Friday, October 29, 2010
Is the Nigerian economy improving?
It did improve between 2003 and 2007, and there was more cash for people to spend. Did we save for a rainy day? Yes, albeit illegally via the Excess Crude Account. Have we put those savings to good use? NO! The money has simply been shared, and those shared funds have found their way into private pockets.
Following the 'Hurricane Sanusi' of last year, our banks which hitherto had been lending only to people who wanted to buy shares, or to people with political connections, simply stopped lending altogether. The banks, which were also the largest employer of labour outside of the government, also stopped hiring, and instead began firing. Our legislators oblivious to the problem (or not giving a hoot), kept increasing their wages and allowances to absurdly ridiculous levels. Our state governments after sharing the money that was left in the Excess Crude Account have now began to go to the bond market in a vain attempt to raise cash for 'infrastructure developments'. We have yet to see the infrastructure promised via the bonds that have already been issued. Companies are still firing people, and actually a lot of them, are falling back on the payments of their wages. That is for those who haven't been forced to take pay cuts. At the moment, the only people who seem to be immune in Nigeria are the people who work in multi-nationals. Let's face it folks, Nigeria is in a recession.
How do we come out of it?
In the West, people have always talked about Keynesian theory as the panacea to their recession. Depending on who you speak with, the recession in the West is not yet over. For some countries (Germany, South Korea as examples) it is over, for others (the UK, France, Greece) it has become a double dip recession, and may well be on the way to becoming a depression. For those of you who may not know, when the Great Depression started in 1929, most economists at the time struggled to come up with an explanation for what was happening. John Keynes came up with an explanation of economic slumps that was quite simple. He said that in a normal economy, there is a high level of employment, and everyone is spending their earnings as usual. This means there is a cyclical flow of money in the economy, i.e, what I spend is what the next man earns and what he spends becomes what I earn.
If however, something happens to shake my confidence in the economy, then I will start saving for the future or more simply put, hoarding the money, which impacts on the other man's earnings. The other man, suddenly faced with a drop in his earnings would also hoard money, and thus starts a vicious cycle of hoarding. According to Keynes, the solution to this was to increase the amount of money in circulation! That was his solution for a recession.
Keynes said that a depression was a recession in which people had fallen into a 'liquidity trap', i.e a situation in which no matter how much more money was pumped into circulation, people would continue to hoard their cash. It is at this point according to Keynes that the government should begin to spend, spend, spend, in an effort to kick start the cash flow again.
Back in 1933, Keynes' theories were eventually applied to the US economy, and by the middle of the 1940s, the US was well on the way to a massive economic boom which ended with them as the world's number one industrial power. In seven short years, under massive Keynesian spending, the U.S. went from the greatest depression it has ever known to the greatest economic boom it has ever known.
In a nutshell, what Keynes meant was that the economy is a cycle fuelled by spending, and the moment that spending fuel stops, the economy would shudder to a halt. What Keynes did not take into account is that money doesn't grow on trees, and there is a limit to which even a government can borrow to spend before the debt becomes unsustainable. Take the example of Greece. When the recession began there, their government like others went into Keynesian programmes in order to jump start the economy. However, fiscal irresponsibility, and the fact that the Greek credit rating is not as good as that of South Korea say, meant that they ran into trouble rather quickly. The lesson from this is that continually throwing money at an economic problem irresponsibly, will not solve it but will only mortgage the future of children just being born.
However, we must bear in mind that cutting spending is what bodies like the IMF recommend to banana republics like Nigeria (think SAP), and we all know that such things don't work. You see, in a country like Nigeria, with a large population, the safest way of raising revenue is from taxes, not from resources. Like I argued a few months ago, the money that Nigeria makes from oil is not nearly enough, EVEN IF we don't invest any kobo of it back into the oil industry. However, to raise money from taxes, you need to have a large working population, and there is a need to tightly regulate the informal economy. To successfully pull off stunts like that, we need responsible people in government, and probably more importantly, responsible citizens. Nigeria's citizens sadly do not appear to know what their responsibilities are with respect to forcing accountability from government, and the government in return does not seem to know what its responsibilities are in terms of wealth creation.
