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Wading
Through Stiglitz Formular
Former
Economic adviser to US President Bill Clinton, Professor Joseph
Stiglitz poses the way to get Nigeria's troubled economy out of
the doldrums. But how far can the proposition of this Nobel Prize
Winner in Economics and chief economist of the World Bank go, writes
TONY IYARE.
Silver haired
Professor Joseph Stiglitz is obviously full of life. Even as he
dissects the problem with Nigeria's huge returns from oil which
bears little fruit on the health of its 120 million people, this
Nobel Prize Winner in Economics on this Saturday afternoon reveals
his hearty laughter and a charming smile. He kept the capacity filled
hall virtually aglow as he reels and reels from his puzzle over
how one of Africa's largest economies got enmeshed in a quagmire.
Wading through the enigma of how a country which earned about $350
billion in oil revenue between 1965 and 2001 got enthralled with
decrepit socio infrastructure, collapsed social welfare policies
and a debilitating living standards for its people hedged largely
below $1 a day, can be a difficult subject. His diagnosis of what
went wrong with our romance with the black gold as opposed to a
country like Azerbaijan which broke away from the defunct Soviet
Union was a bit familiar: $100 billion is stashed abroad by its
citizens, the country is locked in a spectre of corruption, mismanagement
of funds, wrong priority, a crippling brain drain and a jumbo federal
structure which is very expensive to run. "How can you make a headway
when 25,000 of your doctors operate in foreign countries?", the
former chairman of President Clinton's Council of Economic Advisers
queries. Unlike Azerbaijan which is said to be a leading oil producer
in the early 19th century before its decline, the trend has not
been to embark on huge savings of the earnings from oil.
Nigeria, Stiglitz says need to re-energise its socio infrastructure
and create a more conducive working environment for its professionals
sojourning largely in Europe and America so that they can come home
to rebuild the country. Given the right environment, the $100 billion
stashed away abroad by Nigerians could be also be returned and reinvested
to create jobs here. This huge sum, he says can turn around the
economy "That $100 billion is a huge amount of money. But the owners
are afraid to invest here because of the unsafe investment climate.
But I think they would be ready to return this money if they are
sure of their investment. And I assure you, if that happens, it
will bring a lot of positive changes to the economy of this country",
Stiglitz says.
A knotty issue
from Stiglitz's two hour discourse with journalists at a workshop
on the Harzards of Petroleum Wealth at the conference room of the
United Nations Development Programme (UNDP) in Lagos and sponsored
by the Initiave for Policy Dialogue (IPD), and Ford Foundation,
remains his suggestion for continued devaluation of the Naira. This,
he says will be an incentive for farmers and the agro allied sectors
to make hay. Even with the scary huge agricultural subsidy from
the OECD countries which is put at $1billion a day, Stiglitz says
the emphasis here is to focus on agriculture. While he seem to believe
that the campaign to get the OECD countries to reduce their subsidy
to agriculture, the kernel of the breakdown of the Cancun summit,
will achieve some fruit is not too clear.
For many Nigerians who have watched helplessly the devaluation of
their country's currency from the parity with the Dollar in 1985
to N140 to $1 now, the argument for a devalued Naira by a man who
was appointed a tenured professor at Yale at 27 and has also been
a faculty member at Princeton, Oxford and Stanford universities
could be a bile. Stiglitz who has published more than 300 papers
and a dozen books in his 35-year career, says, "Americans used to
agonise over a devalued Dollar until they found out that imports
from Japan, China and other Asian countries whose currencies were
greatly devalued were cheaper". Today, he reveals the US which borrows
$400 billion annually from China is pressing for the Chinese currency
to be valued upwards. Also confronted with cheap and more efficient
electronic supplies and automobiles from Japan, the US is now leading
the campaign for a stronger Yen.
