How Nigeria Can Get out of Economic Crisis

Fri, Nov 4, 2016
By publisher
10 MIN READ

BREAKING NEWS, Cover, Featured

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Charles Okeke, a professor of Economics and dean of a School of Education, Behavioral and Social Sciences in the Nevada System of Higher Education, United States of America, writes on how Nigeria can overcome its current economic woes

IT goes without saying that Nigerians, broadly and generally speaking, love to trade, barter and sell and would sell anything that does not move. A seller provides services and does not produce tangible good. We have done that for centuries with disastrous consequences. We have become so used to trading and selling that we have come to mistake them for producing. Do not get me wrong because there are times we sell stuff in order to acquire something of higher value. Thoughtful peoples and policies advocate, encourage and support the sale of renewable man-made products while those that are not forward-looking would seek to deplete natural resources instead of transforming them into man-made products that would keep generating other products and income.

The chatter now in Nigeria revolves around selling national asset to shore up our foreign reserve and fight recession. Stated differently, sell our productive long-term assets to purchase temporal relief from short-term economic downturn. We have continued to suffer from economic myopia. The celebrated Lebanese poet, Kahlil Gibran summed it up in the following immortal words: How small is the life of the person who places his hands between his face and the world, seeing naught but narrow lines of his hands!

Permit me to digress a tad here. Our continued disregard, not ignorance, of how the domestic and the global economies work is no longer funny, but downright dangerous. In the absence of oil and other God-given natural resources, our country will degenerate into a banana-republic. One of the continuing enigma of the Nigerian state is that this is a country whose leaders past and present would profess the desire to move forward and get over the “present” difficulties, but remain obstructively allergic to the time-tested method of national self-assessment. We need to know how this once promising country fell into this economic and moral state of affairs. There needs to be a time of brutal honesty where everything in on the table. Would it be painful? Of course, especially if it is approached without the benefits of anesthesia.

The decibel of chatter is rising about the disposal of national asset to deal with the negative effects of short-term recession if this has been correctly been diagnosed as a recession, which economists define as two consecutive quarters of declining national output. I suspect, however, that Nigeria is not experiencing the standard form of recession – which the declining output is accompanied by falling general price level (deflation). Rather, some observers have noted that the declining national output has been accompanied with increasing general-price level. So, we are facing a case of declining output and inflation. In economic parlance, this is called stagflation. The question now facing us is whether we should sell national assets to deal with recession? My first reaction is no. However, with unadulterated transparency and proper accounting of what constitutes the national asset, I may be persuaded to change my mind. At this point, I do not see anything which would lead me to believe we are moving in the direction of meeting either of these two conditions.

Accounting for National Assets.

A country that has had difficult setting up a system to ferret out the ghost workers in its state and local government not to mention the federal ministries, would have even greater difficulty accounting for the national assets. It would be Sisyphean labor. As the age-old axiom has cautions, people would always like to take the path of least resistance. Are we talking about selling off the least productive aspects of the national economy such as the legislatures, government ministries, and propaganda units of the governments such as state-owned radio and television stations, and sundry of corrupt institutions?

Buhari
Buhari

May be we are talking about selling off our most productive assets like the government shares of the oil industry, solid minerals industry, government-owned breweries, cement industries and what have you. The propriety of government involvement and ownership of means of production is a topic of another time. In whichever direction we finally proceed on this matter, it is important that timing and distributional consequences of the action whatever it is be considered. This is not the first time assets have been sold. The indigenisation policy which was embarked on after the end of Nigerian Civil war had regional distributional consequences. As economic theory suggests, the equilibrating process of the market will resolve the imperfections emanating from governmental actions, in the absence of further government interventions.

The big elephant in the room is the oil and gas industry in which the Nigerian government has considerable stake through ownership. Are there restrictions on who could bid for the assets? Are people from other lands precluded from the bidding? Are there going to be regional limit on such bidding and ownership? Or would the disposable assets go to the highest bidder unrestricted? How about people pooling their resources to bid on these assets?  Answers to these questions would go to show if the government is serious about transparency or not.

 

Privatisation and Natural Resources  

Nigeria has been so generously blessed with natural resources that Nigerians sometimes appear not to know what to do with all that bequest. The country has also been blessed with people with immense talents. Yet, instead of harnessing those talents for its development, it chooses to denigrate and abuse such people for the benefit of largely ignorant few. Some of the talented ones have begun to see their endowments as a curse, and worse yet, some have begun to act as if they were brainless in order to fit in.

