The Altars Of Famous Gods
“For the four years of my administration, there will be no dinner, no banquet, no luncheon. Nobody will drink anything but water in the office, including my office if I am elected president. Nigeria needs a shock treatment!” – Chief Obafemi Awolowo (1909-1987)
Do you know that in a precarious economic circumstance like Nigeria's, maintaining a mood of cautious optimism might just be imperatively healthy and necessary for one? Therefore, venturing outside the country in search of instances and examples that could make the optimist in one appear to be heading for a comfortable success in life may become very tempting. The optimist wants to take upon himself only those instances and examples he knows he can manage comfortably, and he finds the American example fitting the picture perfectly here:
On Tuesday, 20th January, 1981, at the inauguration of the 'Great Communicator,' Ronald Wilson Reagan (1911-2004), 40th President of the United States' (1981-1989) and 33rd Governor of California (1967-1975), not many people expected that suddenly it will be monumentally possible for the American economy to be so mismanaged, or that the radio, film and television actor-turned-politician will be presiding roughshod over the financial mismanagement that his administration came to be associated with in its early years. Like it was said then: “If the United States sneezed, the world caught a cold”; the world economy definitely could not have stood aloof or seemed unaffected by such unending and daunting financial profligacy which delivered nothing in its wake but unimaginable and staggering deficit that was the hallmark of the Reagan presidency.
Upon the realisation that the 39th U.S. president Jimmy Earl Carter, in office from 20th January 1977-20th January 1981, had bequeathed a recession-plagued economy to it, the Reagan government hoped that its best response would be to stimulate consumer demand. And what propitious way to achieve this, the government thought, if not to help prop up demand, so that production can invariably rise to contain such demand, and create more jobs in the process. This is what its proponents called Reaganomics, and at the time, the elegantly simple approach was, indeed very novel, in economic management.
Originally, a former member of the Democratic Party who joined the Republican Party in 1962, when his positions on matters began shifting rightward in the 1950s, Reagan had not in the least done anything original in this line of thinking. As a leading business and financial writer in the U.S., Paul Emil Erdman (1932-2007), “who became known for writing novels based on monetary trends and historical facts regarding complex matters of international finance” put it, Reagan was only hearkening to the bidding of one of the most influential persons of the 20th century, John Maynard Keynes (1883-1946), “a British economist whose ideas have fundamentally affected the theory and practice of modern macroeconomics, and informed the economic policies of governments” around the world.
Reagan's advisers posited that the inherited economic woe will recommend itself, any day-any time, to the Keynesian solution, which is to artificially stimulate demand to fix the problem of inadequate production due to lack of demand. And it is on the side of government to make the call, that is, to increase spending. Unfortunately, as the administration deficiently spent more money, the balance of payments grew dangerously in deficits.
If anything soured the American experience, it was because American consumers preferred goods and cars made in foreign lands to locally made ones since increased government spending had now put more money in their pockets, which increased their propensity to consume, which in turn meant more demand in the economy. This invariably led to inadequate supply which forced American car buyers to embrace cars made in Germany, France, Japan, etcetera at an unprecedented rate. Mercedes Benz, Volkswagen, BMW, Peugeot, Citroen, Renault, Honda, Nissan, Toyota, enjoyed very strong demand for their vehicles which suddenly became a free for all for Americans, a consumer galore, to put succinctly. They sold the highest number of vehicles in their respective histories. This happened at the expense of those automobiles manufactured in the United States, the demand for which the well intentioned government spending was meant to stimulate in the first place. Indeed, appetite does grow fat on what it feeds on.
The Keynesian solution had thus backfired. Rather than stimulate demand for production to rise thereby generating employment in the U.S., the reverse was the case. It produced imbalance in trade and deficits in towering and embarrassing proportions. For a new solution, therefore, the American president and his economic team must worship at the alter of yet another famous economic god.
