The Nigerian State, Class, And Democracy

By

Dr. Ibrahim Braji

Dribrahimbraji@Yahoo.Com

Office Of The Head Of Service, Kano, Kano State  

 

Introduction:

This topic tries to discuss the nature and development of Nigerian democratic experience. The paper attempts to argue that the crises faced by the polity under the present democratic dispensation are inbuilt as the system is crisis-prone. In trying to understand and do justice to the topic, we engage ourselves in defining the concepts of state, class, and democracy by relating them to the political development of Nigeria. For us to comprehend Nigerian political development and the happenings within the system one needs to understand the basic meanings of these central concepts. This is necessary because most of the concepts used here carry with them a large freight of ambiguity and have different meanings to diverse scholars. In fact, presently there is no universally accepted definition of any of the stated concepts. The attempts to provide one by different scholars have been meeting resistance from different quarters. With this, defining them is becoming worthless intellectual exercises. Some scholars have argued that whosoever tries to define any of these concepts does not either know what he is doing or thinking about. So frustrating it becomes that one scholar for example states “democracy could be defined as a high flown name for something which does not exist.” That does not, however, means that we should not continue with the academic exercise. After all, no successful discussion of politics either in developed or developing nations could be carried out without a clear understanding of these central concepts. It is quite true to say that these concepts carried with them different

meanings and some emotional ideological coloration. Thus, the ideological leaning of a scholar determines his final output in defining these concepts.

 

 

Our contention is that to understand the nature of Nigerian democratic experience and its social ramification one requires an in-depth analysis of the political happenings within and outside the Nigerian state. This, however, could not be possible without comprehending the meanings of these concepts in relation to Nigerian politics.

 

STATE

The state is the centre of politics. Politics revolves within and around the state. Politics begins and ends with the state. Politics cannot be understood and comprehended in isolation without basing it upon the historical nature of the state. The struggle for leadership within a political setting is synonymous with the conflict for the control of the state. It is a legal, political, economic, and social institution recognized and accepted by citizens residing within and outside its territory. Population, territory, government, and sovereignty are the essential elements of the modern state. Based upon these explanations, Nigeria is a state per excellence. Nevertheless, to understand Nigerian politics we require more than the above descriptive positions of what a state is. This requires us to seek elsewhere.

 

The state according to Marxists is an organ of “one class against another, because there is no such state as a classless state or supra-one.”  All states are class state. It bears a “class character,” and is never a state of the “whole people.” The state exists for and on behalf of the dominant class. The state becomes the supreme coercive power for the protection and promotion of the interest of those who own its instruments of production.

 

The origin of the state is linked to the division of society into classes. This division leads to the existence of class struggles and contradictions for the control of the state. Thus, the state can be seen as a “conglomerate of the collectivity made of the various interacting classes in the social formation.” 

 

It is a “committee for managing the common affairs” of the dominant class. The state is therefore a “relation, or a condensate of relation of power between struggling class.” In this case, the state is an institution for the running of societal activities through its instruments, such as government, bureaucracy, judiciary, legislature, police, army, etc.          

 

All the same, the state is a fragment of society that set itself above society. That does not mean in any way that the state does not act on behalf of the dominant class, which it does, but it only shows that the state does not for most part act at its command. This is not only because the ruling class is not monolithic, as people may want to believe, but also because the class itself has different interests and tendencies existing within itself, that it may not be easy to use the state as its instrument.

 

The state, therefore, has a relative form of autonomy, which makes it, “stands apart from them in relative autonomy and thus its ability to accommodate the differing interests of the disparate classes.” This position allows the state to preserve the common rather than the factional interests of the ruling class. Hence, to its appearance of representing national concerns and unity than the factional interests of the dominant class alone. In a situation like this, the state is seen as acting against the short-term interests of the dominant class, but in fact, in reality in the end, it is protecting the long-term interests of the class in general. For example, in capitalist societies, the long-term interest of the state is the promotion of capitalist accumulation, and this is what it has been doing.

 

However, the autonomy of the state does not suggest that it is independent par-excellence or a “state for itself,” but on the contrary, its relative autonomy allows its space to play its class role in a flexible manner. This makes it possible to decide how best to serve the existing social order. This explains the reason why the capitalist states are relatively autonomous from the dominant and the dominated classes.

 

The major functions of the state include the maintenance of social and political order through physical force, legitimatizing of its authority for popular support, and accumulation, which involves both the creating and maintaining of a favorable atmosphere for private accumulation of capital. Through this, the state provides policies to preserve capitalist relations of production and exploitation.

