Global Meltdown By Prof Adeojo

THE GLOBAL ECONOMIC MELTDOWN AND ITS EFFECTS ON THE WELL – BEING OF NIGERIANS AND NIGERIA’S DEVELOPMENT* (*SPEECH DELIVERED AT THE DISTRICT CONFERENCE 2008/2009 OF RI DISTRICT 9130, NIGERIA, AT PLAZA DE’ ARUNA HOTEL, OYO ON SATURDAY, MAY 30, 2009) What is global economic meltdown? The global economic meltdown has emerged as not only one of the most universally discussed economic crisis that this century has experienced, but it is also one crisis that has shaken the whole world to its roots and that has affected every facet of human life. The meltdown has been baptized

variously as “Global Economic Crisis,” “Global Economic

Debacle,” “Global Economic Down – turn,” and “Global Economic Go – Slow,”

all

reflecting

how

the

meltdown

has

made

regressive,

retrogressive, decreasing, debilitating, depressive, repressive, atrophying and negative impacts on the economy of the world, without sparing any country or government, any race or tribe, any business: big or small, any human being of whatever age, in one word, any human undertaking, community and experience relying on money as a means of exchange and transactions and whose economy is essentially driven by market forces. The economic catastrophe moved over the whole world, from its inception, as a rampaging inferno, a ravenous plague or an unstoppable hurricane which left in its passage destabilizing consequences. Like the familiar traffic jam or bottleneck in our major cities, which reduces or immobilizes vehicular movement with inevitable manpower losses, unproductive fuel consumption, physical and emotional stress, the economic meltdown has imposed on the world economy a decline or reduction in the upward movement which implies a slowdown of the economy to specifically less than 3% global economic growth over a short 1

period, with attendant losses, distresses, strains and distortions on the economy and human life in general. The economic gains of the preceding years have “melted” or cascaded; they have dipped, making the whole world economic system perform like a sinking boat or like a vehicle moving in reverse, unlike what happened during the pre-recession period when the economy was blossoming, recording surpluses and enjoying a boom or an increase which made consumers live in a politico-economic environment where the economic indices and policies favored them and in which the key sectors of the economy were flourishing positively well. In spite of all the negative signs that have been showing for years, it was as if the economic quagmire took the world unawares or rather ill prepared, just as the great antediluvian flood recorded by the bible during the time of Noah. The crisis has most paradoxically turned the world’s economic gurus, financial experts and policy - makers to Lilliputians battling fruitlessly with a gigantic monster of monumental power and resilience; just as it was experienced by the mythical Sisyphus when he was battling in vain to push a rock to the top of a high mountain. It is indeed a hydra - headed economic monster which analysts have rated worse than the 1929 - 1939 financial recession or crash, more aptly referred to as the Great Depression of 1929.

When and how it started The meltdown did not just start with the 2004 – 2007 liquidity crisis experienced in the United States, when the ominous clouds that precipitated the final deluge were gradually gathering in a rising tempo. The economic data and upheavals, including the inevitable hyper-inflation and the unending unemployment which started afflicting most world countries a decade before the end of the last century, and particularly the 2

over- generous and weak regulatory policies of American lending and mortgage institutions, had signaled the onset of the gathering of dark clouds in the economic horizon of the world. The threatening phenomena were gradually forming like a gun - powder waiting for a detonating devise to explode. That denoting blow-out was provided by the market-crisis which was caused by the outbreak of the United States sub-prime crisis in August 2007. The crisis, which started like a festering wound, steadily and gravely infected the health of the American financial system with a mounting insolvency in core American financial institutions. By the first quarter of 2008, a widespread “credit contraction” had infiltrated into the financial institutions of the U.S. which were forced to tighten their credit standards in the light of deteriorating balance sheets. The situation came to a dramatic peak when the bubble burst, with the collapse, in September 2008, of the Lehman Brothers Inc., which was a large U. S.A. investment bank of 156 years standing.

This, with such concomitant economic

problems as high default rates on sub-prime, adjustable rate mortgages and bad debts, impacted negatively on all banking and financial activities in the U.S.A. These problems translated into serious illiquidity in American banks and an alarming reduction in industrial production and merchandise trade and a deep plunge in business profits, from the first quarter of 2008. By early 2009, “the deed” had been irrevocably done or, to put it in a Nigerian parlance, “the devil had done its worst.” The economic meltdown had spread into all the nooks and crannies of the world; and, to use Achebe’s phraseology, “things have fallen apart (in the world economic order) and the center cannot hold any more”. It has therefore assumed a global dimension, whose devastating effects have sneaked into both the advanced and the emerging economies across the world. Globalization, with its mission of creating bridges of interdependence across countries, 3

has, indeed, succeeded in mauling its first major victim, which is the world economic order. The U.S.A. had sneezed and all world economies and financial institutions have caught a bad cold. The American economy had dealt a deadly blow on all world economies. The inevitable hegemony of the U.S.A., as an indisputable world economic power, apart from its unquestionable political leadership, has become apparent and strongly affirmed across the globe, whose financial systems became seriously distorted and destabilized. Its consequences in almost all world countries were severe credit and liquidity crunch, massive withdrawals of funds from banks, takeovers and bankruptcy of major banks, depressed profits from investments, low interests on most government securities, collapsed values of stocks resulting from the catastrophic decline in equity prices, lower operational earnings by business concerns and currency mismatches or exchange rate maladjustments or misalignments, increased fiscal deficit and other distortions in the economic and financial systems. It was characterized by a rapid deterioration of the economies of countries which depend exclusively on mono exports or whose economies depend heavily on external financing and manufactured imports like Nigeria.

With these

consequences affecting the core of the banking and financial system, their fullest impacts, particularly the loss of confidence in financial markets and the inability of the financial institutions to play their intermediation role in the economy, could not but be irremediably transmitted to all sectors of the global economy and also to the lives of all human beings. This means, in reality, that the advanced economies, including the 16 countries of the Euro zone as well as other Nigeria’s major trading partners: Great Britain, Japan, China, Asia and India, as well as their peoples were not spared.