Now consider this scenario, we talk about government tightening its belt because the country does not have as much money as it used to. This means that one or more sectors of the government will have to suffer from cutbacks. Let us take the police as an example. That Nigeria's heavily centralised police force is an aberration is another matter, what matters here is that in a normal society, an effective police force plays a very vital role in keeping confidence in the ability of society to function. An effective police force has to be equipped and armed. Imagine a situation where Anabel Nigeria say, has a contract to provide communications equipment to each policeman in the country. Those handsets would need to work, so Globacom would have to provide a dedicated and efficient network for police communications. Then we have DICON providing the arms and ammunition, and PAN providing the vehicles. This alone along with the associated maintenance contracts would generate a lot of jobs for the Nigerian economy. A lot of jobs would generate a lot of income, and expenditure. This would keep the economy moving. We haven't even talked about the revenue that the government would be able to raise in taxing each of these people. However, by reducing expenditure, you are affecting not just the police, but the companies that rely on an efficient police force to remain in business. By taking the money to Switzerland, you are doing worse because the Swiss government would use that same money to do what you ought to have done in the first place. By sitting by the sidelines while our government officials either cut down or ferry the money out, we are encouraging them to do worse in the future.
This anecdote about police spending and how it affects other sectors cuts right across the entire spectrum of the economy. From infrastructure (on which bricks, masonry, carpentry, iron-bending, steel works, and a whole lot of others), to hospitals (teaching, agriculture, vehicles, communication, and a whole lot of others), to schools!
In any event, the most important point that has to be taken from this treatise is that the citizens of Nigeria are meant to be the ultimate gate-keepers of our economy. If we fail in our duty of making sure that our duly (s)elected representatives fail in their duty of properly steering the economy, the results of that failure would be seen in what we see daily right now, high rate of unemployment, massive deficit in the system, politicians mortgaging the future of our children.
Monday, October 25, 2010
"Donkeys live a long time. None of you has ever seen a dead donkey." ---Benjamin from animal farm.
Nigeria is not going to change for the better anytime soon. And the reason stares at you each time you look into the mirror. It stares at me as well. The average Nigerian is so complacent that the rot will keep getting worse and worse until things simply disintegrate. As things stand in Naija, we are already a very dysfunctional state and things have fallen apart, yet we do nothing!
The attitude of the Nigerian in that of Benjamin in George Orwell's 1945 classic Animal Farm. Benjamin was one of the longest lived animals, had seen a lot, but did nothing to warn the other animals of the pigs' corruption which he realised was steadily unfolding. As a matter of fact, his favourite statement was, "Life will go on as it always has gone on, badly."
That is the attitude of the average Nigerian. Having observed how we behave as a people, I have come to the conclusion that the average Nigerian is not unhappy with the rot around him. Rather he is unhappy with his own position within that rot. Ergo, if he is the top-dog, then the rot is alright because he can then lord it over the serfs that still have to eke a living in that rot.
Not much better exemplifies that attitude than two quick stories I must tell.
The first one happened only two Sundays ago. I had gone to the General Aviation Terminal of the Murtala Mohammed Airport to pick up someone. The flight was delayed (as usual), and having not had anything to eat that day, I went into the only available eatery there, a Mr. Bigg's. I ordered a meal of hot-dog and a drink. I sat down and went through the motions of unwrapping the hot-dog and taking a bite. It tasted strange to me, so I took a look. Inside my hot-dog was a dead insect. Immediately I called the closest waiter and showed him what I saw. The young man actually had the nerve to hiss and walk away, so I promptly lost my temper and walked back to the counter to shout. What shocked me was the reaction of the other patrons of the place. They could not care less. One person actually asked me why I was disturbing them "because of ordinary N300!" I left that place in shock, without getting either a refund or a replacement meal.
