Realistically, even the Bank’s bailout plan that he did, was actually faulty. As Irvine Sprague, a former director of the FDIC writes in his book “ Bailout”, “In a bailout, the bank does not close, and everyone-insured or not –is fully protected, except management which is fired and stockholders who retain only great diluted value in their holdings. Such privileged treatment as accorded by the FDIC only benefits an elect few in the economy”. This means bailouts are only for the rich. Sanusi should know that if, for example, JP Morgan Chase or Citibank gets in trouble in the US., the tax payers in the State pay for all losses. This means the $250,000 limit does not apply. In a nutshell, what the CBN did is just a carbon copy of the FDIC in a simple term, which is a smoke screen protecting the biggest banks. This also means if a bank gets caught, the government bails it out with tax payers money the way Sanusi Lamido did with the likes of Oceanic and Intercontinental Banks. What an economic “guru”?
The CBN governor should therefore go beyond economic polemics and rhetoric in what appears to be his attempt at pleasing IMF and World Bank-institutions that he was vehemently opposed to not long ago. It is indeed mind boggling to see the likes of Sanusi and Okonjo-Iweala who few years ago were heavily opposed to certain IMF and World Bank policies are now disco-dancing to their tunes and lyrics. Sanusi in particular was once attacking these Bretons Institutions, because of their economic policy inequalities in the developing nations. Hear him:
“The struggle against global capital as represented by the unholy trinity of the IMF, the World Bank and Multilateral ‘trade’ organizations as well as that against the entrenched domestic class of contractors, commission agents and corrupt public officers were vicious and thus required extreme measures. Draconian policies are a necessary component of this struggle for transformation and this has been the case with all such epochs in history”.
That was Mallam Sanusi Lamido Sanusi of yesteryears when he was depending “Buharism” in his own version of economic theory and political-economy on July 22, 2002 in Lagos. But shamelessly enough, this same man has today eaten up his own vomit by schematically trying to implement the World Bank’s agenda. That is why he seriously craves for the support of Nigerians to succumb to removal of oil subsidy even when he seems not to understand its real meaning and significance from its originators.
In view of the above therefore, we urge on President Goodluck Ebele Azikwe Jonathan, Sanusi Lamido Sanusi and Okonjo-Iweala to kindly refer to Joseph Stiglitz, the 2001 Nobel Prize for Economics Laureate and one of the world’s best known-economists and former Chief Economist at the World Bank, and get well informed about national and international finances, which he (Stiglitz) honestly argued and explained to, especially President Clinton’s government as the Chairman of the Council of Economic advisers. He opined that subsidy removal, “globalization and its discontents”, cannot simply work for the developing nations such as Nigeria. We also urge them to in the spirit of profound camaraderie and sportsmanship revisit this oil subsidy unilateral decision before it consumes all of us.
For Okonjo-Iweala, the Nigeria’s finance Minister, there is lots of lessons that she ought to have learnt from her very senior colleague (Professor Stiglitz) when she was at the World Bank, but she could not do just that. What a waste? She could have learnt from him that subsidy in its real form and structure, is always given and provided by any apex government to cushion the economic hardship of its citizenry. Definitively, she could have known from Joseph Stiglitz’s school of thought the multinational institutions’ policies and what they want to achieve as a faith accompli in developing countries such as Nigeria. A decade after the Uruguay Round, more than two-thirds of farm income in Norway and Switzerland came from subsidies, more than half in Japan, and one-third in the EU. For some crops, like sugar and rice (not even oil), the subsidies amounted to as much as 80 percent of farm income. The aggregate agricultural subsidies of the United States, EU and Japan, for example (including hidden subsidies such as on water), if they do not actually exceed the total income of sub-Saharan Africa, amount to at least 75 percent of the region’s income, making it almost impossible for African farmers to compete in world markets. The average European cow, gets a subsidy of $2 a day (the World Bank measure of poverty), 80 percent of the people living in Nigeria today live on less than that. This means it is better to be a cow in Europe than to be a poor person in a developing country like Nigeria.
The Burkinabe Farmer, for example, lives in his country with an average annual income of just over $250. He ekes a living on small plots of semi-arid land; there is no irrigation, and he is too poor to afford fertilizer, a tractor, or high-quality seeds, unlike his colleagues in California that can farm a huge tract of hundreds of acres, using all the technology of modern farming: tractors, high grade seeds, fertilizers, herbicides, insecticides etc. The most striking difference here is subsidy on irrigation water (not even oil) by the U.S government, which allows the California cotton Farmer to farm very well, because the water he uses to irrigate land is in effect highly subsidized. He pays for less for it than he would in a competitive market. But even with the water subsidy, even with all of his other advantages, the California Farmer simply couldn’t compete in a fair global marketplace were it not for further direct government subsidies that provide half or more of his income. Without these subsidies, it would not pay for the United States to produce cotton; with them, the United States is, as we have seen, the world’s largest cotton exporter. And this brings us to the end of this discourse on oil subsidy removal using Elton Mayo’s Hawthorne studies framework that the incentive plan on subsidy given to people if removed in effect; it affects their general output, socio-economic wellbeing and standards, because it is the key determinants of individual’s welfare and behavior.
The Federal Government of Nigeria should therefore as a matter of national interest urgently reverse the decision on oil subsidy removal. The money it claims to be losing on oil subsidy each year, can be obtained by cutting the salaries of all the political appointees and office holders by 50 percent not by 25 percent as meagerly asserted by President Jonathan in his address to the nation yesterday night. These political appointees, starting from local government councilors, to chairmen, state and federal rep. members, senators, ambassadors, ministers, governors, vice president and president, should be reduced their salaries by half if at all we are serious about nation building. The unnecessary committee sitting allowances given to House Committees should all be remitted back to government coffers for Project Nigeria. Once this is done, we can invite the Sanusis and Okonjo-Iwealas to reevaluate and calculate the national income index and see if the N 1 trillion that they said we are losing on subsidy cannot emerge out of those political appointees spending jamboree. There is no conflict whatsoever between this and action committed to meaningful goals. The two are inseparable. We should intellectually, but ideologically challenge President Jonathan administration, his cohorts and economic think-tanks such as Okonjo-Iweala, Sanusi Lamido and Diezani by collectively letting them know that there are teaming fellow Nigerians who are out there that only manage to eat once a day. We must remind them anytime that because of their stern and inhuman actions on oil subsidy, there are lots of children who will drop out of school, because their parents can no longer afford to send them to study anymore. Indeed, we must tell them that the decision they took, maliciously means afflicting more hardship and suffering to ordinary Nigerians. We have no choice than to tell them that we can no longer confide in them that they will do something tangible with the oil subsidy money trillions that they said will save for the development of Nigeria. We feel nothing will be done with the money other than to be shared again by government top echelons in their business as usual. As we put our hands on deck to salvage Nigeria, we shall pursue our own cause with personal temerity, grandeur and passion. What is wrong, useless and should be avoided is what honourable Dr. Yusufu Bala Usman once referred to as hot-air jargon what is popularly called in Hausa as Dogon Turanci.
Jibo Nura (Quantity Surveyor), is lifetime Member, West African Research Association (WARA), African Studies Centre, Boston University, United States. He can be reached at: email@example.com
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