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Nigerian Currency and Some Specific Contributory Aspects to Development in the Global Environment

By

Jones O. Edobor

edobor@utanet.at

Austria

Presented at the NIDOE conference on Good Governance, Accountability & Transparency at Shehu Musa Yar’dua Centre, Abuja – Thursday, 6 November 2003

This paper shall discuss the following:

1. What are the basic functions of a currency in a modern economy?

2. What impacts do exchange rates have on development, economic growth, and living standard?

3. Do developing countries have an option other than allowing their currencies to float?

4. Is the present world economic order a fair arrangement for developing countries?

5. Is introducing a new currency or re-inventing the Naira an option?

6. Let’s Concentrate our Resources

7. Conclusion

What are the basic functions of a currency in a modern economy?

Before long, let’s look at the three basic functions of a currency and ask if the Naira still satisfactorily fulfils those functions. The currency of a nation would normally serve as

1) a medium of exchange,

2) a standard of value, (accounting unit) and

3) a store of value

A close perusal of these functions would show that in a complex economy, money is usually the only accepted medium through which a buyer pays a seller. Without money as a medium of exchange, most economic transactions would virtually be impossible. The second function, a “standard of value” or „accounting unit”, gives a common unit by which to measure the various kinds of assets of business and human endeavours. By assigning monetary value to such assets as property, production machines, production factors, etc, we can compare the values of different assets when buying and selling them. The currency of a nation functions also as a store of value. Money is a convenient way to store wealth for use whenever it is needed. In advanced economies, money can be held as part of one’s wealth on a bank account or in a “piggy bank." If however, the value of a currency is not stable, the value of that wealth will diminish daily. The ability of a currency to store value is prerequisite for any long-term planning and financial transactions. We know that without long term economic planning there can be no significant economic development. The stability of the value of a currency is therefore essential for economic growth. Because, the currencies of industrialized nations store value, coins and paper currency normally constitute only about one-fourth of the money supply; the rest is usually in the form of demand deposits and time deposits on which cheques are drawn.

Can we say with certainty that the Naira still fulfils those three functions satisfactorily?

The Naira may still fulfil the first two functions, but it badly lacks the ability to store value.

When a currency has a bad reputation to store value as the Naira, people understandably would tend to keep their money from the banking system and spend it quickly to avoid loss in real terms. Yet, we know that this does have severe consequences for an economy, as a large percentage of the money supply is exchanged from hand-to-hand. The absence of such cheap money in the banking system can make loans from banks to small and medium size entrepreneurs almost unaffordable. But even when loans are available, creditors are most likely to charge such interest rates, taking the problems of time lag into consideration that would yield enough to offset any eventual loss in value for the time the money is paid back in the future. However, if the small and medium size companies that create the highest numbers of employment in developing countries have no access to cheap loans, they are unlikely to be able to grant delivery credits (a short-term financial tool) to other companies. Without these facilities, companies cannot operate to their full potentials and the economy at capacity. As price stability is fundamental for sustainable economic growth, the Naira due to its volatility has become a major contributor to the ill health of the failing Nigerian economy.

WHAT IMPACTS DO EXCHANGE RATES HAVE ON DEVELOPMENT, ECONOMIC GROWTH, AND LIVING STANDARD?

It is increasingly becoming evident that the inability of the Naira to store value is amongst the most important factors responsible for the disturbances in our economy and this is solely dependent on external markets and factors. The exchange rate of the Naira is doing enormous damage to the Nigerian economy and unfortunately bringing poverty to the masses. A system of floating exchange rates, by which the price of the Naira is established at the market place and this varying with supply and demand conditions, supposes that imbalances between exports and imports are adjusted automatically by changes in the exchange rate, rather than through government intervention. It is doubtful, if such a market place, an arrangement, without social balance is a place for developing countries to put their nations’ fate and expect a fair deal. As this system is imperfect, only rewarding the strong economies and punishing currencies representing dwarf economies, it is increasingly becoming a source of major disturbances for the developing economies, no matter how hard they try. Quite disturbing is the arrangement that determines the exchange rates of currencies by the following factors only:

a) Nigerian imports/export

b) Short and long-term capital flows abroad by Nigerian businesses as against short and long-term capital in-flows from foreign businesses and investors.

c) Other public and private payments from Nigeria to other countries as against other public and private payments from abroad to Nigeria.

