By Afe Babalola
“Most of the economic, monetary and banking policies over the years have inflicted hardship on the ordinary people causing inflation and making life more and more difficult for the ordinary people and breeding more poverty stricken people”.
Last week I began an examination of extreme poverty which now pervades the country and how the gap between the rich and the poor appear to be widening by the day. I quoted verbatim the address of Lord Macaulay to British Parliament on 2nd February, 1835 that there were no beggars nor thieves in Africa and the need for the British to replace our culture with theirs failing which it would be difficult to dominate us. For ease of reference, I quote the address again:
“I have travelled across the length and breadth of Africa and I have not seen one person who is a beggar, who is a thief such wealth I have seen in this country, such high moral values, people of such calibre, that I do not think we would ever conquer this country, unless we break the very backbone of this nation, which is her spiritual and cultural heritage and therefore, I propose that we replace her old and ancient educational system, her culture, for if the African thinks that all that is foreign and English is good and greater than their own, they will lose their self esteem, their native culture and they will become what we want them, a truly dominated nation.”
I also detailed many of the factors which were responsible for the rise of poverty in Nigeria namely;
1.Government Economic, Monetary and Banking Policies
2.Neglect or abandonment of agriculture
3.Discovery of oil, exportation of crude oil and purchase/ importation of oil for local consumption instead of refining for local consumption
4.Indiscriminate issuance of licenses and waivers for tycoons for importation of sugar, flour, cement, wheat and other basic essential commodities.
5.Geometrical increase in population
- Failure to produce or maintain essential infrastructure for development such as, cheap electricity, modern rail transportation and good road transportation.
- Continuity of colonial system of education
- Abandonment of true federalism for unitary system of government under the guise of federalism
In this edition, I will elaborate on the first factor.
GOVERNMENT ECONOMIC, MONETARY AND BANKING POLICIES IN NIGERIA
Poverty largely results from lack of employment opportunities or under-employment. Among the poor in Nigeria, majority want to work, however, there are few who want to get rich without working.
The economic, monetary and banking policies of the country over the years never favoured a large percentage of the population and who therefore remain poor. Most of these policies largely benefit the importers of foreign goods and multi-nationals such that the foreign earning by Nigerian government go back to the developed economies and what is left find their way into inflated contracts some of which are used for election campaign financing stolen or kept in foreign account.
Most of the economic, monetary and banking policies over the years have inflicted hardship on the ordinary people causing inflation and making life more and more difficult for the ordinary people and breeding more poverty stricken people. Some of these economic and monetary policies include the SAP, the dual exchange rate of Abacha regime, the open market option of hard currency and the fuel subsidy. The Structural Adjustment Programme (SAP) of 1986 virtually crippled the economy with inflation, steady currency devaluation, internationally uncompetitive low wages and the collapse of the middle class. Consequently, everybody including the civil servants, industries and the civil servant became worse up of the SAP.
In 1985, a year before the introduction of SAP, a naira was higher in value than 1 dollar. $1 exchanged for N0.894. The naira has since depreciated so much that a dollar exchanges for N365!!!
Another policy of the government is its interest on loan. Commercial banks give loans on 22% -27% interest while micro-finance banks give loans at 60% interest. In the process, the CBN is killing small, medium and large scale businesses. With the high rate of interests on loans, no business operator can break even talk less of make profit. In any event, the terms of borrowing are beyond the reach of the poor such that loans are only accessible to the affluent who invariably fail to pay leading to failed banks. It is common knowledge that interest on loans in developed countries hardly exceeds 7%. The introduction of SAP led to capital flights, massive corruption, high inflation rate, poor wages, collapse of the middle class, high rate of unemployment, brain drain, collapse of many industries due to unstable currency.
It is appropriate to refer to Stieglitz, former world bank Director who in 2002 openly criticized the world bank and IMF for Structural Adjustment Programme (SAP) recommended to Nigeria in 1986 when he said, “weak economies cannot succeed by adopting the whole free market economies adopted by industrialised nations, rather they need policies that will protect their economy”.
Comment by readers
I thank many readers for their commendable contributions. Because of space, I will publish only the contribution by Mr. Olufemi Thomas.
“Good morning Chief. I read your article in the Vanguard. In fact Prof Ogunmola and Prof Oyediran were with me and we all read and discussed it with few others present. Chief, you are highly regarded by these people. They agreed with you on all points. We look forward to reading the next slot. Well done”.
To be continued.