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Obasanjo’s years

by Business News Report

By Omoh Gabriel, Business Editor
Tuesday May 29, 2007 Nigeria’s third republic will be 8 years old. For the first time in the 47 years of Nigeria checkered political history there will be a civilian to civilian transfer of political power. Ordinarily, the Federal Government would roll out the guns in celebration. But sensing the apprehension in the land, the government has opted for a low keyed anniversary. The day will be devoid of the usual pomp and pageantry that a day like this call for.
47 years in a man’s life is quite some time. At 47 a man is supposed to be mature and grown up and be preparing for retirement and in particular in this part of the world at 47, most people are living overtime life given that the average life span in sub Sahara Africa is 51. An adult would have within this time laid a solid foundation and build a solid edifice for himself and his family. That is, he would have finished his basic education, have a solid background and live independently of his parents, get married and rear his own children. At 47 he would probably have prepared his will.
It is arguable that 47 years is quite a short period in the life of a nation which lives on years after the individual would have gone to the great beyond. The life of a man is short and that of a nation for ever. But every individual is concerned over the years he lives on earth. By the time he ceases to live, he would no longer know what operates. So man often limits himself to that period in which his knowledge takes him on. The past and the present. The future is for those who live up to it.
47 years after independence and eight years of Obasanjo civilian rule, Nigeria as a nation is an economic dwarf with all hopes dashed, made so by a myriads of social and economic problems. Nigeria in the last eight years has on its weak lap religious intolerance, ethnic militia, hostage taking and state consciousness, an elusive unity. Fortunately however foreign creditors are temporary off its neck over the billion of dollars foreign debt that it could not settle but was given debt relief and had to pay a whooping $12billion to exit the debtors trap, an economy with stunted growth and non functional social utilities. For purpose of unity, ethnic arithmetic has been accepted as a way of life rotational presidency has been instituted which has thrown up Alhaji Sehu Yar’Adua as the next president.