What can be done? Quickly, they scampered off to the beckoning shrine of Karl Marx (1818-1883). If Reagan, Nancy's hubby, was bold enough, he should be ready to devalue the once almighty dollar big time- American style (the Teflon culture). This was the only way out, they canvassed. Since beggars do not have a choice, Regan agreed. Thus, Uncle Sam's currency was stretchered into a waiting ambulance, off to the operating theatre. There, the ailing dollar underwent hours of emergency surgery that saw it shed half its weight against the British Pound, Japanese Yen and German Deutschmark. At the end, it was barely recognisable.
The American people were beside themselves with excitement having been told to expect a mightily impressive performance from their now devalued dollar which will encourage the buying of U.S. made goods at cheaper and attractive prices as against dearer and more expensive imports. Abi, if the prices of imported goods became exorbitant and, in some cases prohibitive, many American consumers will be persuaded to look inwards and embrace locally made goods and cars such as Ford, Chrysler, Pontiac, Dodge, etc. They would have finally and conveniently forgotten or abandoned their dream of cruising about in British-made Rolls Royce, jaguar and Land Rovers, German BMWs and Mercedes, and Japanese Toyota and Honda vehicles because not many of them would be able to afford them anymore, thereby reversing imports greatly. American automobile manufacturers such as Cadillac (1902-presnt), Ford (1903-present), Buick (1903-present), General Motors (1908-present), Chevrolet (1911-present), Dodge (1914-present), Lincoln (1920-present), Chrysler (1925-present), Pontiac (1926-2010), Jeep (1941-present), etcetera would be the instant gainers since consumers will now buy their products at cheaper and more attractive prices. The performance of goods and products made in the United States will also improve considerably due to their competitive nature in world markets as a result of their less expensive prices, thereby forcing trade deficits not only to decline but disappear overtime. The economic wine from the altar of German philosopher and economist Karl Marx, who have “influenced much of subsequent economic thought” and published numerous books while he lived, tasted excellent, but its resultant effect on the American economy remained, for some time, largely disappointing. The anticipated change just did not materialise.
The tragedy of economic management has been such that, for the most part, others things will refuse to stay equal. And so, sadly, economic theories, most usually remain what they are, economic theories (apology to Yakubu Mohammed who alluded that much in his The Valley of Fire published by Newswatch in its edition of Monday, 20th June, 1988, on which this piece is based). President Reagan and his team were chagrined to find that, rather than engender a reduction in trade deficit, the recuperating dollar began a swift but rigorous descent, leading to its crash in the end. Reagan sought an immediate explanation!
Justifying what happened to the devalued dollar, Erdman, the economic astrologer, who wrote the book, The Crash of 79, which accurately predicted the crash of world economies as well as the 1979 overthrow of the Pahlavi dynasty in Iran (1949-1979) under Mohammed Reza Shah Pahlavi (1919-1980), who had the backing of the United States, heaped the cause on the simultaneous occurrence of events where imports rose as the dollar's value plummeted, an economic hardship which U.S. citizens found excruciatingly painful. But the American ability to persevere despite these obstacles and setbacks gave them the hope needed to pass through “the valley of fire” to arrive at their economic Eldorado.
Matter-of-factly, the Americans reached the other side of the Valley, their economic Eldorado, as evident by their turning inwards for consumer items which stimulated production and reduced unemployment considerably. Also, the fact that German, Japanese and France's automobile plants have had to shut their plants and factories periodically due to crisis that arose out of a great reduction in American demands for their vehicles, which left them with a loss of the major share of the market, was evident of this turn-around. Simply put, their loss is America's gain.
Now, are there any lessons that Nigeria can draw from the American example? Concerning this, the Yorubas say “Ogbon ologbon ni kii je a pagba ni were” [To make sensible decisions or judgments, we must constantly seek and find wisdom from beyond ourselves]. It is not only true that the country has applied all the world famous economic theories, it has worshipped at the shrines, temples and altars of world famous economic gods and statisticians like Ernst Engels (1821-1896), famous for the Engel curve and the Engel's law, Friedrich Hegel (1770-1831), who, according to Michel Foucault (1926-1984), “is found waiting patiently at the end of whatever road contemporary philosophers travel”, and even French Jean-Baptiste Say (1767-1832), “a classical liberalist and advocate of competition, free trade, and lifting of restraints on business”, who thumped his chest and stated that for the generation of demand and employment, the intervention of government in the economy is a sine quo non. Nigeria was also a cheerful monk at the monastery of Scottish moral philosopher and pioneer of political economy, Adam Smith (1723-1790) and his “invisible hands,” a phrase he used to capture “his important claim that individuals' efforts to maximise their own gains in a free market benefits society, even if the ambitious have no benevolent intentions.” Nigeria equally performed the pilgrimage to the inviting pagoda of Keynes, to no avail. Our economy and currency seem to have defied each and every one these gods. Pah!