4

But then, these impacts assume different dimensions in the various countries across the globe. While some have somehow succeeded in curtailing their grave consequences, others have found themselves enmeshed in their fall – outs, like unprepared, indolent and unguided children, forced to sit for a competitive examination, who would no doubt inevitably crash in the examination. Amongst such countries which have considerably minimized the strangulating effects of the global economic meltdown are the G8 member-countries as well as the highly industrialized countries like Japan, China and those of Asia. This development is the natural consequence of being one of the economies which are reasonably established on the solid grounds of sound fiscal policy management, liquid and safe government securities markets, net private flows, stable, focused and

less

expensive

governance,

regulated

consumer

policies,

technologically sustained manufacturing exports, well tested banking systems, a knowledge – economy guaranteeing a productive and an enlightened citizenry, heavy investment in human capital development, absence of high – profile corruption and the uncompromising application of other moderating, consistent and stabilizing economic policies. Among the countries which have found themselves heavily burdened and mercilessly crushed under the gloomy consequences of the meltdown are those of the third world, particularly Nigeria, which were ill – prepared and, in fact, unprepared to face the challenges of such a plague.

Our masters lied to us.

What made the economic monster to bare its ravenous fangs at Nigerians mercilessly, as to unprotected preys that seemed to have been fattened for slaughter, was that we were deceitfully lulled

to sleep on or relax, in 5

peace and comfort, by the lullabies of our economic masters who were continuously making us believe, at the onset of the crisis, that we were comfortably shielded away and insulated from the prevailing economic inferno; that we were securely protected and immune from its damaging effects; that we were safely anchored in a safe economic haven which no disquieting and distressing wave could reach. The word of assurances of our economic leaders is similar to the biblical prophetic statement: “we would indeed hear of it but it will not come to our dwelling place.” And so, while the advanced and industrialized countries were putting their houses in order, to be able to squarely face the challenges of the approaching inferno, the Governor of the Central Bank of Nigeria as well as government spokesmen and some vocal chief executives of financial institutions kept telling us or rather deceiving Nigerians, that the global meltdown would have no damaging effect on our economy and financial institutions. That they later denied their well-publicized assurances did not detract from the fact that the measures that ought to have been taken by them were not taken to stem the negative economic tide. To have been forewarned would have been to been fore-armed. However, we now know better, in the context of the clear negative economic indices in our country and the devastating effects that the economic meltdown has made on our well-being as individual Nigerians and on the overall parlous and impeded state of development of our country. Like the “seven lean years” of the Old Testament Egypt, under Joseph as its Prime Minister, the impacts of the meltdown are so glaringly distressing, so painfully unbearable and so depressingly destabilizing to majority of Nigerians that some analysts have suggested that, rather than give the same term of global economic meltdown to the Nigerian version of the phenomenon, ours should be best referred to as a national economic holocaust or Tsunami.

6

Domestic socio-economic and political back-ground to the global meltdown in Nigeria

The justification for considering the global economic meltdown as placing more heavy burdens on Nigeria than it did to most other countries is anchored on two major parameters, which had provided a peculiar domestic background to the global economic gloom. The first of these is our general lack of preparedness and provisions for emergencies; and even, when some provisions are made, we have demonstrated a dismal record of lopsidedness and abject incapacity in our application and implementation of such provisions aimed at assuaging the pains resulting from the emergencies. In the case of the global economic meltdown, we were not only totally unprepared but we were, as pointed out above, initially given false assurances of our immunity from the ravages of the meltdown. But, what makes the distress more depressing is that the economic meltdown is a complex phenomenon that cannot be treated with kid glows but that calls for very intricate, high-profile and wide-ranging deployment of strong intellectual resources and well-informed expertise, of which Nigeria is paradoxically blessed but which are hardly called upon or properly harnessed by our political masters for such an assignment. The crisis therefore invaded us, pants down, as a helpless, hapless and rudderless country, bereft of cushioning palliatives or responses to contain its cataclysmic effects. More tragic in the invading economic onslaught, is the political and socio-economic terrain of Nigeria on which the economic volcano has dispersed its acidic lava. Long before the present global catastrophe, Nigeria had been saddled with an avalanche of socio-economic and political misadventures, upheavals and deprivations, whose dimensions 7

were steadily aggravating as years rolled by, with added tensions, accrued amplification and entangled complications, all combining to unleash on the Nigerian nation and its citizenry untold hardships and complexities, which marooned our country, like a ship-wrecked politico-economic entity, in an abysmal hopelessness making us to be gravitating on virtually the same spot. These misadventures included our long years of inept governance which has not done much to put our country on the global highway of development and modernization. Apart from polluting our political terrain with dictatorial tendencies and our life in general with the jungle law of subjugation, denial and appropriation by force, military rule, in particular, perfected more than the pre-military regimes, bribery and corruption which were elevated to a national norm of getting whatever you want by what you have, however you can, and conserving it through dubious and hidden means, thereby entrenching in our body politic, the culture of fraud, violent and dubious appropriation, lopsidedness and injustice, which have been brazenly imposed on the management of our affairs. With this, most vital political and public service positions are hardly merited but “bought” materially, religiously and even on the basis of nepotism. Such a mismatch,

which

has

instilled

mediocrity

and

injustice

into

the

management of government affairs and our economy, cannot but reduce the quality of public service offered in Nigeria. Such a situation has therefore given rise to a pervading drudgery in offices, discontent in the workforce, made up paradoxically of mostly competent and qualified subordinates who feel generally by-passed, under-rated, unrecognized, unmotivated and cheated as they are most often supervised or directed by un-formed, unqualified, incompetent and unfocused superiors. With this orientation, Nigeria has gradually developed into a breeding-ground for the re-cycling of bribery, corruption, mediocrity and poor governance, all combining to infect our development and economy, with a permanent go8

