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Forward Ever, Backward Never.
Samuel Akinyele Caulcrick
Ex-President Obasanjos handing over, by crook, crude or candour, of the leadership of Nigeria to a generation of Nigerians born at the beginning of the second half of the last century could go down in the annals of Nigeria as his greatest achievement. This generation of Nigerians dubbed the Independence Children that are being handed over the baton, were tempered by political crisis and exposed to various, wobbling omni directional economy policies. The torch, however, is passed and a hope of a new dawn is somewhat enticing. Obasanjoss other achievements or no achievements, depending on whether you can afford a little bit of sympathy or not, have generated diverse reactions among Nigerians. What fascinates me is the chosen theme of the new administration, which the present leadership dubbed Forward Ever and Backward Never.
With the above in mind, my deliberation of the past would as much as I can; be only a foray in order to perhaps delineate if need be. I, therefore, apologise for any offence. The huge population size of Nigeria could either be a burden or an asset, depending on ones inclination of economic theory. Were the population of Nigeria to be one tenth of its present size, the achievements of the past no doubt would have sufficed. Be as it may, we can not wish away the remaining 90% that missed out on qualitative living. Would that have any bearing on the degree of success of any regime? That also depends on where your sympathy lies. Did the reforms of the last regime impact on the majority of Nigerians? Where would the Nigerian economy be today were the price of oil to remain at $29 per barrel? I do not think Nigerians contributed, productively, to the hike in the price of oil.
But of course we can argue that by fanning the ember of rage in the Niger Delta, Nigeria had a say immensely; wittingly maybe, to the over $65 average price of crude oil per barrel and by default had a robust GDP. Somebody said that if all Nigerians were giving Lexotan or Valium and were made to sleep continuously for 365 days, the country would still earn the same amount from oil, if not more, at the end of the year. Mm! that tells us that the productivity of the Nigerian labour force is almost zero to the GDP, since oil that is produced by foreign companies with their efforts still accounts for the bulk of Nigerias GDP. That also shows that the productivity of the Nigerian worker is overrated. Nigeria is a macrocosm particularly because of its diversity and that is not just playing politics. There are few people though who believe that the country is not as complex as it seems.
Despite the diversity, Nigerians have at least a common task and that is to put food on the table or the mat as it were. I suppose we could, therefore, put politics on the shelf for the next four years to keep it warm. The next attractive topic will, hence, be the economy. Economy as a system is a mode of wealth distribution. Since the beginning of the Industrial Revolution, two forms of wealth distribution, capitalism and socialism, have emerged distinct. In each of these systems, as indeed the economics before them which was feudalism, labour has always been an important component. Whereas in feudalism there were no wages, capitalism brought about wages for the first time in the history of mankind; but paid little wages. Socialism was meant to address the imbalance in the capitalists attitudes towards the workers.
Socialism would, however, evolve into something bigger than just an umbrella for workers. It catered for everybody in that community. As socialist reforms gained grounds, workers formed themselves into unions to protect wages and ask for more from the capitalists profits. But, they kept on asking for more and sometimes ridiculously more to the point that it stifled the development of the business and its competitiveness. The capitalists cannot understand the thinking of the workers - even the politicians cannot either. For a start, the capitalists pay wages even if it is not much, but the feudal lords had paid nothing. From thence, a lifelong battle was drawn between the workers and their employers the capitalists. The political class, the state, found itself in the middle. The state, nonetheless, has a responsibility to look after both the rich and the poor, but needs money to do so and the bulk of the money needed would have to come from the rich.
Anything that would reduce the cost of labour thus became the capitalists dreams. Should the state regulate the activities of the capitalist or not regulate. At last, the capitalists put up an argument. Surprisingly, the capitalists would use the principle of socialism for their debate: The unionised workers do not represent the majority in the community, they argued, and are only a tiny percentage of the population. The state has the responsibility to look after everybody, with fairness, irrespective of status. If the capitalists are, therefore, allowed to relocate their businesses to anywhere labour is cheap with no labour agitation, the business would be competitive. That is bound to generate huge profit to be remitted home to be taxed by the state. That is more money for the state to look after everybody including the retrenched worker. The politicians were won over by the capitalists argument and globalisation thus came into force.
