08 Feb 2009 |
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| The Nigerian Face Of Global Recession By Reuben Abati
THE key subject in global discourse today is the meltdown of the financial world, the advertisement of the limits of capitalism and more especially of neo-liberalism, and teh ffect of this on national economies. All of a sudden, Karl Marx is resurrecting, he is emerging as the hero of the moment, as governments are adopting measures taken straight from the pages of Marx's The Communist Manifesto. Market forces now appear like the plague. In Nigeria, after initial official denials of the impact of the global recession on Nigerians, there has been in the past month frantic attempts by government to address the likely knock-on effects of the crisis in Nigeria.
The Federal Government has had to set up a National Economic Management Team. After initial criticisms about the composition and character of that team, it was hurriedly reconstituted, and its Chairman, and Finance Minister, Dr Mansur Muhtar, has now admitted that the global economic crisis has exposed Nigeria to "considerable shocks". CBN Governor Charles Soludo who had hitherto been credited with the declaration that Nigeria is not in any way affected by global recession also now tells everyone that he never said so. He was misunderstood by illiterates. It is not difficult to see the specific manner in which Nigeria is already suffering from "considerable shocks". According to Mansur Muhtar, "we have witnessed sharp drop in market capitalisation in the Nigerian Stock Exchange, reduced budgetary revenues, falling external reserves and market depreciation."
To rephrase all of this in common language, the reality of the Nigerian situation is that the country's stock market is at an all-time low, all those attractive stocks which Nigerians used to buy with so much desperation and anxiety have all become penny stocks. Stockbrokers who used to be major financial advisors in this environment have become villains. Oil, the mainstay of the Nigerian economy, has also lost its value in the international market thus turning national budgetary projections adrift. In much specific parlance, Nigeria is likely to become bankrupt if the crisis perists. Our national reserves are down, and the country's credit rating is thereby eroded. The naira has lost its value against the dollar by about 23 per cent. Inflation is skyrocketing. The consumer is under pressure. Even newspapers have had to increase either their cover prices or advert rates. States are borrowing money, or increasing taxation in order to stay afloat.
The Managing Director of the Securities and Exchange Commission was said to have accused the banks of causing the problem in the Stock Exchange. After the outrage that attended his statement from the banking sector, he has since recanted. But what is known is that many Nigerian banks are living on borrowed time. It won't be long before they tell the true story of their balance sheets. More companies, in other sectors, are already threatening to close shop due to the rising cost of doing business. Landlords are increasing rent. When their tenants protest, they ask them to watch television. Are they not aware that the entire world is facing a financial crisis? And that the cost of cement has gone up again? It doesn't matter that the house was built 20 years ago. In Nigeria, landlords always use changes in the cost of cement and other building materials to fix rent, without regard for the Rent Edict.
But the most memorable illustration of the crisis occurred the other day at a nightclub. A guy had picked up a young lady who turned out to be an ECOWAS lady, and after his initial advances, he had been told pointedly that what he wanted would cost him N20, 000. The shouting match that ensued drew the attention and the intervention of others.
"Twenty thousand for what?", we had suddenly heard as the guy shouted.
"For what you want. Look at me, do I look cheap?" She didn't look cheap at all.
"But it is 4 a. m in the morning. Try and be considerate."
"� am sure you know what the Naira is saying against the dollar"
"The dollar has nothing to do with this matter, I beg. I'll pay N5, 000. That is the going rate today. "
"But that is not my own going rate, " the lady pointed out. And I nearly laughed.
The negotiation went back and forth, eventually the negotiators lowered their voices. And they left together. And I had my chance to laugh. Candidly what has the exchange rate got to do with the matter between the guy and the lady?
But for the most part, beyond the formal gestures in government and the rising cost of consumer items, the global financial crisis is yet to make a dent on the lifestyle of Nigerians. In other parts of the world, the crisis has changed lifestyles and expectations. People are either cutting down on costs or planning for the raining day that has come. Between 1929 and 1932, when there was a similar crisis, it was as if the world had come to an end in the West. In the face of the present crisis, many abroad have committed suicide. Britons in Spain have had to sell their homes and return to the United Kindgom to queue up for unemployment benefits. More persons are losing their jobs in North America. Asia and Europe. At Davos, it was projected that the global job cut rate in 2009 alone will be the highest since 1933. Governments in the West are bailing out institutions and industries in order to stabilise the economy. In the United States, people are being encouraged to still take mortgage. Restaurants, tour companies, and other businesses are giving the people generous discounts to encourage them to spend. Everyone is being careful in the face of what looks like the definite end of the end: apocalypse.
In Nigeria where I live, there isn't such panic among the people. There is a report of official panic, but the people are unfazed. Every weekend, we still have so many of those wasteful social parties, which are taken beyond mere social observance to the realm of advertisement of private wealth. The mortgage sector is still booming as people continue to build houses. Nigeria's housing sector is probably the most vibrant in the world. Some of the most expensive cars in the world can be found on our streets, purchased striaght off the production line. It is common knowledge that there are few jobs still available in Western countries, but many of our compatriots are still queueing up at the embassies looking for visas.
