Debt
Relief And The New Colonialism
By
Segun
Ayobolu
culled from GUARDIAN, July 20,
2005
"On account of its gross
mismanagement of the economy, involving wasteful squandering of oil money on
frivolous festivals, Trade Fairs (in which Nigeria had nothing to sell but
everything to buy), inflated construction contracts and the like, Obasanjo's
regime drove Nigeria into financial bankruptcy by 1977. Nigeria, in spite of
her oil wealth, was forced into the imperialist "debt trap" again." *
Professor Bade Onimode, Imperialism and Underdevelopment in Nigeria,
Macmillan, 1983, p. 206.
It is so tragic that as a nation we have such a short historic memory. We
tend most times to react reflexively to events as they occur without
allowing the lessons of yesterday to inform the present for the benefit of
the future. This flaw in our national character was very much evident in
most reactions to the recent debt relief granted Nigeria by the Paris Club
of Creditors. There was first of all the euphoric, self congratulatory
national broadcast by President Olusegun Obasanjo whose government, in his
first outing as military Head of State, set Nigeria on the path of
humiliating debt peonage in the first place.
The President naturally feels that the substantial debt relief secured
for Nigeria vindicates his endless trips across the globe over the last six
years and many commentators appear to agree with him. Well, I am yet to come
across any thorough content analysis of Mr. President's trips to enable us
know how many were actually in pursuit of debt relief. Moreover, it will be
interesting to find out if the leaders of other countries also granted debt
relief had to expend so much money on so many trips to achieve the
objective. Afterall is this not an age when the communications revolution
has made it possible to transact the most complex businesses across vast
distances without the inconvenience of physical dislocation?
Following the President's broadcast, I have read newspaper columnist
after columnist heaping encomiums on him and describing the debt relief as a
democracy dividend. No wonder that when he appeared on his last monthly
media chat alongside the Finance Minister, Dr Ngozi Okonjo-Iweala and the
Speaker of the House of Representatives, Alhaji Bello Masari, the mood was a
celebratory one. Mr. President glowed with pride. Dr Okonjo-Iweala beamed
with joy. Mr. Speaker's face, however, was rather inscrutable. Virtually all
the callers were falling over each other to congratulate the President, our
new redeemer from the mortal sin of indebtedness.
What really was all the celebration and back biting about I wondered? Had
we launched a Satellite into space, discovered the cure for an incurable
disease, maintained even one year of uninterrupted electricity or produced
another Nobel laureate after our own WS, I would understand the
self-indulgent backslapping. But a richly endowed country like ours, blessed
with diverse mineral and natural resources, harbouring some of the most
gifted, resourceful and resilient people on the face of the earth simply has
no business celebrating the partial forgiveness of a debt that was
recklessly, needlessly and shamelessly accumulated in the first place.
Honestly, we deserve to be collectively spanked like spoilt, prodigal
children.
On a purely theoretical plane, I find it intriguing that economists of
the IMF/World Bank orthodox school, which was largely responsible for the
policies that led to the protracted economic crisis of the last three
decades including our indebtedness, are today once again at the helm of our
economic affairs. These were the champions of the Import-Substitution model
of Industrialisation, which was heavily dependent on foreign exchange
especially for the importation of spare parts and machinery. The sharp drop
in oil revenues in 1977 exposed the limitations of this industrialisation
strategy and the resultant foreign exchange crisis forced the Obasanjo
military regime to take the first Jumbo Euro-Dollar loan of N1 billion. With
the acquisition of this loan, Nigeria's indebtedness, which stood at N82.4
million in 1960 and had risen to N496.9 million in 1977, jumped
astronomically to over N1.5 billion in 1978.
