Wednesday 16 October 2013

The Coordinating Ministry of Uncoordinated Economy: A Metaphor for the Ministry of Finance in Jonathan’s Administration




 

 By Olisa Godson Muojama

After the independence of Nigeria in 1960, Nigeria started with parliamentary system of government. In this system, there was a Governor-General, who was Head of State and a Prime-Minister who was Head of Government. In 1963, Nigeria adopted the Westminster parliamentary system of government, in which power was shared between the President and the Prime Minister. This system was truncated following the incursion of the military into Nigeria’s politics in 1966 and the concomitant suspension of the constitution. The civilian rule that commenced in 1979 adopted the presidential system of government. In this case, there was a President who was both Head of State and Head of Government.  But this arrangement was again toppled by the military in 1983.

The return of democracy to Nigeria in 1999 heralded the return of presidential system of government. However, in what appeared to be a distortion of the presidential system of government, Goodluck Jonathan has conferred on the Minister of Finance the position of the Co-ordinating Minister, a position which most people have stigmatised as that of a Prime Minister and, ipso facto, inconsistent with the presidential system of government.
The conferment on the Minister of Finance the position of the co-ordinating minister of the economy is on the supposition that the Minister of Finance would be in a better position to manage the economy. However, this idea may not always be true. It is possible that someone may be an expert in finance management without being an expert in the management of the national economy. Finance is just an aspect of the economy. Therefore, anyone capable of managing the country’s economy should not only study finance, but should understand the general workings of the economy, most especially macro-economy in a globalised world. By extension, the person should also understand the laws of motion of global or world economy.

Evidence, from the organisation of Nigeria’s economy, shows that the minister of finance in Nigeria may not have acquired this holistic training in macroeconomic management. If at all she had attempted such training, it appeared she did not complete it.  The uncoordinated, disjointed, and disarticulated nature of the Nigerian economy shows that there is a problem with the ministry of finance, Central Bank and macro-economy of Nigeria in general, typified in the policy summersault that has characterised the ministry’s agenda. Examples of this claim abound in history of her activities in Nigeria:
President Olusegun Obasanjo hired the current Minister of Finance from the World Bank during 2003-2007 dispensation. Her arrival was greeted with shouts of Uhuru and with high sense of acceptability due to the credibility she had, even before assuming office. This misplaced extempore credibility derived from the fact that she was educated at Harvard and that she was working with the Bretton Woods institution. It also derived from the fact that she is a woman, on the illusive pretention that women are motherly and more humane than their male counterparts, most especially when it comes to the issue of welfare. This hypothesis was to fail in Nigeria, upon her arrival. No sooner had she taken office than it became obvious that her ultimate interest was not in improving the lots of the Nigerian masses, but in the misguided experiment of neo-liberalism, the mantra of the Washington Consensus.

For instance, she started with privatization of public corporations in Nigeria, which analysts have described not only as a caricature of privatization, but as a rape on Nigerians. Privatisation is a good economic wisdom if it is properly handled. For instance, after the collapse of the Eastern Europe in 1989 and the Soviet Union in 1991, economic reforms followed: a transformation from centrally planned economy to market economy. Poland alone had 3, 177 state enterprises in industrial sector to be privatised. This transformation required comprehensive action on three fronts: macroeconomic stabilisation, liberalisation of economic activity and privatisation of state-owned enterprises.
Macroeconomic stabilization is the overall function of national economy. There are various measures of stabilizing the macro-economy. It involves Fiscal policy: a programme provided for a tightening of fiscal policy to restore a balance in the general government accounts. The goal was to cut subsidies to reduce expenditures, and eliminate tax reliefs yielding additional revenues. It also involves credit and monetary policy, which means ceilings on Net Domestic Assets (NDA) of the banking system were imposed, allowing for national growth.

Liberalisation of economic activities means the opening up of the market and sectors previously monopolised by the state to private participation. To achieve this, there are various measures: Price system in which price controls were removed. Prices are to be fixed no more by the state, but by the operations of the market through demand and supply. It also involves Exchange and trade system in which foreign exchange could be provided without restrictions for most current transactions, as opposed to the previous system of rationing.

