Unbanning economic Armageddon (1)
The statement credited to Sanusi Lamido Sanusi, about the National Assembly’s spending, was perhaps a culmination of his own frustrations about how the country’s economy is now being run. His plight is double; for he will also be blamed by the time bedlam sets in; after all he is the CBN Governor. But whether the […]
The statement credited to Sanusi Lamido Sanusi, about the National Assembly’s spending, was perhaps a culmination of his own frustrations about how the country’s economy is now being run. His plight is double; for he will also be blamed by the time bedlam sets in; after all he is the CBN Governor. But whether the National Assembly is spending 3% or 50% of our national budget, the truth is that we are running the most expensive democracy in the world and the system is now out of control. Government expenditure is growing more and more due to entrenched interests, everybody else goes for the jugular to see how much they can extract from the poor country. We live in one of the most expensive countries in the world because we have simply lost it as a people!
Some of my readers sent me the following text, urging that I forward it to at least five other people, but why not share it here?; “Do you know it costs tax payers N290 million yearly to maintain each member of our National Assembly in a country where nothing works and 80% of our population earn below N300 a day. A Senator’s daily earning is more than an annual pay of a doctor,.. more than the salary of 42 army generals or 48 professors or 70 commissioners of police, more than twice the pay of the US President, nine times the salary of US congressmen. Please, lets say NO to looting of Nigeria in the name of democracy…”
In the middle of all these, the government decided to experiment with the economy by unbanning imported items such as 15 years old cars, furniture, all manners of textiles and of course, toothpicks, hit the waves. I couldn’t but marvel at the wisdom behind such recklessness at this stage of our economy, and of course, with the current reality of the global macro-economy. Can Nigeria afford free-for-all importation at this point?
First, I considered where the government is coming from. What are the justifications? Principal is that this new policy was borne out of the recommendations of the World Bank and other foreign organisations, who advised Nigeria that our list of banned items ‘was too long’. Perhaps they were trying to make Nigeria a more ‘sexy’ country by focusing the government we are saddled with today, on aesthetics. But that is such a mean thing to do. Onno Ruhl, the WB Country chair, knows better than to tell any country to loosen trade barriers now; more less a sick country like Nigeria. The second idea behind the unbanning of these items is surely political, as the Goodluck government is trying to garner votes from selfish Nigerians whose minds are sealed to any national good.
Taking up the recommendations of the World Bank, I can only refer Nigerians back to the early 80s when most African countries were going through different intensities of recession. In that era, we all ran to the World Bank and the IMF, and the Chicago School led by Milton Friedman recommended Monetary Policy to us. By their estimation, all we had to do was; 1. Devalue our currency, 2. Privatise public companies, 3. Increase Taxation (to make our people take government more responsible), 4. Reduce government expenditure by laying off workers, 5. Remove government subsidies from several sectors, including agriculture, 6. Reduce barriers on trade and allow free import and export.
We were assured that the moment these actions were taken, all will be well with our economy. However, Milton Friedman and co only had the good of the American economy in mind as they played almost every African, Asian and South American country that took their advice, into oblivion. It was the season that we in Nigeria lost our innocence. They said exports will grow, but failed to tell us that they in the USA had retained subsidies on their key sectors (like agriculture) and that even the infrastructure they had on ground was going to put them in a position of advantage over poor African countries where farmers had to trek to and from farms with their produce. They failed to point our attention to the existence of things like phytosanitary conditions and other intricacies of standards and measurements which led to most produce from Africa to be discounted heavily or outrightly rejected when they got to their destinations abroad. Many of our farmers and exporters were thereby bankrupted. And abject poverty increased in our land.
Fast-forward to the present. The response of the Western countries to the ongoing recession (affecting them) has been the direct opposite of what they prescribed to us in the 80s! Instead of devaluation they are defending their currencies. Instead of privatisation, they are using taxpayers funds to buy up banks and car manufacturing companies. Instead of increasing taxes they are sending tax refunds to their citizens through the mail. Instead of reducing government expenditure they are trying to spend their ways out of the problem by printing and spending (now called Quantitative Easing). Instead of laying of workers, their governments are absorbing workers laid off by the private sector! So, where is the sense in following the prescriptions of the World Bank again? But I can’t blame the present government as it is a beneficiary of the shenanigans of Western countries. And Mr Aganga is the representative of Goldman Sachs in Nigeria, just as Hank Paulson came in handy for them to milk the taxpayers in the USA!
Regarding politics, some Igbo guys online hailed Jonathan for the policy, alleging that Hausa and Yoruba leaders had put up the bans just to destroy the Igbos. I was initially distressed at their statement and was wondering if the Igbos saw themselves as the ones who must keep importing everything thereby dragging the economy down, until I came across the statement of another Igbo man who condemned the policy. This second Igbo man is a manufacturer and the consequences of the unbanning of sundry items is simply devastating for that endangered group in Nigeria. Therefore, if the Jonathan government intended to use the unbanning to garner Igbo votes, I think it is quite a cheap shot and a most myopic idea.
Regarding the generation of import duty which had been hitherto lost to the Republic of Benin etc, we are talking here about losing 100% of foreign exchange in order to generate 20% of import duty. It is being penny-wise-pound-foolish. Every country is conserving its stock of foreign exchange now.
More next week.