25 Years (Silver Jubilee) of Nigeria's Economic Suicide

In a few weeks, Nigeria will mark the Silver Jubilee of the cause of its madness and economic suicide. Twenty five years ago, 26 September 1986 to be precise, Nigeria charted a new course that looked OK at the time. It has, however, ended up slowing down the Nigerian development and has spun the country into a social and political upheaval: it was not what was envisaged, but it has turned out to be worse than anybody's imagination. Audit figures confirm that there has been a massive deficit of assets on the ground within the borders of Nigeria; this is based on the comparison with what the country has earned from oil, in U.S. dollars, from 1986 till date. This result has dampened the expectation of many people. Was the failed economy planned wittingly? We may never know, but most of the principal actors that captained the country during the 25-year journey have come out of the economic forest, they had pushed the country into, with their pockets bulging; raping the the state and leaving sullen faces all over the land.

How has Nigeria managed a negative growth in a regime of huge oil receipt? It has been by a combination of sheer ignorance, ineptitude, stupidity and greed by a selected few. The country chose a trading route by default. The mercantile (trading) option taken, in the name of market forces, has been subjected to distortion. Nigeria practically abandoned a manufacturing (factory floor) route to economic prosperity; and that has turned out to be a stupid option - more so for a large population like Nigeria. A mercantile option (banking, stock or commodity trading) as the main stay of an economy, may do well for a small country like Ghana with few mouths to feed. Trading in an economy only generates commission for the trader, and does not add value to either the goods or the currency like the naira; it has also created fewer jobs. It could be argued that it is good money, but does not generate enough opportunities for a teeming population like Nigeria.

If Nigeria had emerged as the trade-transit hub for the Sub-Saharan Region, commission generated could have been value-added. Instead, our traders generate their commissions in a domesticated economy bowl filled mainly with Nigeria's oil receipts, i.e. no external value added. The scenario is that the petrodollar is auctioned by government to whomever that has enough naira, in order for the Nigerian governments to pay workers' wages and whatever is left, is for capital projects. The traders, as expected, outbid other users, mainly the potential wealth producers, at the Dutch Auction Market of the CBN. The traders then bring, into the country, what they think the people need for better living. They do not need to employ many people to do that, nor do they need much electricity to power their warehouses. On the other hand, those that are supposed to create additional wealth and jobs for the nation (education; agriculture and animal husbandry; mining and manufacturing) are readily outbid by those in the mercantile sector - the traders.

Education creates knowledge, which we all know is wealth; agriculture and animal husbandry use nature's engineering to multiply seedling or offspring to create more wealth; in mining (extraction), we could tap into over 1000 years of nature engineering to create more wealth and in manufacturing, on the factory floor, raw materials are forged to what people need to produce more wealth. On the other hand, trading generate only commission. Sidelining these wealth producers, in favour of mercantile goods, has set Nigerian youths onto the streets looking for jobs and has made all of us to scramble for the few resources oil has brought; this has fuelled corruption. In short, Nigeria is not earning enough for its huge population. It is reported that Nigeria earned slightly more than $58 billion U,S. dollars last year (mostly from oil and gas). This is hardly enough, these days, for good living of over 150 million people: Nigeria should be earning 5 to 8 times more, that is in the region of over $300 billion a year from the export of our goods. However, it is impossible in this regime of exchange rate mechanism.

Our seaports and airports ought to be a beehive of activities of a reversed sense of what they are now, i.e. ships should sail out fully loaded with Nigerian goods and cargo planes takeoff fully loaded also with our goods. Don't believe the trumped up GDP growth ruse; it is glossy and the reason it has not translated to job creation. For ten years (1997-2007), I witnessed the nakedness of our economic policy from the cockpit of a foreign airline. I flew cargo into Nigeria from virtually all the continents - all finished products. As a Nigerian captain of a foreign airline, I used to shed tears and embarrassed after every takeoff from either Lagos or Port Harcourt - flying out empty; not to Europe, but to Accra to carry perishable vegetables (pineapple); or to Entebbe to carry fish; or Nairobi, or Lusaka, or Harare to carry flowers to Europe. It is only out of Nigeria that ships and cargo planes go out empty: these were on daily bases by all cargo planes into Nigeria - the return flights usually pay for the cost of operation and flights into Nigeria were huge profits. For a fact, in my 4 years of flying in and out of Shanghai, Shengzou, Macau or Beijing, all in China, I always flew into China empty and out fully loaded.

So much has been said about what is, at least from my perspective: many Nigerians have postulated what they think is wrong with the country. Mine has always been odd, but I will stick to it because nothing out there is fundamental enough. I will continue to hinge what is wrong with Nigeria to only the flawed way the exchange rate of the naira is determined (exchange rate mechanism). Besides, statistics is on my side: capital flights; brain drain (Diaspora); investors' divestment; factory closures; apparent subsidies; decaying infrastructures; manifest-corruption and high unemployments became the order of the day from 26 September 2011 - the same day we adopted the present exchange rate mechanism.

The saying "the witch-cry was yesterday, and the child died today; who does not know that it is the witch that killed the child," becomes apparent. It is understandable why most Nigerians are afraid of tinkering with the present Dutch Auction of the dollar in the CBN to determine the exchange rate of the naira, because of the experience of the past; but the cost to the well being of the country has been too high. It depresses the desire of genuine foreign investors and ordinary Nigerians - why should a few selfish people, who have access to cheap money, determine the value of the naira in our pockets as it is being done at the Dutch auction of the petrodollar: it kills honesty and destroys productivity. No wonder foreign investors shy away.

Samuel Akinyele Caulcrick.