We have wrongly assumed in the prevailing logic that all economies are equally developed, with same educational and technological level, with equally developed capital and financial markets, efficiency, productivity level, real income levels, etc.; hence, all economies are required to compete by the same rule. To put it simple, the conventional theory that draws its logic from the argument that when a country’s currency exchange rate, due to a deficit in export/import and capital in- and outflow, has to depreciate to balance out the imbalance in trade, with local products becoming cheaper and consequently leading to higher demands of locally produced products and to growth does wrongly neglect the specific domestic factors, such as the social conditions, the structure of industries, structure of import/export items, income disparities, other specific geographic and environmental factors, etc., that are essential for economic growth. Empirical observations have shown that, in fact, because these important domestic factors are neglected, devaluations have often had the contrary effect. There is no known developing country where devaluation alone has actually lead to sustainable growth and creation of wealth for the masses. Instead, they have often lead to a series of problems that have sooner or later lead to the next devaluation, starting off a spiral of economic decline.

Developing countries should be cautious when it comes to the devaluation of their currencies, as every devaluation indirectly destroys part of the wealth of their citizens. They should fully analyse the macro-economic impacts, first looking at other options, they must ask themselves, what they consider more damaging, as the merit of having an equilibrium exchange rate in the current world economic dispensation may be relatively small compared with the social cost to society and the loss of all the goods and services of all the people becoming unemployed in a Nation, resulting from imported inflation.

In the case of the Naira, because of the volatility and unpredictability of the value of the currency most people with fixed money incomes, retired people, white-collar workers, and public employees are suffering a dramatic decline in their living standard, consuming less, as they get poorer by the day with their Naira at hand. As the exchange rate of a nation’s currency does affect production and employment level, and living standard of its people, devaluation is a national issue that affects everyone and must therefore be analysed in depth and discussed broadly before changes are made.

DO DEVELOPING COUNTRIES HAVE AN OPTION OTHER THAN ALLOWING THEIR CURRENCIES TO FLOAT?

I should think that since the purpose of government is to bring prosperity and not poverty to her people, the following questions must be addressed with all other options taken into consideration before deciding whether or not to allow the currency of a developing economy to float:

Are we a net importer/exporter (what is the structure of our foreign trade; do we import food and other consumer items in large quantity that can hardly be substituted by local productions)?

How is the structure of our industry (are we solely a raw material, half-finished products supplier or are we a supplier of high end products as against how many millions of Nigerians, who in certain sectors still depend on imported materials and machinery, spare parts, vehicles, chemicals that will become more expensive from abroad

Can we increase our export by at least the same margin/percentage as the devaluation?

Do we expect a net gain of capital inflow?

What are the expected positive impacts on the economy and living standard of the masses?

I argue strongly that if the answers to the above are not convincingly positive, developing countries should consider other options, other than allowing their currencies to float freely as this only leads to uncontrollable depreciation and devaluation of their currencies with all their consequences. Devaluations under such circumstances only lead to better terms of trade for their trading partners with no benefit for the developing economy. The Nigerian experience has demonstrated too well that when a country is a net importer with her most important export commodity (crude oil) quoted in dollar, whose allowed export volume or price are fixed by some cartel outside her boundaries, devaluation would actually make little sense as the demand for crude oil which amounts to over 85% of her total export volume would not increase thereby leading to any economic growth. Isn’t it inevitable, that giving this circumstance the Nigerian economy was bound to fare badly as it has been ever since the devaluation experiment was started? Wouldn’t Nigeria no doubt be faring better by either pegging her currency to the dollar being her largest trading currency responsible for over 85% of her foreign trade earnings or to a basket of the currencies of her most important trading partners, like the dollar, Pound Sterling and the Euro? I admit though, that the idea of the mixed currency basket is still in development that I hope to discuss fully in another paper. Now, depending on the movement of the currencies in the basket, the exchange rate of the Naira shall be determined by an index and reviewed say once every month. This can be called “controlled or managed floating”.

