Looting capitalist elite attempts to further attack working people
As usual for the poor working masses, there is nothing to cheer at in the proposed 2009 Budget recently presented by President Umaru Musa Yar’Adua. The suffering of poor Nigerians has, in fact, been compounded by the global economic meltdown which has taken its toll on oil revenue, which accounts for about 98% of Nigerian foreign earnings and over 80% of annual revenue. Sadly, during the boom which saw the price of crude oil reach the all time high of $147 in July, there was no fundamental improvement in terms of living standards or infrastructural development. Resources which ought to have been spent on developing infrastructure and also effectively improving the masses’ living standards were simply looted by the capitalist elite, whose main income comes not from major industry and agriculture like that counterparts elsewhere, but from primitive looting of crude oil wealth.
Falling Naira (currency) and oil prices
Underscoring the misfortune that will blight the Nigerian economy in the coming period, oil is now being sold below the proposed Budget benchmark of $45. On the basis of this benchmark, the 2009 Budget has had an all-time high deficit of N1.09 trillion which is a big pain in the neck. Yar’Adua did not state in his speech the exchange rate used for the budget. Some arithmetic puts the budget estimates at N117 to a US dollar, when the Naira is in free-fall against dollar. It shed about N15 in less than two weeks. At present the exchange rate is above N130 to a dollar and with the continued slide in the price of crude oil, the naira will most likely continue to depreciate. Therefore, both the Budget benchmark and exchange rate are too optimistic.
Although Yar’Adua will not admit it, the government will attempt to squeeze the poor masses and workers that did not benefit from the boom and make them pay for offsetting an economic slump with increased taxes and neo-liberal attacks that will see them paying more for education, health care and power, as well as goods and service. Labour must be prepared to mobilise workers, youths and the poor in a struggle against all neo-liberal attacks and specifically fight for public resources to be really committed to socially beneficial programmes like housing schemes, quality health care and education for all, stable and affordable water and electricity services, etc.
However, in his budget speech, laced with half-truths, Yar’Adua made a futile attempt to give the false impression that all is well with the Nigeria’s economy. Due to the prevailing global capitalist economic meltdown, about two-thirds of the total revenue from crude oil exports has presently disappeared no thanks to the dramatic collapse of oil prices internationally. Yet the President in a very laughable manner still lives in self delusion. He said, “Notwithstanding, the global downturn, Nigeria’s economic growth remains on track”!
Budget cuts in key sectors
Yar’Adua said that the 2009 budget provides 91% of capital votes to five key priority sectors which include critical infrastructure, human capital development, Agriculture and water resources, Niger Delta and Security. On the surface, this appears cheering. But there is nothing to celebrate; emphasizing 91% is just an exaggeration. In reality, compared to the 2008 budget, there is reduction in allocations to the sectors identified by Yar’Adua as critical to his fabled seven-point agenda. For instance, education, health and transport have seen the capital components of their allocation reduced from N47.8bn, N49.37bn and N94.36bn in 2008 budget to N33.6bn, N39.6bn and N35.2bn respectively in 2009 proposed budget. Also, the capital allocation to the Niger Delta has plummeted from N84bn to N77.12bn, shared between the newly created Niger Delta Ministry and Niger Delta Development Commission. Worst still, there is zero allocation to the housing sector!
This reveals why Yar’Adua fraudulently compared the 2009 capital allocation to that of 2007, instead of 2008. He had gleefully stated, “More crucially, the capital vote of N796.7 billion is significantly higher than the actual capital expenditure of N491billion in 2007.”
But while there is reduction in capital allocations, the total budget put at N2.87trillion “represents a 4.45% increase over the N2.748trillion initially appropriated in 2008 and an 8.42% increase over the 2008 amended budget’s level of expenditure of N2.647trillion”. This has raised questions regarding which areas or items the increase in the budget have been allocated to. The government has also given the impression of austerity measures, with the suspension of investment in non-priority outlays like the acquisition of new vehicles and furnishings of office, as well as reduction in the cost of gallivanting within and outside the country. This is only a token measure in the face of a gargantuan economic downturn. A critical look at the budget however reveals that the beneficiaries of the budget increases include the politicians in the presidency and legislature which have seen a 10% rise in their office expenses (Vanguard December 4, 2008).
While the government has expected people to tighten their belts, it has increased the pay package of its functionaries who already loot the treasury on daily basis. Thus, Labour and pro-masses’ organizations must not allow themselves to be blackmailed by the declining oil revenue, rather they should immediately raise the demand for a living wage at all levels for workers. What is sauce for the goose is sauce for the gander. More so, the poor masses who did not enjoy anything from the boom must not be forced to pay for financing an economic slump with increase in VAT and other taxes.
