CATEGORY ‘YOUTH’
Impacts of Crisis on Young People’s Access to Decent Employment
How Young People Cope with Employment Shocks
Causes of increasing youth crime
PATTERNS OF CRIMES BY YOUTH DURING ECONOMIC CRISIS
Theoretical framework
RESEARCH QUESTION

CHAPTER THREE
METHODOLOGY
INTRODUCTION
RESEARCH DESIGN
STUDY AREA
Population of the study
SAMPLE SIZE AND SAMPLING PROCEDURE
SOURCES OF DATA COLLECTION
METHODS OF DATA COLLECTION
METHOD OF DATA ANALYSIS

CHAPTER FOUR
PRESENTATION AND DISCUSSION OF FINDINGS FROM THE STUDY
CAUSES OF ECONOMIC RECESSION
SOCIAL-IMPLICATIONS OF ECONOMIC RECESSION
PATTERNS OF CRIME DURING RECESSION
INCREASE IN THE LEVEL OF CRIME

CHAPTER FIVE
SUMMARY, CONCLUSION, FINDINGS, DISCUSSIONS AND RECOMMENDATIONS
SUMMARY
DISCUSSION OF FIINDINGS
CONCLUSION
RECOMMENDATIONS

REFERENCE

APPENDIX

ABSTRACT

There have been series of crimes ranging from kidnapping, armed robbery, rape, bribery, corruption, money laundering to cybercrimes popularly called ‘yahoo –yahoo’ or ‘G-plus’ in recent years. The level of crime in Nigeria is said to be high, this study was able to ascertain whether there has been any change to the rate of these crimes and if so, what impact did the economic downturn had on the level of crimes committed. I examined the influence the economic downturn had on the criminal behaviour among youths most especially those based in Benin City, Edo State Nigeria, analysing data from pre-economic recession to post-economic recession period. A combination of longitudinal and cross sectional study survey were used in gathering the needed data from subjects; newspapers and crime statistics formed the secondary data for the study. Content analysis and inferential statistics was used for data analysis. The combination of these instruments provided robust information on the subject matter and also serve as a basis for cross – checking for consistency in the information supplied by respondents. In this study I discovered that the fall in the price of crude oil and poor economic policy were the major causes of economic recession in the period studied. And during this period, there were closure of businesses resulting from low patronage and high cost of doing business in the country. There were high rate of unemployment and those formerly and duly employed lose their jobs which resulted to social instability/youth restiveness in the State, thus from my analysis, there was an increased in three types of crimes; kidnapping, murder and attempted murder as a result of the economic recession the country went through.

CHAPTER ONE

INTRODUCTION

What effect does economic recession have on crime especially amongst youths whom according to demography analysis are from the ages of 15 to 35 years and who form the working population of a country? This question is often asked during periods of economic underperformance, such as the recession that occurred in the United States in 2008. The economic theory of crime as postulated by Kurtz (2015), common intuition suggests that a bad economy will leave some out of work and will decrease annual income for many. Some criminologists and social scientists theorize that the rise of unemployment and decrease in income that results from a recession will cause crime levels to increase as some individuals turn to criminal activity to provide for their basic necessities. If this theory is correct, then policymakers have an even strong incentive to prevent recessions from occurring or lasting too long, as the poor economy will compound societal problems by driving crime levels up. This is so because we have seen increase in cult activities, kidnapping and robbery in Nigeria. Killing and maiming of innocent people have continued unabatedly across the states. Research reveals that scores of young men and women lose their lives daily to ritualists, kidnappers and other criminals. The social media and newspapers are replete with scary stories of crime of various dimensions being committed across Nigeria. Nigeria’s economy has recently slipped into recession and inflation is already at an eleven-year high of 16.5 per cent (Vanguard, 2016).

