Professor Charles Soludo

Reflections on Charles Soludo’s Bombshell

Relections on Charles Soludo’s Bombshell by Grimot Nane

Professor Charles Soludo

I have a lot of respect for Professor Charles Soludo; he is a genuine intellectual giant of world renown in the arena of economics and I follow his works seriously. Soludo’s recent article on the Buhari versus Jonathan is very enlightening and fact-dominated. However, it brushes aside some fundamental issues and canonises Olusegun Obasanjo.

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First, Obasanjo carries the can for the president of Nigeria who governed the economy by way of “micromanagement” and no person who observed and understood the governance or economics under his watch would even attempt to deny that. From inexplicable due process / due diligence waivers, to “unorthodox” payments (even for contracts not started or completed), to holding the position of Minister of Petroleum, to the usurping of the jurisdiction over off-shore oil rights from oil-producing states, to spending at least a quarter of his first term in office outside Nigeria looking for foreign investment with derisory results, to interference with state and local government finances, etc. Obasanjo orchestrated it all in his person as if it was his own corner shop. Obasanjo micromanaged an economy he later shoddily privatised Is there a worse way to outsource presidential powers and control?

Second, austerity is part and parcel of the economic dogma of neoliberalism of which Soludo has been highly critical of, before and after his tenure as Governor of Central Bank, but surprisingly not during that time. Austerity had more than two decades of experience in Africa before it landed in Europe and America due to the 2008 financial crisis. It is defining policy of neoliberalism even more important than privatisation nowadays. Nigeria would have faced austerity even with a good performing economy.

Third, since the Lagos Plan of Action of 1980 poverty, as it punishes everyday Nigerians, has steadily increased from the Shagari years through the military years up to 1999 when the nation returned to democracy. Between the presidencies of Obasanjo, Yar’Adua and Jonathan any claim, even if minor, about the reduction of poverty or improvement in public services is either criminal or schizophrenic. Such claims should never be tolerated. Poverty reduction has only occurred by way of bribe-taking, extortion, employee defrauding employer, brother duping brother, friend stealing from friend, the escape to Diaspora, robbery, the wholesale commercialisation of sex, the sale of unhealthy or unworthy goods knowingly, seeking commission for doing favours and shameless begging. Since the Gowon years which president can boast of creating significant numbers of jobs that provide a “living wage”? Look at the state of hospitals, school, roads, public buildings, soldier barracks, police barracks, power supply, water supply in Nigeria. Health services, education, transport, electricity, fuel prices, jobs, etc. have never been political issues. We cannot make them so overnight.

Why Nigerians will Continue to Vote with their Stomach by Grimot Nane

Dr Grimot Nane

Fourth, this brings us to the issue of the absence of political debate in Nigerian politics especially elections looking at the forthcoming one. Politicians like Chief Obafemi Awolowo came from the era of “jenjebility politics”. Independence politicians spoke of policies and mechanisms of implementation that unfortunately not more than 2% of the population understood. The –isms and –bility that suffixed a lot of campaign words caused many to call such rhetoric “jenjebility”. These politicians were mostly speaking to themselves unless they were promising roads, schools, local governments; it is a national shame that roads, schools political zoning are still central political issues after 70 years. Stunted thinking? I ask what percentage of electorate understands economic lingo and jargon in the present day? Are there any institutions of political debate customarily accepted in Nigeria by Nigerians at election time or otherwise? Political debates do not fall from heaven; they have to be instituted. Furthermore, how effectively will political debates influence the swing of votes in a Nigerian election?

Fifth, still on the issue of political debate it is very evident to every shrewd politician that besides tribe and religion, ricism is a very effective vote winner. It is evident the great politician or great persuader will in 19 cases out 20 lose elections to the great “ricist” i.e. he or she who shares the most rice and other products of vote inducement. Why then should debate be an important part of Nigerian election campaigns? As for the performance of elected politicians in office there is only one measurement and a thoughtless for supporters “he is trying” or “she is trying”. Facts, figures, persuasion, logic, discourses and narratives do not count to the majority of voters. Nigeria is not ready for persuasion objectives of genuine political debates.