slow, which would become aggravated, with the global economic meltdown. The most depletive aspect of the pervading atmosphere of bribery and corruption is in the way that privileged Nigerians who are entrusted with positions of trust and authority, who have bought their ways into such positions where they allow themselves to appropriate mandates and prerogatives to oversee and dominate our political, administrative and economic life, have adroitly cornered stupendous wealth by all imaginable means, making Nigeria to accommodate some of the most mischievous and most creative cheats that God has created. Almost all highly placed Nigerians are involved in this looting or nefarious bleeding of the wealth of Nigeria. The percentage of the rare ones who are not involved in such shady deals is hardly up to one percent. These suckers of the nation’s wealth include Heads and members of governments in all the tiers of government, members of the hallowed chambers, Heads of parastatals, highly placed civil servants and Chief Executives of financial institutions: all living, in sharp contrast to their life-styles before being in public office, in highly provocative opulence, all parading a flamboyant and extravagant life-style that surpasses human thinking, all exploiting their influences sadistically and egotistically and viciously involved in working out secret measures to cover-up the traces of their ill-gotten wealth. With all the EFCCs and ICPCs of this world, only a few of the unlucky ones who must have failed to faithfully play the rules of the dirty game are caught and sanctioned. And even then, these ones and their un-apprehended peers who are treated as sacred cows, still continue to flaunt, to the consternation of Nigerians with conscience, their stolen wealth with impunity, with some tucked away in secret bank accounts within and outside Nigeria or kept in coded accounts through surrogates. News of 9

their cheating exploits fill the pages of our newspapers on a daily basis, just as we also read of how they are continuously celebrated in public shows of shame. These villains, in their thousands, who corner a big chunk of our resources, are daily marooning our economy and development in an economic meltdown, which is steadily aggravating. It must of course, be said that these high-profile cheats are copied by their subordinates and also by some personnel of some units of the public sector (the police and the customs, in particular) who also stealthily take their own share of the nation’s wealth. Added to the wastes that corruption has caused to our revenues and the distortion to our revered values, is the expensive cost of governance in Nigeria. It is very paradoxical that the cost of servicing our administrative and political machinery is grossly at variance with the quality of services offered. It is, therefore, not only a tragedy that our economic glow-slow is fuelled by an inefficient administrative system but that it is also funded at a very high cost from tax-payers’ money and the wealth derived from our national resources. While our governments have consistently failed to respond to the basic needs of Nigerians for the radical transformation and modernization of their poor living standards, for the promotion of their selfesteem, for the eradication of the endemic poverty and strangulating misery of the majority of the populace and for the provision of suitable, functional and beneficial social, financial and economic institutions and of good leadership, the cost of servicing the Nigerian system of government is considered to be the most expensive and the most outrageous in the world. It is an irony that the 17,474 elected and appointed public officers at all the three tiers of government who represent a very tiny percentage of 150 million Nigerians cost Nigeria N1.3 trillion for their salaries and outrageous allowances, including heavy provisions for constituency 10

financial allocations to lawmakers. This represents almost half of the Federal Government’s approved budget of N2.87 trillion for 2008. While a Senator currently takes home about N10m per month, his House of Representative counterpart coasts home about N7m; and these from budgets that are yearly jacked up from the ones originally proposed by the Executive. For example, for the current year, the allocation to the National Assembly was jacked up from N64.7 billion to N113.3 billion, while in 2008, the National Assembly did the same thing by jacking its budget from N67 billion to N140 billion. This is in the same country where the minimum monthly wage of N5, 500 is the lot of most members of their constituents and where some do not have access to a single meal per day. The visible cost of governance does not, of course, include the heavy sums spent to maintain the offices of the First Ladies and to finance such private parties and ceremonies as marriages of the children of government officials, the funerals of their aged parents and their birthday anniversaries. They do not include also the generous gifts doled out as largesse from the political overlords

to

communities

and

individuals.

The

scandal

of

this

impoverization of the country, through the exploitative machination of those who ought to provide exemplary leadership and protect the wealth and welfare of Nigerians, so much angered Prof. Sola Adeyeye, who had himself benefited from the scandal, as an ex-member of the House of Representatives, that he declared in a recent interview: “If Nigerians know how much we, in the House of Assembly, were making, they would come and stone all of us [ …..] When we first got there, we were receiving N18m per year. In our last year there, we were receiving about N50m a year, which is N4.25 million per month”. Apart from these, the huge capital budgets of successive yield regimes have been eaten up by bloated contracts which have not yielded much, in terms of infrastructural development, to add value to the quality of the living conditions of 11

Nigerians and also to justify the huge contract sums voted for projects. But what has made the Nigerian economic meltdown to assume such an alarming dimension is the poor quantity of the political leadership that the country has had since independence. It is generally said that “when the head is healthy, it affects the whole body”. The reverse is also true, if the head is rotten or unhealthy. Good leadership has a salutary effect on every human setting: family, business community and particularly a nation. Unfortunately, our country has, since independence, had the strangulating fate of poor leadership which has grossly impeded our progress, muddled up the management of our political and economic life, stunted our development, deprived us of the blessings of modernization and advanced technology, put us to shame many a time within Nigeria and in international fora, failed to motivate Nigerians to fully develop their potentials or put them in the service of their fatherland with conviction and commitment.

It has led to the very frequent shifts in our policies and

focus, without offering us pro-active and positive alternatives, a situation of instability and inconsistency which has virtually stagnated Nigeria and has led to the economic and developmental go-slow that has made Nigeria to have one of the poorest per capita income of $2,035 (which was $1036 in 2007), the lowest GDP growth rate, and being one of the world countries having the highest percentage(more than 70%) of its population living below the poverty line or in absolute poverty, and also having the lowest minimum monthly wage of N5,500.00 (about $25) in the continent of Africa. We are ranked, with ignominy, with countries at the lowest rung in the UN development index. While the highly positioned Nigerian embezzlers, kleptomaniacs, mythomaniacs, cheats and fraudsters are brazenly exploiting the weaknesses and ineptitude of our governments, to 12

appropriate large chunks of our revenues, through their devious and everresourceful means, including bloated contracts, abuse of office, diversion of funds, falsification of records and other forms of pen-robbery, majority of other Nigerians are relegated to a life of misery, depression and hyperexploitation. Not only are many able-bodied Nigerian men and women grossly under-employed, under-paid and pushed to eking out their living in very dehumanized conditions, but these unlucky Nigerians are condemned to “suffering and smiling” and reduced, with resignation, to being the cheering crowds, errand boys and foot-soldiers of those who wantonly display the stolen wealth of their fatherland in their flamboyant life-style and extravagant spending culture. In a society where some are enjoying scandalous booties from the coffer of the Federation, millions of very qualified graduates are either unemployed or left with no alternatives than to survive on menial jobs and such inhuman and unrighteous crimes as armed robbery, electronic manipulations and advance fee fraud, generally referred to as 419, prostitution, child-trafficking, kidnapping and other immoral life-saving or survivalist ventures. It is estimated that 70 million Nigerians are today either under-employed or unemployed. Among these are 15 million children, aged below 14 years, including 10 million within school age, who work under what UNICEF representative in Nigeria, Dr Soumi Sakai, qualified as “exploitative conditions”. This is a monumental tragedy in a country that is blessed with limitless mineral and natural resources as well as abundant opportunities of which a resourceful and focused government would have taken advantage to open up limitless avenues for job creation and poverty-alleviation for its robust, youthful and abundant human resources, who are acknowledged the world-over as being exemplarily resourceful, dynamic and resilient.

