Privatization: Nigeria's new gold rush
By
IT was a pleasant New Year eve that December 31, 1989 when we discussed the bumper farm harvests in Zimbabwe with a farmer at Otta, Ogun State. Zimbabwe was then essentially a mixed economy. But the hard sell of the Structural Adjustment Programme (SAP) by the West, pleading that their Marxist leader should turn full circle to Adam Smith and Hayek, bothered our host, the Otta farmer, General Olusegun Obasanjo, that day. Nigeria had then seen two-and-a-half years of the International Monetary Fund (IMF) and World Bank experiment in national destruction and the General did not wish it for Zimbabwe, he being an Africanist. Nigerians had rejected SAP from the onset. He found willing ears in us - Eddie Aderinokun and me. He bought my thoughts and asked that I should write a book. The project fell through owing to unforeseen circumstances. Like all upstarts, Robert Mugabe married a young wife, threw caution to the wind to sup, with fanfare, the meal from the West.
The result after 10 years of that misadventure is the obliteration of whatever gains that country made from freedom fighting and nine years of independence before embracing the new religion. Today, the same West that dragged Mugabe into such a terrible excursion in economic disaster are up in arms, accusing him of every crime imaginable and asking for his head. They had used the so-called crash of communism in Russia, which they caused their agents, Mikhail Gorbachev and Boris Yeltsin, to mastermind, to convince Mugbe, while they played down the gains made by the same system in China that feeds 1.2 billion mouths.
The Anglo-Saxon press on both sides of Atlantic waxed strong in their propaganda using the make-belief of television to dramatise the imaginary success of SAP in Ghana and elsewhere.
And so, like all past African leaders who were gullible to sell their children and kinsmen into slavery for a bottle of gin, Mugabe joined the so-called reformist school and burnt his fingers. Today, better late than never, he is beating a retreat, turning his back on privatisation, not without a scar to show for it. This should be a lesson to the new convert to laissez faire, President Olusegun Obasanjo, about how not to buy a pig in a poke from the West.
Self-preservation is the first law of man. Competition is man's other nature. How then would you wish that your competitor equalled or bettered your standard? Our founding fathers understood this. Small wonder Nigeria fought a 30-month civil war without borrowing of any type. The purpose of this piece is not the Zimbabwe political crisis. It is rather to caution our leader, President Obasanjo, to look before he leaps.
He has acted wisely to discontinue the subtle rule in Nigeria by the supra-national IMF and World Bank. Life does not end with how black a man's account in the bank reads. America's account in the last 30 years, except during Bill Clinton's, has always been red. So should a nation yet to find its feet not seek and tread the middle in the boom-and-bust world of capitalism? Must a nation auction its assets to heartless plunderers of its resources who reduced the state to beggarliness? Obasanjo would do well to reason with the people in the bid to please the West. True, we have not given him a blank cheque to sell our assets because it did not form part of his electioneering message when he sought our votes.
Even the National Assembly cannot unilaterally vote to auction our national assets. It will need major constitutional changes because most of those assets were created by Acts of Parliament.
Besides, theories do not produce wealth. The wealth of a country is produced by its people. No progress can be made amid class distrust which breeds corruption. The brand of moral decay and corruption that exists today was not known in 1979 when Obasanjo left government. The new corruption that chokes any progress in its course was born in 1986 when Babangida introduced SAP. This is the issue to attack for moral re-armament. The people must be mobilised positively. They don't have confidence in any government or institutions, nor in anybody now. How can we grow when we cannot carry the people along with us? Can we fight a war without soldiers? Do officers lead empty battalions? These are the odds stacked against Obasanjo's government, which can only be solved with honesty of purpose and not short cuts that lead to no where.
The privatisation bid in Nigeria has become sheer madness and an utter gold rush. Who says privatisation has succeeded in the world? What happened to education, transportation, health care and shelter after Margaret Thatcher landed Britain in extreme capitalism? Didn't Britain cease to be a manufacturer? Didn't every social life of that country - education, health, transport, sports, even industries - suffer while Dennis and his clique wheeled and dealt in the name of free enterprise; grossing millions into a few private pockets? That was a re-creation of feudalism. Thatcher's rule brought armed robbery to Britain because homeless people started to live in cardboard shanties.
Let us talk of Nigeria. Why must we privatise NICON Insurance Company, Nigeria Printing and Security (Mint), NEPA, NITEL, NNPC, Nigeria Ports Authority and others.
NICON for 10 years had been the most successful business. In 1999, NICON was posting a profit of N1 billion. While big insurance companies were selling out to competitors, NICON was expanding its trading interests in hotels, manufacturing and other areas in Nigeria. NICON is the largest insurance company in Africa with assets in excess of $1billion. When the Yorkshire Insurance Company, a British firm in Nigeria, fell into bad times, NICON bought it over and made it a profitable business concern in the name of Niger Insurance Company. Why then must this company be privatised for those who looted our till to further dispossess us of our remaining property?