As an entity, job rationing is done on state basis in order to reflect the federal character and to satisfy the multi-ethnic groups that make up the country, Nigeria. Nigeria’s socio-economic problems over these years comprise a complex set of both internal and external factors. The internal factors being most disturbing. Painfully, 47 years after independence and eight years of Obasanjo as President, basic social overhead capital are still very lacking in Nigeria. Services such as power supply, transportation, storage, communication etc that are indispensable to modern industry and agriculture are grossly inadequate and not available on regular basis.
What is more, power supply is erratic, transportation chaotic. The lack of this capital is a bottleneck to Nigeria’s economic development. It was the hope of all Nigerians that Obasanjo would perform the magic of transforming the economy through the Nigerian Economic Empowerment Development Strategy which was launched with a fanfare an home grown reform programme supported by IMF. Yet, the problems seems to be more than the will power of Obasanjo’s government as the problems have not been adequately tackled.
The government had succeeded in stabilising the economy and achieved some measure of growth. Between 1999 and 2001 the economy grew by 2.7 per cent. It dropped to 1.5 per cent in 2002 and rose for the first time to 10.7 per cent in 2003. The growth rate however dropped to 6 per cent in 2005 and rose again to 6.9 per cent in 2005 and nose dive to 6.2 per cent in 2006. The rate of growth of the economy has not kept pace with the rate of population growth and the many years of neglect of social infrastructure and the growth has thus not transform into any meaniful impact in the life of the citizenry. Inadequate transportation, though with some measure of improvement in telecommunication courtesy of GSM, has blocked the exploitation of rural resources in Nigeria. As a result poverty has taken over the land. Though the Obasanjo government set up a poverty eradication programme, poverty level is still high at 57.8 per cent going by government claim that it has dropped from 65.6 per cent to 57.8 by 2006.
The rich resources of the country are inaccessible to most part of the country that could have been the food basket of the country. A lot of food produced rots and wastes away in the villages and yet in the 21st century one of Nigeria’s problems is how to feed her over 140 million people that had led to mass importation of various food products.
The unfortunate thing is that Nigerian leaders seem not to understand the very important nature and role of transportation and power supply in economic development. Nigeria according to available statistics loses one third of its agricultural output because of its lack of storage facilities to protect such products against spoilage, rodents and other wastages.
It was hoped that President Obasanjo, himself a farmer, would reverse this trend. But that is not the case as he bows out of office. Erratic power supply from PHCN and the very lack of it in some parts of the country have thwarted the growth of industries dependent on it. Industrial capacity utilisation has dropped from about 60 per cent in 2003 to 50 per cent in 2007 and 47 per cent in some sectors. Educational facilities are a vital elements of social overhead capital. The majority of Nigeria population are still illiterate, lacking the basic skills and training necessary for industrial production or modern agriculture.
As at today, the few trained graduates, school leavers are wasting away and basking in unemployment heart-wave. Education, of course, has become expensive and only few, the rich, can afford it over the last few years. Public schools are a shadow of what they used to be and private schools have sprung up here and there.
47 years after independence and eight years of Obasanjo rule, Nigeria’s most disturbing problem is the lack of dedicated business managers and government administrators. In the early stage of economic development of Western Europe and North America the efforts of countless, mostly private entrepreneurs gave them the momentum to move into and beyond the take-off stage of economic growth. Those Western Europe and North America entrepreneurs eagerly searching for new profit opportunities combined factors of production in broader state than ever before in history to produce new products for emerging markets Later a large class of business managers arose to promote and administer the expanding private enterprise.
The Nigerian economy is more of consumption depending largely on imported products. It is a matter for concern that 47 years of corporate existence, Nigeria lacks a business class that is willing to invest in new industrial enterprises and has the know-how to manage them. The Nigeria business community are mere traders, contractors and merchants engaging in forwarding and clearing and contracts rather than in real manufacturing. Most of the businesses are patrimonial and depends largely on government patronage.
The few who venture into manufacturing do so with little interest. In all, they are speculative, looking for where to make quick profits in real estate, demanding five years house rent in advance before allowing any one into their estate, banking until recently where speculation in forex and financing of commerce hold sway. The Nigeria upper-class until very recently disapproves of serious business and prefers to invest in land and rearing their children to be land owning aristocrats, soldiers trained to seize government at the slightest opportunity, lawyers and diplomats, instead of business executives.
As a result, the Nigeria economy has had to be dominated by foreigners in commercial activity and manufacturing – Indians, Lebanese, Britons and French. Lacking private entrepreneurs, the governments of Nigeria had to take the lead in formulating and implementing national development plans where government was involved in wasteful business ventures that gulped up to N3.5trillion. Most of the enterprises are being privatised with heavy criticism of lack of transparency in the process.
Unfortunately, another problem arises – the shortage of dedicated government administrators. The result is often incompetence, worsened by endemic bribery, corruption and favoritism. The anti corruption crusade instituted by Obasanjo administration is on but has been widely criticised as being vindictive. More so, the ineffective systems of taxation over these years had failed to mobilize financial resources for capital formation. Bad as this situation is, it is worsened by investment allocation. Nigeria in her bid to foster unity in diversity set up and allocated investment in ways that do not promote economic growth. What is more, these public enterprises are operated at a loss, draining off scarce capital rather than creating it. The government realising that it cannot do well in business has made attempt to privatise these enterprises that has been a source of economic rent to bureaucrats.
The Nigerian economic situation can be aptly described as an interlocking set of vicious circles that perpetuate economic stagnation and rural poverty. One of these circles involves the savings – investment gap in rural Nigeria. In Nigeria, productivity is low because investment is low. Investment is low because savings is low; savings is low because income is low; income is low because productivity is low. That is the situation bulk of the population is going through today except the few who have gotten hold of money one way or the other, fair or foul.
In the opinion of the World Bank representative in Nigeria, between 1965 to 1987, Nigeria’s Gross Domestic Savings decreased from 17 per cent to 10 per cent. In comparing 12 countries growth rate, it was discovered that during the two decades from 1965 to 1987 the World Bank found that Korea, with a population of 42 million in 1987, joined the rank of middle income countries by increasing its per capita income from US$650 to US$2,400. During this same period Malaysia and Brazil accomplished the same while Nigeria’s per capita income declined from $440 in 1965 to a mere $394, $411 in 2005 and $426 in 2006 with a high population of 140 million. What this means is that Nigeria’s per capita income in 2006 is lower than what it was it was in 1965.
This implies that in 2007 Nigerians welfare is not anywhere near what Indonesia, Malaysia and Brazil attained in 1987. In the same period the World Bank observed, Korea’s industrial share in GNP increased from 25 to 42 per cent; in Indonesia from 13 to 32 per cent and in Argentina about 42 per cent of GNP. By World Bank calculation, the most potent factor in economic growth is gross domestic savings. From 1965 to 1986 Korea’s savings rate increased from eight to 35 per cent; for Indonesia from eight per cent to 24 per cent; for India from 16 per cent to 21 per cent. For Nigeria, it decreased from 17 per cent to 10 per cent and for Japan it was maintained at 32 per cent.
The situation in Nigeria remains largely the same as savings has not improved beyond what it was in the 1980s if not worse off. Going by World Bank reckoning, while Korea achieved about 94 per cent level of secondary school and tertiary enrolment, Nigeria, during the same period achieved 29 per cent. The implication is that while these countries have reached a self sustaining growth, Nigeria has been trapped in poverty, deficit budgeting N315 billion in 2003 and population explosion 140 million in 2007.
The effect is that the living standard of the populace is on decline and this has dragged more Nigerians into the poverty line. In fact, a recent study shows that more than 70 per cent of Nigerians live below one dollar a day though the government has argued that it has come down to 57 per cent. The situation has not changed much. These are the realities starring the populace in the face as Nigeria celebrates civilian to civilian change of power.
When President Olusegun Obasanjo mounts the dais to take the salute to bow out of office, the questions that would haunt him are what are Nigerians celebrating? 47 years of nationhood or eight years of straight democracy? What legacy is he leaving behind? Has Nigeria achieved anything in his eight years of democratic rule to be proud of? The President no doubt would turned in his mind the debt forgiveness from Paris Club members, EFCC crusade on corruption, the GSM revolution, Banking and Insurance reforms, Huge external reserve but, he would have starring at him faces of desperate graduates in their thousands looking for jobs, epileptic power supply, The intractable Niger Delta crisis ETC.
He must equally have thought of the mounting industrial close downs, insecurity of life and property, lack of drugs in hospitals, the large army of able-bodied but retired generals, mounting inflation, high government borrowing and an army of able-bodied men turned beggars as a result of lack of jobs. The president will probably go home with a smile, maybe or maybe not.

Obasanjo years 15/05/07

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