Most policy makers in developing countries seem mislead to assume that after deregulations and opening up the capital market followed by a floating currency and some devaluation, the market just takes care of itself producing those desirable results with the invisible hands doing all the magic. Yet we know that some of these medicines can be fatal to the health of a developing country, as uncontrolled import and capital outflow in times of economic crisis often lead to a worsening of the crisis that lead to the initial measure. The measures often punish those they are supposedly designed to help and reward their trading partners with better terms of trade.

Such developed economies like Austria and Switzerland that are amongst the richest countries (income per capital) in the world, had their currencies pegged to the German Deutsche Mark, until the introduction of the Euro 2 years ago. The Swiss Francs that can still be considered to be amongst the stronger and stable currencies of the world is actually not floating freely; it is more or less pegged, with a bandwidth within to move, to the Euro. The stability pact signed by all European Union members before the Euro was introduced that sets a limit of a maximum 3% fiscal deficit for all countries of the Euro zone was designed to keep the Euro strong and stable. Thus, if the conventional theory, was always right, that devaluation leads automatically to higher demand of local products and to growth, then generally speaking, periodic devaluation should be desirable, but why should the European Union actually be relentless in their efforts to protect the value of the Euro and avoid just that. Why the Europeans aren’t happy to have a weak Euro as this should be good for European export is because they know that the merits are often outweighed by the demerits of higher costs for import and other services from abroad that could eventually lead to imported inflation and economic decline. Developing countries that have little to export shouldn’t carelessly allow their currencies to float instead they should peg them to the currencies of their most important trading partners, this irrespective what outsiders tell them.

IS THE PRESENT WORLD ECONOMIC ORDER A FAIR ARRANGEMENT FOR DEVELOPING COUNTRIES?

The current world economic order appears unfortunately responsible for the increasing economic decline and poverty in many developing countries. The system requires us to leave economic development to private sectors and market forces alone. It requires us to open up our markets and deregulate all sectors so that others can come in and leave as they please, without taking into account that developing countries lack the resources to go into those markets and do likewise. It sets the rules according to the needs and economic standards of the strongest and declares all are equal and free to fight by the same rule. It is like putting a well trained Mike Tyson, or a current world champion in boxing with an undernourished farmer from some remote parts of the world in a ring and declaring them healthy adults and wishing both luck to fight by the same rule with the winner taking all the yields. The farmer would not only obviously lose the fight and starve but also even risk being killed in the process. It is a system for the survival of the fittest that is increasingly enriching the industrialized nations while punishing developing countries. For the fight to be fair, we shall need rules that take the advantage of the world boxing champion and weaknesses of the farmer into consideration. The current world economic order demands that solely our net capital movement, and net import and export volume should determine our exchange rates and consequently “terms of trade”. By demanding of the developing economies to take away all discriminatory trade barriers and fully open up, most developing countries are consuming and fast losing control of their economies. It is becoming a system that evidently encourages developing countries to consume what they cannot afford, only to be required at some point to at rather exorbitant interest rates to service those debts. Governments of developing countries are pressured to eliminate all subsidies and eliminate all direct government involvement and interventions in the economy, but we know that governments are still highly involved in numerous sectors and industries in some European countries. We know that the European Union and the US still subsidize their farmers and other sectors they consider strategic to them, without listening to what we have to say, particularly in agriculture and other such areas developing countries might have some comparative advantage. We know that most railway systems in Europe are still owned by government and are subsidized. We know that nearly all of the pension schemes in Europe are subsidized. We know that the social and welfare state in the industrialized nations are subsidized. We know that emergency social programmes are in place for their citizens’ benefits most people of the developing countries do not have. We know that the European Union and the US have a number of products on quota, that the numbers of certain products allowed into the Unions are still regulated and monitored.

