Having said that, I ran into comments (on a popular Nigerian website) by someone defending the Obasanjo Administration. His comments are in red, my responses in black.
1. Obasanjo is the only leader to free Nigeria from Billions of in debt owed to the Paris and London Clubs. It's worth remembering that this was debt contracted by all of Nigeria's former Heads of State.
As the man said, General Obasanjo was one of the former Heads of State that create the debt problem in the first place. He then paid $12 billion in exchange for the cancellation of the balance of $18 billion on our debt. Much was said about how we would have $20 billion in savings over 20 years, or $1 billion a year.
What no one pointed out was, at a low level of compounded interest, the future value of $12 billion is worth at least $20 billion over 20 years, so the Paris Club members did in fact get from us the $20 billion over 20 years they purported to have forfeited.
Secondly, the value of $12 billion used to leverage private investment in infrastructure was worth more to the Nigerian Gross Domestic Product than $20 billion over 20 years.
And thirdly, because of a lack of fundamental reform, restructuring and transformation (and because of political leaders like Obasanjo who took advantage of the lack of reform), the Federal Government of Nigeria has, since the "debt cancellation" deal, incurred new debt that has left us with the same level of debt as we had before we cancelled it. So we are back at square one only a few years later. Indeed, that $1-billion-a-year in savings that were supposed to be spent on Millennium Development Goals does not exist, as we are now paying interest on the new debts.
And mind you, that is just the federal debt. The states and local government areas of the Fourth Republic have been running up debts without question, checks or balances. There has been no analysis that I have seen as to whether or not the states and LGAs can sustain the debts they are incurring, or as to whether or not the projects they are carrying out can generate the revenue to pay back their costs plus interest.
What no one pointed out was, at a low level of compounded interest, the future value of $12 billion is worth at least $20 billion over 20 years, so the Paris Club members did in fact get from us the $20 billion over 20 years they purported to have forfeited.
Secondly, the value of $12 billion used to leverage private investment in infrastructure was worth more to the Nigerian Gross Domestic Product than $20 billion over 20 years.
And thirdly, because of a lack of fundamental reform, restructuring and transformation (and because of political leaders like Obasanjo who took advantage of the lack of reform), the Federal Government of Nigeria has, since the "debt cancellation" deal, incurred new debt that has left us with the same level of debt as we had before we cancelled it. So we are back at square one only a few years later. Indeed, that $1-billion-a-year in savings that were supposed to be spent on Millennium Development Goals does not exist, as we are now paying interest on the new debts.
And mind you, that is just the federal debt. The states and local government areas of the Fourth Republic have been running up debts without question, checks or balances. There has been no analysis that I have seen as to whether or not the states and LGAs can sustain the debts they are incurring, or as to whether or not the projects they are carrying out can generate the revenue to pay back their costs plus interest.
2. Obasanjo excelled in the area of privatization. Under OBJ Nigeria made a whopping $7.07bn - the sum generated from the sales of many state own companies.
According to Vice-President Namadi Sambo, 80% of privatized firms are moribund, which, in his view defeats the purpose of employment-generation and economic diversification. I am not sure what to say about this. As an economist I am theoretically supposed to say that firms with no economic reason to exist should be shut down. As an economist inclined towards the development of Nigeria, I have to ask more questions. Why did these firms shut down? Is it because there was not an enabling environment? Infrastructure driving the cost of business up? Or was it a question of asset-stripping, or of shutting down a government-owned cement corporation to strengthen a near-monopoly in the cement market?
This isn't an abstract conversation. There has been so much back-and-forth in ownership and other issues regarding the Ajaokuta Steel Comples, NITEL, the Aluminium Smelting Corporation of Nigeria, the Oil Refineries, the Lagos-Ibadan Expressway Concession (awarded to Bi-Courtney and then taken away from Bi-Courtney), and Electricity, among other big-ticket economic sectors. Things go in one direction with great fanfare, and then with less fanfare (much less fanfare) those same things are reversed. The Lagos State government has just bought back the Lekki-Epe Expressway Concession after years of controversy
Again, I ask for more in the way of analyses. It is not just a question of saying we had "debt cancellation" or that "we got $7 billion in privatization money". We must always ask whether there was some other thing that we could have done that would have got us more.
