A Wall Street crash will affect Nigeria – Dele Ashiru

Interview with Dele Ashiru, political economist, and lecturer, Department of political science, University of Lagos, Akoka

How would you evaluate the volume of trade between the Unites States, US, and Nigeria?

The volume of trade between both countries is negatively skewed against Nigeria. What I meant by that is that more goods and services from the US enters Nigeria and less from Nigeria going into the US. Therefore, the odds favour the US substantially and otherwise.

What is the implication of this?

The implication of this is that because Nigeria is a large market, the US stands to gain a lot from production activities tailored towards Nigeria, whereas Nigeria does not have the same opportunity to trade massively in the American market. We just do not have the capacity.

If this is the case, does the current Wall Street problem affect Nigeria in any way?

Of course, it has an imperialistic effect on the Nigerian economy. What I mean by that is that an average Nigerian, and indeed the Nigerian government conduct their fiscal policies in dollars. I need not emphasize that the dollar is the American currency. Therefore, you should expect that if there is a problem at the Wall Street, it would have a multiplying effect on the Nigerian economy. Because we are tired to the apron strings of the American economy, there is no way what is happening in America will not affect our economy, particularly the exchange rate, the world reserve is conducted in US dollars, even though it is not even the strongest currency in the world. It makes one wonder why many countries of the world including Nigeria, still conduct their economic activities revolving around the dollar. China and Japan presently have taken away the volume of trade from the US, and yet no countries of the world conduct their fiscal business in the Yen or the Chinese currency.

How does the crash at Wall Street affect our Stock Market?

It is obvious, from what is happening at the Nigerian Stock Exchange, that local and foreign investors are not happy with the way it seems tired to the economy of the US. Moreover, that creates problems of dependence because even the political economy of Nigeria is tied to that of the US. In addition, going by the words of one of my colleagues here, the Nigerian economy is an ‘arena’ rather than a major player in the global political economy. This just goes to prove to you that a place that is an arena rather than an active participant, whatever goes on at the centre of the world’s economy would definitely affect Nigeria the arena.

Apart from the Nigerian economy, does the crash at the Wall Street affect global economy?

Yes, it does, because as I said earlier, nearly every country in the world including Nigeria, conduct its fiscal policies tied to a currency that is not even considered the strongest in the world.

…And does it affect our foreign reserves? If it does, how does it happen?

Yes, it affects our foreign reserves. Look, our foreign reserves are not cast in iron. Our foreign reserves are monies that belong to the Nigerian people, but lodged in foreign banks. These banks use these monies for economic activities and that is why some of us question the rational behind foreign reserves when there are developmental projects that these so-called foreign reserves can be put. Those in whose custody these monies are kept use them for other purposes, and that is why I suggest that we must rethink this idea of foreign reserves. These monies should be used to cushion the effects of the economic hardships of government policies instead of hiding them somewhere in the name of foreign reserves.

What does Nigeria stand to gain from the crash of the US Wall Street?

I cannot categorically say that Nigeria stands to gain anything from the collapse of the US Economy. Rather, I should say that we have lessons to learn. The first of those lessons is that a people develop themselves or not at all. We must jettison major political and economic policies that are dictated from metropolitan centres, and begin to think of alternatives…

…Alternatives” What do you mean?

I mean that there must be to a very large extent, equal foreign exchange between Nigeria and other economies of the world in terms of trade. Perhaps we are yet to realize that each time we buy any piece of equipment manufactured in Europe and America, we open up new manufacturing opportunity for them. Here in Nigeria, we are not producing anything. We import virtually everything that we need, even the oil. In addition, I have always argued that a people who consume what they do not produce would be either bandits or parasites. Therefore, until we begin to think about producing our own things, no matter how little – I do not mean oil! I mean real manufacturing, producing and selling, we will always remain victims of the economic mistakes of other countries.

How do I tell the ordinary trader at Ojuelegba that Wall Street has crashed at it affects him?

The way it affects the ordinary Nigerian is that the Wall Street crash will affect the fiscal policies of government. It will affect our thinking faculty in dollars. As long as fiscal policy is calculated in dollars and nearly everything is done with the dollar in mind, whatever affects the dollar, will also affect Nigeria and Nigerians.