NIGERIA ECONOMIC PARADOXES Nigeria’s current economic condition is traceable to the historical condition from where she emerged politically. The continual influence of the neocolonialism and subtlety of modern imperialism manifesting in the current configuration of globalization are all part of Nigeria’s economic woes. Directionless leadership and terribly wrong economic policies which are partly as a result of synergic diabolical work between the political elites in Nigeria and the manipulating, imperialist, capitalist western power all contribute to the current messy state potentially great Nigeria economy now find itself. We can not understand the current state of Nigeria’s economic condition without making a historical survey of how Nigeria was trusted into this uneven global market and strangely configured global economic order. The word globalization, though relatively new is part of a historical continuum, began about six centuries ago, and every discovery and advancement in the technological and scientific world has impacted on its evolution. The examples of the railway, marine transport technology, air technology, telegraph, e-mail and now the Internet ensures faster and more efficient movement of goods and services. This development in Western technologies opened up Africa and exposed it to the destructive impact of colonialism. The colonialists came to Africa and put in place a system of government and trade that displaced the organized procedures and principles of the African people. Colonialism was accompanied by the exploitation of human and material resources in an inexplicable magnitude, hence Africa has entered the global village at a competitive disadvantage wherein its products were traded without bargain, and buyers fixed prices for the supposed sellers, and the period between 1870 and 1915 became known as the “Age of Empire”, a period when competition for sphere of influence and colonial space was driven by the exploitative desires of the West in dire need of raw materials and cheap labor attracted great importance to colonialism, and the deceptive acronym widely known as the civilianizing mission. In process, as the exploiters, they were confronted with intellectual guilt and sought to rationalize their rape of African human and material resources, and pretended that Africa needs a new form of government that would encourage liberal virtues, enlivens debate, accommodates criticisms and promote succession through the power of the ballot rather than by ancestral means, or might. At the turn of the 1940s and the advent of the Second World War, a renewal of globalization masked as internationalism came with the birth of the United Nations Organization (UNO), designed to promote universal membership and seek a just resolution to the Second World War to maintain world peace through collective effort. However, the colonies of Africa, including Nigeria, were never part of the deal, but simply integrated in turns at political independence. The UNO presented the world with the global village concept, designed to build a better world through basic fundamental methodologies such as tolerance, justice, and the oneness and dignity of humanity. Nigeria, Africa’s most populous country has an estimated population of about 120 million people, emerged from the civil war of 1967 – 1970 with a devastated economy, however a meaningful recovery process started with the advent of petroleum in the mid- 1970s. The economy was basically agrarian; the relative share of agriculture, livestock, forestry and fishing which was 65.6% in 1960-1961 has declined with the agricultural sub sector accounting for only 32% per annum in the 1990s despite the fact that the sector still constitutes the source of employment and livelihood for about three-quarters of the population, 70-75%. Up until early 1980, Nigeria had a reasonable amount of foreign reserve with a insignificant record of foreign debt. Its currency, the Naira was competing strongly with other foreign currencies, yet by mid-1980s the economy started declining as foreign reserves became almost exhausted, and foreign debt started accumulating at an alarming rate as the naira lost its value in exchange with other currencies . The World Bank World Development Report indicated that the country’s gross domestic product (GDP) in 1980 was US $91.13 billion, which puts it as the 20th on rank in terms of GDP size. From 1986 – 1987, the country was hit by the triple disaster of political instability, economic stagnation and the pursuance of inappropriate and ill-fated structural adjustment programs. This devalued the currency, assets and productive resources available for use, and left the country economic managers with the problems of: 7 correcting any distortion affecting any of the four major prices-exchange rate, interest rate, and domestic price level and wage rate; avoiding regression in employment and external balance; avoiding devaluation (although devaluation makes good politics in the short run, it is at the same time dangerous on the long run), and creating an incentive and opportunity system as a way of improving the economy. In this process, the level of industrialization and technology development is so low that it whittles the competitiveness of the economy in a globalized world to the point that foreign actors would have to give more, and have little or nothing to receive, since globalization is the channel of redistributing technology. This is to say that with the challenges of industrialization and technology development, the Nigerian economy is posed to encounter a Herculean task effecting globalization transactions aimed to Nigeria’s advantage. The lack of zeal of domestic corporate executives to engage investment in the industrial sector exposes finance capital to the hazard of foreign invasion, which implies that foreign investors could take this advantage to expropriate the wealth of the nation, and thus hamper the strength of the Nigerian economy because capital is mobile, and globalization is about interconnectedness and interdependence as the finance capital available in the economy is being moved at will to the economy of other states. Thus, globalization has brought about the domination of the Nigerian economy since its basic export is woven around raw materials (the basis for production and further production), whereas export in Nigeria promotes economic diversification abroad and restricts diversification in the domestic setting, placing the Nigerian economy in an uncompetitive space in the global trade circle. Debt Servicing Profile and Illusion of Globalization Globalization is at best an illusion in view of the high indebtedness of the countries of the South. The debt-servicing scheme has virtually created a perpetual debtor in the less developed countries, and has dehydrated the national economy and stultified growth, which erodes the much-taunted gains of globalizations. Using Nigeria as example, it is no news that the servicing of the nation’s external debt had severely encroached on resources available for investment, growth, socio-economic development and poverty alleviation. And although since 1986, the nation had taken a decision to limit debt service to not more than 30 per cent of oil receipts, it has not brought much relief as external debt overhang, adversely affecting the inflow of foreign capital investment. The picture created by this debt service regime is that any attempt to underestimate the crucial linkage between debt, growth, development and poverty reduction will create a distorted view of globalization and its side effects. 