STATEMENT OF PROBLEM

The 2016 recession in Nigeria disproportionately affected jobs in the manufacturing, service, and retail sectors amongst others in the country. Besides having a dare impact on the formal sectors, the informal sectors in the country was not left untouched. The recent years have seen a number of companies and banks retrenching a huge number of their workforce for inability to pay salaries as a result of low patronage or inability to access foreign exchange in a country which majorly depends on importation to meet over 90% of its citizen’s consumption, though the implementation of the Treasury Single Account (TSA) has blamed for this World Economic Forum (2015), Ojoye (2016). The market women, small scale farmers, traders, eateries and fast foods, restaurants and bar, hostels, hospitals, schools, cab drivers amongst others had to increase the cost of doing business as a result of the economic downturn which had a ripple effect on every other aspects of life in the State.

Stories of youths getting caught in the act of stealing food items (like bags of rice, oil, yam whose prices tripled during the recession) base on their inability to provide for themselves and or their families especially in the yuletide period abounds in the social media. Children being withdrawn by their parents from private schools to government schools, not minding the deplorable conditions of these schools, all for the purpose of saving cost. The Edo State government increased the school fees of the students in Ambrose Ali University (AAU) and Auchi Polytechnic in 2016, not minding the level of recession and its impact on the citizenries. Not forgetting the rate at which Nigerians in general illegally migrated to other countries in search of greener pastures, which has led to brain drains and the loss of lives of those who had to go through the Libya dessert to get across to Europe (World Bank, 2009) and (African Development Bank, 2014). Lots and lots of Nigerians have been indiscriminately killed in Libya being a war zone controlled by terrorists after the ousting and death of Muammar Gaddafi by the Obama’s administration in 2011 (Wikipedia, 2011).The cry of the Igbos in the Eastern part of Nigeria to secede has become increasingly loud with some supporters giving hunger, marginalization and unemployment as a logical reason.

In the face of the ever increasing acts of lawlessness, social disorder, armed robbery, cry for secession, more marginalization of the minorities by the majorities, senseless vindictive assassinations in Nigeria, it is necessary to look for causal explanations that go beyond common sense or armchair conclusions. This work is therefore intended to add to the body of literature that go to substantiate the claim that economic recession affects criminal behaviour in youths.

OBJECTIVE OF THE STUDY

There is a common notion which proposes increase in crime during hard times, resulting from little or no purchasing power and many other disadvantages or effects, according to this school of thought, crime tends to persist as individuals would do everything necessary to fulfil their basic needs that is, the need for survival. Unlike previous research, this analysis will determine if economic recession has any influence on criminal behaviour amongst youths. The general objective will be to determine if economic recession has any influence on criminal behaviour of youths.

The specific objectives of this research are however as follows:

i. To identify the causes of recession
ii. To determine the social implications of economic recession on the society.
iii. To ascertain the increase in the level of crime amongst youths in economic recession.
iv. To ascertain the patterns of crime committed by youths in periods of economic downturn.

SCOPE OF STUDY

This study seeks to examine the influence of economic recession on criminal behaviour amongst youths. This research work would however be based in Benin City. Thus responses from the respondents shall be gathered from Benin City, Edo State, Nigeria. This is due to convenience and time on the part of the researcher. This work would therefore be restricted to gathering information that relates to the issues under the study.

OPERATIONAL DEFINITION OF TERMS

1. Causes of crime refer to statement in opinion polls, editorials, news stories and features in selected newspapers that explains factors responsible for economic recession.
2. Implication of recession as used in this study refers to statements, from opinion polls, editorials, news stories and features in selected newspapers describing the consequences of economic recession on the society.
3. Patterns of crime refer to frequency of crime statistics after January 2015.
4. Trend refers difference in frequency of crime by the average of pre economic recession rates.

