Dele Sobowale

“The jobs crisis is hitting the young especially hard. And what should have been a brief employment crisis is turning to a life sentence, possibly for a whole lost generation” –

Dominique Strauss-Kahn, former Managing Director International Monetary Fund (IMF).

This article should actually have come before the two part series on Non-Interest or Islamic banking. But given the heat generated by the matter and the avalanche of requests by VANGUARD readers, there was no choice but to deal with the matter right away.

But, Richard Neustadt, the chronicler of US President Eisenhower in his book POWER AND PRESIDENTS, taught us that, “Dates make deadlines in proportion to their certainty; events make deadlines in proportion to their heat”.

Non-Interest banking was threatening to tear the nation apart, before we can address the monster problem of unemployment. So it had to be urgently addressed. I am unequivocally in support of Non-Interest banking and that is the end of the matter — as long as the concerns listed last week are taken care of.

Irrespective of what one might think of Strauss-Kahn’s morals and sexual life, he is, at least, one of the world’s leading economists alive today. He could not have become the Managing Director of the IMF if he was not. He has made an important observation which should concern or even alarm us.

Indeed, what the former IMF Chief called a life sentence, meaning a life without meaningful or relevant employment or career, has become a death sentence for nearly a whole generation of Nigerian youth since the Structural Adjustment Programme, SAP, introduced by General Ibrahim Babangida, IBB, in 1986.While SAP has become history, the disasters it brought with it are still very much with us till today.

All the pains that were inflicted on our people had been un-remitted by any of the gains promised at the time. The sacrifices which Nigerians were asked, or forced, to make, at the time, have largely been made in vain.

The same SAP which helped the Asian Tigers to get over their own economic crisis, in 2001 to 2003, failed to perform the same magic in Nigeria. Instead, it deepened our problems till today.

By understanding what went wrong at the time we might be able to avoid the unintended consequences which might again result in death sentences being passed on another generation of Nigerians. We have lost one generation already. They were the ones who “checked out” with Andrew in the 1980s.

Those over fifty years old and who can remember the history of the time, would recall that SAP was designed to lead to another death sentence being passed on the next generation of Nigerian youth. Let me quickly recount some of what transpired under SAP.

On the eve of SAP, UAC of Nigeria Plc was Nigeria’s leading conglomerate as well as the largest enterprise. Starting, it did, as the Royal Niger Company, it was the only company, known to Africa, which also was granted all the land lying within one kilometer of its boundaries and which also virtually ran a nation.

By 1986, UAC had over 38 divisions and employed over 100,000 Nigerians directly and over 500,000 indirectly.

Immediately SAP was introduced, UAC merged several divisions, sold off others (Kingsway Stores, Kingsway Chemists etc) and retrenched thousands of its staff. Many, although fully paid their entitlements, were never again to obtain a job.

UAC was not an exception. In fact UAC survived SAP better than other firms, multi-national or indigenous. The carnage to employment was the worst in the nation’s history. Nothing has come close to it since then.

An estimated 4 million Nigerians previously employed lost their jobs as a result of SAP. That was not the intention; it was the consequence of a measure which was embarked upon without regard to one iron law of economics.

Devaluation of the currency, which was at the heart of SAP, only makes sense if the country adopting it, has products or services to export. By 1986, Nigeria had no demonstrable surplus of anything for export. So the pains were manifest but the gains proved elusive in the end.

At the moment, the Central Bank of Nigeria, CBN, has introduced a whole slew of measures which presumably are designed to revive the nation’s banking sector.

They are also expected to drive greater investment and ultimately job creation. Good intentions, undoubtedly, but are they good enough to avert the disaster which years of increasing youth unemployment will induce? That is the question.

To answer that question, we need to examine the series of measures taken recently by the CBN and the banks themselves.

The acid test of the effectiveness of these measures will be the potential for creating jobs or, God forbid, eliminating jobs.

Again, our attention will have to shift, for now, to the likely repercussions of the banks imposing new policies on their customers. One of which is the minimum balance which depositors must achieve in order to continue to enjoy banking services.

By September of this year some banks have announced the minimum deposit required for depositors to continue to operate their accounts. Those customers unable to maintain the stipulated minimum deposit will be asked to close their accounts.

While, this policy will relieve the banks of the “nuisance” depositors, it will also certainly lead to more money leaving the banking sector – at least in the short term.

The question here is: is that the intention, and if not, how will banks make up the loss of liquidity that will result? And will this policy increase bank deposits and lending? It is difficult to see how that will happen.

On the contrary, it is likely that deposits will shrink and lending will be constrained considerably. The measure might in the end prove counter-productive judged strictly on the its ability to promote full employment.

LETTERS

1.      0806-773-2320

I watched Sanusi (CBN GOV) on NTA at House of Rep. I appreciated him and fell heavily for his expose. I bought everything he said, line, hook and sinker. If we want change, transformation, and a better Nigeria, we have to start somewhere.

Is it not a shame that countries like Kenya, Namibia have reached that level of financial fluidity? Indeed the “Giant of Africa”. Sanusi needs your support. You are a pillar to be reckoned with.

2.      0805-204-5674

Nigeria is not a country of the blind where Sanusi, like the proverbial one eyed man can reign supreme. Nigerians are just docile. Bonny from Lagos.