13

But, with the poor political leadership that Nigeria has had over the years, which incidentally, has not been able to produce a single world-acclaimed political star who can single himself out as being outstandingly above board, the country has continued to exhibit itself as “a toothless bull-dog”, as it is continuously displaying the traits of an impotent politico-economic giant who is simply big for nothing, who cannot positively and definitively contain or overcome its internal adversaries of poverty and inefficient, dilapidated,

over-stretched,

moribund

and

decadent

infrastructure

(electricity, roads and water), who cannot wean its economy from overdependence on oil, who cannot feed its populace, most of whom are not gainfully employed.

It is a country which has shown itself as being

shamefully incapable to unite its people in order to create a strong, wealthy and resourceful nation which can be truly a pride to the black race. It is continuously showing how incapable it is to effectively and productively harness its abundant and God-freely given resource of oil to respond to the local needs of its people to fuel their vehicles with just 32 million liters of petrol per day and 12 billion liters per annum, representing a tiny percentage of Nigeria’s total output of crude oil, without recourse to fuel importation. Our poor leadership cannot work out a dynamic strategy to stop the flaring away of our wealth-yielding gas, as if flaring is the best way to offer a sweet-smelling savor as sacrifice to the gods of the firmament. Our political leadership has not been able to offer, to the relief of peace-living Nigerians, lasting solutions to the lingering violent crisis in the South-South, in spite of the fact that the crisis is acknowledged as a major threat to our main source of revenue, and therefore, to our financial base or fountain as a nation. It has demonstrated a treacherous lack of courage to put a stop to the recurrent religious terrorism and intolerance in various parts of Northern Nigeria.

14

Our political leadership has continuously produced bad governments which have failed to positively harness the abundant human capital that Nigeria is blessed with, due principally to their recurrent inability to evolve consistent and well-conceived macro and micro economic policies that are anchored on our peculiarities. All the major past and present economic plans and agendas: Abacha’s Vision 2010, Obasanjo’s Vision 2020 and NEEDS as well as Yar’Adua’s refurbished Vision 2020 and 7-point Agenda, each of which has an unbearably long period of incubation or gestation and devoid of implementable deadlines or time-frames, have presented themselves as tall dreams than implementable programs, more of rhetorics and adverts than achievable, pragmatic and result-oriented programs; in one word, they are like as the bleating of sheep or the cowardly barking of frightened dogs woken from their state of stupor, just wanting people to feel that they are there. Our political leadership has not been able to put in place pragmatic, well-manned and well-funded social policies and actions, that will focus strongly and comprehensively on the essential and critical areas of education, health (in which the country’s under- 5 mortality rate stands at 189 per 1000 live births) and security or that will take advantage of our expansive, arable and fertile land to engage in massive and aggressive agricultural development. It has not yet put in place enough agro-based industries nor succeeded in diversifying the economy by expanding our sources of revenue from oil to non-oil sources like agriculture and export-oriented industries. Our governments have not been able, except for a brief period during which Obansanjo used the services of some economic egg-leads, to put in place consistently prudent and carefully monitored fiscal, monetary and exchange rate

policies,

whose blessings, even under Obansanjo, were neutralized by other perverse

high-profile

corruption,

mismanagement

and

extravagant

spending. 15

Our poor governments have found it impossible to stem domestic sabotage and vandalism which have contributed a lot in making our available infrastructure comatose and dysfunctional and which have also considerably reduced our administrative efficiency. They have not succeeded in neutralizing the insecurity that makes life unsafe and insecure all over the country. These are the major factors which feed the poor quality of life in Nigeria and which continue to create serious impediments to economic growth and industrial development in the country. The above was and still remains the socio-economic and political terrain on which the global economic meltdown landed in Nigeria, by the second half of 2008. This local terrain has really prepared a gradual go-slow for the global economic go-slow to amplify its effects on the different facets of the economy as well as on the various tiers of government

and has

mortally reduced the quality of life of Nigerians who continue to invest more and more heavily on the cost of living due to the galloping inflation that has become the trade-mark of the Nigerian life and the poor quality or non-availability of critical infrastructure, unlike the consumers in advanced economies who, at this period of global meltdown, when inflation in most of the countries has fallen to a 0.0 percent , spend less on goods than at the pre-recession period .

The impacts of the global meltdown on the Nigerian economy and the well - being of Nigerians

16

On the whole, the global economic crisis in Nigeria has most brazenly aggravated the Nigerian economy, which has been marooned for long in a go- slow; it has gravely affected all its sectors and has further diminished the depressed quality of life of the average Nigerian. The financial institutions, which were flourishing impressively after the consolidation of banks and were enjoying the blessings of the ‘fat years’ similar to “the seven fat years” in Egypt under Joseph, were the first to swallow the bitter pills of the crisis, particularly with the massive withdrawals of funds from the banks by foreign investors, at the wake of the meltdown. These massive withdrawals resulted in very precarious liquidity in banks and a sharp decline in the value of banking shares. Apart from the cut-throat rivalries between banks aimed at attracting patronage, by the vilification strategies of de-marketing of other banks, which have created a crisis of confidence amongst them, banks staff have to give up some of their remunerations and incentives: up-front payments, advance salaries and loans; others lost and are losing their jobs, while the jobs of some others are on the line. Apart from this staff rationalization or streamlining, by way of rightsizing and downsizing in a few banks as well as the liquidity crunch in all banks, resulting from the massive withdrawals, the inability of investors in shares to pay back their loans, the effects of other non-performing loans and the shrinking of foreign credit created great upheavals in the banks. The collapse of the Naira in the foreign market is another “Waterloo” in the banking sector. Apart from the banks, the shares of almost all quoted companies fell drastically, with the attrition-effects borne with pains by shareholders. With the exit of foreign investors as well as the recall by mid-2008 by banks of margin facilities granted to stockholders, the stock market, which peaked 17