Lesson: it is the little N300s that count. If we can't stand up and fight for those small things which add up, then how are we expected to stand up and be counted when our roads begin to develop gashes which later turn into gullies? This is precisely the same thing that happened when NEPA began to first take the power for one day, then one week, now forever!
About a decade ago, a friend of mine became a local councillor somewhere in the former Bendel state. Overnight this young man's life changed. He became a 'big boy'. What surprised those of us onlookers who had grown up around the guy (he is a few years older than I am), was how haughty and arrogant he became. As far as he was concerned, he was the next best thing to God. People who know him still wonder what happened (and for the records, his humility has returned now that he is out of power).
However, a cursory observation of the obeisance paid to people who get into positions with the slightest trapping of power explains to me what happened to this young chap.
In Nigeria, the moment the most stupid and ignorant illiterate wields just a little power, everyone around him begins to tell him how good and smart he is. His wife overnight becomes 'mummy' to all around her. Anyone who so much as mouths (not to talk of voicing) the slightest criticism to him becomes an enemy at that instant, and all the sycophants around our friend will do their utmost to destroy this 'enemy' in the hope of currying some favour real or imagined. Small wonder that our government officials as an example genuinely believe that they can do no wrong, and that they have all the answers to whatever happens despite the fact that their policies are so obviously failing. Small wonder that when their tenures are coming to an end they do every and any thing to retain some vestige of that absolute power that Nigerian society confers on anyone who is fortunate to get into a position of authority within his own domain...
With these twin factors of complacency and obeisance, those of us who think that Nigeria is about to change are dreaming. Probably the best advice I can give to us is to wake up.
Thursday, October 14, 2010
TWENTY CEOs of IT companies, each from a different country, board an airplane and are told that the flight that they are about to take is the first-ever to feature pilotless technology: It is a completely unmanned aircraft.
Each one of the CEOs is then told, privately, that his company's software is running the aircraft's Automatic Pilot System.
ONE by one, nineteen of the CEOs leave the aircraft, each offering a different excuse, some lame and laughable.
Now that is obviously lack of confidence.
The Nigerian CEO alone remains on board the jet, smiling and sipping his tea. Asked why he is so certain his software will run the totally computer-controlled plane, he replies : This plane will never take off !"
...That , my friend, is confidence!!!
Thursday, October 07, 2010
Many forms of government have been tried and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all wise. Indeed, it has been said by Winston Churchill, that democracy is the worst form of government except for all those other forms that have been tried from time to time.
Ioseb Jughashvili was NEVER in the Imperial Russian military. As a matter of fact he dodged serving the Tsar's armies during the Great War against the German invader. His role during the Russian Revolution, Russian Civil War, and Polish-Soviet War was as a Bolshevik political commissar, not as a soldier. However, that lack of soldiering did not prevent him as Joseph Stalin from being the cruellest dictator of the twentieth century. In the 1930s, he gradually removed ALL opposition to his rule in what became known at the Great Purge of the Soviet Communist party. And it was at that point that Soviet Russia finally slid into a full blown dictatorship.
You see, the most successful societies of the last two thousand years have been almost without doubt Imperial Rome, Great Britain and the United States. All three of them have had one thing in common, a vibrant opposition. The Roman emperors, far reaching though their powers may have been, had the Senate as a weight to check their excesses. Britain was set on its way to becoming a global superpower after the nobles curtailed King John's power by forcing him to sign the Magna Carta. Some may even argue that Oliver Cromwell's attempts to kill off opposition during his reign, and the subsequent frowning on opposition with the return of the monarchy actually sparked off the migrations, which lead to English domination of what became the United States. We all know about the constant rancour in the US Congress.
The underlying point here is the importance of a vibrant opposition.
Tolu Ogunlesi, a writer at NEXT has received many thinly veiled threats ever since his article appeared on Wednesday criticising the rather silly statements made by our president last Saturday. On my Facebook page, I also criticised those statements, and I have had a lot of vitriol (and Bible verses) flung in my direction. It all reminds me of a statement once credited to the current Osun State governor, Oyinlola, when on receiving new decampees to the PDP he enjoined other people to "stop playing politics of opposition and join the winning party".