Privatisation means the transfer of public owned enterprises to private owners. It is creating anew the basic institutions of a market financial system, including corporate governance of managers, equity ownership, stock exchanges, and a variety of financial, intermediaries, such as pension funds, mutual funds, and investment trusts.
This is textbook economics, beyond which you find the theory of enlightened self-interest which is silent in conventional economics textbook and which is obscure to the Goodluck Jonathan’s economic team. There is no gainsaying the fact that the Minister of Finance is implementing some strange textbook economics. She perhaps did not learn the theory of “moral sentiment” propounded by Adam Smith (the Father of free market economy which she claims to be championing) and popularised by Amartya Sen, the Indian economist.
For instance, one of key points in the strategy of privatization is that much of the privatization should be accomplished through the free distribution of shares to various groups, including workers, pension funds, and mutual funds, rather than through the sale of shares in an initial public offering (IPO). This did not happen in Nigeria due to the religious implementation of the dictates of textbook economics, and the neo-liberal jargons of the Bretton Woods institutions. She might not have read the book of her former boss at the World Bank, Joseph Stiglitz. In his book, Globalisation and Its Discontent, Stiglitz (2002) notes that privatization should follow the trend of sequencing and spacing, that is the theory of ‘gradualism’, or ‘two-track approach’, not the ‘big bang’ approach employed by our honourable Finance Minister.

Another illustration to demonstrate the uncoordinated nature of the Nigeria’s economy is the debt buy-back. In 2006, Nigeria shocked the whole world when the government paid 12 billion dollars to the Paris Club in exchange for a debt cancellation estimated 18 billion dollar. There is no country of the world that is not in debt. American government finances the consumption of its citizens through debt, as has been demonstrated by Taggart Murphy (2006) in his article “East Asia’s Dollars”. Therefore debt repayment by the Nigerian government with the advice of Madam Minister is nonsensical and an antithesis of developmental economics. It is the greatest disservice one can commit against ones country. Such money could have been used to provide social security to the citizens of the country, provide stable electricity, provide quality and sound education for Nigerian citizens, and provide good roads, good water supply, good sanitation, good housing scheme and good infrastructure. Under Goodluck Jonathan new debt procurement has resumed. This is a deliberate ploy to keep Nigeria in perpetual debt trap and to perpetuate herself in office. According to Aluko and Arowolo (2010) “Countries entrapped in foreign debt have some perceptible symptoms. Representatives of the creditor institutions take over strategic financial institutions of the country such as the central bank and the finance ministry to mention a few. This is done to monitor and ensure that no resources are misappropriated or diverted to anything other than servicing the external loans.”

Obasanjo’s administration ended in 2007, followed by Late President Yar'Adua’s administration. The death of Yar'Adua threw up Goodluck Jonathan as president (an incident which he has always touted as part of his achievement as a president, as he stated in one of his interviews with the CNN). Goodluck Jonathan not only invited the madam Minister again, but made her the coordinating Minister of the [uncoordinated] economy. This, many think, is a second missionary journey that will enable her to complete the destruction of  Nigeria’s economic fabric and the gang-rape of the Nigerian citizenry using the benefit of purported textbook and boardroom economics.
As a case in point, she started out with subsidy removal from petroleum products, the natural resource derived from Nigeria’s backyard. Her and CBN Governor’s argument was that subsidies are not placed on consumption, but on production, another textbook, classroom, and boardroom economics learned by the duo from their respective classrooms, without exposing themselves to the nitty-gritty and practical details of development economics as practised in the developed countries of the world.