CHAPTER TWO

LITERATURE REVIEW

INTRODUCTION

Before giving an explanation of what recession means, it is very important to note that a market economy comes in two forms, either as a growing or declining economy. There are also two factors of the market: demand and Supply. A growing market economy experiences an upward spiral which includes an overall rise in stocks coupled with a staunch believe by investors that the trend will continue so; the value of stock continues to increase in the market. There is an increase in employment with a positive effect on the consumers’ ability to buy goods. Producers tend to hire more people and consume more raw materials and consumers feel confident in future and growth of the economy so they have the latitude to buy more stuff. A declining market economy is a direct contrast of a growing market economy. Here, a downward spiral is experienced through employed workers fear they will lose their jobs, so they spend less money. The stock market falls coupled with investor fear that value of stocks will decrease, so they are less willing to invest in new companies. Consumption of raw materials by producers decrease in response to reduced demand. Consumers do not feel confident about the economy so they are very cautious of what they buy. Back to the factors of market, an average producer wants the demand for his product to always be high while consumer wants the goods be purchased at a low cost. Usually, demand equals quantity but here demand equals price. This is so because price determines the quantity of sales which implies that in a competitive price there will be more demand while an uncompetitive price breeds less demand. Recession then simply means the economy shrinking for two consecutive quarters (6 months) with a decrease in the Gross domestic product (GDP) which is the value of all the reported goods and services produced by the people operating in the country. A good GDP indicates a thriving economy. If GDP is growing, then market is growing due to increased demand. If recession continues for next quarter, (>6 months) then there will be a depressed economy. Recession occurs when supply exceeds the nation’s ability to consume what has been produced. Supply is greater than Demand. In Nigeria, the effect of this recession on the economy may even hit harder due to the activities of the Niger Delta Avengers. This is because the major source of government’s revenue comes from the sales of crude (Bamgboye, 2016).

MEANING AND NATURE OF RECESSION

A recession is when the economy declines significantly for at least six months. That means there is a drop in the following five economic indicators: real GDP, Income, Employment, Manufacturing, and retail sales. It is often said to be when the GDP growth rate is negative for two consecutive quarters or more (Vanguard, 2016).

According to Claessens and Kose 2009, there is no official definition of recession, but there is general recognition that the term refers to a period of decline in economic activity. Very short periods of decline are not considered recessions. Most commentators and analysts use, as a practical definition of recession, two consecutive quarters of decline in a country’s real (inflation adjusted) gross domestic product (GDP)—the value of all goods and services a country produces. For Claessens and Kose et al. 2009, although this definition is a useful rule of thumb, it has drawbacks. Because focusing on GDP alone is narrow, and it is often better to consider a wider set of measures of economic activity to determine whether a country is indeed suffering a recession. Using other indicators can also provide a timelier gauge of the state of the economy. The National Bureau of Economic Research (NBER), a private research organization, which maintains a chronology of the beginning and ending dates of U.S. recessions, uses a broader definition and considers a number of measures of activity to decide the dates of recessions. The NBER’s Business Cycle Dating Committee as cited by Claessens and Kose et al. 2009, defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough.” Consistent with this definition, the committee focuses on a comprehensive set of measures—including not only GDP, but also employment, income, sales, and industrial production—to analyse the trends in economic activity. They further asserted that although an economy can show signs of weakening months before a recession begins, the process of determining whether a country is in a true recession (or not) often takes time. For example, it took the NBER committee a year to announce that the U.S. recession which started in December 2007. This is understandable, because the decision process involves establishing a broad decline in economic activity over an extended period of time after compiling and sifting through many variables, which are often subject to revisions after their initial announcement. In addition, different measures of activity may exhibit conflicting behaviour, making it difficult to identify whether the country is indeed suffering from a broad-based decline in economic activity.

According to the National Bureau of Statistics, in the Second Quarter of 2016, the nation’s Gross Domestic Product (GDP) declined by -2.06% (year-on-year) in real terms. This was lower by 1.70% points from the growth rate of -0.36% recorded in the preceding quarter and also lower by 4.41% points from the growth rate of 2.35% recorded in the corresponding quarter of 2015.Nigeria GDP contracted in consecutive quarters during 2016 Q1 by 0.36% and 2.06 in Q2 of 2016 (Financial Watch, 2016). Two quarters of negative growth for GDP is typically regarded as a recession. By this definition the recession has been on for two quarters now, from 2016 Q1 to 2016 Q2.

