By Dele Sobowale

Euro zone governments and institutions must act swiftly to resolve the Euro crisis and all European economies must confront the debt overhang to prevent contagion to the wider global economy”. Leaders of Australia, Canada, Indonesia, Britain, Mexico, South Africa and South Korea.

This could be regarded as an open letter to the Federal Minister of Finance, who is already deeply immersed in the Herculean task of formulating an economic blueprint that will make it possible for the government of Nigeria to create three million jobs in three years.

Much had been written on this page questioning the sincerity and the ability of this government to fulfill a promise that had been made several times by previous governments with nothing to show. However, the economy is not all about job creation; it is also a matter of job preservation. If governments cannot create jobs, they should at least endeavour not to create more unemployment.

In that regard, we must realise that Nigeria operates within a globally integrated economic pool. Indeed, our failure to understand the inter-relatedness of our economy with the global economy was the reason two former “giants” in our economy failed us so miserably.

Few would forget very soon, if not for life, the financial crisis which shook most of the Western economies – starting with the meltdown in mortgage sector in the US and moving to Europe three years ago. The capital markets were devastated across the world and a mini-recession was underway – until governments were forced to take drastic measures to avert worse disasters.

Here at home, the former Governor of the Central Bank, Professor Soludo, assured the nation that Nigeria was “insulated” from the global upheavals. The Director-General of the Nigerian Stock Exchange, Ndidi Okereke-Onyiuke, was just as upbeat, announcing that the capital market, which was already showing signs of distress “will soon bounce back.”

History would record that neither one of the two major players in the Nigerian economy has read the handwritings on the wall correctly. By the time the global contagion hit the Nigerian stock market first and our banking sector later, it was too late for corrective measures to be taken.

Today, we are again at the cross-roads with signs pointing to “redemption” or “ruin.” The Nigerian economy will suffer minimum damage if our policy-makers take pre-emptive steps to protect our economy from the inevitable fallouts of the Euro zone crisis. Otherwise, we face another round of local crisis and job losses such as we have experienced in the banking and stock brokerage sectors.

At the start of the former financial crisis, 25 banks were operating in Nigeria. Today, the number has been reduced and more contraction can be expected resulting in more job losses on account of mergers and branch closures.

Unfortunately, it is not just the Euro zone, the world’s second largest economic bloc that faces serious problems. Even the mighty United States of America, the largest global market offers a sobering outlook for the future. On Wednesday, September 21, 2011, the Federal Reserve Bank (America’s Central Bank) announced Operation Twist designed to spend $400 billion to raise short-term interest rates and push down long-term rates.

The reasons the Fed gave should concern our Economic Team. According to the Fed the following day, the US economy faced “significant downside risk.” Central bankers, as every knowledgeable observer knows, speak in parables for the initiated to unravel.

It didn’t take a whole day for the capital markets worldwide to get the message. The United States’ economy stands a great chance of sliding into another recession despite the recent efforts of President Obama to boost the economy and provide jobs.

The US is our number one trading partner and Europe our second largest. Even a market trader knows that when his/her top two customers are in financial difficulties, there are tough days ahead. This warning is being given because of the often demonstrated blind optimism of economic managers to variables that might not favour the official mantra. Soludo and the D-G, NSE were caught in that blind optimism aided by self-interest in the case of the former CBN governor.

He sought re-appointment as CBN governor and must have felt that telling the truth would hurt his chances. The NSE-CEO on her part, could not accept that the market she had grown to over N14 trillion could melt down to less than N10 trillion during the last days of her stewardship.

To that extent, they both did Nigeria a disservice. The current Economic Team, full of “blind optimists, defined as believers in Vision 20:2020, runs the same risk of dismissing important events which will certainly alter the economic outlook, at least in the short run.

For instance, a great deal of our foreign reserves is held in the US dollar and the Euro. We only recently diversified into the Chinese currency. There is a clear need to take a second look at that policy because a European Central Bank study warned last week that “the entire euro currency project is now in peril”.

In layman’s language, their own Central Bank is warning that we might be holding unto “tissue paper” by continuing to hold any of our foreign reserves in the euro. When, the houseboy of the host announces that he perceives the odour of something burning, it is time for the guest to head for the door – if he does not want to be consumed by fire. Obviously, it is time to reduce significantly our exposure in euro.

While all those measures designed to safeguard the value of our external reserves are important, they are still mostly defensive in nature. They don’t result in job creation. But, without them, the economy itself will be in such shambles as to preclude any reduction in unemployment. The only way to create jobs is to produce goods, especially consumer goods that are in high demand locally and to encourage their consumption.

Local manufacturers and producers of non-manufactured items have always operated under considerable disadvantage with respect to imports. For decades, China and India closed their gates to certain classes of imports despite the unrelenting attacks by Western nations and believers in “free trade” until their producers could compete fairly.

Similarly, Japan for years ignored the complaints of the US and European nations about unfair trade tactics on the way to becoming the world’s second largest economy – until overtaken by China. In each and every case, export subsidy was a major component of their rise to economic prosperity.

Obviously, the objections of the World Bank and IMF to African subsidy had been selective and deliberately biased against developing countries. This time, we must re-examine our stand on that issue. We must use subsidies where it will promote our interests and not get shackled by Western ideology which is selectively applied.

By the time the Federal Minister of Finance returns from the meeting of Finance Ministers and governors of the World Bank, the euro crisis which started several weeks ago will still remain unresolved; President Obama’s job creation bill is still in the coolers of the United States Congress and will definitely not emerge in the form it entered the legislative chambers. So, job creation, even in God’s Own Country, is proving not to be an easy task.

However, it might be of interest to you that part of Obama,s job bill calls on Americans to “Buy American Goods”. That is the beginning of a trade war. One Republican member is considering a bill to force China to re-value its currency or face sanctions in the US.

One thing is certain, trade barriers are about to be erected to protect domestic industries and to revive manufacturing in the US. The World Bank and the IMF will ignore all these because it is the US; but unless we protect our local manufacturers, it is obvious there will be no revival of manufacturing in Nigeria. We too must erect a wall against Chinese toothpicks and other frivolities we import from that country as well as others.

That prescription is against the conventional wisdom at the World Bank and IMF which, under the control of the USA and Western Europe, had insisted on “free trade” of goods and services, while opposing free movement of labour from poor countries to their nations.

Yet, everybody, including you and your former colleagues in the Bretton Woods institutions knew that the only commodity poor nations can provide competitively is cheaper labour. Granted we don’t have much manufacturing to protect, but the little left should be defended and strengthened before the Chinese start supplying us fire wood.

In everything that you do henceforth, remember that you now represent Nigeria, not the World Bank. Our interest comes first.

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After readg your piece, I came away with the conclusion that you are the lone voice crying in the Naija wilderness, because selfishness has made all our “leaders” deaf.

O.C. Enugu.