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Nigeria and the global economic crises

Kennedy Ifeh avises Nigerain government to expend savings in the excess crude account on the Infrastructural development in order to cushion the effects of the global economic meltdown


Lagos — The collapse of Berlin Wall in 1989 and the present global economic recession raises questions bothering on the credibility of 19th Century Ideas of Socialism and Capitalism. Indications suggest that the meltdown is to capitalism what the collapse of Soviet Russia was to Socialism. Developed and emerging economies in Europe, America and Asia seem to have all abandoned the globalization relic and the promises of hope for mankind to adopt protectionist policies. World economy has suddenly turned Keynesian.



Governments are injecting stimulus bailouts and enforcing financial regulations. Only recently, the US Treasury Secretary, Tim Geithner, unfolded plans that suggests government’s move to nationalize banks. In all of these, countries of the third world are left in the dark and have helplessly assumed the status of the popular Nigeria phrase “sit-down-look”. If recent diplomatic body movements between Washington and Beijing are anything to go by, the world is gradually being dragged into a new world order of bipolar orientation between America and China. When the die is caste, we will all be back to the cold-war era.

Pope Benedict XVI recently ended a tour of Africa with a call for concerted effort to put an end to poverty. The fears of every right thinking Nigerian and indeed citizens of the third world, is uncertainty of what tomorrow will bring. Inspite of the Soludo’s assurances that Nigeria’s economy will not suffer recession, many are loosing jobs, the price of oil is on decline, export is still steady near 0%, Stocks have tumbled by 40%, even the banks, Soludo’s “shork absorbers”, have stopped lending due to rumoured bad effects of stock markets and foreign investments slumps. The question remains, what went wrong and what is to be done?

After the collapse of Soviet Russia in 1989, capitalist countries of Europe and America led by the US immediately keyed into the spectra of globalization. In this context, the unfettered spread of the doctrine of free market, technological innovations and democratic governance gained global prominence. America had all economic advantages to compete in a globalized world. It was an assertion of cold war victory. Situations when conditions were perceived unfavourable, the United Nation’s creed was violated to justify reckless foreign policies.

Within this bound, the Kyoto protocol was abused, the Arabs were forced to surrender to a fortified Israel making Palestinians lost hope of a home in the face of endless hostilities, a monster was nurtured in Saddam Hussein by play of double standards in the Iraq-Iran and Gulf War etc. A bestial sect angered by the Middle East Question – Al Qaeda – cultivated the vulnerability of the US [exposed by Saddam] to bring calamity to the mankind on September 11, 2001. Since then however, we have been ushered into a new order.

Only recently, the world was stampeded into the Iraq and Afghanistan war in attempt by US and Britain to use might to suppress terrorism and assert control of global Political Economy. In their book, The Trillion Dollar War, Joseph Stiglitz and Linda Blimes emphasized how the Iraq and Afghanistan War have cumulatively cost America Three Trillion Dollars. Most suffocating is the realization that this amount will increase in geometric progression over the next couple of years. The increase will be due to Veterans disabilities compensation, medical care, interest upon interest to pay on borrowed funds, sustainability of war officials and manufacture of more arms. Lately, Obama order 4000 more troops into Afganistan.

I wish to state that the financial crisis was caused by huge deficit in the US due to the war in Iraq and Afghanistan. Monies from China and rich Oil producing states flooded American economy in the midst of lack of regulation; this kept interest rates low and fuelled the credit boom and the related boom in the prices of assets, such as houses and equity, whose collapse precipitated the crunch. As the US economy fell, all economies of the world mutually tied with it in the web of globalization collapsed also.

Developments in advanced regions of the world indicate that globalization is undergoing reversal and tending towards protectionism; a gradual reflux of capital from foreign markets to home ones and a retreat into domestic lending and domestic financial marketing. The Bank of England show in their data recently that in the fourth quarter of 2008 local banks sharply cut lending to foreign customers. This is accompanied with ban on importation and in some instances softly imposed by heightened tariff and import duties. For example, China has stopped imports of a wide range of European food and drink, including Irish pork, Italian brandy and Spanish dairy products. The Indian government has banned Chinese toys.

Debates between Capitalism and Socialism are not for modern age. Gorbachev’s Perestroika/ glasnost and Geithner’s regulated capitalism points to new thinking for the world. Martin Luther King’s words makes more sense in our generation, “the Kingdom of God is neither the thesis of individual enterprise nor the antithesis of collective enterprise, but a synthesis which reconciles the truths of both”.

In the face of obvious realities, the third world should look inwards and harness the powers from within towards a strong economic alliance and convergence of common interest rather than to hope for aids from the G20. There is need to move towards a thoroughly regulated economic axis of the third world/ developing nations to frustrate protectionist tendencies of developed nations. The only solution is radical.


In Nigeria, reliance on Soludo’s assurance of the magic of the “Wander Banks” could be suicidal. With a weak productive base, mono product economy, collapsed education and a large unskilled workforce in the midst of slumping oil income and a depreciating currency, it is mere wishful thinking to suggest our “economy will not slip into recession”. The government needs to be more in control of our finance service sector. A re-capitalization process, with the government harnessing equities in the leading banks is laughable but could save us economic woes in the offing. We need to strengthen and nationalize all failed public corporation and place them in the hands of equal equity-based government-private ownership. Okonjo Iweala’s antidote remains the best for our economy.


 The excess crude savings should be expended to “create assets especially infrastructure and other investments that could spur economic diversification and support long-term growth of the non-oil sector”. The Yar’adua’s government needs to be more pro-active on issues that concern the welfare of Nigerians. We have heard enough promises about the proposed seven-point agenda. Our worst nightmare is a collapsed Civil Society. Our thorough-bred cadres have run themselves into the crises of individual heroism to fulfill political expediencies. Civil Society Organizations have been turned into NGOs.

As we move into the framework of a converged new world order, the G20 nations should realize we have passed the era of America Dream or the dream of any nation. There is no hiding place from a Global Dream. The destiny of the world is tied to the conditions of over One billion poverty stricken poorest of the poor.

– Ifeh writes from Port Harcourt