Figure 1: Real GDP Year on Year Growth

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Source: Premium Times (2016) et.al. National Bureau of Statistics

Economic recession, a period of general economic decline is typically accompanied by a drop in the stock market, an increase in unemployment, inflation rate and a decline in the housing market (Mckinney, 2006). The blame for a recession generally falls on the federal leadership often either the president himself, the head of the Federal Reserve or the entire administration (Mckinney, 2006).The effects of recession on employment, public sector, revenues and services have been compounded by continuous increase in price of food and fuel, impacting severely on poor people and pushing millions more into poverty (Marcus and Gavrilovic, 2010). Poverty in Nigeria and in other parts of the developing nations of Africa is a wide spread phenomenon and seems to be on the increase. When poverty joins high levels of economic and social aspirations, the stage is set for criminal activities, particular corruption, ritual killings, robbery and dealing in illegal goods and services. People who are thwarted in attaining desired social and economic goals legally may seek to obtain them illegally (Gabriel, 2016).

The global economic recession of 2007 experienced by the United States of America, Britain France, Germany etc., despite being developed had deep and far-reaching impact on human lives and social institutions across the world, in the process, forcing government and schools, as well as businesses to rethink and tremendously alter or change their operations and ways of thinking, and the gross difficulties in finance and economy forcing many more people to turn to crimes and criminally-related activities for the sole purpose of survival and making ends meet (Mcfarlane, 2012). The research work tends to explain and analyse the extent to which the effect of economic recession promotes criminal behaviour amongst individuals especially youths in Nigeria. Increases in state unemployment rates, low income, poverty and decreases in Gross Domestic Product (GDP) per capita as it affects youths and their level of criminal activities in Benin Metropolis in the year 2016. According to the Central Bank of Nigeria (CBN) in understanding the monetary policy volume 14, (2012), every economy (country) is affected by business cycle (or economic cycle). Business cycle refers to economy-wide (nationwide) fluctuations in production, trade and general economic activities over medium-to-long-term in a free market system. Free market economy is one where there is no government intervention in economic activities; rather demand and supply interact to correct disequilibrium (anomalies) in the market. The business cycle is the upward and downward movements of levels of gross domestic product (GDP), and refers to the period of expansions and contractions in the level of economic activities (business fluctuations) around its long-term growth trend. These fluctuations involve shifts over time between periods of relatively rapid economic growth (boom), and periods of relative stagnation or decline (a contraction or recession).

Recession is a business cycle contraction, and it refers to a general slowdown in economic activity for two consecutive quarters. During recession, there is usually a decline in certain macroeconomic indicators such as GDP, employment, investment spending, capacity utilization, household income, business income, and inflation, with the attendant increase in the rate of unemployment. Technically, when an economy recorded two consecutive quarters of negative growth in real GDP, it can be said to be in recession. GDP is the market value of all legitimately recognized final goods and services produced in the country in a given period of time, usually one year. A typical business cycle, as demonstrated in Figure 2 has a period of booms (prosperity), followed by a period of recession, slump and recovery. During the boom period, there is minimal unemployment; high production and consumption; high standard of living; high inflation; and so on. It is a period when most macroeconomic indicators are positive. In a recession period, economic activities slowed considerably. When economic activities reach the lower part of the chart (Figure 2), it is said to be in a slump (depression); a prolonged recession. Most macroeconomic indicators remained negative for a long time, usually more than two years. Subsequently, the cycle enters a recovery period. This is as a result of the impact of fiscal policy (the use of taxes and government expenditure) and monetary policy (the cost and availability of money) to stimulate economic activities. Demand and other macroeconomic indicators begin to pick up, leading to increased investment and production of goods and services in the economy. Gradually, the boom would be restored and the cycle continues.

