Nigeria: Obasanjo’s Economic Reform - A blessing or a curse?

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By Ola Kazeem in Lagos    
Wednesday, 28 March 2007

Nigeria has never had it so good, at least that is what the economic strategists of this regime say. Nigeria economy has been growing at an impressive rate of 6.5% since 2003 as against 2.8% in the 1990s, (how reliable this figure is, is another question) the inflation rate has dropped from 26% to 9% (December 2006), and the Naira has now appreciated against international currencies. Foreign reserves have grown from $4 billion in 1999 to $43.5 billion as at December 2006, even after paying $14 billion to the Paris and London club. This regime has also celebrated a huge debt relief of $33 billion from Paris and London club.

According to their figures - and only their figures using their own formulae - the unemployment rate has declined from 18% in the 1990s to 5.3% in 2006. Even more laughable is the figure on the percentage of the population living below the poverty line, which according to them moved down from 70% in the 1990s to 54% in 2004, while the figure for 2005-2006 has to be kept from the public for "strategic reasons".

Capital inflow has been doubling every two years and stood at about $4 billion in 2006. Suffice it to say, that the budget has always been based on the price of oil at $40 since 2003, whereas the price in the market has been between $67-$71 for the larger part of the period in consideration, and this fact the Nigerian ruling class always leaves out of its analysis.
The reality of the Nigerian situation

Beyond these tremendously alarming figures lie the reality of life of the Nigerian working class and poor masses. Side by side with the above figures, we have it on record that Nigeria generates less than 2,000 MWH of electricity although it is estimated that we need 50,000 MWH to power the economy. If we take the sectoral growth into consideration, Telecommunications & Post grew by 32.5%, being the fastest growing part of overall GDP. However, there has been a huge cut in jobs in telecommunications as a result of the privatisation of NITEL. Then follows Wholesale and Retail which grew by 14.33%. In the 1980s the manufacturing sector constituted 17% of overall GDP, but by 2006 it had fallen to 3% of GDP. In any other situation you would have expected only a civil war to have achieved this level of deterioration, with manufacturing now operating at only 22% of its installed capacity.

Despite the forced merger of many banks, South Africa's largest bank has about the same capital base as all the current 22 banks in Nigeria put together. Total credit made available by the banking system to the Nigerian economy is about 20% as against 100% in South Africa. SME loans (i.e. to small and medium-sized enterprises) are a meagre 0.9% of total loans as against 22% in South Africa.

Even official statistics have it that self-assessment of poverty in Nigeria has risen to 78%, although the actual figure (by "actual" they mean their own estimation) they claim has been reduced to 54%. Youth unemployment (ages of 15-34) actually increased from 18% in the 1990s to 23%, with highest in the South-South at 26.2%, despite the fact that over 70% of national wealth comes from the oil-rich South-South. Current GDP per capita of Nigeria in 1980 was 938 Units (US$ per person), whereas, by 2005 it had fallen to 560 and by December 2006 to 450.

According to internationally accepted standards, when the "Gini coefficient" [a statistical measure of inequality in any country, with "0" expressing "complete equality" and "1" representing "complete inequality"] for any country goes beyond 0.40 the situation could become unstable. In Nigeria in December 2006 it had reached 0.75. It was already 0.51 in 2000 and with the rate at which it is growing, before the end of this year an unprecedented record could be reached. You do not need to search any further to see why there is so much instability in the land, why there is intense intra-class conflict and why the inter-class war is getting so tense. Nigeria is a ticking time-bomb and the Nigeria bourgeoisie is helpless in the face of a fast moving disaster that is approaching them. Any move they make simply accelerates the process even further.
Uneven development Of Nigeria

The Nigerian bourgeoisie has failed to genuinely unite the country and develop all the regions equally. The figures reveal that they are only exacerbating the divisions of Nigeria with extremely backward regions and so-called "developed" regions. For example, Lagos in the South West zone, accounts for over 70% of the total loans and 50% of bank deposits. Three Zones in the North have fewer banks deposits than the South-South Zone alone. After over 40 years of "Political Independence", the Nigerian ruling class is incapable of build a Nation.