Let me give you an example.
Let us say getting $7 billion from privatization is the best thing possible. Now, the Central Bank of Nigeria, under Professor Charles Soludo, one of Obasanjo's proteges consolidated Nigerian banks, but neglected his duties of oversight and regulation, largely because the bank bosses were friends, allies and political associates of President Obasanjo. They were untouchable because of their contacts with Aso Rock ... and because of that, current CBN Governor Sanusi Lamido Sanusi has had to spend more than $10 billion bailing out the banks. In addition, between them, Soludo and Sanusi spent tens of billions of our reserves defending the value of the Naira. Most other countries would see a fall in the price of their currency as an opportunity to increase their manufacturing and other exports, but since Nigeria imports everything ....
If a person does something that earns ₦700.00 while simultaneously doing or failing to do something else that loses ₦700,000.00, should we throw a party for the small gain or ponder the reasons for the larger loss?
Speaking of which ....
This isn't an abstract conversation. There has been so much back-and-forth in ownership and other issues regarding the Ajaokuta Steel Comples, NITEL, the Aluminium Smelting Corporation of Nigeria, the Oil Refineries, the Lagos-Ibadan Expressway Concession (awarded to Bi-Courtney and then taken away from Bi-Courtney), and Electricity, among other big-ticket economic sectors. Things go in one direction with great fanfare, and then with less fanfare (much less fanfare) those same things are reversed. The Lagos State government has just bought back the Lekki-Epe Expressway Concession after years of controversy
Again, I ask for more in the way of analyses. It is not just a question of saying we had "debt cancellation" or that "we got $7 billion in privatization money". We must always ask whether there was some other thing that we could have done that would have got us more.
Let me give you an example.
Let us say getting $7 billion from privatization is the best thing possible. Now, the Central Bank of Nigeria, under Professor Charles Soludo, one of Obasanjo's proteges consolidated Nigerian banks, but neglected his duties of oversight and regulation, largely because the bank bosses were friends, allies and political associates of President Obasanjo. They were untouchable because of their contacts with Aso Rock ... and because of that, current CBN Governor Sanusi Lamido Sanusi has had to spend more than $10 billion bailing out the banks. In addition, between them, Soludo and Sanusi spent tens of billions of our reserves defending the value of the Naira. Most other countries would see a fall in the price of their currency as an opportunity to increase their manufacturing and other exports, but since Nigeria imports everything ....
If a person does something that earns ₦700.00 while simultaneously doing or failing to do something else that loses ₦700,000.00, should we throw a party for the small gain or ponder the reasons for the larger loss?
Speaking of which ....
3. Obasanjo left Nigeria external reserves to the tune of $60bn. Today, this amount has all but gone.
Rising demand for crude oil from China and India helped drive the exogenous processes that hugely increased Nigeria's external reserves. Internal, domestic policy decisions by the Nigerian government eroded that windfall. Remember when President Obasanjo moved Dr. Ngozi Okonjo-Iweala from the Finance Ministry to the External Affairs Ministry? He was about to use federal government money to carry out what he called "do or die politics" in the run up to the 2007 Elections. That type of fiscal indiscipline is the reason Nigeria has borrowed so much new debt since the "debt cancellation" that we are back to owing as much as we owed before the "cancellation". The expensive, violent "do or die elections" elevated Obasanjo's protege, Dr. Goodluck Jonathan, to the Vice-Presidency.
As Interim President, Dr. Jonathan's federal government generated a truly massive fiscal deficit during the 2011 Elections. That deficit was rolled into the ever-growing debt. Indeed, the funny thing about the debt is we the citizens of Nigeria have to repay loans taken by the federal government to buy elections for Presidents Obasanjo and Jonathan.