at a total capitalization of 12.623 trillion Naira in March 2008,

took a

plunge with an unabated bearish run which continued till about mid - April 2008, when it dropped to an all time low of 4.3 trillion Naira, rising recently by the end of May 2009 to about 6.1 trillion Naira. The shareholders, who had all along put their hopes on the financial returns from the sale of their shares to shore up their dwindling incomes that are eaten up by the galloping inflation, have been the most seriously hit by the collapse in the prices of shares. It has been reported that some heavy shareholders have suffered and continue to suffer serious emotional shut-downs, while others actually lost their lives as a result of depression and high blood pressure caused by their inabilities to meet up with the terms of loan-repayments from banks. Other effects included the unhealthiest occurrence of share price manipulation, loss of confidence of shareholders in the capital market and the revelation of discordance and disunity in the approach to policy-implementation and regulation of the three regulators of the capital market: the Security And Exchange Commission (SEC), The Nigerian Stock Exchange (NSE) and The Central Bank Of Nigeria (CBN). All these factors have very negative effects on the moral and financial health of the capital market. Petroleum is another victim of the global melt-down in Nigeria.

But,

petroleum is one multi -dimensional victim which has exerted the most depletive effects on our economy, on the revenue accruable to government, on the quality of life of Nigerians and on the tempo and quality of the nation’s development.

It is to be remembered that Nigeria

is the 6th oil producer and exporter of crude oil in the world and the 5th exporter of crude to the U.S.A, which accounts for 52.5% of our total export of crude. Oil accounts for more than 80% of the country’s total revenue and 95% of its foreign exchange earning. This almost exclusive 18

dependence on crude oil makes our economy a mono-product economy which has resulted in our revenue - base being almost entirely tied to the fortunes or misfortunes of crude oil in the world market and has promoted petroleum to the point of being our country’s life-line. With the wind of global recession blowing ominously across the importing countries of our crude oil, particularly to the U.S.A, the demand for oil from these countries suffered a serious attrition. This attrition has become a multiple jeopardy for Nigeria, since, not only did the quantity of oil exported reduce, but its price per barrel also fell. For example, from the high record of $147 per barrel in July 2008, the price fell to a dismal low of $32.40 by December 2008. In concrete terms, with about 3 million barrels per day before the recession, Nigeria was reaping $2.2 billion from its oil export by January 2008.In the same month of this year, it had dropped to $1 billion. With our present output quota of 1.67 million bpd, which is in sharp contrast to the projected target of 2.29 million bpd at $45 per barrel used for the 2009 deficit imbedded budget, the total distributable revenue to all the tiers of government took a deep plunge. For example, from N746.7 bn shared out in May 2008, only N237.6 bn was available for sharing in March 2009, with the distributable revenue nose-diving by N509 bn in only 10 months. Apart from this, the foreign exchange needed to feed the country’s foreign currency reserves, which naturally serve as a guarantee for its foreigntrade transactions and imports could not but shrink drastically, due partly to the decline in the quantum of returns from the sale of oil but also to the extensive spending spree of government.

For example, the reserves

dropped from $69bn in July 2008 to $53 bn in January 2009, dropped to $49 bn in April 2009, and by the third week of May 2009, to $45bn. This, no doubt, accounted partly to the collapse of the Naira in the foreign exchange market, making our imports expensive, with consumers having 19

to bear the brunt of the increase in the prices of both imported and locally manufactured goods. This has also resulted in the decline by 20% to 30% volume of foreign currency transferred to Nigeria within the past 12 months. It must, of course, be noted that the series of sabotage unleashed by the South - South militants to oil installations have been having very adverse effects on the decline of available oil for export.

The current military

activities have, according to the oil Minister, reduced the supply of crude oil by 1 million barrels or N8.7 bn per day. This has completely cancelled the gains which must have been made from the latest rise in the price of crude per barrel, to $66 by the end of May 2009. The negative multiple effects of the gross decline in government’s distributable revenue have been recorded in all segments: public, financial, manufacturing and private sectors of the Nigerian economy and have had distressing impacts on the financial strength and performance of the various tiers of government. In the public sector, with the revenue that is available to government and government-funded

institutions

nose-diving

and

the

consequential

reduction in the quantum of internally generated revenues, the provisions of critical infrastructure and the maintenance of the existing ones, as provided for in the capital budget as well as the execution of the recurrent budget including the payment of salaries, are hampered. The welfare of the citizenry is also inevitably seriously jeopardized. For example, with only 70% of the projected revenue in this year’s approved budget being realizable in the second quarter of the year, it is becoming more and more difficult for government to fund its functions and activities as well as those of its parastatals and institutions including our embassies abroad. This decline in the available revenue has also resulted in the temptation to 20

cancel many projects or reduce the scope and cost of other projects with inevitable negative results on quality and durability. There is also the threat to lay off workers, even in the context of the current numbing unemployment, poor remuneration particularly to low-income workers, increased cost of living and the legitimate outcry of workers for improved financial remunerations. The picture presented by the public sector is gloomy, depressing and demoralizing to workers and a serious embarrassment to the three tiers of government, with most States and Local Government Councils only able to take care of the payment of salaries of their workers from the total allocations made to them by the Federal Government. The manufacturing sector, which depends, for its success, on the effective provision of electricity, safe and well secured working environment, efficient transportation and urgently needed improvement to the existing dilapidated infrastructure, affordable and available imported raw materials and spare parts, easy access to a working capital through favorable interest rates and easily - obtained and

loans on

inexpensive foreign

exchange, has been witnessing a rising cost of production and a depressed capacity utilization. The hopes for positive action on these fundamental set-backs are becoming dimmer and dimmer with the continuous decline in government revenue which makes it impossible to update, upgrade, expand, provide in the right quantity and quality and maintain the material, infrastructural, financial and human conditions and sources indispensable for a favorable working environment. The costs of products coming out of our factories are therefore rising steadily and may continue to rise indefinitely, with solutions to the existing problems appearing like a mirage.