Illusions in private sector
With the increases in the budget it should have been expected that an increased effort would be made to meet the enormous developmental challenges facing the country. Even more so when, by the government’s own admission, the 2008 budget could only achieve about 40% implementation. But for this self-serving government run on neo-liberal capitalist principles the responsibility of economic development and improved living standards have been ceded to the private secto,r through public private initiatives, leaving huge public resources for looting and over-bloated pay for the politicians. Yar’Adua has said that, “private initiatives are expected to complement the Government’s interventions in key areas of our economy with the overarching objective of making a positive, tangible and enduring difference to the life of the ordinary Nigerian”. But the meager capital allocations suggest that the government expects the private sector to play the lead role. Shamsudeen Usman, the Minister of Finance has been categorical in this regards when he said that the private sector was a “more preferred” method of financing infrastructure provision (This Day October 24).
The United Nations Conference on Trade and Development (UNCTAD) had, in a report in 2007, expressed the utter incapacity of the private sector to drive development. The reports states, “the widespread market failures, along with the huge financial resources involved in implementing the earlier stages of development imply that private sector cannot be expected to play lead role” (BBC September 27, 2007).
But the Yar’Adua government has thought otherwise, even at a period when advanced capitalist economies are injecting huge funds into the economy with a view to avoiding deep recession. Yet there is capitalist logic in what is happening now. The imperialist countries are moving heaven and earth to try to stabilize their economies, but even in these countries this is at the expense of working peoples’ living standards today and the likelihood of inflation and spending cuts tomorrow. In countries like Nigeria, more crucial is the question of whether the private sector will raise funds to finance infrastructure in the face of the rampaging global financial meltdown. Already, the world’s big banks have cut down the credit lines to the Nigerian banks. But even when the oil price was high before this worldwide economic crisis started, the Nigerian ruling class refused to invest in Nigeria. The ruling elite’s long established looting policy reflects Nigerian capitalism’s inability to develop in a world economy dominated by the imperialist powers. This is why Keynesianism, the bourgeois alternative to neo-liberalism, will not fundamentally develop Nigeria with its policies of state support for capitalism.
New debt burdens
Determined to help the private sector vampires out of the credit crunch, Yar’Adua government is proposing to raise $500 million, in naira denominated bonds, from the international capital market. This has shown the private sector’s lack of both will and financial capacity to develop infrastructure. The government is therefore providing them with funds to finance infrastructure and make huge profit from the users; while the Nigerian working masses will be saddled with new international debts. The Yar’Adua government, like its predecessors, is in power to gratify corporate profit interest at expense of poor working masses. It is the same way, the government pays huge interest from public resources to banks under the guise of mopping-up excess liquidity. So-called excess liquidity is idle funds banks refuse to lend to the real sector and is left in vaults knowing full well that it would yield a huge return at a later stage. However, it should be stressed that refusal of banks to provide credit facilities to the real sector actually reflects the depth of socio-economic crisis in Nigeria. In the face of pervasive infrastructural decay and high costs of doing business; to the banks, the risk of granting loans to the real sector is unbearable.
The payment for the banks’ idle funds constitutes a huge part of the domestic debt stock. Already, N283.6 billion budgeted for debt service in 2009 appropriation bill is more than the combined capital votes for power (N88.5bn), education (N33.6bn), health (N39.6bn) and transport, including railway (N35.2bn). This fact alone shows the utter bankruptcy of capitalism which prioritises debt repayment to both international and local finance speculators over critical economic and human needs! Just less than 3 years ago, a whopping sum of $12.4bn was paid to international capitalist vampires under the guise of debt repaymen with a false promise of a debt free Nigeria.
What Labour must do
Nigeria requires huge injection of public funds to infrastructural development like roads, railway, power, housing, schools and hospitals. Labour and pro-masses’ organisations must demand, in addition to public resources from other sources, the use of a large part of the foreign reserve for this purpose, rather than putting it at the risk of losses amid the international crisis. Already, the reserve has dipped from $63bn as of September 18 to $58bn at present. Labour must show force and voice against attempts to plunge the country in another debt peonage. The last debt overhang was offset by the foreign reserve, why not use the same resources for economic development instead of keeping it to mop up the mess.
However, like the probe of power projects, where about $16bn has gone down the drain, has revealed, budgeting public resources for capital votes or infrastructure is not enough. It must go side by side with an open democratic control of the projects by the working people, community representatives and professionals.
Also, importantly, to finance the huge developmental challenges and social reforms, the foreign reserve is not enough. The commanding heights of economy including the oil industry, banks etc must be put under public ownership and democratic control in order to mobilise adequate resources for socio-economic development. The recent nationalisation of banks and financial institutions in Europe and US, though aimed at saving capitalism, have shown the crisis of private ownership and that public ownership of commanding heights is not utopian. These nationalisations, and the massive state aid being given to the auto and other industries, show the limits of capitalism. But for working peoples’ needs to be met, genuine socialist nationalisation with democratic control by working people is needed. However, this could only be implemented by a working class and poor government that itself could only be ushered in by a mass working peoples’ political party. This is one the reasons we of the Democratic Socialist Movement have been calling, for some time, on the NLC, TUC and LASCO to facilitate the formation of such party that could chase out the thieving ruling elite from power at all levels. The party being argued for should, in and out power, intervene in the daily struggles of working masses to both win immediate improvements and build a movement that can finally liberate Nigeria from the chains of capitalism and backwardness.