With preparations for the 2011 general elections gradually gathering momentum, it is increasingly becoming clear that all facets of national life will be affected before, during and after the elections. This could be positively or negatively. Already, strategic institutions and industries in the economy are getting heavy attention and, in some cases, are coming under intense pressure from political gladiators who are trying to make a point or assert themselves.
From all indications, whether the long awaited economic recovery is hastened or is further delayed will depend on the actions of current political leaders and the bureaucrats they put in charge of financial regulatory bodies. It has become clear, for example, that President Goodluck Jonathan has more than a passing interest in not just the economy but in the ongoing banking reforms carried out by Malam Sanusi Lamido. Similarly, he has taken very keen and active interest in the recent events at the Nigerian Stock Exchange.
Undoubtedly, it is a very good thing that the President has shown deep interest in the economy as that is a prerequisite for the needed political backing for patriotic leaders and reformers to bring about the required economic recovery and revival. Thus, when Jonathan told the world in his recent Facebook comment that he had given Ms Arunma Oteh, director-general, the political cover to carry out her cleansing exercise at the NSE, it became clear what gave the SEC DG the nerve to give former director-general of NSE, Prof. Ndi Okereke-Onyiuke and Alhaji Aliko Dangote the marching orders.
During Oteh’s first weeks in office, she sounded overly optimistic about her ability to bring about a change in the capital market. That was not unusual. Knowing how slippery the terrain has been for genuine reformers because of the political connections of the heavyweights that were behind those perpetrating the ignoble acts of fraud in the financial markets, I was concerned that the then new DG was underestimating her task. So I asked her just one simple question at a forum: “Do you think you have the political will to pursue your mission to a logical end?” Of course, she answered in the affirmative, disregarding the term ‘political’, stressing that she had the will and was ready to do just what she had said. Now the President has answered my question. The same phenomenon has been replicated in the President’s backing of Sanusi’s banking interventions. Two weeks ago, the Federal Executive Council urged the CBN governor to ignore his critics and forge on with his reforms. It was the second time the FEC would publicly give its blessing to Sanusi’s actions.
To understand the importance of political backing, the following examples will do. When Malam Nuhu Ribadu had the necessary political backing, he rode roughshod over many a powerful politician and spoke boastfully about his intention to run corrupt politicians and businessmen who committed economic crimes into jail. He ran an impressive anti-graft campaign that earned him accolades the world over. But when his principal, Chief Olusegun Obasanjo, the erstwhile president, left office, and there was a shift in the political calculus, Ribadu became hounded by the incumbent powerbrokers that almost sent him to prison after getting him dismissed from the police. Dr Ngozi Okonjo-Iweala, former finance minister did so well that she was considered one of Nigeria’s finest finance ministers but had her tenure cut shut. She resigned after she fell out with Obasanjo, who also happened to be her principal.
So what will Jonathan’s backing for Oteh produce in the short and long run? Another pertinent question will be: How sustainable will his actions be? How thoughtful has the president been while giving support to these officials? Will his actions aid economic recovery? These questions properly answered, will shed light on where the economy is likely headed.
A hard look will, however, show that most of Jonathan’s current activities are geared towards making a statement about his ability to lead Nigeria decisively. Before the death of former president, Umar Musa Yar’ Adua, there was a general concern that Jonathan would not be able to tackle the issues of state in a resolute manner. He was viewed widely as a weakling and he is very much aware of this fact. This formed the basis for his rather rash reaction to Nigeria’s poor showing in the World Cup held in South Africa recently. After sacking the Super Eagles and withdrawing the team from all international football fiestas for three years, he later recanted those pronouncements when it became clear that they would be counterproductive.
These kind of inconsiderate intervention has found its way into the economic realm. Informed sources say it was Jonathan who summoned Oteh and asked her to fire Okereke-Onyiuke and Dangote, both of whom had constituted themselves into a nuisance at the NSE.
But the military manner with which the sacking was carried out and the replication of Sanusi’s actions at the banks in the Exchange is causing a backlash. It is so bad that some multinationals are considering delisting from the Exchange. This is aside the manner with which the indices are plummeting as a result of investor fatigue and apathy.
One sad revelation that these actions have thrown up is the fact that the current economic team is not given the opportunity to make thoughtful contributions which are likely to impact positively on the economy in the long run. Instead, the president is taking unilateral actions which, he supposes will make him a hero and politically attractive to voters.
The unfortunate consequence of all these is that the period of economic recovery will be prolonged more than necessary, while many good opportunities will be lost in the process. There is much talk of recovery in the banking sector but the banking industry is still a shadow of itself and it is becoming a burden rather than a prop for the economy. Lending is drying up and liquidity in the system is stifling businesses, which are rationalising their operations. Unemployment is a major outcome.
Add to these the heavy spending by a government that is thinking of borrowing to implement its budget. Remember that international oil prices are not as attractive as they used to be and government revenue is dwindling and you will understand recovery time for the economy will not be anytime soon as confidence is dwindling fast and serious investors will prefer to keep cash while foreign investors will either wait or go to other economies that are more focussed and less given to theatrics that always end in convulsions.