|
New Page 9
Economic reforms: How far?
ANENE C. OZOAGU
NIGERIANS
first learnt of privatisation in 1986, when Gen. Ibrahim Babangida invited the
International Monetary Fund (IMF), which came with funds to bail Nigeria out of
economic woes. Britain in 1979, was forced to borrow money from the IMF in order
to protect the pound sterling and save itself from the statism of the Keynesian
macro-economic policies. But for developing countries like Nigeria, the IMF
became partner to our debt-ridden government and came to our assistance by
imposing stringent economic conditions for our bail-out. Their conditions
include removal of trade protections - which our various governments failed to
do since 1986. We approached them and devaluation of our currency - which
Babangida did first. Other conditions included reduction of deficit spending,
and end subsidising loss-making enterprises and stop or transfer state - owned
companies to the private sectors. Nigeria got into these severe straits owing to
bloated government sectors, inefficient state-owned enterprises, trade
protections, deficit spending and inflation all, which led to corruption. The
failure of our various governments from Yakubu Gowon to the present Obasanjo�s
regime to appreciate these made our predicament worse.
At the height of the oil boom in the
1970s, Nigeria was depositing large oil revenues in the banks of the
industrialised world. The foreign banks recycled our petrodollars in the form of
loans to both our government and the parastatals. According to Daniel Yergin and
Joseph Stanislaw, "because of the downturn in the industrial countries, business
in the home market of the banks was poor - intensified competition among banks
led to ever sweeter and more enticing terms for would-be borrowers. In fact, the
in-thing was to lend to third world countries, and no one wanted to be at the
bottom of the league tables." Nigeria would not equally be at the bottom of the
league table of borrowers. The regime of Gowon, not knowing what to do with the
petro-dollar, embarked on massive cement importation (the cement armada) with
which he built edifices. Not content with that, we falsely imposed on ourselves
the leadership of Africa. To justify our leadership of Africa we organised one
of the biggest sports jamboree tagged "All Africa Games."
Although Gowon was dethroned before the
game was staged, yet the regime of Murtala Mohammed went ahead planning the
extravaganza, which General Obasanjo staged after the death of Mohammed.
Economic considerations were thrown to the dogs and the economic consequences of
that wasteful exercise led the same General Obasanjo, who staged the games to
impose the severest of "austerity measures" on Nigeria preparatory to handing
over the civilian government of Alhaji Shehu Shagari in 1979.
Other succeeding governments since after
Obasanjo in 1979, believed that the economy could remain fine-tuned through
macro-economic management and the fiscal tools of taxation and spending.
Government ministries were over enlarged, each with bloated bureaucracies. State
ownership of companies were multiplied and other public authorities mushroomed
in all fields. So did mismanagement and graft. Massive state intervenions
created equal massive opportunities for corruption. Industrial development meant
that the government extended enormous largesse to favour some sections with a
price to be paid by those so favoured. Anybody eager to do business in Nigeria
followed the informal rules of the flow of funds in the generation of business,
i.e kickbacks, bribes and political pay offs. By the time they were done with
Nigeria, mounting losses by state owned enterprises: NEPA, Railways, Water,
Health, Education, etc, turned into steadily increasing government deficit,
public debts soared, and the government tried to catch up by borrowing and this
resulted in Structural Adjustment Programme and Economic subjugation of
Nigerians.
Nigeria became an over-governed society
with the arrival of President Olusegun Obasanjo in 1999. The president adopted
his predecessors� collective economic policy that hamstrings Nigeria with
overdose of inverventions, tariffs, protections, taxes, regulations and barriers
to competition. All these resulted in entrenched inflation in many ways.
Standard of living for Nigerians, except those close to him and his government
fell over 90 per cent below what was obtained ever when the "maximum ruler"
General Sani Abacha was in power. The value of the naira tumbled from N80 to one
dollar, to N130 to a dollar. Individual and political freedom became seriously
undermined.
The 1999 Constitution of Nigeria helped
President Obasanjo to centralize power around himself, thereby straining the
limits of democracy. Like India Ghandhi, he used his constitutional position to
erode the powers of the states, and local governments.
In the economic arena, Obasanjo�s
government has the largest bureaucracy in the whole of Africa with so many
ministries, parastatals and commissions. Each of them has several more
departments that are as large or even larger than the parent ministry,
parastatal or commission. The President failed to realize that the concentration
of power in the hand of a central government is a great danger to individual,
economic and political freedom-the greatest danger to democracy, hence the
massive discontent in the land and the massive government infestation of the
highways with police and security operatives everywhere. In "Free to Choose",
Milton and Rose Friedman said that each department "uses able, skilled people
who could be engaged in productive activities to grind out rules, regulations,
red tapes and forms to fill in that bedevil us all".