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Figure 2: Graphical Example of Business Cycle

Source: Central Bank of Nigeria (2012)

ECONOMIC RECESSION: HISTORICAL PERSPECTIVE

The history of economic recession is as old as the history of humanity itself, dating back to the 3rd Century. This was the period of a Military Anarchy also known as imperial crisis (AD 235-284), during which the Roman Empire came close to collapse as a result of economic depression, civil crisis, invasion and diseases. The crisis culminated in the assassination of Emperor Alexander Severus by his own troops, resulting in the competition his successor. Consequently, the Empire split into three competing states by AD 258-260.The resultant effect of the foregoing was hyperinflation in the Empire, necessitating years of coinage devaluation. During the period, fiat money was created to pay the salaries/bonuses of the Military, without accretion in the real economic activities. Also, there was serious disruption of Rome’s extensive internal trade channels due to the crisis. The widespread civil unrest made it no longer safe for merchants to travel and the financial crisis that struck compounded the exchange with the debased currency. This produced profound changes that, in many ways, would foreshadow the much decentralized economic character of the coming Middle Ages.

The 14th Century economic crisis stemmed more or less from the banking crisis, when the Bardi family and Peruzzi family lent Edward III of England a total of1,500,000 gold florins which he failed to repay. The situation led to the collapse of the two family banks. During the 15th Century, the Bardi family continued to operate in various European Centres, playing a notable role in financing some of the early voyages of discovery to America, including those by Christopher Columbus and John Cabot (Guidi-Bruscoli, 2012). Besides Edward III of England, other notable rulers were indebted to the Bardi family and most of them defaulted.

The economic recession of the 17th century was as result of a Dutch prosperous era, during which the price for the supply of bulb (from Tulip mania or Tulipomania) rose to a very high level and then suddenly collapsed. History stated that at the height of tulip mania around March 1637, one tulip bulb sold for over ten times the annual income of a trained artisan. The period was generally regarded as the first recorded speculative bubble, although, others argued that the Kipper-und Wipperzeit era of 1619 – 1622, when the whole of Europe experienced series of reduction in metal content of coins to finance war, was the first speculative bubble. Large economic bubbles are metaphorically referred to as Tulip mania in some quarters.

Tulip was different from other flowers due to its attractive petal colour, hence, its popularity began to spread to other parts of Europe. The emergence of non-peril tulip as a status symbol during the period coincides with the rise of newly independent Holland's trade fortunes, resulting in the rise of its golden age.

Merchants made huge profit of up to 400 per cent exporting tulip to East Indies.

As a result, the tulip became attractive luxury goods and other varieties of tulip were introduced through mosaic virus (tulip breaking virus). The virus added to the beauty of the tulip, and at the same time weakened its reproduction as it took longer time to produce. This led to the scarcity of tulip, resulting in a significant increase in the price of the product. This resulted in speculative trading over time.

Recession in the 18th century started with the stock price bubble of the South Sea Company. The South Sea Company was a British Joint Stock Company, established in 1711 as a public-private partnership (PPP) with the sole responsibility of reducing the cost of national debt. The company was established during Britain’s war against Spanish secession, hence there was no way it was going to make profit. This was because the company was given monopoly over South America, where Spain had greater influence. The value of the stock of the company rose principally on account of increased operations in dealing in government debt, peaking in 1720 before collapsing to a little above its original price; this became known as the South Sea Bubble. The share price crash affected many people at the time and reduced the value of the national economy. This was caused by several abuses including insiders trading, parliamentary lobby and margin trading.

Also, there was the peace time Credit Crisis of 1772 in London, which then spread to other places like Netherlands and Scotland. On June 8, 1772, Alexander Fordyce, a partner in the banking house Neal, James, Fordyce and Down in London, fled to France to avoid debt repayment, and the resulting collapse of the firm stirred up panic in London. Economic growth was dependent on the availability of credit, which mirrors peoples‟ confidence in the banking industry. The default resulted in a run on banks which led to the collapse of the industry.