After the 2011 Election, President Jonathan re-hired Dr. Okonjo-Iweala as Finance Minister to burnish his government's reputation with the Western European and North American financial institutions. I suspect she will be sidelined again when the 2015 Elections come up, and it is time to run up more debt to buy an election.
As Interim President, Dr. Jonathan's federal government generated a truly massive fiscal deficit during the 2011 Elections. That deficit was rolled into the ever-growing debt. Indeed, the funny thing about the debt is we the citizens of Nigeria have to repay loans taken by the federal government to buy elections for Presidents Obasanjo and Jonathan.
After the 2011 Election, President Jonathan re-hired Dr. Okonjo-Iweala as Finance Minister to burnish his government's reputation with the Western European and North American financial institutions. I suspect she will be sidelined again when the 2015 Elections come up, and it is time to run up more debt to buy an election.
4. Obasanjo appointed foreign fund managers in collaboration with the Nigerian Central Bank to partner local banks in the management of Nigeria's foreign reserves. The banking reforms led to the recapitalisation of the Nigerian banking system and brought down the number of banks from 89 to 25 viable banks.
And these would be the banks that were bailed out by the CBN to the tune of more than $10 billion and the foreign reserves that dropped dramatically because of bad fiscal and monetary policy and policy-execution?
5. Under Obasanjo, the non Oil sector grew and the economy diversified.
Obasanjo can take credit for de-regulating the telephone markets.
6. Under Obasanjo, Nigeria, from being a pariah state, became one where foreign investment poured in. Nigeria's credit rating was considerably improved under Obasanjo.
The same was true the last time we had an oil boom. Angola and Equatorial Guinea are also attracting investment. Now, unless Obasanjo is responsible for the economic development in China and India ...
Sarcasm aside, the same infrastructural and policy bottlenecks to economic activity continued to exist, and still exist now. More dangerously, much more dangerously, the security situation and public security deteriorated markedly during Obasanjo's administration, and the deterioration continued under his hand-picked successors. Aside from the usual problems and dysfunctions of the Nigerian security apparatus, the nature of Fourth Republic politics is such that the people most responsible for violence and insecurity are the same people politicians rely on to rig electoral victories for them. As such the government has never been serious about bringing these groups to justice, and gave them so much room to operate and grow that they (the state, local and federal governments, and the various political fixers and godfathers) have lost control of their former minions. But even as these groups become ever-greater threats to the federal government, the politicians are still maintaining alliances with them in the hope of using them again at the next election.
Sarcasm aside, the same infrastructural and policy bottlenecks to economic activity continued to exist, and still exist now. More dangerously, much more dangerously, the security situation and public security deteriorated markedly during Obasanjo's administration, and the deterioration continued under his hand-picked successors. Aside from the usual problems and dysfunctions of the Nigerian security apparatus, the nature of Fourth Republic politics is such that the people most responsible for violence and insecurity are the same people politicians rely on to rig electoral victories for them. As such the government has never been serious about bringing these groups to justice, and gave them so much room to operate and grow that they (the state, local and federal governments, and the various political fixers and godfathers) have lost control of their former minions. But even as these groups become ever-greater threats to the federal government, the politicians are still maintaining alliances with them in the hope of using them again at the next election.
Nigeria was on it's last legs when Obasanjo came to office. A Loan Shark wouldn't have touched Nigeria with a barge pole. Obasanjo made Nigeria attractive again. Goodluck Jonathan is today enjoying the benefits of that achievement.
The violence and insecurity bred by Fourth Republic "do or die politics" might make the writer rethink the meaning of being on your "last legs". The legacy of violence has continued into the Goodluck Jonathan administration. The government might pacify the Northeast, but if the history of the Fourth Republic is anything to go by, something else will kick up somewhere else. The federal, state and local governments remain averse to real political and security reform, as it would result in most of them being prosecuted and jailed. This leaves we the citizens in a state of near-constant exposure to violence of one form or another.
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