The NNPC makes $7 billion every year in its participation in upstream oil exploration. It contributes nothing to the exploration. It is an idle partner. The $7 billion is besides royalties paid by oil companies. Looters want to snatch this away too. And the Nigerian budget is based mainly on this $ 7 billion free gift.
It is madness to think of privatising the Mint. That will be an invitation to counterfeiters to thrive undeterred. The Mint is not a liability to government. It is an asset and a very strategic resource. How come this new craze that it must be privatised? The self-proclaimed leading capitalist country in the world, the United States of America, has not privatised its Mints in Philadelphia and San Francisco. What will Nigeria gain from privatising the Mint? Has Nigeria privatised the Federal Government Press? We may soon privatise Aso Villa for efficiency.
NITEL, for example, is grounded by debts owed to it by all the governments and their agencies. NITEL is not subsidised by government. It is the dictatorship of the military that drew NITEL back, not the performance of a democratic government. Besides, in the days of dictatorship, Dodan Barracks and Aso Rock took money indiscriminately from these public corporations, including NEPA. It is on record that the Electricity Corporation of Nigeria (ECN) was viable and self-sufficient when it lasted.
In fact, if I were Obasanjo, I would be careful about privatising NICON in my tenure so as not to be misunderstood or misconstrued for political jobbery because of that corporation's present leadership.
It is easy to establish proficiency and discipline if checks and balances are introduced into our corporations. In the colonial days and the First Republic, the Prime Minister did not just appoint board members from his house at Onikan. Their structures allowed for contributions by all the regional governments, the colours of their political parties notwithstanding. Let us look at NEPA as a case study. If the structure of its board membership is made up of two representatives of the federal government, one each from the six zones, one from the Nigeria Labour Congress (NLC), one each from the Christian Association of Nigeria (CAN) and Supreme Council of Islam SCI and from the Nigerian Society of Engineers (NSE), the management will be on its toes. The federal government could appoint the managing director who must operate within the rules set by the board. One expects in this case that while the APP will have two; AD, one; PDP, five; NLC, one; CAN and SCI, 2 and NSE, two; there will be no lop-sidedness on political grounds in the 13-man board. There will be professionalism. The model could be replicated in other corporations to ensure efficiency. And the appointments must be from governments of these zones. Really, what Obasanjo should address seriously now is how to revive our medium-sized and cottage industries. Is it not sad that South Africa is now a major manufacturer of cars while during Obasanjo's first tenure Volkswagen of Nigeria had become a commercial success? Was it not ruined by IMF's SAP? Our textile industry is in coma.
Let us congratulate Obasanjo on imposing imports restrictions and high tariffs on some goods. America, Britain, France, Germany, Japan, South Korea and others operate that way to save labour in their countries. In many cases they pump government money into private industries to avoid the social consequences of unemployment. They subsidise their farmers and impose impossible restrictions on goods from Africa so as to eventually buy our commodities at rock-bottom prices in their futures market. Not that one is taking credit, there is no other way to move forward other than to resort to local ideas. Sixteen years ago Nigerians rejected IMF's SAP. It stands rejected and must not be revived in the guise of privatisation. Obasanjo must from now beware of the ides of the West. He has stepped on their toes. Obasanjo's survival now will depend on his alliance with the masses. He must purge those agents of foreign interests in his chicken cabinet. After all, the survival of Kenneth Kaunda and Julius Nyerere for so long in power was because of their alliance with the masses.
When Oscar Kambona of Tanzania and Kapwewe of Zambia requested the Central Intelligence Agency's (CIA) help to overthrow their former friends, they were plainly told that those leaders were impregnable because they were incorruptible and had no loot stashed in foreign vaults. Obasanjo has given scant attention to the authenticity of the so-called debts we are owing to the Paris Club. When Major General Muhammadu Buhari came to power, assisted by that able Minister of Finance, Dr. Onalapo Soleye, he contracted Barclays Bank of London to verify our debts. The findings, before the investigation was aborted by the IMF coup of August 1985, were revealing. Crooks in the Central Bank, Ministry of Finance and some commercial banks were said to be responsible for the debts we are now saddled with through dubious deals.
Obasanjo should order further international investigation of the Paris Club's debts. South Africa and Malaysia should be arbiters. We were sold down the river by a conspiracy of these local interests to overseas creditors of doubtful characters. Many managers of some manufacturing and importing firms were also part of the deals, which accumulated our debts tenfold in compound interests because of default in payments. Most of the imports never came to these shores. Some were just stones and sawdust in containers. Most Nigerian banks, except a few old generation and new ones, are glorified bureaux de change. General Sani Abacha did his best to fight that rot even though he became a man of questionable morals. Banks need further sanitization. Most of the banks thrive on selling foreign exchange. They don't perform essential banking services of sensible leading for productive development like manufacturing. In the words of one Chief Ogunade, an industrialist, they are the "Cowboys of the Nigerian economy".
Their lending rates are so high that no farmer or industrialist will take loans and be solvent. This is an area of concern if we are to fight the present general poverty.
March 2002