By now, shouldn’t we know that to alleviate poverty in the developing countries and move the world economy towards some equity, the theory of demand and supply alone, without some social balance is inadequate to address the challenges of the future. I propose therefore that Nigeria, along with other developing countries initiate an international conference on how best to determine a just and fair “terms of trade” between developing and developed economies. I envisage a time, when the terms of trade between nations are not just reduced to and depended on net import/export and net capital flow but by such formula, in which such indexes as those of production factors, real increase in GDP, Import/Export, capital flow, income per capital and some other social components that would purposely reward those developing countries willing to reform.

There can certainly be no sensible economic theory to justify why a university graduate in a developing country should work about twenty times or more to exchange a product with a colleague of the same discipline in a developed economy, just because the one graduate lives in a country that is a net importer and his country is not attracting a surplus in capital movement. Unfortunately, economists and economics professors in developing countries just repeat what they have been told or read in books written in developed economies, not bothering to challenge a system that is evidently causing such disparities to the disadvantage of developing countries nor to develop and propagate alternative theories and approach. How can we ever win the Nobel Prize Award for economics, if not by putting such unbalanced and imperfect system to scrutiny? How shall we ever develop our economies by being such conformists?

Even more surprising is the fact that policy makers in international organisations have unfortunately not realized yet that there is a positive correlation between a rise in real income in developing countries and the quality of economic transactions with their economies. And that any policy that favours developing countries is in their own interest. I am afraid that not until there’s the awareness that developing economies differ from developed economies in numerous ways, and this inequity is taken into consideration when international policies are formulated, would the world economy be addressing the challenges of our time and the future.

Unfortunately, the IMF that was created solely to balance out the imbalances and weaknesses of the present system has itself become part of the problem. By operating the business of the IMF like a commercial bank, with authoritarian approach, imposing such untested and experimental “conditionality” with their rather exorbitant interest rates on their victims, they have inevitably driven numerous countries to the brink of bankruptcy. They press for economic contraction policies when in fact economic expansion policies are necessary. They ask developing countries to focus on inflation ignoring employment and growth policies." They preach free markets but enjoy intervening with governments without allowing individual countries to freely practice their chosen policies.

The IMF has sadly become, in a way, a self-serving institution helping to widen the gap between rich and poor nations. It has developed into an institution that thrives and blossoms on the weaknesses of the present system, hindering developing nations from addressing those weaknesses. Isn’t it unique to have a system whose sole beneficiaries have reserved the right to have the last say, keep majority votes and even vetoing any initiative by the victims of the system, yet they are asked to believe the system is to their good. The IMF carelessly imposes their untested and devastating “shock therapy” theory on developing countries, while countries of the developed economies are evidently practicing the opposite; namely offensive in character but soft in approach strategy in their own economies. One but wonders why the IMF is not propagating their untested and experimental conditionality to any developed economy as the way forward, despite evident heavy government involvement in several sectors still, because they know they would be completely ignored.

They ask developing countries to privatise without asking them to first create such institutions as competition regulation agencies; thereby turning state monopolies to private owned monopolies without any safety net for the victims.