9 One of these is the unenviable role of the lowest rate possible. Typically, as noted by Akin Arikawe10 such a conflict of interest causes excess volatility in interest rates, as the Central Bank of Nigeria (CBN) swings back and forth between holding down interest rates in order to borrow money as inexpensively as possible, and raising interest rates in order to control inflation and defend the exchange rate of the naira. From a paltry debt stock of $ 1 billion in 1971, Nigeria had towards the end of 2005 incurred close to $40 billion debt with over $30 billion of the amount owed to the Paris Club (an informal group of official creditors who find co-ordinated and sustainable solutions to the payment difficulties experienced by debtor nations) alone. Although, Nigeria’s debt was more than the total of those of the 18 other poor countries (14 of them African countries) classified as Heavily Indebted Poor Countries (HIPCs), it had been a Herculean task convincing the creditors that debt cancellation was the most desirable option. Prior to Nigeria’s $18 billion debt cancellation deal, these eighteen other poor countries i.e. Benin Republic, Bolivia, Burkina-Faso, Ethiopia, Ghana, Guyana, Honduras, Madagascar, Mali, Mauritania, Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia had secured a 100 percent debt cancellation totaling $40 billion. The Nigerian President, Olusegun Obasanjo had waged a six-year war on debt cancellation wherein he hired Nigerian-born former World Bank official Ngozi Okonjo- Iweala as Finance Minister to prosecute the war. In their bid, they joined several other anti-poverty campaigners to argue that by so doing, the Group of 8 (G8) countries will be stopping 30,000 children from dying each day of hunger, lack of clean water and diseases (Christian Science Monitor as cited in Time magazine) 13. The argument is that the poor countries of the world pay over $100 million dollars everyday as interest alone on loans which kept pilling. Before the debt cancellation deal, Nigeria was to pay a whopping $2.3 billion every year on debt servicing. This amounted to $32 billion between 1985 and 2001 alone14. At the Gleneagles meeting, Britain’s campaign that something must be done about the debt burden worked. World leaders saw reason, but tied debt forgiveness to good governance. President Bush for instance canvassed a partnership with Africa that is different from a relationship of “check-writer”. As he said, “We have got obligations and so do people we are trying to help” 15. According to the Centre for Global Development (CGD), Nigeria’s actual borrowing in the 1970s was $2.1 billion. The monumental debt build up was substantially due to highly controversial interest rates regime and penalties for not meeting attendant obligations. After intense negotiation, Nigeria was classified into the 60% debt forgiveness zone. The creditor nations felt Nigeria was not in the 100% zone of countries rated as extremely poor. Nigeria’s rich potentialities in natural resources and the oil deposit accounted for this feeling. Mrs. Okonjo-Iweala collaborated with her former World Bank colleagues now working with the Centre for Global Development (especially Nancy Bedsol an Todd Morse) 16 to ensure that Nigeria was able to borrow from both the concenssional arm of the Paris Club – the International Development Association (IDA) rather than the Commercial arm – the IBRD. With the reclassification as an IDA – only – country, the proposal for 67% reduction was tabled. Nigeria’s perception as having worked hard in the last few years to enthrone sustainable economic development was then used to secure the debt relief. The debt relief was simply put: pay $12 billion to buy back $18 billion and exit Paris Club. The details as provided by the Nigerian Finance Minister17 included the idea that paying back $18 billion for the next 23 years would no longer be required. Also, the $1 billion allocated to debt servicing annually can now be plough back to developing critical sector of the economy. Noteworthy, paying the $30 billion over a period of 23 years would have amounted to paying a total sum of $50 billion in the final analysis. Whichever of the options taken, Nigeria would still have to pay about $5 billion owed another group of creditors the London Club (an informal group of private creditors that reschedules commercial debt). The $18 billion debt cancellation for Nigeria is good but is less good than it should be. The creditors are nasty and stingy. To extract $12 billion immediately from a country with an annual budget of $3 - $4 billion is callous. Why would they be demanding so much from a country where children are dying, millions are not in school and hunger and disease pervade? This testament of dubious debt relief or cancellation package espoused by Professor Jeffrey D. Sachs, Professor of Economics and Director of the Earth Institute at Colombia University captures the perfidious attempt of the Paris Club and other Bretton Wood institutions to ensure the retrenchment of the Nigerian economy – an economy assessed to be of great potentialities but approached with debilitating economic policies surreptitiously packaged as contributions to getting a reprieve. The history of Nigeria mounting debt profile can hardly exonerate its decades of misrule and the continued recklessness of its leadership. As can be gleaned from the table below, Nigeria debt stock in 1971 was $1 billion. By 1991, it has risen to $33.4 billion, and rather than decrease, it has been on the increase, particularly with the insurmountable regime of debt servicing and the insatiable desire of political leaders to obtain frivolous loans for the execution of dubious projects.