The above philosophy is predicated on the end justifying the means. The man with the means to produce wealth, the capitalist, thus had a stronger argument that countered the argument of the labour unions and even looks fairer than the narrow interest labour unions. The labour union thus lost its voice. In recent years, the West had concentrated on the Reaganites capitalism theory of wealth distribution, called trickledown economy. Put simply, the rich man makes the wealth and the system allows the wealth to trickledown to the masses unregulated. One thing is for sure, trickledown or no trickledown; the sum total of all the individuals and governments wealth is the wealth of a nation. The aggregate wealth generated must, therefore, be contained within the confines of a nation in order for it to count. That, the capitalists promised.
The capitalists, China and probably India , have realised that the cost of labour is the difference between profit and huge profit. Surprisingly, the cost of labour is usually less than 20% of the cost of running any enterprise, but it is somewhat important component but the most susceptible. The first action taken to improve profit in any business is to axe labour. If you look around you, all you hear from any ailing organisation is the retrenchment of the labour force. As protectionism became deemphasised all over the world, China opened up without first dismantling his political communist system. Politicians in the West had to choose between the huge profits from its capitalists who had relocated there and the rhetoric of politics of human rights.
The communist government, however, is a huge labour union. China understands that the capitalist satiability is low wages. That would be maintained in order to remain the destination for investments from the feudal-capitalist that would rather not pay for labour at all. Communism had provided the Chinese workforce with discipline and thus there is less agitation from the workers. China , therefore, becomes the heaven the capitalist had always dreamt of. What do the workers need higher salaries for in any case? Mostly, it is to fund food, shelter and clothing, and to educate their children with the hope that the children would fair better than them. The Chinese government would provide those to its people as long as the people are ready to work cheap and allow foreign money to flood in.
What lessons are there for Nigeria ? President Yaradua has been invited as an observer to the G8 summit in Rostock , Germany . I hope he will open his eyes and ears and not behave like his predecessor, the olowu leti of Owuland (cotton wool stuffed ears). It is glaringly clear that oil receipt alone cannot sustain Nigeria s huge population in a progressive world and therefore, Nigeria needs injection of money through foreign investments. Yaraduas predecessor woefully failed in that regard in spite of logging thousands of miles with cap in hand. Why didnt any genuine investor come back with Obasanjo? With so many celebrated economists milling around the Rock in Abuja , why are the investors shying away? Yaradua may need to fire all the economists from the past including maybe the celebrated Soludo.
With due respect, all the celebrated economists have failed to come up with policies that would attract foreign investors, which Nigeria urgently needs in order to cater for its teeming population. Nigeria presently is not attractive to foreign investors and the reasons to me are not farfetched. I have often heard people say that Nigeria is a huge market huge market of what? Probably, Nigeria is a huge market of counterfeit and used goods, and those do not lure genuine investments. Counterfeiters cannot come out in the open to invest in Nigeria , even if they want to. The unrestricted influxes of second hand goods also discourage genuine investors. Revenue from the sale of a second hand good does not go to the original producer. Not even maintenance spare parts for the used goods benefit the treasury of the original producer because most are fake products in any case.
Let us take Mercedes Benz of Stuggart , Germany , for example. Mercedes Benz exports less than 4000 units to Nigeria yearly from its authorised factories, yet more than 150,000 Mercedes Benz used vehicles enter Nigeria in a year, most of whom had been earmarked to be crushed for recycling before being brought to Nigeria . How do we expect Mercedes Benz to classify Nigeria as a huge market then? The revenue derived from the sale of used Mercedes vehicles does not go to Daimler Benz. The story is the same for all other genuine investors that could have come to Nigeria . At the onset of the Nigeria s oil boom in the early seventies, investors came knocking at Nigeria s doors. Gowon did not have to travel the world to entice foreign investors but they came on their own. The investors had reasoned that the wealth being derived from oil would be in the hands of the Nigerian people and it was. The exchange rate was 68 kobo to one American dollar and thus higher buying power for Nigerians.