Despite the fact that Nigeria has been devaluing the Naira since Alhaji Shehu Shagari succeeded Chief Obafemi Awolowo as Minister of Finance in 1971, devaluation is still being readily recommended for the country. Nothing else will do to satisfy the market gods. Although General Muhammadu Buhari (GMB), whose Finance Minister, Dr. Onaolapo Soleye, an ally and adviser of President Olusegun Obasanjo, who was not a trained economist, refused to devalue the Naira drastically. The Buhari government refinanced trade debt arrears, supported rationalisation and restriction of imports, created new Naira notes to halt currency smuggling, but failed to stop the trend of budget deficit financing and import licence racket. CBN Governor, Mallam Sanusi Lamido Sanusi, has since defended the averse view of Buharism to the bitter pill of devaluation as well as lampooned its proponents in his article Buharism: Economic and political economy, posted online by Daily Trust of Tuesday, 20th August, 2002, where he wrote:
“I have no doubt in my mind that the position of Buharism was based on a sound understanding of neo-classical economics and that those who were pushing for devaluation either did not understand their subject or were acting deliberately as agents of international capital in its rampage against all barriers set up by sovereign states to protect the integrity of the domestic economy.”
And when recently the International Monetary Fund (IMF) gathered the courage to admit through an official report it released declaring “that while its basic policy prescriptions were correct, it underestimated the negative effect of austerity on growth and therefore ended up making economic prognoses that were much too optimistic about Greece's debt sustainability.” Sanusi merely retorted:
“all patriotic economists saw it for what it was: a hypocritical statement of remorse after attaining set objectives.”
As the CBN Governor rightly alluded, political economist Professor Yannis Varoufakis, 52, an active participant in the current debates on global and European crisis; American economist Professor Jagdish Bhagwati, 79, an advocate of free trade, who is well known for his research in international trade; and a former senior vice president and chief economist of the World Bank, Professor Joseph Stiglitz, 70, author of Globalization and its Discontents, have all chided the Fund for one reason or the other. From Mexico to Thailand, and from Argentina to Greece, it is the same grim news about IMF's penchant for erroneous forecasting; “the deliberate reproduction of an ideological script that narrowly serves the interests of private creditors by shifting the burden of adjustment squarely onto the shoulders of the poorest and weakest members in the debtor countries”. Jerome Ross corroborated Sanusi's claim in his article, The IMF's “mistakes” on Greece Are Nothing New, posted at Roar Magazine of Monday, 10th June, 2013:
“…the IMF's belated mea culpa is nothing new. The fact of the matter is that these type of self-critical reports by the Fund have been a permanent feature of its management of international financial crises ever since the 1980s. For some reason, every time a debt crisis strikes, the IMF moves in to impose the same short-sighted bailouts, austerity measures and market reforms – and then, several years later, comes to the conclusion that it made major mistakes in its handling of the crisis. Yet it never changes track: when the next crisis hits, it simply reproduces the same old script: stabilization, privatization, liberalization.”