It will be pertinent to remind Madam Minister and Mr President that by American standards and by its poverty measure over 90% of Nigerian citizens are poor. For instance, lecturers in Nigerian Universities (for instance) from the cadre of senior lecturer down the ladder are all poor by American standard! To be sure, in the United States, the Federal Poverty Level is used by the US government to define who is poor. The Federal Poverty Level is used to determine who receives subsidies or aid from the government. See http://useconomy.about.com/od/glossary/g/Federal_Poverty_Level.htm. “It is based on family’s annual income rather than their total wealth, annual consumption or their own assessment of well being.” Its origin is owed to President Johnson’s war against poverty. From this War on Poverty came many of today's programmes such as food stamps, Medicare and Medicaid. “For 2013, the Federal poverty guideline is an annual income of $23,550 for a family of four. For example, a single-person household is considered poor if his or her annual income is $11,490 or less.” Unfortunately, the annual salary of a lecturer II in Nigerian Universities is less than $11, 490.

What this means is that the government of the US is spending money, putting subsidy and financial aid on consumption by its citizens not on production. Food stamp enables families in the US to obtain food using their government subsidy and aid, just as Medicare, Medicade and Obamacare assist the American citizens to enjoy state of the art medical attention with subsidies from the government. This is social security which makes it impossible for any American citizen to fall below a level considered as degrading to the humanity. Unfortunately, in Nigeria we either have semi-literate leaders or wicked leaders or both. It is this myopia that the co-ordinating ministry of uncoordinated economy has brought to bear on ASUU-FGN negotiation.

ASUU has gone on strike since 1 July 2013 in order to get the government to implement the agreement it willingly entered into with the Union in 2009 based on collective bargaining. In 2012, the Government of Goodluck Jonathan signed a Memorandum of Understanding on how the rot in Nigerian Universities could be addressed. It agreed to inject 100 billion Naira annually into the education sector, starting from 2009. Up till date nothing has been remitted and the debt has now aggregated to 400 billion naira. Again, from the 2009 ASUU-FGN Agreement, the government should also pay earned allowances to university workers as a whole, not to ASUU members alone. Up to date nothing has been paid and the debt has amounted to 92 billion naira.

Remember, the total amount of the arrears of earned allowances between 2009 and 2013 amount to N92b, which the Minister of Finance interpreted as 15% of the recurrent expenditure of 2013 budget, without stating what has happened to the fund allocated for that purpose in the previous budgets of 2009-2012. She insisting that government had no money and could afford to pay only 5% of the recurrent expenditure of 2013 budget, which amounts to N30b.

The figure was not derived from any logical bases, but from unfounded fiscal policy. What this means is that government has arbitrarily awarded payment to ASUU, without basing its judgement on any formula derivable from collective bargaining. This is tantamount to negation and abrogation of the Agreement which government willingly entered into with the Union in 2009, as well as the Memorandum of Understanding it also signed with the Union in 2012.

It was at this point that ASUU declared a nationwide, total and indefinite strike starting from 01 July 2013. Up till today, Madam Coordinating Minister and Mr President are still brandishing N30b which emanated from calculation summersault. Therefore, if ASUU goes back to work because of the award of a paltry sum of N30b, it means that the essence of the strike has been defeated, and that we have wasted our time.

From the foregoing, it is clear that a return to status quo ante will amount to a waste of precious time and a betrayal of the spirit of fairplay and collective bargaining; principles we hold so dear in our union and in our classrooms. There can be no governance as planless and as unprincipled as we presently have it. We cannot afford to put the future of generations yet unborn on the line and pretend that we are only being gentlemanly.

The asset shoreup of these political office holders holding the country to ransom has multiplied in their billions since they became office holders and coordinators of the economy that even they are afraid to openly declare their assets. All we hear of is that gone are the days when they have no shoes and singlets. It is a gargantuan irony that it is the same set of individuals who now collaborate with Bretton Woods stooges to gangrape their own economies and cut off the feet of the unborn.

 
We call on all well meaning Nigerians to stand up and say no to sabotage and slavery, and save their own people from the shackles of a heartless comprador class whose mainstay is the conversion of politics to trade and mindless corruption. The Arab spring is around the corner and we can feel the effect just down the road from us. Now is the time to stand up to a purposeless class of rulers whose business is to ruin the future of our children and our children's children. 

 For Communications and Information Committee, ASUU-UI .
 Edited By Kay Bello.
     


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