Nigeria is fifty years old, or half century old as others will put it. This is in one of the most difficult of journeys to nationhood. When the journey begun on October 1, 1960, there were a lot of pessimists who doubt the success of this journey. The multi ethnic composition of the country, the suspicion between the Christian South and the Muslim North, and the absence of mutual trust among the elite of the country made the journey looked one destined to fail. With more potential than any other African country, abundant natural resources like Coal, Tin, Columbite, Limestone, Iron ore, Gold, and Crude oil; agricultural resources like Groundnut, Cotton, Palm oil, Cocoa, Rubber, as well as Hide and Skin; the optimists of the period saw a giant nation in the making. But what we have today is a different picture from the ones foresaw by both the optimists and pessimists. A nation that is on the run from been described a failed state, but far away from it potentiality and God given important position among the League of Nations. The fifty years anniversary of our great nation has coincided with one of it most difficult moment in it history. Since the return to civilian rule in 1999, tens of thousands of people have lost their live to socio-economic and religious crisis. The level of poverty in the country have multiplied. It was estimated that about 70 percent of its citizen live below poverty threshold. Insecurity is rampant in the country with arm robbers and kidnappers having field days. The decay of moral and social base of the society is so severe that some segments of the country have began to forget their cultural roots. Human trafficking has become a big lucrative industry that thousands of girls are exported every month out of the country to Western Europe for prostitution. Corruption has become so common place that if you do not receive or give you are out of place - a stranger. In those days people turned to rituals when they found themselves in extreme poverty, but in today Nigeria it is the rich and the most powerful that are the vanguard of such practices. In the economic sphere the country has found itself in one of it most difficult and unpredictable moments since the days of Structural Adjustment Program (SAP). The global economy is in big trouble, what is been described as the biggest economic crisis since the great depression. Economies everywhere around the world from Peru to Vietnam, Iceland to South Africa are in serious trouble, the out come of the financial crisis that originated from Wall Street. Here in Nigeria the story is not different, from weak stock exchange, deteriorating exchange rate, high interest rate, growing fear about the health of the banking system, unfavorable term of trade, rising inflation, unemployment, to increasing poverty level. Governments everywhere are taking concrete measures aim at tackling the many problems that arise from the global economic meltdown. From Barack Obama economic stimulus in the US to interest rate cuts across Europe and eastern Asia, Economists and policy makers are alerted.
Up till now, Nigeria long term response to economic crisis like the current one, and it other socio-economic challenges is vision 20:2020. Vision 20:2020 is a long term plan that provided the road map to lunch Nigeria into the league of twenty largest economies in the world by the year 2020. I don’t want to pronounce Vision 2020 dead but since the start of Jonathan administration little, if at all is heard about the program. The same minister who is responsible for supervising the implementation of the vision, minister of national planning Shamsuddeen Usman, is still the same person in the same ministry. Whether Vision 2020 is what we need in Nigeria is a different matter, but, to have a plan in place is better than no plan. The main problem with Nigeria is discontinuity and absent of the will to see a policy to it final implementation. Abacha’s vision 2010 made the same promised of taking Nigeria to the league of developed countries, but like with other policies before it the Vision went with Abacha to his grave. I pray that this 2020 Vision will not share the same fate as 2010, or go the way of Obasanjo NEEDS that promised heaven and earth. “Over the next few years (2003-07),” wrote Obasanjo in his forward to NEEDS,”NEEDS will consolidate the achievements of the previous four years and lay a solid foundation for sustainable poverty reduction, employment generation, wealth creation, and value reorientation”. At the end Obasanjo was able to double the number of poor people, though he succeeded in producing few billionaires. Sometime during the final days of Obasanjo term in office, Goldman Sachs (a US global investment bank) in it usual global survey and forecast come out with a report that look at the world by the year 2020. In the report Nigeria was included among 11 economies in the world with the potential to be among the twenty largest economies in the world by year 2020.This is how Vision 2020 originated; an American inspired economic blue print like others such as SAP. The main difference been SAP is more of an economic order forced on Nigeria by the IMF and World Bank, while V2020 is a mere projection, how we achieved it, is left to us. The projection like SAP was built on the underlying assumptions of Free Market enterprises. The realization of the vision hangs on many premises, that include maintenance of GDP growth of more than 6%, annual investment of 10 Billions Dollars in infrastructures, Macroeconomic stability among others. I strongly belief that this Goldman fore cast was inspired by the astronomical growth in the global price of Crude Oil before the last economic crisis. It was crude oil export that helped to explain the outstanding growth in Russia during the same period. And the same Russia was included among the BRICs (Brazil, Russia, India, and China), coined by Goldman Sachs, as countries with potentials to rival US economy. Now that price of Crude Oil has crashed, Russia is no longer seen as part of BRICs by the same people who made noise about the potentials of the BRICs.