Even so, a good society protects its talents while a backward despises knowledge and celebrates fools. It is the mind, not natural resources, that develops a country. The absence of natural resources does not retard a country. Japan is a case in point. This is a country with virtually no natural resources, but has a cadre of highly educated and trained workforce. The presence of natural resource does not guarantee economic development when the mind is absent. Nigeria and many countries in Africa fall into this category. The tragedy is that many terrible racist theories have been formulated around this phenomenon.

kemi-adeosun
Adeosun

God is generous and has distributed his gifts quite liberally among nations and peoples. What we do with our talents and natural resources determines our successes and failures. As a nation, we have chosen consumption over production and we have no one to blame but ourselves. Definitely not God! Our problem is not ignorance per se (though a measure of it does exist among our country’s leaders and general population), but ignoring what is important to pursue shadow.

 

Cost of Governance and Depletion of National Income and Resources

While the declining price of crude oil has created problems for Nigeria’s economy, the source of the country’s economic problems goes much deeper than that. It is not even corruption. I know how surprised readers are to read that. The genesis of our problems is crisis in the value system. When a university lecturer demands financial or sexual inducement from a student in exchange for a grade, the action pollutes the student and the learning process and denigrates the value of education. When priests, pastors and others with the trappings of false holiness asks God to multiply the donor’s wealth without regard to the source of that wealth, they cheapen people’s relation with God, inspire cynicism towards all “holy” men, and sow confusion among the faithful. When a politician tries to sell a property that is held in national trust without providing the reason nor accounting for the use of the proceeds, it raises the question of motive and casts doubt on the integrity of the process.

Non-renewable resources have to be used with utmost judiciousness with the aim of utilizing the proceeds if sold, to replace the natural resources with man-made resources.  To do otherwise would be reckless and ignorant at best. Saudi Arabia, if news reports are to be believed, is planning for an economy that does not depend on oil. Where is Nigeria in this regard? We remain on our oil-bloated path with no regard to the future, but only hoping that the price of crude oil will rise again to provide the poverty-stricken politicians the continuing opportunity to live high on public money. We must have the courage to slash the budget allocated to politicians and their hangers-on by nothing less than 70%. Nigeria has one of the least productive legislatures in world, but the highest paid. The country cannot afford them. All in all, selling our national assets is not the answer to the country’s economic crisis. Our values must change if our self-destructive path is to change. We cannot be doing same thing while we expect a different result. To expect different outcome is the classic definition of insanity.

*Charles Okeke was born in Nigeria. He attended St. Joseph’s Secondary School, Awka-Etiti and earned Grade I in the West African School Certificate Examination after which he attended St. Patrick’s College, Asaba.  He is currently a professor of economics and statistics in the department of social sciences and the dean of the School of Education, Behavioral and Social Sciences in the Nevada System of Higher Education.  His areas of interest and research include Health Economics, Macroeconomics, Development Economics, Monetary Economics and Labor. He served as the chairman of Department of Social Sciences from 1993 – 2003. He obtained the Bachelor of Business Administration in Economics from University of Wisconsin, Whitewater, a Master’s degree in School Business Management from University of Wisconsin, Whitewater, Master’s and Doctor of Philosophy degrees in economics from the University of Wisconsin, Milwaukee. He is an expert in wealth protection and intergenerational transfer of wealth.  He hold licenses in Life, Health and Fixed Annuities in multiple states in the United States. He has authored and co-authored numerous public interest articles as well as academic papers such as “Enterprise Zones and Community Revitalization: A Wish or Reality?”  “The Wealth Gap: The Continuing Dilemma,” “Employment and the New Economy,” “Why Is the Cost of Health Care Rising So Fast?” “Unskilled Labor and the International Trade’” “Health Insurance Coverage, Medical Events, and Bankruptcies,” and most recently, contributed a chapter titled “The Integration of Africa: Commodity Based Industrialization Examined,” in in a book slated to be released this Summer,  Private Sector Development in West Africa, Diery Seck, Ed.  (2015) (Springer Scientific Publishing). He has also served on numerous boards such as, International Journal of Economics, Business & Finance (Editorial Board Member) & Scientific Journal International Review Board, (2008 – Present). He was a board member of Las Vegas-Clark County Urban league and later served as its consultant. He is a member of the Knights of St. Peter Claver and 4th degree member of the Knights of Columbus.  He is member of Nigerian Association of Las Vegas where he served as the founding secretary.  Okeke also holds memberships in the International Health Economics Association, American Society of Health Care Economists, Western Economic Association International and the American Economic Association. With over two decades of experience in Higher Education internationally, he is a highly sought after speaker on various policy issues.

— Nov 14, 2016 @ 01:00 GMT

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One thought on "How Nigeria Can Get out of Economic Crisis"

  1. Nice one. Very informative, but unfortunately, the targeted audience that can exploit the content to benefit Nigeria may want Article suppressed. Similar rich articles and write-ups have remained moribund on public library shelves in our Country. Nonetheless, I believe posterity will one day recognize genuine input by intellectuals.