It is obviously counterproductive to demand that governments of developing countries relinquish all involvement in the economy, when we know that without government participation, most investments in the developing economies would not take place. This is not to argue that fiscal discipline and the concentration of government activities on reduced functions have not their merits, but reality on ground have often shown that without government the private sectors in some of these economies cannot be developed. Whilst we need liberalization of the local markets, taking those specific conditions of the environment into consideration, uncontrolled privatizations can actually be risky and even lead to economic decline. I just want to remind the Nigerians that the so-called indigenisation decree, of the seventies was also a privatization scheme, though forced in character. The decree forced many expatriates to abandon their investments to Nigerians at give away prices. We know that just a little after two decades our president is travelling round the world to beg those we callously and enthusiastically threw out to return to help build Nigeria. We created Nigerian Managing directors who lacked the ability to run those businesses successfully. In the absence of those expatriates and skills, some of the businesses were destroyed in less than ten years and others in fifteen. All those well paid employees were gradually laid off and today nearly all of those companies are either folded up or are just shadows of their glorious days. We popularly introduced policies that were to systematically come to destroy our economy and selves. This paper is not denying there are merits in an economy with a broad private ownership base; what it is arguing at this point is that privatization strategy should be selective in approach and not viewed from micro-economic perspective only, particularly since such sales only bring a one-time yield that often disappear after one fiscal period. More important is the question what are the additional macro-economic benefits of such a step to the economy. It is not good enough to argue that these companies can become profitable after private ownership, if increase in prices and reducing staff number are part of the cost reduction strategy. For any government’s privatization scheme to be considered successful, it must generate spin-off effects, lead to expansion, to more employees, and cheaper prices in services. Government would have to consider eventual social costs as part of the deal. It is only when the macro-economic benefits are obvious, that a privatization of any industry should be carried out. Yet governments of developing countries are advised to identify those few sectors they consider of strategic importance to their nations and remain involved, if even as a minority stake holder to avoid a complete sell-out and development in such sectors that may be contrary to strategic development policies. Developing countries are therefore advised to take the faith of their economy and currencies in their own hands by deciding which way to go and actively organising those important factors to their requirements.

IS INTRODUCING A NEW CURRENCY OR RE-INVENTING THE NAIRA AN OPTION?

In view of the importance of a stable currency for economic growth and the current state of the Naira, an offensive approach for the revival of the economy appears inevitable. As the Naira appears to urgently need a reform, I propose a debate on the following options:

a) Re-introduction of the Naira. The Naira can be reformed and re-introduced and named the “new Naira” the conversion of the present Naira to the “New Naira” shall be say 100 to 1; that is 100 units of present Naira for one “New Naira." Each individual should have say between 2-3 months to convert his money. The exchange rate of the new naira should either be pegged to the dollar or be adjusted towards a currency basket of the US Dollar, Pound Sterling, and the Euro. This basket should be reviewed as already discussed above. The base index of 100 can be reviewed after a period of say every 2 years. Haven’t the recent crisis in Asia illustrated so well that those countries with some sort of control over their currencies have survived the crisis with little depreciation and least turbulence. Shouldn’t other developing countries learn from their experience?

b) Introduction of a new currency. The introduction of a new currency, whereby 100 units of the present naira shall amount to 1 of the new currency. The advantage lies in starting all over without the burden of the bad reputation of the Naira, offensively moving ahead to win back the confidence of the Nigerians in their currency. The pegging to the dollar and floating currency basket for determining the exchange rate discussed above should be applicable for the new currency.

In both options, to put it simple, the logistics and administrative costs shall be almost the same whilst the conversion shall mean smaller dominations with stronger value, eliminating the present inconvenience of having to transport money in bags, when making such banal transactions like buying a refrigerator. But, the reform cannot be about changing figures and name alone, it must be a reform that leads to a change in the real income of the people. Let us debate:

As the objective of the reform must be to curb inflation and pursue price stability and economic growth, let fixed salaries be converted by a ratio of say 100 to 1. However, to stimulate future consumption, let “fixed deposit” with a minimum of 3 year maturity be converted by a ratio of 80 or 85 units to 1; i.e. if one had a savings of say 200.000 on a time deposit, after the conversion his savings in the new currency would be either 2.500 or 2.353 units of the new currency. Anyone wanting to take advantage of the “fixed deposit” conversion rate must open an account and put his money on the bank. This money shall be non-withdraw able for a minimum of three years. The purpose of the fixed deposits will be to increase the working capital of our banks. It should be obligatory for the banks to use this money to give cheap loans to small and medium sized companies to create employment. Whilst the individual converts his salary at the normal rate, the value of his fixed savings will appreciate. This approach I call “selective approach." The selective approach will not only keep the present price level stable but also stimulate the economy through higher investments and create the base for sound economic growth. Prices are likely to adjust around a ratio of 100 to 1, since immediate demand would depend on the disposable income.