It is indeed amazing, as Professor Adebayo Olukoshi notes that "Although
specific projects were listed for execution under the loan application, the
actual disbursement of the Euro - dollar loan and the plan for its
repayment, which was to be done in four installments, were unrelated to the
profitability or even viability of the projects". The country plunged deeper
into the debt morass when the military regime negotiated another Euro-market
loan of $1.145 billion "on terms similar to the first loan and for basically
similar projects". Yet today economists of this persuasion are in charge of
our reforms and advising us to make sacrifice after sacrifice while waiting
endlessly for the promised El Dorado.
I again find it strange that we all seem to believe that Nigeria is
solely responsible for the debt crisis and therefore owe our creditors a
world of gratitude for benevolently granting us debt relief. Nothing could
be further from the truth. In reality, given the negative impact of soaring
energy costs on western economies following the OPEC - induced sharp
increase in Oil prices in 1973, the creditors needed to lend money to
developing countries as desperately as the latter needed to borrow.
Professor Claude Ake illuminates this point with characteristic simplicity
thus: "The debt of developing countries was partly a product of the decade
1974 - 84, when the effective cartel strategy of the Organization of
Petroleum Exporting Countries (OPEC) produced the great oil boom. Some of
the surplus earned by OPEC members found its way to the industrialized
market economies, whose banks began to have excess liquidity. Since the
economic slack resulting from high-energy costs had dampened the demand for
capital, those economies began to encourage developing countries to borrow
money to mop up the excess liquidity. In some cases, such as Nigeria, which
was seen as having good prospects, credit was liberally extended".
The creditors are as culpable as the debtors for the confounding debt
crisis. While the debtors are to blame for not investing the credit obtained
wisely, the creditors too recklessly loaned out money to largely unviable
projects without thorough risk assessment or even a cursory understanding of
the economies of borrowing countries. In her explosive book, A Fate worse
Than Debt, Susan George gives a graphic description of how desperate 'loan
hunters' from western banks flooded Africa offering loans to governments on
juicy, irresistible terms.
A progressive Nigerian government, therefore, ought to utilise our
immense clout to mobilize Africa for a collective position on resolving the
debt impasse with both creditors and debtors bearing a joint responsibility
for their mutual errors. Furthermore, there is absolutely no reason why we
should not have adopted and intensified the reparations campaign of the late
MKO Abiola thus balancing the debt claims of the creditors with the even
more devastating impact of the slave trade and colonialism on the psyche as
well as social, political and economic systems of Africa.
Is there any objective basis for the optimism in some quarters that the
debt relief will promote the cause of development in Nigeria through new
opportunities for investment in health, education and public infrastructure?
I sincerely don't see any. The problem with the development process in
Nigeria is not necessarily the paucity of funds but the very structure of
the state and the character of its operatives. Sadly, the Nigerian State,
despite all the antic - corruption rhetoric, remains a means of primitive
accumulation for the private enrichment of a rapacious, parasitic elite who
control its levers. Matters are not helped by the excessive centralization
of its functions, inequitable federally skewed allocation of revenue and the
immense powers of an imperial presidency that operates with scant regard for
the Rule of Law. All of these combine to reinforce corruption, promote
inefficiency and undermine development. If the structural roots of Nigeria's
socio - political and economic crises are not decisively addressed, not even
the cancellation of all our debts will resolve the dilemma of
underdevelopment.
As we await the Policy Support Instrument (PSI), which we are to
negotiate with the IMF as a condition for debt relief, I foresee this deal
ushering in a new era of recolonisation of Nigeria. Of course we will
continue to exhibit all the outward trappings of sovereign autonomy - a
flag, a national anthem, security forces to contain a captured citizenry
etc. And there will be no white colonial faces running our governments and
other institutions. But our economic policy and destiny, the critical
sub-structure on which rests the political, legal and social super -
structure, will be firmly controlled by those without whose aid and 'debt
relief' we apparently cannot survive. How sad a fate it is for us. But then
a people who cannot responsibly manage their affairs deserve to be managed
by others.
* Ayobolu is a Special Adviser on Information with the Lagos State
Government