Coming down to details, to privatize, the
parastatal to be affected has to be fixed, ie. loss-making activities must be
reduced, the organisation was to be restructured and the basis of profitability
established. Between 1982 and 1984, with Sir Keith Joseph as Minister of State
for industries, Mrs. Thatcher fixed and privatised North sea oil gas, and had
Enterprises Oil, British Petroleum, Ports, Railways, Airports and
Telecommunication. British water was privatized in the form of series of
regional water companies, electric power monopoly was broken into twelve
regional distribution companies, and one open-access grid company. Yergin and
Stanislaw said that eleven of the distributing companies, were later sold and
seven of them bought by American electric companies. On how to ensure that these
companies do not fall into foreign hands as the distributing electric companies
of Britain later did, Mr. Nigel Lawson, Chancellor of the Exchequer had this as
an answer, "the golden share � a special share which would be retained by
government after privatisation and which would enable the government to prevent
the control of the company from falling into unsuitable hands". All these
happened within two years from 1982 to 1984.
But the Nigerian government started
talking about commercialisation and privatisation soon after Ibrahim Babangida
came to power in August 1985, though soon after the visit to Nigeria of Sir
Geoffrey Howe, the British foreign secretary. To start it off, rather than using
the Ministry of Industry. President Babangida created the National Council on
Privatisation. The council, made up mostly of politicians, was bigger than the
parent ministry. It had more personnel money and received more attention from
the government than the supervising Federal Ministry of Industries.
The energy sector, Nigeria�s principal
source of revenue, had Ministry of Petroleum Resources. Late in the 1970s,
Nigerian National Petroleum Corporation (N.N.P.C) was created as a parastatal.
The multiplication of companies under this ministry continued until 1999, when
President Obasanjo on being sworn-in took it into the presidency. The NNPC, and
the National Council on Privatisation rather than being offshoots of the
Ministry of Petroleum Resources now stood as the father and mother of the
Rasheed Badamosi controversial Petroleum Product Pricing and Regulatory Agency (PPPRA)
that nearly set the country ablaze in June, 2004. In fact, the Ministry or
Department of Petroleum Resources has no minister, numerous parastatals/department
each bigger and more money guzling than the parent ministry. The PPPRA coined
the term "market forces" as against the "free enterprise" or "free market" in
its deregulation efforts. Again, rather than the deregulation of the entire oil
industry, the government said it was deregulating the �down stream sector.� What
happens to the upper stream sector is anybody�s guess. The down stream sector
was created to satisfy the special interest of politicians as against the
general interest of Nigerians. Mitton and Rose Friedman said, "individuals who
intend only to promote the general interest are led by the invisible political
hand to promote a special interest that they had no intention to promote." They
also taught us how to produce oil surpluses and shortages. "Do you want a
surplus? Has the government legislated a minimum price that is above the price
that would otherwise prevail" they asked, and added, "do you want a shortage?"
The PPPRA, in the name of �market forces� legislated prices below the price that
would have otherwise prevailed in order to produce a shortage on the pretext
that the price of oil in the international market had fallen. "There is one
simple way to end the energy crisis and gasoline shortages tomorrow - and we
mean tomorrow and not six months from now, not six years from now" the Friedmans
further remarked, "it would show how useless, indeed harmful, are the activities
of the employees of the department of Energy." It is hoped that Rufus Kupolokun
and Rasheed Badamosi and the bureaucrats in the various parastatals of the
Petroleum Resources Ministry/Department should take note.
It would be needless to continue the
examination of other ministries and their numerous parastatals and commissions
but suffice it to say that giving the right atmosphere and allowed to operate in
a free-market, the Nigerian Judiciary, Ministry of Health and the Nigerian
Police Force could have made the establishment of NAFDAC and the Anti-corruption
Commission unnecessary. The activities of these two bodies have really proved
"that the emperor is naked," and according to the Friedmans "we have a
government of the people not by the people but by a largely faceless group of
bureaucrats" and politicians who are after their own special interest and not
the general interest of Nigerians.
Having reviewed only the energy sector,
our principal source of revenue, the question now is what can we do? The answer
is simple. At the state level, the State Assemblies should adopt a resolution
mandating the National Assembly to call on President Obasanjo to convene a
national conference where economic management of our resources should take
precedenced over politics. On his own, the President will never voluntarily
convene a conference because the 1999 military-designed Constitution gave him
absolute powers to lord his whims and caprices over Nigerians.
�Ozoagu lives in Ngwo-Enugu.
|