In the 19th century, there was the post-Napoleonic depression known as post-war economic depression in Europe. In England, an agricultural depression led to the passage of the Corn Laws and placed great strain on the system of poor relief inherited from Elizabethan times. A major peacetime crisis was the Panic of 1819 that resulted in a financial crisis in the US and general collapse of the US economy over three years. The main characteristic of the panic was the transition of the US from its colonial commercial status with Europe toward a dynamic economy, characterized by the financial and industrial imperatives of laissez-faire capitalism. The crisis was compounded by high speculation in public lands, fuelled by non-regulation of the issue of paper money by banks. The development led to general banking apathy and the belief that government economic policies were flawed. This raised greater involvement in politics by the Americans in order to defend their local interest. The development led to the signing of treaty between the US and Britain to end the war and other anti-trade regulations in 1812. Following the situation in the US, was the Panic of 1825 that started in the Bank of England (BoE), which resulted in stock market crash arising from speculative investment in Latin America. The crisis led to the closure of six London banks and sixty country banks in England. The crisis also extended to Latin America, Europe and the US. It took the intervention from the Banque de France infusing gold reserves to save the BoE from total collapse. Economists term the crisis as the first modern economic crisis that was not exogenously induced by war. Thus, the particular crisis has been designated as the beginning of economic cycles.

In the US, a serious economic depression started in 1893, caused by excessive construction and faulty financing of rail construction. The resulting effect of the crisis was the failure of so many banks, and a run on gold supply. As a result of the Panic, stock prices declined. Five hundred (500) banks collapsed, 15,000 businesses failed, and many farms ceased operation. Timberlake et al, (1997) noted that unemployment rate rose significantly during this period; Pennsylvania (25 per cent), New York (35 per cent), and Michigan (43 per cent).

In the 20th century, there was the Panic of 1907 (1907 Bankers ‟Panic or Knicker bocker Crisis) in the US, where the New York Stock Exchange (NYSE) fell by over 50 per cent from the peak it attained in the previous year. The panic occurred during economic recession, and resulted in several runs on banks and trust companies. The panic spread to other states and local governments, and resulted in their bankruptcy. The panic was as a result of a failed attempt in October 1907 to corner the market on stock of the United Copper Company. The failed attempt to corner the market resulted in the crisis of confidence as there was a massive runs on the companies associated with cornering schemes and their affiliates.

Preceding the great depression of 1930, was the most devastating stock crash in the US in 1929. It is the Wall Street Crash of 1929 (Black Tuesday or Stock Market Crash of 1929). The crash marked the advent of 10 years of great depression, which did not spare any of the industrialized Western countries. The great depression affected both the rich and the poor countries alike, as unemployment rose across the globe, world trade declined (due mainly to protectionist policies adopted by countries of the world), and demand for goods and services fell. Other crises in the century include the black Monday (October 19, 1987) where stock market around the world crashed within a short space of time, the Mexican economic crisis (1994) caused by the sudden devaluation of the peso, and the Russian financial crisis (August 17, 1998) similar to that of Mexico.

In the 21st century, there was the global financial crisis (GFC), which started in2007, caused principally by the housing bubble in the US that peaked in 2006. The complex interplay of policies that encouraged home ownership, providing easier access to loans for (lending) borrowers, overvaluation of bundled sub-prime mortgages based on the expectation that housing prices would continue to escalate triggered the crisis. Also, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritized short-term deal flow over long-term value creation and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments, were other reasons for the crisis. The crisis has been adjudged the most severe since the great depression of the 1930s. The crisis resulted in the collapse of many big businesses, distressed banks, mergers and acquisitions in some cases, and bailouts in some countries (Central bank of Nigeria, 2012).

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