There are two points that can be brought out here; Nigerians generally do not know how to take criticism. Nigerians generally do not have ideals. All of this is displayed in our political class.
On the first point, I called for the president to resign on a radio show on Wednesday morning. Before getting to the office, people had already called my boss to ask if that was NEXT's official position on this matter. No it is not. It is MY opinion, and I am entitled to it.
For the sake of clarity, the only printable word I can think of to describe President Jonathan's conduct since the October 1 affair is goof. And 'goof' is the only word I can think of to describe a lot of things that he has done since just about the time he became substantive president. I believe, and strongly too, that the President, Federal Republic of Nigeria ought to be a strong character who knows his left from his right. Sadly the man currently occupying the office is neither, and it has shone through in a lot of his decisions. If he were stronger, a lot of the flux around Abuja would not be happening.
Again, no matter how you cut it, the president is the Commander-in-Chief of our security forces. A failure of our security personnel is a failure of the president, and the buck stops at his desk. If he cannot call them to heel, then he is not fit for the purpose, and he should leave the stage.
What we had on Saturday was one of the most embarrassing incidents ever, where the President publicly exonerated the ONLY group to have claimed responsibility for Friday's atrocity BEFORE the security agencies had settled down to begin investigating anything. That action alone prejudiced the investigation before it started because the security agencies would not want to contradict their boss.
Then the subsequent actions of those agencies do smell of a political witch hunt against the campaign of Ibrahim Babangida. One must wonder at the sudden efficiency of our security agencies in catching people with text messages when Aba is full of kidnappers and has been full of them for going on two years, yet there has not been one prosecution, not to talk of conviction.
The point must be made here that as far as I am concerned, IBB has no business being our president or in government ever again, and if Nigeria were a normal country where there was justice, he probably not be in the position he is now. But as things stand, IBB has NEVER seen the inside of any Nigerian court much less been convicted, so in reality, and according to the Nigerian Constitution he has EVERY right to run for office. It then becomes the duty of Nigerians to go out on election day and vote against him. This attempt to use underhand tactics to get him out of the presidential race is unseemly, and is a method that could be used in future to shackle the opposition.
You see, in any normal environment there are two extreme ends of the political spectrum, the extreme conservative end, which is also known as the far right, and the extreme liberal end also known as the far left. Typically, people on the far right see any form of change as a bad thing and are opposed to it, while people on the far left tend to always want to change things. But then those are stereotypes. In reality, there is no human being who is entirely conservative, neither is there anyone who is entirely liberal. What you have are people who are more conservative than liberal, or more liberal than conservative. With that in mind, it only makes sense that at any point in time, not everyone will agree on the same points and we will have opposition. Opposition IS ESSENTIAL to the survival of democracy.
Unfortunately in our country, what we have is a culture of the big man always being right. Hence someone like Uche Chukwumerije can yo-yo between three or four parties in less than a year and see nothing wrong with it. People who have possibly killed other people on behalf of the PDP in my home state (Edo) have all swung over to the AC simply because the current governor is from that party, and trust me, if he is kicked out in the next elections, all of these people would sashay back to the PDP like it's nothing new, while those who say things as they are suddenly become enemies.
Friday, October 01, 2010
Yesterday night, myself and a friend traveled up and down all over Lagos Island and Victoria Island looking for a party that would properly capture the mood in the city going into today's independence anniversary. I find it quite significant, that Race Course, the venue of the handover ceremonies half a century ago was as it normally is. Unkempt.
The only parties that seemed to be happening were in elitist watering-holes around the Island. Nothing from the proletariat to indicate that the day was special. And why should there be? Do they at the moment really have anything to look forward to?
What I found quite interesting is that a few years ago it was relatively easy to galvanize Nigerians into some form of celebrations on October 1. Now, everyone is fatigued.
Maybe our people are finally beginning to vote with their feet. Maybe, just maybe, the rubbish that the elite have been feeding us with for yonks is no longer washing. After the fruitless jaunt, I went home to no light and had a dreamless sleep.