Nigeria subsequently became a market economy that enticed investors. The plan in the agreement was to upgrade, with time, into a producer economy using the oil revenue as a bargain. People always forget that there was a shift in that policy after Gowon was ousted and everything thereafter fell to pieces. Presently, Nigeria is far from being a market economy except a delusion that confuses the limited needs of genuine goods by a few Nigerians as a huge market for investors. The rich are the only ones that can afford the products of genuine investors but they are few. Two things tickle an investor where to produce cheaper goods and where to sell them. Since Nigeria is off the list of market for genuine goods, the only other option left for Nigeria is to attract investors as a place for cheap manufacturing.
For Nigeria , the most populous black nation, to become the China of Africa with cheap labour? That seems too condescending to a people of great pride. Besides, the government would need to battle the powerful labour unions and eventually might need to suspend labour unionism for a period for it to materialise. Would that even be enough to prise the investors away from the Far East to relocate to Nigeria , which is closer to the European market? President Yaradua could do the unthinkable. He could use the over 42 billion dollars external reserve of excess crude oil, for a start, as a bargaining chip for the first 5 years of any genuine investor that relocates to Nigeria. The external reserve as it were would then fund the wages of Nigerian workers working for the new businesses. Considering the propensity of the capitalist to avoid paying wages or little if possible, it is a crazy idea that could entice them.
This is a global competitive economy; you use what you have to achieve what you want and in Nigeria s case, it is to alleviate poverty and sustain growth. What is in it for Nigeria ? Plenty, I would say. The country would generate huge revenue from the sale of power to the incoming industries; huge revenue from land rentals for their factories; huge revenue from the ports for exports; sale of water to the factories; massive employment for the millions of unemployed graduates and many more that I will mention later. The first thing a reader that is familiar with the chaotic situation in Nigeria would ask is where is the infrastructure to back this dream? China had nothing when the investors went in. The investors would come in and fix those. The only problem to me is how to get Nigerians to work because this dream requires hard work. I mean real hard work.
A friend who has just relocated back to Nigeria from the U.S.A said, Youll make the people work by enslavement. You will enslave them with good life
Nobody wants to work, but the prospect of a good life makes us to wake up at 5.00 am everyday to go to work. That makes sense. A worker, who is made to live a good life outside of work, on credit, would work his ass off to sustain it. That will surely enslave him and by default build the nation, but he needs guarantee that that lifestyle would be sustained outside of the compass of his control. That, my friend said would be provided by the insurance industry. Nigerian economists are either lazy or are armchair economists with PhD in economics and that is all. You do not need rocket science to know that the biggest financial institutions ought to be the Insurance Industry and not the Banking Industry.
All over the world, it is the Insurance Industry that owns the banks and not the other way around. The philosophy is simple. The state encourages you or sometimes compels you to insure all aspects of your life. It is usually a very small percentage of the principals to be insured with a guarantee that in case of eventualities, your good life is not so much disrupted. It may appear as a small drop of water, but that is what makes a mighty ocean. With a low probability of attrition due to claims, it is the insurance industry that funds development, housing; industry; roads; rails; aviation, and even backs the confidence the banks need to give out loans. However, all these are predicated on the assumption that the wealth the country generates stays within the confines of its border.
When I asked my friend how to discourage the flight of capital to foreign lands, he said it is simple. You will need to convert your wealth, the moment you earn it, into cement concrete (cement and steel) for posterity
That way, youve planted your wealth and barring natural disaster or war, it is there for a long time on your land; generating profit. That would explain why presently, China consumes half of the worlds production of cement and steel. The Chinese are busy converting the profit of all the made in China goods into cement concrete. Shanghai alone has over 6000 skyscrapers the highest number of tall buildings at any place in the world. All roads are being changed from asphalt into cement concrete in China . Nigeria needs to learn from the Chinese experience or did they learn from us? I remember in the early 70s, Gowon massively imported cement into Nigeria to convert the earning from the oil boom into cement concrete. My friend said, We did not understand it then and queried the Cement Armada.
Thank God he stuck to his guns. They are the only reminder today that we once had oil.
Samuel Akinyele Caulcrick, the author of The Devil Must Be Laughing.
ISBN 1-4241-2196-5

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Posted by Robot| 05.06.2007 21:44