How else can one explain the shocking figures in the table below? We see that very high levels of poverty are essentially a northern phenomenon. 10 states with highest incidence of poverty (all in North)    10 states with lowest incidence of poverty (all in South)
1. JIGAWA ----- 95.0    1. BAYELSA ------- 20.0
2. KEBBI ------- 89.7    2. ANAMBRA ------ 20.1
3. KOGI -------- 88.6    3. ABIA ----------- 22.3
4. BAUCHI ----- 86.3    4. OYO ------------ 24.1
5. KWARA ------ 85.2    5. IMO ------------ 27.4
6. YOBE -------- 83.3    6. RIVERS -------- 29.1
7. ZAMFARA ---- 80.9    7. ENUGU --------- 31.1
8. GOMBE ------ 77.0    8. OGUN ---------- 31.7
9. SOKOTO ---- 76.8    9. OSUN ---------- 32.4
10. ADAMAWA-- 71.7    10. EDO ------------ 33.1


 

 

 

 

 

 

 

 

 

 

 

 

What makes this picture worse is the fact that, according to the last census result the population of the North is 63.7% of the total population. This is obviously an inflated figure for political gains. Nonetheless it gives an idea of the situation. The Nigerian ruling class has exploited politically the backwardness of the North since independence. Rather than carry out a genuine programme of development, the Nigerian ruling class is eating the fat on this extreme gap existing between the North and South.
Why has Nigerian Ruling Class been unable to develop Nigeria?

By 1998, 67% of working capital in the Nigerian economy was foreign. With the speed at which the present regime has been privatising since 1999, there is no doubt that this percentage must have risen tremendously.

Over 66% percent of Nigerian workers now work for foreign owned companies with almost 30% working for the State. Therefore, the question to be asked is: who owns Nigeria? Why is it that CNN is more concerned about sensitive issues in Nigeria than Channel, which is a local TV station? Why does the Nigerian situation always gain such prominence in the US Congress? Why does the Chinese government never sleep with two eyes close over the Nigerian crisis? The answer is simple: because they own Nigeria!

The real master of Nigerian society is imperialism. They only employ the Nigerian ruling class to watch over their property on their behalf. The real class struggle going on in Nigeria is between the Nigerian working class and the imperialists, with the Nigerian ruling class playing a reactionary role of forcefully keeping the Nigerian workers down for the imperialists to exploit, making sure that a conducive-environment is provided for intense exploitation of the Nigerian working class. They emerged onto the arena of economic activity when the imperialists had already accumulated all the wealth in their hands and when the workers has already matured as a class. Therefore, they have nothing left for them to do, other than be the watchdog of their imperialist Godfathers. The ruling class in all backward countries like Nigeria, is reactionary, feeble, docile and completely lacking any initiative of their own. To expect anything different is to expect lions to eat grass.

This is how Karl Marx characterized them in similar situation:
"From the very beginning ready to betray the people and to compromise with the crowned representatives of the old regime, because the bourgeoisie itself belongs to the old world; keeping a place at the steering wheel of the revolution not because the people were back of them, but because the people pushed them forward; ... having no faith in themselves, no faith in the people; grumbling against those above, trembling before those below; selfish towards both fronts and aware of their selfishness; revolutionary in the face of conservatives, and conservative in the face of revolutionists, with no confidence in their own slogans and with phrases instead of ideas; frightened by the world's storm and exploiting the world's storm, - vulgar through lack of originality, and original only in vulgarity; making profitable business out of their own desires, with no initiative, with no vocation for world-wide historic work ... a cursed senile creature condemned to direct and abuse in his own senile interests the first youthful movements of a powerful people, - a creature with no eyes, with no ears, with no teeth, with nothing whatever, - this is how the Prussian bourgeoisie stood at the steering wheel of the Prussian state after the March revolution."

These words describe today's Nigerian bourgeoisie very well!
The tasks of the Nigerian working class

Despite the enormous propaganda that is published daily, despite all the fantastic statistical figures that the ruling class think-tanks churn out, they cannot understand why there is so much anger against the government that has performed these "wonders". They cannot provide an answer to why there is so much political instability. And this is all happening during a period of so-called economic boom. What will happen when there is recession?

The working class needs to be told that the answer lies in overthrowing this system that subordinates labour to capital, this system that values wealth over the welfare of the people, that measures growth based on the well-being of the few and misery of the many, a system that can only operate on the basis of half-truths and not the whole truth, a system that exists for the few to the detriment of the overwhelming majority, a system that thrusts the mediocre forward and silences the intelligent, a system that makes the stupid the master at the expense of the capable. Nigerian workers must rise up to their historical responsibility of salvaging Nigeria and rescuing us from the gaol of this docile Nigerian ruling class.

Forward To Workers Power!