LET’S CONCENTRATE OUR RESOURCES

If economic progress is to be achieved and this happening not by coincidence, the only way therein is through a well developed long term concept of concentrating all of one’s available resources on a few objectives at a time. When we spread our available resources on too many projects, we over-stretch them, resulting in allocations to projects that are too small for any impact to be felt.

In accordance with set strategic objectives, governments in developing countries must take those initiatives and continuously influence their directions through their policies. The policy of concentrating our resources includes concentrating the minds of our people. Nigerians of all walks of life both at home and abroad must be engaged. By engaging the minds of those experts in a particular sector, the government would be concentrating the resources of the intellectual capacity available in that sector. Amongst others, one of the goals of such concentrated engagement must be to understand the consequences certain actions could have, what tenets society is going through, what lessons are to be derived and what measures must be taken to prevent a negative chain of reactions.

No developing country can succeed simultaneously developing all its economic objectives at the same time. They would have to pursue a strategy of “unbalanced economic growth." To illustrate, let us assume that the government of Nigeria has drawn up a list of her strategically important sectors and because we produce crude oil, and oil has become our main source of income the oil industry is a priority sector. Because we have enormous comparative advantage (raw material under our backyard), refining oil in Nigeria would make good economic sense. In pursuance of this policy, the government shall continue to build refineries until at least domestic demand is satisfied. And because this is a designated strategic and priority sector, the government can even go a step further, taking advantage of her comparative competitive advantage, by installing additional capacity to produce more than locally required, exporting excess productions to neighbouring countries. There are no sensible and acceptable economic reasons or justifications for why we should export crude oil that is in abundance in our backyard at a give away price only to import their refined products at exorbitant prices and then argue we have to raise prices to international levels, when we can produce them locally and cheaper. A strategy of concentrating our resources in the oil sector does mean for example that we shall continue to build refineries and other refined product related industries until our set objectives are satisfactorily achieved. This strategy is likely to yield the following benefits. 1) Domestic demand can be provided for at rather affordable price levels that can help stimulate growth. (2) The more refineries that are available, the higher the number of qualitative employment opportunities the sector and relating industries can offer. (3) Import of refined oil shall be substituted reducing pressure on the currency. (4) Increase in export volume of finished products with foreign exchange earnings and eventual appreciation of the naira. (5) There shall be spillover effects on related and affiliated industries. Now, for the refineries to function they shall require chemicals and other inputs. It is to be expected that some companies to take charge of logistics and distribution of the refined products shall locate near the refineries. Because of the eventual high demands of chemicals required, some chemical producing companies are likely to be attracted to invest and produce locally. Such chemical companies are likely to produce for the refineries and other chemical related industries. Moreover, because there are these chemical companies in the country, other industries that have chemical related base would eventually be attracted to site their plants in the country. Under this strategy, the government though had focussed on the down stream oil sector or the refined products only, but may eventually attract good chemical and related industries. The constant des-equilibrium caused by this strategy lure investment in a rather steady flow to affected sectors at a manageable and sustainable rate.

This strategy prescribes that only when those set objectives are achieved, may the government shift emphasis to a new objective. To achieve our strategic objectives, we must set those priorities every year and that priority list must contain those few most important projects starting from 1 to n. This priority list implies that problem number one must be addressed before problem number two and number two before three and so on. If all problems are to be solved effectively, and not in a wishy-washy style, problems on the list must not be addressed at the same time.