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Even when manufactured products do not necessarily depend on the availability of fund, foreign exchange and other relevant conditions for production, manufacturers and traders have justified their increases on the global recession! This is even the case in the open local market, where traders often justify the increased prices of their merchandise, including local food stuffs, on the global economic ‘go- slow’. With the above, one can only imagine the distressing and destabilizing predicament of the common man, whose purchasing power has been gravely eroded by the effects of the meltdown. Not only is he spending much more than before on his basic needs, without a corresponding increase in his incomes but the quality of his life is becoming more and more stressful and depressing. Apart from the stress of having easy access to the financial wherewithal to cope with his material and social needs and the very stressful conditions resulting from infrastructural inadequacies and his overstretched income, the typical Nigerian also has to painfully cope with the ever-recurring fuel shortage for which he spends long hours in queues. He also pays a lot to fuel his generator in the content of the unstable, erratic and unpredictable supply of electricity. Added to this is the burden of having to pay for his personal and residential security, water, and the cleaning of his environment. The plight of many qualified youths, who are unemployed, is more than pathetic, as they are continuously roaming the streets for jobs that are rare to come by or are busy running from pillar to post for the very few jobs for which more than 100 times the number of applicants for

available posts

apply. Even those who are employed are daily threatened with sack, as a result of the difficult times through which companies and governments are passing. 22

Indeed, the times are hard and harsh; and many more Nigerians than before are continuously being forced to enlist in the gangs of undesirables and miscreants to earn a living. What is the way out?

The Way Out A multidimensional crisis as the global economic meltdown that has diverse impacts on human life, as lived and experienced in Nigeria, with its peculiar problems, calls for multidisciplinary and multidimensional solutions, in order to minimize its ravages on life and the country, increase the revenues accruing to governments at all levels, make available incomes that will enable Nigerians to live reasonably well and provide jobs for the unemployed including those who are daily added to them as a result of redundancy or rightsizing. The heart of the solution is in good political leadership which is intellectually sound, fearless, dynamic, broad-minded and politically mature, capable and clear-sighted, so as to be able to positively transfer visions, ideas and proposals into actions that will benefit the majority of Nigerians and to harness available and potential resources, through an efficient and pro-active resourcefulness that is energized and propelled by a strong intellectual and professional team of experts of proven integrity and maturity, by a political-will that is not compromised by tribal, religious and personal biases, and also by the strong determination to leave the political scene much better than he found it and making positive impacts on the country as well as on the life and hopes of its citizenry in a way that would make him stand out as one who has left indelible marks on the evolution of Nigeria. 23

The leadership that would be needed in times like this is one that would find it easy to attract, synergize and fully explore relevant local (from all tiers of governments and individuals) and international resources and expertise in such a dynamic manner that would greatly benefit Nigeria and help the country to be integrated into the global highway of development, modernization, systematic and uncompromising due-processing of issues as well as good life. The leader who would move us out of the present politico-economic gloom or doom is one who can bring strong intellectual, political and reasoned illumination and ‘sun-shine’ into the politicoeconomic firmament of Nigeria to galvanize the country’s citizenry to wake up from their seeming indifference to national issues and be sufficiently motivated to determine to invest their patriotic zeal or fervor and Godgiven talents in the development of the country. It is the galvanizing dynamo who would have no problem in encouraging Nigerians to join in building a truly great Nigeria that the country urgently needs. He is one who has a vision of transforming Nigeria into a great country where things work as they should be. He is that Nigerian who lives by example and not simply by what he says. He is the man who motivates and energizes Nigeria and Nigerians with his exemplariness in patriotism, transparency, accountability, incorruptibility, truthfulness, fairness and firmness, selfdiscipline, moderation, righteousness and fear of God. He is the man or woman who is imbued with commitment to excellence and hard work, a sense of direction, a zero-tolerance for lawlessness , deceit and unconstitutionality, and who has a depth of concern for his people’s needs and hopes. In one word, the leader we need now is one who can lead in deed, speech and attitude and who is thoroughly saturated by the spirit of sane and healthy competition to excel than others and to stand out with distinction, who is not bereft of ideas and strength of character to marry his 24

ideas with those of bright minds in order to put those ideas into action. The leadership that Nigeria badly needs now is the one who would identify the best brains, first- class professionals and exemplary technocrats who possess an un-impeachable character and who would most intelligently propose, for implementation, workable, creative, innovative and practical strategies that would enable him put together: (1) Feasible micro- and macro-economic policies that will put our country on a stable, well reasoned and strong economic base that will greatly improve our economy’s global competitiveness. (2) A well conceived and implementable programme of diversification of our revenue base that will wean us from our over-dependence on crudeoil; and that will beneficially explore such avenues for the expansion of the internally generated revenue bases asa).

a problem- free collection of custom fees and rates, without

exempting anybody, groups or institutions, b). an effectively and efficiently managed taxation that will cover both the formal and informal sectors( the latter constituting 60% of our economy), thus broadening the tax net beyond the formal sector which is presently carrying the tax burden of the country and also ensuring that all taxable Nigerians contribute their quotas through the payment of the appropriate taxes on their incomes, property, imports, productions, turnovers and even as deductable from the public display of their excessive wealth on merriments and ceremonies; c). an aggressive agricultural development including mechanized farming, preservation of farm products and other agro - allied industrial activities; d). an active and well documented exploration and exploitation of all our mineral resources; 25

e).