But for other Americans like John Kerry, the Democratic challenger
for the US presidential election who argue that jobs that should
have been created for Americans on their soil is being created for
foreigners as companies scramble to enjoy this low economy of scale
in Asia, this message could also be a hard sell. "Our global system
is characterised by a lot of inequities", Stiglitz says, arguing
that "it seems increasingly important to try to redress these inequities".
He equally pooh poohed the move by the US to bulldoze creditors
to write off the Iraqi debt estimated at $130 billion. "How can
you talk about writing off the debt of Iraq, a middle income country
when we are doing nothing about the crippling $230billion ravaging
poverty stricken sub Saharan Africa", he contends. Like the other
speakers at the workshop, the accomplished Economics professor says
the oil companies operating in our shores, as the media expose on
Shell Petroleum Development Company's shady affair has revealed,
are not being transparent in their dealings in the production of
Nigeria's oil. "You do not seem to know the exact quantity of oil
that is pumped out from here", he says. Stiglitz who was in the
country as part of the dialogue series by IPD, with different segment
of civil society in Nigeria on how to fix the troubled economy,
says he was part of the team that started fashioning out a community
centred development programme for the World Bank. IPD's objective
is also to provide an alternative to the strangulating policies
of the International Monetary Fund and World Bank. Apart from his
lecture at the Pan African University and discourse with journalists
and the academia all in Lagos, Stiglitz has carried his message
of public policy reform to Abuja where he interacted with government
officials and other sectors of civil society. Stiglitz came down
hard on the malaise of corruption.
If this cankerworm is not checked, he fears, it may smoulder the
world's largest black nation. In the first four years of its reign,
the government of President Olusegun Obasanjo claimed it spent N350
billion on roads, N1.02 trillion on poverty alleviation and over
N200 billion on power generation. These figures pale into insignificance
when compared to what has actually been achieved. The huge craters
dotting the country's highways almost everywhere is a sad commentary
on the management of the large sum claimed to have been spent on
fixing the roads. The Human Development Report 2003 which says 70.2
per cent of Nigerians live below $1 also flies in the face of the
claim that N1,02 Trillion was spent on poverty alleviation. NEPA
too appears to be sliding back to the pre-Obasanjo years. Stiglitz
wants the government to concentrate its efforts at implementing
the policies enunciated in the National Economic Empowerment and
Development Strategy (NEEDS) which is geared towards the creation
of 7 million jobs.
Although the World Bank is slated to support NEEDS with a grant
of $2billion over a three year period, its president, James Wolfenson
who recently visited Nigeria, acknowledge that the programme would
require more than $30 billion for its fruition. Apart from the fear
that NEEDS may also be bugged down by the scourge of corruption,
its vision of creating 7 million jobs at a time when the government
is virtually castrating itself of its strong hold of the economy
appear inconceivable. "How can a rentier state that is divesting
itself of its control of the economy create 7 million jobs", Baba
Omojola, an economist asked rhetorically last week. Although Obasanjo
has been visiting many foreign capitals as part of the frenzy to
shop for investment inflow into the country, this does not seem
to have yielded positive dividend. The president who now leads the
African Union disclosed recently that foreign investment to Africa
in 2003 peaked at $18 billion, no one is sure of what percentage
of that actually got to Nigeria. But the UNDP claim Foreign Direct
Investment FDI to sub Saharan Africa took a nose dive from $12.6billion
in 2001 to $7billion in 2002. Much of the foreign capital inflow
into Nigeria is visible in the Telecommunications sector which has
grown meteorically from 450,000 to more than 4.5 million phone lines
within a spate of two years.
It could also be seen in the beverage sector like the N50 billion
new production plant of the Nigerian Breweries Plc in Enugu and
the grand plan by Guinness Nigeria Plc to also invest $5 billion
dollars in new production lines in the country. But analysts reason
that the apparent move to authoritarianism in the country, evinced
by the latest declaration of a state of emergency in Plateau State,
following the outbreak of inter ethnic skirmishes that also reverberated
in Kano, by the government, could be some warning shot to investors
that this clime is not safe for business after all.
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