What is this paper suggesting here; it is talking about strategic planning and implementation. It is saying that setting clear goals with time limits and pursuing them with all our disposable resources are the only way to feeling their impacts and achieving progress and sustainable economic development.

Before setting such a priority list, the following questions must be answered in detail:

Detail analysis of answers to the above, should help us in setting our goals right. If we are to succeed with economic modernization and growth, we must demonstrate a greater concern for planning, organization and efficiency, a faith in science and technology and finally a belief in distributive justice.

As I have argued before in previous papers, this paper is propagating a development planning strategy where all backward- and forward linkage effects are considered. And that only a complete “system-thinking-approach” guarantees sustainable growth. A project-by-project approach that only vaguely takes into account how a new project fits into the already existing industrial landscape and long term social objectives aren’t going to take us far enough and can thus be considered from the very beginning as a wastage of resources. The following examples may be somewhat extreme; they however illustrate what the paper is arguing:

If we had just enough resources to build one good airport and there are three states agitating for the airport, we wouldn’t decide to build the airport at the border of the three states, building the control tower in State A and building the run way in state B and the arrival lodge in state C (that is to say, putting the infrastructures in different locations in the name of federal character), although majority of the travellers come from state A. The costs of operation and customer satisfaction of such an airport shall invariably lead to her failure in the future, particularly when resources become scarcer to generously disburse for its running. However, even more important is the fact that the inefficiency can lead to such wastage of resources that can be mobilized after a couple of years to finance other tailored projects in the respective states that do take their competitive advantages into consideration.

To want to cultivate a dessert for farming, out of federal character consideration, when you are blessed with enormous fertile land would make little economic sense, since such projects would require more than average inputs and her long-term success cannot be guaranteed.

Any good military strategist should know that opening too many fronts at the same time would soon exhaust his resources (which would otherwise be very effective in just one or two fronts) in scattered, isolated and difficult to coordinate small groups, which at their best can only prepare the ground for the major offensive, if one’s intention is not merely to harass the enemy. The point is a decisive victory over an enemy or a national problem demands concerted efforts and concentration of resources. Musashi once wrote, in A Book of Five Rings “Don’t attempt to win in all fronts at the same time, since this could actually make you lose in all fronts. If you sense you are winning focus all your resources”.

This paper is arguing that in concentrating our resources, we must also move away from pursuing isolated projects located in far apart places from their raw materials and not locate industries or carry out strategic economic decisions under such obscure titles as Federal character but merely on their merits. Every region of the nation has strategic, geographic, and comparative advantages and products they can best and cheapest produce on which industrial development of the individual regions should be based. Each region must be allowed to develop according to their resources and at different paces. What a developing country needs is a cluster of industries and expertise. Companies supplying products and services to the same industry should be concentrated in the same region to have synergy effect. Clusters do not only foster companies working together, it also encourages the development of specialised facilities. Consumers do also benefit because the cost of transporting raw materials and other services along great distances are eliminated or reduced to minimum, reducing final prices of products. They are in this way not only more efficient but are more cost effective.