But the government of General Ibrahim Babangida who succeeded General Buhari devalued the Naira, in a clearly elaborate operation. President Babangida, who had former IMF and World Bank economists such as Dr. Kalu Idika Kalu, a two-time minister of finance, and minister of national panning and also minister of transport, who in January 2012 was appointed to chair the special Task Force on refineries. He recently described the CBN's cashless policy as a misnomer; Yale-trained banker, Chief Olu Falae, 75, a former secretary to the Federal Government who also served the Babangida regime as minister of finance, Dr. Chu S.P. Okongwu, a former minister of finance and national planning, who recently criticised the Federal Government of nepotism over what he called the poor handling of the privatisation of the power sector, and Alhaji Abubakar Alhaji, Nigeria's former High Commissioner to the United Kingdom and finance minister (many are of the view that most of them while in office were in cahoots with their former employers). These men, who worked for Babangida's government as “architects of fiscal and monetary policy”, devalued the Naira by 500%, or rather the Babangida administration allowed the Nigerian currency to find its “natural” level. It was even said then that an unofficial devaluation of the Naira had been taking place since 1981 outside the CBN's official position, if one had bothered to stop at any of the banks at Heathrow or Gatwick Airports in London for confirmation. All to no avail. If we are choosing the wrong war, shouldn't we, at least, be picking the right weapons?
Like the United States of the 80s, Nigeria has been experiencing its own 'valley of fire', but unfortunately with no end in sight. For nearly three decades now, the prayer that the Nigerian situation should “follow the American example and cross the valley to the other side, into safety and therefore into prosperity”, has remained unanswered. Could it be that our so-called sound economic managers, who are charged with seeing the economy through the valley of fire, are not sound enough or have, indeed, gone gaga? To suggest that Nigerian governments, one after the other, did not come prepared with “enough discipline and patriotic national fervour” to effect the big jump across the valley, as did their American counterparts, is to hit the nail on its head. What our undisciplined and profligate governments saved with the right hand, they squandered with the left, almost immediately.
Like any and all optimists, Nigerians are hopeful about the future and about the success of these numerous measures put in place, and why not? But the pessimists among us, too, are equally justified to see things differently, like they always do. They are right when they argue that Nigeria is not the United States. That the country is not the same as the United Kingdom either, or for that matter, Japan, France or Germany. That because the measures worked so well in one country does not mean that they will also work so well in another. Perhaps no model can ever be a perfect analogue of another, but the un-progressive but popular quote of three times British prime minister (1895-1902), Lord Robert Gascoyne-Cecil, 3rd Marquess of Salisbury (1830-1903), the first British prime minister of the 20th century, the last PM to head his full administration from the House of Lords and first PM younger than Alexandrina Victoria, officially known as Queen Victoria (1819-1901), who “hated being pregnant, viewed breast-feeding with disgust, and thought newborn babies were ugly”, is more than appropriate here. Salisbury, who did not believe in a legislative government, but in an aristocratic class born to rule, worked with his Conservative Party to restrain demagogic liberalism and democratic excess. Portraying his “narrow cynicism” while opposing Parnellism and the demand for Irish Home Rule, Salisbury (after whom Fort Salisbury, later changed to Harare in April 1982, was named at its founding in September 1890) once declared at St. James' Hall in the most earnest language to depict his hostility on the subject:
“Democracy works so perfectly well when it is limited to people of plutonic race, but that it does not work so well when people of other races are called upon to join in it. ”
As a timely reality check, Nigerians probably told themselves that they were ready for the shock treatment promised by Chief Awolowo, a most likely candidate for both political and economic change at the time. But there were those among them who took exception to “conducting national affairs with the principles which are prescribed to individuals”, and so worked assiduously against the late sage's election as president. The people professed their preparedness to embrace those tangible ingredients that went into the making of America, France, Britain, Japan and Germany. That they were ready to abide by whatever conditionalities and package deal the IMF thrust in their direction , or whatever fresh economic pasta sauces the World Bank serves to tempt their more demanding palates. And so, they have journeyed from austerity measures since the time of General Obasanjo's first coming (1976-1979), with nothing to show for it when that government wound up its activities, to the Structural Adjustment Programme (SAP) introduced in July, 1986 by the Babangida administration (1985-1993) due to the deplorable state of the country's economy as a result of serious foreign exchange problems it experienced following the collapse of the oil market in 1981. The Shehu Shagari civilian administration had worsened the situation through unrestricted imports. The proportion of the national income which the Buhari regime committed to debt repayments alone stood at 40%, and was rising to 60% by the time of his ouster. Under Babangida, Nigerians also watched the CBN changed the bidding system on Thursday, 2nd April, 1987, to the Dutch option on fortnightly instead of weekly sessions, which failed to effectively address the problem of inadequate funding. It proved only an Elastoplast solution to a far greater economic problem. Atedo Peterside, then general manager, credit and marketing at NAL Merchant Bank (currently Sterling Bank), at the time identified inadequate supply of foreign exchange to the market as chief among the reasons which militated against the Naira's realistic rate. He argued that the Dutch auction:
“simply introduced an added air of caution in the bidding process, until all the participants (i.e. banks, and their customers) realised that the naira was only heading in one direction; i.e. cautiously downwards.”