The queues have not reduced. Nigerians abroad who presumably know better visit home, and they still give the impression that they live in Paradise. Some of them sound as if they won the presidential election in the US, not Obama. It doesn't seem to matter that many Nigerians abroad are engaged in jobs and circumstances that shame would never allow them to take on, were they to be in Nigeria among their own people. It is true that there is some official admission that all is not well with the economy but in real terms, government officials are living it up too. Speaker of the House of Representatives, Dimeji Bankole almost lost his seat a few days ago only because he compelled his colleagues to pay back the salary advance that they had collected for Sallah and Xmas celebrations. They couldnt figure out why they had to pay back when the same House of Representatives returned N2 billion unspent funds to the Treasury! If Bankole had agreed that they could keep the N2 million each as their bonus for serving the Nigerian people, there would have been no problem at all.
Why are ordinary Nigerians so unconcerned? Perhaps unconcerned is not the exact word. The short of it is that global recession means little to the average Nigerian. I have been told that a ready reason is that we are not part of globalisation, we are marginal players in an interconnected world, much of Nigeria's wealth is undocumented and untraceable. Completely out of the formal system. And whereas the formal system has collapsed internationally, with a globalised impact, the informal economy in Nigeria is alive. I am not an economist, so I won't pursue this further. But commonsense tells us that perhaps the reason the average Nigerian is carrying on with life as if the end is not nigh, is because the recession that is making people in the West lose sleep is something that he or she is used to. It is his life. In fact, Nigerians moved from recession to depression about 20 years ago. And they have been wrestling with it since then.
What is making other people of the world lose weight at the moment appears to the average Nigerian as normal reality. At the reecent global economic forum in Davos, so much was said about the growing rate of unemployment as a result of the financial meltdown. When a man loses his job in the West for two years, he believes that the world is over. In the US, one man and his wife killed themselves and their children because they both lost their jobs. In Nigeria, this is no big deal. There are families in this country today where both husband and wife have no jobs, but somehow they survive. And they may even appear to be happier and richer than otherwise fully employed persons. Such a couple can dress up in the morning and stand by the roadside and beg for alms, with their children carrying bowls. They will tell you that no condition is permanent.
Many Europeans and Americans are no longer able to pay for electricity and gas supply and they are inconsolable. When Nigerians are told that lack of access to power supply can be an issue in global recession, they are indifferent. Long before a global recession was declared, Nigerians have been living without electricity. Transportation is supposed to be a problem in the age of recession, life is supposed to shut down and governments are struggling to cushion the effects. The average Nigerian is so used to these situations that give foreigners sleepless nights that he cannot really be bothered.
If the national currency is depreciating, for him it is a familiar story, companies shutting down, a vanishing economic reserves, dwindling oil revenue, as far as he is concerned, it was a long time ago that he lived normally. Indeed, the Nigerian economy entered the depression mode about 20 years ago. More than 15 years ago, I gave a public lecture about the fate of literature in a dispossessed economy. Such words: dispossessed, recessive, recursive, failed and depressed have been part of the Nigerian lexicon for decades. Our capacity to accept depression as a fact of normal life is a reflection of how so far apart we are from the rest of the world. But do we have something to market here? Nigerians are probably in a better position to teach the rest of the world how to live in uncertain times and be truly happy in the midst of misfortune. Our obsession with religious faith perhaps explains our continuing resilience.
Where Is The Electoral Reform Committee Report?
THE 22-man Electoral Reform Committee led by former Justice of Nigeria, Justice Mohammed Uwais presented its report to President Umaru Yar'Adua on December 12, 2008. Nearly two months later, Nigerians continue to discuss the report as mere hearsay and through word-of-mouth transmission. Some newspapers have published excerpts of the report unofficially. But where is the report? Nigerians have been told that it is over 290 pages long and that it is in six volumes. But where is it? Where is the White Paper on it? President Yar'Adua had promised at the time that his government will work in collaboration with the National Assembly to implement the recommendations of the Electoral Reform. Senator David Mark, the Senate President, also pledged the commitment of the National Assembly to the Constitution Review and Electoral Reform Process. But since then, the Uwais committee report has not been released officially. Releasing it to the Nigerian public will serve the purpose of transparency and encourage wider ownership of its recommendations.
It is such an important document, it ought to be discussed and debated by Nigerians, the fact that the ERC received 1,466 memoranda and held public hearings in 12 states notwithstanding. Constitution review and electoral reform are directly linked to Nigeria's future and the strengthening of our democracy. Nigerians do not have the luxury of time. These are issues that should be resolved expeditiously. Unfortunately, the Presidency is not showing enough political will to deal with the matter and the National Assembly is busy fighting over who should be chair or co-chair of the Joint Constitution Review Comittee (JCRC).
By ignoring these important issues, we face a serious danger. There may well be a Constitution Review and Electoral Reform in the life of the Yar'Adua administration but for reasons of contrived time constraints, it could be so rushed through the process, that the key beneficiaries will be those who want the status quo retained or who are determined to hijack the process. The outcome could well be that nothing serious will be changed in the Constitution and we would be nowhere near a more credible electoral system by 2011. The Nigerian Government must release the White Paper on the ERC report today. It is important that it does not end up like similar efforts which were thrown into the dust bin. Till today nobody has seen an official copy of the White Paper on the Justice Babalakin report on the 1979 elections, the Okigbo Report on the Central Bank and the Gulf war oil receipts and the Oputa Panel Report on Human Rights Abuses. Nigerians are waiting.
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