Coming down to global economic melt down and how it affects Nigeria, the crisis in the banking industry, the depreciating foreign reserve and declining Naira, our bearish stock market and the falling price of crude oil in the International market are all symptoms of global melt down. The number of bank staffs who lost their jobs in the last one year are in thousands. While in more advanced countries anniversary moments like this one are periods to showcase economic success stories, the story is different here in Nigeria. Apart from the share we received from the global crisis, we have our own home grown economic problems. Even the Goldman Sachs, with a track record of over seventy years of investment banking, was devastated by the global economic crisis, forced to convert into Retail bank, and go begging for money from the US economic Stimulus package. If not of recent, Goldman Sachs was partially nationalized and forced to rethink its business model. According to some forecast Euro zone and EU economies are expected to have negative GDP growth this year. This together with contractions experienced in the US and Japan will leave the world economy with a negative growth. The only good news is the one about emerging economies like China and India who are expected to have positive growth, though less than what had been realized in the recent past. Their increasing use of raw materials like iron, copper and crude oil has led to the current increase in the price of these materials. Millions of jobs have been lost to this economic crisis around the world. Manufacturing jobs are in shambles, likewise jobs in primary industries. Events such as this have continue to drag back the little progress made by emerging economies in Africa and else where. With the developed economies in trouble, the foreign investment needed to streamline Africa’s growth have stop coming, calling for serious economic reform and change of direction. Wall Street that is at the center stage of the crisis, have come under heavy scrutiny from the US authorities. It is no longer business as usual, the fat cats that caused the present mess, should be made to pay for their callous attitude. The global order in the financial industry today is that of draconian re-regulation. The expansionist era that is clouded with the obsession for growth caused by the previous economic bubble is over. Critics have argued that it is the destructive innovations in the industry and laxity on the part of regulators that caused the present state of affairs. Because of the lost incurred in the last one year, investors have become more risk averse and demand for strict risk management regime before committing their money in any institution or country.
The Nigerian banking sector at it fifty anniversary has gone along way, from a sector dominated by foreign institution at independence to one almost 90 percent dominated by Nigerians. The financial sector has recorded a substantial growth in the last one decade: fueled by money from the last oil boom and reforms in the banking sector. Now that big institutions have been created, the task for Sanusi Lamido is to continue to guard against possible risk of default. Nigeria cannot afford a systemic crisis or any bank failure at this time of global melt down. According to CBN, banks in the country have total asset base of about N 14.93 trillion, half the size of the country GDP. The recent scenario in Iceland where over bloated credit structure(many times the country’s GDP) led to the whipping away of the country financial structure and entire economy, call for caution on the part of Nigerian regulators. Despite the global crisis, it is expected that banking industry in emerging economies such as Nigeria’s will continue to experience growth. Though the growth is expected to be below potential, given the right atmosphere the industry can grow faster than GDP. Banking reform alone cannot achieve Vision 2020; concerted effort is needed in other areas. The growth experience in India and China is being driven by the real sector. In fact the financial industry in china is one of the most underdeveloped in Asia, yet its economy is one of fastest growing in the world. On how these economies and others in Asia commonly referred to as Asian tigers were able to achieve these economic feats? None of these economies rely on one export commodity as sourced of growth. They are highly diversified economies who moved from reliance on primary industry to diversify export of manufacture products. During the three decades preceding this century, these economies experienced phenomenal growth in infrastructures, and primary and secondary school enrollment. Agriculture experienced rapid growth in both output and productivity that led to improvements in the living standard of rural dwellers. There was effective public administration devoid of corruption. These were augmented by government investment in applied research, good macroeconomic management, and effective subsidy to key industries.
(Earlier Published on Gamji.com site on October, 2010)
(Earlier Published on Gamji.com site on October, 2010)