From November 1993, the government pegged the exchange rate of the Naira at N85 to the dollar in a regulated economy sanctioned by General Sani Abacha (1943-1998) in those 'Never Again' five years (1993-1998). Nigeria has since gone back to enthroning the old regime of deregulation (i.e. allowing market forces to determine the true worth of our national currency), and where has that also got us? Purgatory, every step of the long tortuous journey was one of economic purgatory, because as at today, the official exchange rate stands at N155.71 to the U.S. dollar, whereas from the middle of October to December 1986, during the 12th, 17th and 19th bidding sessions of SFEM, the exchange rate officially stood at between N3.0 and 3.5 to the dollar. The CBN had openly intervened to keep the Naira down despite showing signs of picking up, which angered Bola Kuforiji-Olubi, 77, then Chairman of UBA [later ING's Secretary of Commerce], who later declared at that year's distinguished lecture series organised by Obafemi Awolowo University, Ile-Ife, that financial experts were finding CBN's constant interventions disturbing. She had pleaded:
“The Naira should be left entirely to the forces of supply and demand and allowed to reach equilibrium at acceptable rate based on conditions of the market.”
Since then, it has been one hell of a journey for the poor Naira have continued to slide and falter against as well as tumble before key industrial currencies of the world, since succeeding governments in the country have continued to elbow aside one policy after another - all to no avail. As a result, the country's future has continued to remain bleak; uncertainty, in every ramification of the word, has pervaded the landscape. And, there is no respite in sight; the people must eternally be prepared for belt-tightening, they are told. Knowing what we know already (remember her role in the Sunday, 1st January 2012 removal of fuel subsidy which sparked off the 'Occupy Nigeria' nationwide riot last year), and given her background as a former employee of the World Bank, not many Nigerians take Ngozi Okonjo-Iweala, 59, one of only three women finance ministers in the world (the other two being 55-year old Luisa Dias Diogo of Mozambique and 46 year-old Saara Kuugongelwa-Amathila of Namibia) seriously anymore, and the same thing goes for the government, which economic team she is heading as the nation's Finance Minister, an appointment designed to give her more economic elbow room as the co-ordinating minister for the economy. But for the fast approaching 2015 general election which President Goodluck Jonathan is bent on contesting, “Okonjo-Wahala” (as she rightly noted Nigerians nicknamed her disapprovingly), would have been warming up to another round of fuel subsidy removal by Wednesday, 1st January, 2014; that time of year when fuel prices in Nigeria usually increase owing to speculation of subsidy removal by the government. This is what galls Nigerians most. Ah, we don't want all that palaver again, do we?
Harvard-trained Okonjo-Iweala may have brought a certain cachet to the job since Monday, 11th July, 2011 when she reassumed office as finance minister, but the cack-handed way she and her economic team have so far handled the near cadaver economy of Nigeria still leaves much to be desired. She should save us those her smartass comments and justifications; you needed to hear her speak the other day about government efforts at job creation to know it is all dressed up as a confidence trick. The “brilliant reformer” cut a pitiable figure as she rambled away with no sense of purpose. Under the watch of Forbes' 83rd most powerful woman in the world, things have moved painfully slowly for everyone. Nigerians have suddenly found themselves to be at the mercy of the same finance minister (2003-2006), who the caddy President Obasanjo dropped like a bad habit (a less palatable way of sacking a minister) on Wednesday, 21st June 2006. Five years later, she would win favour (20011-present) with the incumbent president, who, in appointing her, swayed precariously more to the past than the present. How did GEJ get so bewitched? Didn't they say thunder doesn't strike in the same place twice?