CONCLUSION

In addition to the arguments above for sustainable economic development, I would like to mention that the concept of globalisation as presently being discussed (liberalization of production and free capital market, deregulation and removal of all national discriminatory laws), no doubt, does offer the world economy an enormous potential for growth. But this growth must reach all corners of the world for it to be beneficial to all. Unfortunately, the present arrangements can only be to the benefit of the developed economies and perpetually to the detriment of the developing countries. For globalisation to yield those desirable results for all, the disparities in our present system must first of all be addressed. Should the discussion continue to neglect the weaknesses of the present system in supposing that all economies are equal and must compete by the same condition and rule, in this case, globalisation without any control and social balances shall not be in the interest of developing countries. Some laws that protect local production, market and capital movement must continue to be in place. Removing these laws prematurely because it is currently trendy to do so would be tantamount to economic suicide. I suppose that the first step to a successful concept of globalisation is the “countrylisation”, which means the objective of such a policy shall be to liberalise and deregulate the economy, eliminating all monopolies within a country, encouraging those wanting to participate in local investment and production to do so without any discrimination. At this development phase, import substitution through local productions must be given priority, telecommunication and other vital infrastructure be upgraded, emphasis laid on educational quality and having the banking system re-organised. The second phase should be regionalisation, in the case of Nigeria, say for example “West Africa” or “Africa”. These countries should compete freely with one another in an open market without any hindrance or discrimination. I am afraid, we would have to first of all learn to walk and train before we can want to fully participate and expect to win at a competition to determine the fastest athletes in the world at a game where the winner takes it all. It is only after such a phase of regionalisation can we discus globalisation that can be beneficial to all.

However, giving the Nigerian present environment and history of unstable and irritating policies, we are certainly not so naïve as to expect that big foreign investors will line-up to come to Nigeria, just because we say we have changed and everything is okay, when even such basic infrastructures like reliable transportation means are missing and our roads are dead traps. How can we expect foreign investors to come when such basics as uninterrupted electricity supply, security for life and property are not guaranteed and even law enforcement is not taken seriously? Nigerians need not beg anyone to come to Nigeria, given Nigeria’s huge market potentials, when we have done our homework and put the right infrastructures in place and the climate is conducive; investors will come begging to be allowed to build factories in Nigeria. But we must first of all make those sacrifices and clean up.

We Nigerians cannot shift the responsibilities to Government alone, as it is the duty of us all to create that environment where creativity and innovation are encouraged and to give our people a strong sense of compassion and social unity. Whilst we need an enterprising, highly creative economy, we must create a community with strong social bonds between people and government and where a sense of responsibility, obligation and duty towards others are a matter of course. We must appreciate a society in which multi-cultural heritage is not an obstruction but a motor to national development. At a time other countries of the world are beginning to appreciate the potentials of size and diversity, and are more or less merging, this irrespective of language, to form unions to enhance their developments, we Nigerians are backward looking, full of sentiments that do not bear any prospects for development. The only road to a great future also certainly passes through a society where women feel absolutely equal to men, where sex or regional belongings do not determine opportunities.

Thus, may I implore Nigerians to revisit the logic behind the “Federal character” concept, whether this policy has been beneficial to our development as a Nation, as how shall we benefit from the best amongst us, if choices are based on a quota system depended on regional belongings and not excellence.

What good are we to ourselves, if everything is turning for the worse, yet incapable people, driven by egoistic motives, continue to rush for positions and sailing on the winds of tribal sentiments, when we should know they couldn’t take us on the roads to a better future?

Finally, may I remind Nigerians that before the in some quarters highly hated British administration left, electricity shortage was unknown, we had one of the best educational standards in the world, we probably now have one of the worst in the world. Our Economy was strong, our real income was worth something and families could live on their incomes. We had labour offices in the cities where people seeking employment went. Our railway system was functioning and hauling goods and passengers across the Nation. Our garbage collection system was functioning. We had few roads, but the ones we had were without potholes. People were disciplined and obeyed the law. Even just until recently, our Airways had aircrafts and our shipping line had vessels plying the oceans of the world. Security was a common commodity everyone took for granted. Justice was independent and fair. Our police force was disciplined and took their responsibilities seriously without selling their conscience to the highest bidder. The army was disciplined and people behaved and society honoured those who did something right and sanctioned those bad elements in society. Life and living standards were more or less in harmony with the environment. Is revisiting our past and structure then perhaps an option, since our current structure and approach are failing us so badly!

Yet, I know that we can collectively transform Nigeria within a short space of time, giving her enormous resources and potentials to a great country, a role model in the region that can generously satisfy the needs of her inhabitants, if only we shall collectively decide to use our heads for a change.