Some Musings on Nigeria’s Economy (1)
Some Musings on Nigeria’s Economy (1)
However, events in the past six years will make looting under Abacha a child’s play. For the past six years, crude oil has sold for an average of $80 per barrel, while Nigeria sold an average of 2 million barrels per day. This is aside greater exploitation of natural gas, with Nigeria having the 10th largest reserve of natural gas, despite the historic and monumental waste through gas flaring. Yet, things have gone from bad to worse for the vast majority. About 120 million Nigerians out of Nigeria’s 165 million are considered or consider themselves as poor. Unemployment is around 40 percent. Petrol that sold for around N11 in 1999 is now N87 per litre.
While minimum wage has increased by about a thousand percent
since 1999, its social and economic values have hardly changed, if not
decreased. For instance, for an import-dependent country, naira devaluing from
around N85 per dollar to around N200 has meant skyrocketing inflation and
higher cost of living. A quantity of beans sold for N26 in 1999 is now close to
N300, an increase of more than 1000%. Education standards have nosedived, with
pass rate in WAEC less than 40 percent, while access to university education
has worsened with less than 30 percent of those seeking university admission gaining
entrance. This is aside spiraling hike of fees that has taken tertiary
education out of the reach of the common people. Education itself has lost
social value with those educated either unemployed or grossly underemployed. The
crises and rot in the health sector are heartrending. On the other hand, the rich few have increased in value and in number too. And that to Jonathan is a measure of economic success. Aside direct looting of public wealth, public entities and services have been privatized at rock-bottom prices for those who only wanted to milk from the miseries of the working and poor people. Not done, the Jonathan administration gave public funds to these private sharks to establish buy and sustain the privatized public corporations, the most recent of which is the N213 billion government-guaranteed bailout funds for private buyers of electricity companies, after electricity tariff was hiked three times and over 50, 000 workers sacked.
But it will be doing history a great disservice, if the rot in the Nigerian economy is limited to the last six years, or to Jonathan administration alone, even though the administration has taken the rot to a higher level. Just less than 18, 000 political and public officers at all levels take a whopping N1.3 trillion from about N10 trillion annual national budgets, as emoluments and perks of office. Just some two or three years ago, Mr. Bola Tinubu directed his lieutenants in government houses in the southwest to demand for immediate disbursement of excess crude money, because according to him, Nigeria cannot be saving money while Nigerians are hungry. Pronto, the account has been depleted by over $30 billion within a span of 4 years, with state governments (and their local government appendages) collecting more than 40% of the disbursement. The excess crude money is not appropriated as part of budgets by both federal and state governments. The monies are expended at the whims of the execu-thieves.
But, what the governors have been able to give to Nigerians is more hunger and poverty. In Osun State, in spite of the huge fund got through the revenue allocation and excess crude account, nothing much could be shown. In the education sector, Aregbesola (one of the APC chief strategists) achievement is three newly refurbished schools while remaining over 2, 000 schools are in shambles. Tertiary education has nearly collapsed. Public health institutions are in shambles. While some local roads were rehabilitated, this, in the absence of functional public works ministry, could only mean defrauding of the state, as a kilometer of local road was rehabilitated at more than N70 million. Also in Lagos State, more revenue has only resulted in failed attempt at hiking fees in the state-owned university, by close to 1000%. Today, the university is in state of rot as a result of chronic underfunding. Public health system is sorry state, with the state teaching hospital, LASUTH, a supposed tertiary health institution, unable to dress wound! Primary and post-primary education is in total decay in the state. Workers are suffering. This is the star government of the APC. The list is just endless. Yet, billionaires and mega-millionaires have sprouted in these states.
Moreover, in spite of attempt at whitewashing Obasanjo, most of the anti-poor and fraudulent policies of the Jonathan government are legacies from Obasanjo administration. Take privatization, deregulation, fuel price hike, etc., you will see the full imprint of Obasanjo government. It was during Obasanjo government that over $16 billion was looted under the guise of power sector reform. Obasanjo created the Dangotes, Otedola and Jimoh Buraimoh of this world, by handing over public properties to them at fraudulent prices, granting them waivers, tax rebates and loan guarantees. It was Obasanjo government that started handing billions of dollars to middlemen in the name of fuel subsidy.
When Soludo wrote about missing trillions, he forgot to mention billions of dollars given to private banks through issuance of treasury bills and bonds, at exorbitant rates by his leadership in CBN. While low MPRs (monetary policy rate – the rate at which banks borrow from CBN) were set around 7-8 percent, government borrowed money from banks through treasury bills and bonds at higher rates of between 12-13 percent, thus guaranteeing banks or quick and unmerited profits at the expense of public finance. Worse still, a large portion of money banks loaned to government was (and is still) government’s money kept in banks.
Also, banks made (and are making) billions of dollars in profits through underwriting and funding of privatization and sale of oil blocs. This means, without engaging in any other economic activities, banks were assured of billions of dollars in profits. This led to banks making billions in profits in a depressed economy. The money made by banks was invested in gambling through the stock exchange, and in ostentatious lifestyles and jamborees by bank executives (a la Akingbola, Cecilia Ibru, et al). Soludo’s bank consolidation was meant to create oligarchs to coordinate this fraud. When oil revenue, the source of the free money for banks, fell and foreign portfolio investors milking from this, withdrew their cash from stock market, the banking and of course, the economy collapsed. Meanwhile, Soludo and his colleagues-in-fraud had made their billions. Yet, the huge debt of government (through treasury bills, bonds, loans, and over-bloated contracts by both federal and state governments) during this period and up till now; and the over five trillion naira spent by Sanusi-led CBN and Jonathan government to offset bad loans by banks, contribute significantly to ballooning domestic debt now standing at over $49 billion.
Lessons:
1. As much as the oil revenue has fallen significantly, Nigeria is still rich to afford the needs of the people, if the greed of the capitalists is removed. Crude oil sold at less than $11 during Abacha era, and despite the massive looting, Nigeria did not collapse. So when they tell us that we should tighten our belt because of lower oil revenue, we should tell them to leave if they cannot cope.
2. The heightened crises of Nigerian economy, while it has been worsened by the Jonathan government, is a creation of all sections of Nigeria’s capitalist class – both in politics and big business; federal and state governments.
3. On the basis of the nature of Nigeria’s capitalist class, being primitive and rent-seeking, solutions to Nigeria’s economic woes cannot be found within the precinct of capitalism or capitalist politics. We need a new socioeconomic paradigm based on public ownership of the economic mainstay, under democratic control and management by the working people.
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