But then, what have Nigerians not heard about their country's ailing economy? What have they not been told by past and present governments? It is the same old, cock and bull story all the time; the handing down of the anachronistic and superannuated prescriptions of the eighties: “rapid fiscal contraction, fire sale privatisation and commercialisation, “and far-reaching neoliberal market reforms.” Nobody is doing any visible or serious realigning, or showing more political realism anymore, which ought to see the government recognise and accept the true nature of the Nigerian situation and try to deal with in a practical way. So, the country is left to drift perpetually with the severe economic problems besetting it, and more and more Nigerians are falling into poverty in the process. Based on a wealth of statistical evidence that “austerity kills,” political economist and senior research leader at the University of Oxford Professor David Stuckler and epidemiologist and Associate Professor of Medicine at Stanford University Sanjay Basu, wrote in their book The Body Economic: Why Austerity Kills that recession can hurt, but austerity definitely kills, and added:
“many countries have turned their recession into veritable epidemics, running or extinguishing thousands of lives in a misguided attempt to balance budgets and shore up financial markets.”
In the Nigerian finance ministry in the last ten years alone, this has been the roll-call: Ngozi Okonjo-Iweala (2003-2006); Nnenadi Usman (2006-2007); Shamsuddeen Usman (2007-2009); Mansur Mukhtar (2009-2010); Olusegun Aganga (2010-2011) and again Ngozi Okonjo-Iweala (2011-present). The people just do not know who or what to believe anymore. They do not know what to expect either. All the various programmes which successive governments mapped out to transform the country's economy in the last five decades have failed to get the country out of the woods. 'Na like dis e go dey go?' Where do we go from here?
Nigerians have had enough of this impunity. Henceforth, as a well considered opinion, public servants who “misadvised” government in this country should be unceremoniously bundled out of the way, and to prison if found guilty. It is high time we began punishing such government officials whose penchant is to “misadvise” the government as General Abdulsalam Abubakar painfully averred in his Thursday, 1st October, 1998 broadcast to the nation. On that day the amiable general betrayed Nigerian workers when he went back on his promise to pay the agreed N3,500 minimum wage, claiming that his government was “misadvised”. For a government that had only a few months left in office to have threatened to “deal with those who misadvised it at the appropriate time”, the statement marked no serious will on the part of the regime, but merely an attempt to pacify its critics.
Thankfully, General Abubakar is not alone in this line of thinking. Jereome Ross agrees with him entirely when he called for the trial and imprisonment of IMF officials who persist in dishing out their so-called “mistakes”, ibid:
“Even if we assume that the IMF's policy prescriptions were based on mere “mistakes,” such mistakes must have consequences. At the very least, those responsible for the mistakes should lose their jobs and reputations. A genuinely democratic state of law, however, would require such mass manslaughter to be punishable by law- with long term imprisonment.”
There is no gainsaying the fact that our so-called economic experts, who have been responsible, by and large, for the bestial conditions into which Nigeria's economy has sunk, should equally be made to face the music in Nigeria. Until this happens, Okonjo-Iweala and her economic team will continue to show us a toad as the perfect specimen of a lizard by their direct imposition or justification of those policies “that literally kill thousands of people and destroy the lives of millions more” only to admit later that they have made a terrible mistake.
If we must speak the truth, all our efforts have gone down the drain on no other account than the monumental corruption and profligacy by the combination of Nigerian politicians, public officials (which include the so-called economic team working as domestic agents for their global capitalist former employers), military adventurists and their cronies, civil servants, unscrupulous businessmen and foreign collaborators.
These are the main culprits, and many of them are walking our streets as free men and women, and enjoying their loot without hindrance. They must be made to face the full wrath of the law, and then the next set of people will sit up. The Goodluck Jonathan administration should be chided for fighting corruption with kid gloves. A government that proclaims it is all in favour of openness and accountability should not be making elaborate efforts at the highest level to conceal a crime or shield the corrupt. Neither should its resolve to severely reprimand real culprits be shouted down.