a dynamic exploitation of our tourism potentials, whose viability

depends majorly on a sound and all embracing security system that will make the country safe, modern and well – maintained road network, other means of mass communication and standard hotels that will compare favorably with those in the tourism havens in advanced economies and Arab countries; f). an aggressive promotion of exportable agricultural, manufactured, artistic and non – oil mineral products. 3). A better exploitation of our robust revenue from oil and gas for the provision of stability of our economy and of our infrastructural development, as it has been convincingly exemplified by the Arab countries which have put into use their God – given oil revenues to provide modern infrastructural facilities for their present and future generations. (4) An effective and well manned, well-funded and well sustained mobilization and effective utilization of all available human, material and natural resources, to make Nigerians enjoy the blessings of affordable, well distributed and constant electricity, generated from all available resources, i.e. hydro, solar, coal, gas, bio-fuel, wind, etc, dependable water supply, well- funded, well- managed and easily accessible health care delivery system, functional and well funded education, adequate fuel supply from local refineries, motorable, solidly constructed and well maintained road network and modern mass transport system (rail and water especially), all of which will provide more jobs for Nigerians. (5) A solidly co-ordinated support-base, purposeful incentives, policies and tactical encouragement for rapid industrial development including small

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-scale, medium -scale and cottage industries, based principally on local raw materials. (6) Measures to encourage the active involvement of private sector investors in the implementation of more sectorial developmental programmes and provide investors the favorable environment to operate. 7). Well- conceived bail-outs to failing financial institutions, financial operational grants to small and medium enterprises and massive financial and strategic support to investors particularly in agriculture and poverty alleviation programmes. (8) An effective poverty-alleviation and carefully diversified programme (much better than the present ineffective and weak National Poverty Eradication Program, under NEEDS), to be manned by specialists and professionals with creative resilience, robust innovativeness, proven integrity and deep concern for the actual needs of the poor. Practical measures

to

control

unemployment,

through

aggressive

skills

development programmes, training in entrepreneurship and provision of jobs for both the skilled and the unskilled. (9) Well-conceived social security programmes that will take adequate care of the vulnerable members of the society: children, women, the elderly and the physically challenged. The elderly, who are senior citizens and who have invested their lives in the service of the nation, have been most disappointingly neglected by successive governments. It is hoped that the National Centre for the Elderly Persons Bill, sponsored in 2007 by Senator Ganiyu Solomon, would be the beginning of better days for the elderly from Nigerians. 27

(10) A sound fiscal policy management and discipline predicated on consistency, sustainability, efficiency, accountability, transparency, effective documentation, uncompromising monitoring, strict adherence to due process, as enunciated in the Due Process Compliance Principles, all supported by technical capacity, legal framework and well trained workforce, sustained by prudence, sanity, probity and strict adherence to the spirit and terms of the Fiscal Responsibility Act, passed into law in 2007 and being monitored by the newly established Fiscal Responsibility Commission. (11) Formulation of sound economic parameters that will be applicable to all financial institutions for capital formation and the curtailment of scandalous

profits,

through

effective

monitoring,

documentation,

standardization, collaboration and creative planning. (12) Reduction in spending on unproductive, unrealistic, irresponsible, white - elephant and non-people oriented projects. (13) Considerable pruning down of outrageous and anomalous allowances to public functionaries as well as of wasteful spending on such unproductive activities as election campaigns, advertisement during birthdays and other celebrations, parties and merriments and of official government financial support to public officers on their private programs. (14) Zero tolerance, through legislation, security monitoring and stiff legal sanctions, for corruption and all its supporting vices of abuse of office,

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diversion of public funds, falsification of documents, bloated or abandoned contracts. (15) Sound and courageous actions to stamp out vandalism, sabotage, religious intolerance and terrorism, militant restiveness in the South South and other geographical locations, political thuggery and other deviant social crimes, all of which create distortions in the economy and distress to the populace and entail unnecessary expenditure to government and stress to security agents.

(16) An innovative strategy to take advantage of the present economic meltdown to review past economic and financial policies, by identifying their strengths and mistakes and evolving strong measures based on best practice-standards in other countries so as to move our country to the “next level” and to radically and positively restructure the country’s economy. The qualities of the leadership that Nigeria badly needs to move it from the present economic gloom are not restricted to the one needed for Federal government alone but for those needed to nurture all the tiers of government. There must be a more symbiotic working relationship and cooperation among the tiers of government with the Head of State leading. The financial sector, which is the heartbeat of the meltdown, cannot but be expected to play a decisive role in finding viable solutions to checkmate the down-ward movement of the economy and to reduce the pains of the crisis by, among other things, improving its services and increasing its 29

profitability, through the initiation and integration into its practices with the best banking services and channels (internet, mobile, ATM’s, Points of Sale, Direct sales, Kiosks etc), bearing in mind the socio-cultural peculiarities of our country as moderating factors. The return to profitability in banks and relevance to the interests of their clients can also be greatly fast-tracked by doing everything to attract additional partnerships from both within and outside the country, including potential stakeholders in governments, establishments, economic

international for

related

financial

infrastructural projects

institutions

development,

including

education

and

business

agriculture, and

health,

socioskill

development programs for the teeming, restless but dynamic Nigerian youths and other potentially profitable projects. To improve their overall performances and return the banks, with increased tempo, to the blessings of pre – recession period or the ‘fat years’, the following strategies would prove most relevant and fruitful: cost management and control, focused strategy and its pragmatic and proactive execution, dynamic and uncompromising risk management strategies, better loancollation and recovery, transparency, strategic opening up of unbanked markets, adoption of relationship banking and research-based judgments in business decision-making, focused on value-creation and updating of the banks’ personnel in innovative and effective banking through training and other professional exposures. The bottom line is that banks should instill more confidence in their existing and potential clients and shareholders, carry out actively and profitably their intermediation roles to Nigerians, increase their profitability, aim at moving higher and extensively in visibility in the country and in their relevance to Nigerians and be patriotically involved in raising the level of the key sectors of the economy.

