Meltdown economics!

Perhaps, the urgency of what is on hand can only be brought to the fore, by looking at the economic situation of the country.  For too long, we have exhibited the same unoriginality that I complained about last week, even in the area of our economics.  Nigerian governments consistently report GDP growth rates and celebrate […]

Perhaps, the urgency of what is on hand can only be brought to the fore, by looking at the economic situation of the country.  For too long, we have exhibited the same unoriginality that I complained about last week, even in the area of our economics.  Nigerian governments consistently report GDP growth rates and celebrate same, year in, year out.  When prodded further, our successive governments are wont to quote foreign sources as commending them for the high growth rates, even when they know that those figures are absolutely meaningless.  We have continued with this mindlessness until we are now faced with perhaps the biggest economic dilemma of all times.

The government on one hand, wants to remove fuel price subsidies by January 2012.  If it does that, Nigerians may immediately begin to pay as much as N180 per litre of fuel.  It takes only a pedestrian understanding of economics to know that there will likely be stagflation as a result of that policy.  The prices of everything else, will likely climb by 300% – 400%, before losing a bit of ground.  How prepared is the government to deal with this coming cataclysm, more so as this is a government that has prided itself as not being assertive or articulate?  Are we going to wait for our problems to be solved by divine intervention?  While I see the need for government to try and get a better hold of its finances, by reducing the haemorrhage that is fuel price subsidy (which it pays to its fuel-importer friends anyway), it is evident that the government MUST regulate other sectors of the economy, if this country is not to wake up to pandemonium and collapse ONE DAY SOON.

The other apparent economic shocks have to do with what has now become a fait accompli – the devaluation of the naira.  When the IMF recommended same a few months ago, I was one of the few who knew that we couldn’t escape a devaluation, no matter the fact that our government chose to rave and rant.  I really pity my good friends Sanusi Lamido Sanusi, on whose head all the economic troubles of Nigeria will now be hung!  Really, this is a bad time to serve government in Nigeria.  With its self-advertised unassertiveness, this very government is unable to get a hold on runaway fiscal profligacy, which translates into an uncontrollable monetary policy nightmare for Sanusi and his lieutenants.

The result of government’s inability to control fiscal spending, is that month in month out, every state and local government simply drive in long, siren-blaring convoys to Abuja, collect the largesse that is called FAAC – Federal Allocation – spend the money in less than a month and come back broke to get some more.  By the time fuel price is deregulated and the hyperinflation sets in, civil servants will find that their new minimum wage is nonsense!  Strikes will start afresh, as well as the corollary reduction in productivity levels.  It is also apparent, that though Nigeria has been selling good amounts of crude oil at near-record-high prices, Nigeria’s reserves have been dwindling all the same.  With capital flight indicated by the huge volumes of foreign exchange demanded from the CBN every week – sometimes running into over a billion dollars – the economy has never been in more jeopardy (and that goes for the society too).

Are we looking at a future collapse of the naira?  After all, the real issue is that the economy is NOT PRODUCING, and that our saving grace is merely crude oil sales?  Are we looking at the naira berthing at say N300 to the dollar?  My observations may sound alarmist, but I have since realised that those outside government see what is wrong clearer than those in government.  There is positive value in critiques like this.

So I say; this is the time for a rethink of several things – if only we were united in the quest to save ourselves from perdition.  This is the time to stop reporting GDP growth as success, knowing well enough that our GDP figures are skewed unnecessarily by crude oil sales and prices.  This is the time to start measuring, documenting, and analysing our social and economic indices in a truthful manner like we never did before.  This is the time to look inwards and start to innovate what we use, rather than wait to buy the innovation of others, or worse still, to wait for others to come and innovate what is indigenous to us and then sell those innovations to us at exorbitant prices.

This is the time to re-evaluate our ways of life, our cultures, and cut back on useless spending that has defined us as a people.  This is the time to cut back on those useless birthday celebrations, those sycophantic congratulatory messages, those deceptively wasteful bootlicking that people in government enjoy so much.  This is the time for us, even at our private levels, to save, save, and save some more.  For the deluge is coming and those who are unprepared will surely drown in the next wave of global poverty which will first be felt more painfully in black Africa – the global dumpsite for poverty, disease, war and everything bad.  This is the time, most importantly, to note that the solutions to our problems have become long term – even if we did everything right today, we can only begin to see cogent results in say twenty years.  But we must start the work of redemption today!

Our situation is made worse by the global failure of the systems we are copying.  Capitalism has more than failed, but rather than its promoters acknowledging this failure, they are ready to bring down the world on all of us.  In so-called developed countries, huge monies made from dumping goods, especially arms and ammunition in Africa and parts of Asia, from stoking wars and watching millions die – as is being done in Libya and being surreptitiously promoted in Iran and Syria today – has simply been pocketed by a few.  In the coming years, the economies that will stand are those economies of tax havens where these ‘bloody’ (pun intended) capitalists have stashed monies that should have been used to make the world a better place.

This then becomes a time to communicate.  For good or ill, it has fallen on Goodluck Ebele Jonathan, to lead this country in a period of unprecedented economic and social warfare.  The war is ill-defined and virtual in nature.  It is a make or mar war.  The world is staring at the prospects of a Third World War which may be brought about by the fact that powerful countries have absolutely NO ANSWER to the economic predicaments facing them.  It is not enough for President Azikiwe Jonathan to appeal to our sentiments.  He asked to be president. And presidency is no walk in the park.  I wish I had the platform to address the nation and sensitise our people to the needed attitudinal and cultural changes that has become more than urgent.  The president himself needs to powerfully and passionately, convey these messages to Nigerians.   But will he?  Can he?