Sixth, in Soludo’s time as CBN Governor, it is true that Nigeria “saved” stocks of foreign reserves reportedly peaking at $68 billion. I described such savings at two separate conferences as the “Premiership Footballer’s Paradox,” which is a case where a footballer earns over £100,000 a week but could not afford to buy himself cigarettes. Saving for appearances macroeconomic performance while citizens are ‘catching hell’ is part of the “great neoliberal fiction”, simply, economic growth with citizens having less or no money in their pockets. The uncompleted projects that litter Nigeria had a good dose of contribution during this time under Obasanjo’s watch, especially the scandalous Nigerian Independent Power Project (NIPP) and power sector contracts that guzzled $16 billion dollars but have assured that blackouts have been privatised and Nigerians live without regular electricity. In a decent country, many of those implicated in such scandals would have written their stories from jail. Yet Soludo canonises Obasanjo as a saint and great administrator. I must sincerely affirm that if Soludo was given a free hand to run the CBN he would have done a world-beating job instead of working under the micromanagement of Obasanjo.

Sanusi Lamido as Governor of Central Bank came out to expose the corruption taking place in Jonathan’s government and got sacked for it. I would have loved it if Soludo had praised such transparency and courage.

Seventh, Soludo’s analysis of the Nigerian political economy superimposes realities of developed nations upon that of a developing nation like Nigeria. If we follow the theme of such a message new presidential and other political aspirants should not try to make changes to the political economy of their constituency because things are bad. Soludo contested elections to become governor of Anambra State. I guess he hoped to do good for his constituents, despite the conditions of the day. Some would rightfully ask what would Soludo’s rhetoric be at this time if he was sitting governor awaiting re-election?

Eighth, according to Mobolaji Aluko, Nigeria’s approach to paying off the $12 billion lump sum in a debt forgiveness deal of which 85% was owed to the Paris Club was arguably not a shrewd economic move at all. Aluko’s argument was the debt should be paid off gradually in instalments over the period of a decade because the money could be invested in the economy particularly infrastructure and services producing multiplier effects within the nation over the time period.

I agreed with the wisdom Aluko’s argument. It is a ridiculously high amount to pay lump sum and the highest ever in history. This argument was immediately countered with the following argument by Chikwendu Ukaegbu;

“Aluko’s plan of very gradual repayment will put Nigeria in more and more debt in the long term. Recall that the vocabulary or concept of multiplier effect has never existed nor does it presently exist in the consciousness of Nigerian politicians. A typical Nigerian politician-president, governor, minister, senator, assembly member, commissioner, councillor, senior bureaucrat and technocrat, sees government money as something to be distributed rather than be multiplied. That is why they are incapable of linking the shortcomings of the Nigerian socioeconomic environment to the multiplication of the country’s economic resources. In a society where the consciousness of political leaders espouse distribution rather than multiplication, gradual repayment of the debt will increase the temptation for more borrowing in the future. Hence the country goes ‘back to square one’, as Nigerians always say. Aluko’s plan assumes an ideal world, that all the conditions he stipulated would be respected by the governing apparatus called the Nigerian state.”

This is an apt description of the quality of the managers of the economy under Obasanjo’s government. Did Obasanjo or anyone of those who managed the economy at any time adopt policies that were focused on the multiplication of Nigeria’s financial resources? Paying off the debt was a triumph of an “oil boom” and foreign benevolence not indigenous economic prudence. I rightfully credit the great humanitarian and economist, Ann Pettifor, of Jubilee 2000 (Campaign for Debt Relief) proposal and process for Nigeria’s debt forgiveness and not Obasanjo or any part of his government.

All in all, I have learnt a lot from Soludo’s article but I also observed some politics in it that turned a still excellent piece into a political one. I encourage people to read Soludo works and I am sure it would not take too many pages to appreciate the brilliant intellect and enlightening insights of the man.

  • Dr. Nane is an errant scholar and economist. Follow him on twitter: @Grimot

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  1. Austin

    Soludo’s scholarly vituperation of the present government’s economic failings is, in my view, not born out out patriotism. Like his former boss, Obasanjo, Soludo is seeking political relevance having failed to join the looting gang as governor. Second, your take on the loan repayment method, which was a repayment plan rather than one-time repayment, is standard and sensible in a setting where institutional checks and balances structure exist. Chukwendu Ukaegbu’s take on the repayment issue is more pragmatic, in my view, because pretending to invest the bulk money by getting into a repayment plan while a sound financial management, is not a sensible proposition given the financial recklessness and corruption that is endemic within the Nigerian civil service and political class.

    Dr Nani has made sensible points here but we are aware that normal economic principles don’t usually apply (most of the time) to the Nigerian setting. Soludo’s tenure under Obasanjo was anything but transformational, therefore, his rantings about what is and what is not about the economy is self serving and rather a cover letter to his CV to Buhari, if he wins in my view.

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