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As for the manufacturing sector, which is one of the most afflicted victims of the melt-down, it should work in partnership with all the tiers of government and its relevant stakeholders to evolve innovative strategies that would increase its competitive advantage in the global market, open up more markets within and outside the country through the excellent and durable quality of its products, expand its activities to cover more and more of our local raw materials, replace as practically as possible foreign materials with local alternatives, reduce the rising production cost of its products, create a more conducive environment for growth, expansion and modernization and flood the Nigerian market with products that will enhance the quality of the living conditions of Nigerian consumers and that will be adapted to their needs as well as being affordable and durable. The manufacturing sector would also get itself more quickly revived and lead itself from the gloom and depression caused by the present economic crisis to more glorious days by effectively partnering with banks on which depends the availability of favorable modalities for loans and credits to increase working capitals, with government on which depends the provision, in the right quantity and quality of the critical infrastructure that are indispensable for the profitable production of goods and on whose policies industrial development can be enhanced or marred. Other stakeholders include shareholders, local and foreign associates whose cooperation and participatory role shall provide the appropriate leverage to make industries flourish and be profitable. Others are manufacturing colleagues, with fairly identical interests, who can synergize their efforts and form syndicates that can import, in concert with one another, relevant spare parts and materials, an option that is one of the most viable capital– optimization strategies. The bottom-line is for the industries to make profit, effectively negate the bitter effect of the present economic meltdown, reverse the down–turn trend in production, satisfy the needs of Nigerian 31

consumers, target all potential customers, reduce production cost through an objective restructuring exercise and plug all wastage – loopholes including the easing out of unproductive and redundant staff. As for Nigerians who are individually and corporately affected by the meltdown, they are to view the economic meltdown as an adversity that should make them adjust to the unpredictable but unavoidable expediencies of life. The adjustment should be appropriated by every Nigerian as a challenge to enable each one initiate ways of adapting his/her incomes to his/her needs, acquire only such things that are basically necessary for their lives, avoid wasteful spending and stop throwing away possessions that are still manageable and usable. The time is now that Nigerians should learn to make a creative use of leftovers. The need to be particularly careful in working out a personal budget is more than imperative for every Nigerian now; so too is the need for everyone to save and prepare well for the rainy days, as the tea party is never permanent. The present crisis also provides an opportunity for every Nigerian to be more concerned and active in selecting good political leaders who will be adjudged

sufficiently

qualified,

gifted,

politically

mature,

trusted,

trustworthy, nationalistic and intellectually equipped to lead in our country. The Obama phenomenon should serve as an incentive to Nigerians on the blessings of effectively mobilizing themselves to choose the leader of whom everybody would be proud. Each Nigerians has to decide to actively participate in choosing the leader that we very much deserve as a country of the most resourceful and the most dynamic blacks in the world. We should no more allow ourselves to be governed, at any of the tiers of government, by misfits or second or third best who have more money than 32

brains, who know and exploit the art of a tricklishly seducing and deceiving the electorate than exploring great and innovative ideas to enlighten and convict them. We should no more allow any cabal of impostors to mesmerize us with their ideological jargons which can neither put food on our tables or add value to our lives nor reflect in our lifestyles. We should all be concerned with choosing the best, for any political office, from the stage of primaries to the final stage of elections. Democracy should be internally (within each political party) and in all elective positions be pragmatically and honestly practiced. This will help us to choose the political best as our deserved representatives and not the political beast, who is the perfect exploiter of the law of the jungle. We deserve the choicest and not the available or just anybody who is egotistically propped up by his god-fathers or financiers or who props himself up with money and violence or through a vicious mass media hype. Not only should Nigerians actively participate in the election of who should lead them but they should also be always concerned about and voice out their objective appraisal of the quality of services rendered to their country. The media should henceforth rise beyond mercantile and mercenary partisanship and be truly patriotic in their watch–dog mission for the nation. Nigerians should no more be fed with jaundiced and dangerously subjective and selective media coverage of issues, a journalistic orientation which has done a lot of damage to the essence of truth, objectivity and fairness. The Nigerian media should no more stoop to ape and whitewash, for the consumption of gullible Nigerians, the whims and caprices of the highest bidder but should always defer, in their mission of informing the masses, to the highest ideals of patriotism and what is good for the majority of Nigerians. Indeed, the meltdown offers our nation and its citizenry an opportunity to reappraise our level of patriotism, and our approach to emergencies and to the Nigerian cause. 33

Conclusion Nigerians should see the global economic recession as the needed shake–up or the galvanizing awareness to wake us up from our state of stupor so as to stand on our feet and squarely face the challenges of life, just as would be done by an orphan who suddenly finds himself denied his hitherto indispensable parental support or as a drowning man, suddenly confronted with a threatening danger, stirs up his survivalist instinct to frantically swim to safety. The economic meltdown should be viewed as the divinely ordained necessity which becomes the mother of inventions; and so it should motivate us to be more innovative, more adventurous, more rational and more creative in managing our individual lives and the affairs of our nation. It should, in fact, be seen in the context of the Yoruba proverb which states; ‘ile oba to jo, ewa lo bukun’ (meaning: the royal palace that is gutted by fire presents an opportunity to get it rebuilt and to make it more attractive). Adversity, which is always pregnant with useful lessons, if resourcefully and circumspectively managed, can be a therapeutic harbinger of prosperity, just as dark clouds is a prelude to a downpour. The meltdown should therefore be considered by all Nigerians, all sectors of our economy and the three tiers of government as a divine opportunity to wean ourselves from our age-long pampering and babyhood and become stronger, more mature and better equipped to face the challenges of the inevitable changes that define and authenticate life, since change is the only thing that is permanent. Like the members of ICAN say, let us all say and show that WE CAN make it, in spite of all odds. Let us also echo

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with Obama that WE CAN CHANGE IT. We should not despair. We should not lose hope; rather we should all dream big and high. We should sustain our dream with belief in God, in ourselves and in our collective wisdom and abilities and convince ourselves that we can reach the light at the end of the tunnel. We should keep in mind the advice of Martin Luther King Jnr. who said: ‘if you lose hope, somehow you lose the vitality that keeps life moving, you lose that courage to be, that quality that helps you go on in spite of it all’. We should take the decisive steps, without procrastinating anymore, to attain that light at the end of the tunnel. We can no more afford to stand on the fence or on the side-line. We should take a decisive side and that side is the side of change and progress: change in our damaged, polluted and emasculated valuesystems and attitudes, progress towards achieving the promotion of the society to a higher level and the betterment of our nation. Distinguished Rotarians of RI DISTRICT 9130, NIGERIA, thank you very much for your attention. Professor S Ade Ojo (OON) Officier dans I’Ordre des Palmes Academiques Chevalier de la Legion d’Honneur Dean of Student Affairs, Caleb University, Magodo, Lagos State [email protected]

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