 

 NIGERIAN STATE 

Considering this, a post-colonial state, like Nigeria is a form of a capitalist type of state in a specific stage of development. It is a transitional state per se. The Nigerian state is not an instrument of a single class because the social groups, which have an interest in controlling the state, are weak, since they lack a base to develop independently. This situation is not only due to the colonial background and international capitalist exploitation of its social formation, but also due to the subservient nature of the class and the class relations within the state itself.

 

There is the absence of an economically dominant class in the social formation, since the economy is controlled by foreign nations and the domestic bourgeoisie are only agents, at best, for the exploitation of the state. This, however, does not mean their interests are identical or does not conflict or compete in the economic and other spheres.

 

The post-colonial state, therefore, represents itself because it turns out to be the means of acquiring political and economic power. It is the source of economic power as well as an instrument of it. Those who control the state use its machineries to further their economic interest since it is the major means of production.

 

The Nigerian ruling class is neither homogeneous nor united, since political power means economic prosperity. This explains the intense struggles for the control of the state. Nevertheless, the state tends to have a high degree of autonomy becoming in some extend a “state for itself” or to those who control the coercive instrument. The Nigerian state serves the dominant social order, thereby turning itself to a political battleground and the victor’s spoils.

 

DEMOCRACY IN NIGERIAN STATE

The western political lexicon defines democracy as “Government of the people, by the people, for the people.” Although this definition is simplistic, it expresses the fact that in a democracy government comes to power through the consent of the people. The west identifies certain essential features of this system of government, such as freedom of expression, freedom to form and join organizations, right to vote and be voted for, right for individuals to compete for support, free and fair elections, etc.

 

However, in all honesty these features are illusory for the dominated classes. The liberty to vote, express views and compete for positions as enshrined in the constitution are not meant for the dominated classes but for the dominant class that has the resources and backing of the neo-colonial state to form political associations and the chance to stand for elections. The constitution in trying to justify western democratic ideals turns out to be an ideological justification for neo-colonialism and bourgeois rights. 

 

Party formation, elections, and other democratic rights enshrined in the constitution simply legitimized the rule of the dominant class. Voting does not mean that those who stood for hours to vote have any power at all. In Nigeria, with or without their votes governments are formed and sustained. The electoral contest is partly a show to create an illusion that there was actually a struggle for government in which the people has a say on who should rule them. The fact is that the dominant class decides who rules, as it controls, and owns the political parties.              

 

It seems the dominant class is not sincere with the inclusion of these rights in the constitution. These rights have a purpose, as they mystified freedom. Through these phrases, few individuals who rise to the political positions by foul measures control government and its resources. Peoples are made to believe they have the same rights to aspire to the highest post. However, as money plays a significant role in elections, the poor cannot contemplate capturing power. After voting them, the citizens believing that they represent them look up to them for survival.

 

Registration of many parties, on the other hand, to contest elections is an attempt to provide the dominant class alternative channels to struggle for power. However, it does not avail the weaker classes the chances of either leading the nation or the right to choose their leaders. Voting right gives the weaker class the chance of voting but not an alternative to rout out the bourgeois political parties registered by the Electoral Commission.        

 

This is not surprising, as Nigerian democracy is a product of the bourgeois state. It is a by-product of bourgeois dominance in the social production, so it remains a bourgeois class political doctrine. A bourgeois regime is an oppressor regime. Moreover, for the oppressor, as Paulo Freire has shown us, there exists only one right: their right to live in peace, over against the right, not always even recognized, but merely conceded, of the oppressed to survival. They make this concession only because the existence of the oppressed is necessary to their own existence. 

 

REGISTERED POLITICAL PARTIES

The parties are identical, in both moral and ideological characters in spite of their claims of being different. Their manifestos are similar in outlook and focus. The parties emphasize the importance of education, healthcare, rural development, employment, industry, and agriculture. These definitely have universal attraction to all classes. As the parties are the products of the Nigerian state, one cannot expect them to promise anything radical that can lead to its destruction. The system benefits the bourgeoisie and since they formed the parties, one should not expect the manifestos to be anything but tools for the protection of the class’ rights. Individuals seeking to control the governing apparatus by gaining office through an election arranged and supervised by them formed the parties. Thus, these parties are not meant to carry out any particular policy different from those executed by the defunct military regimes. As Anthony Downs once argues that politicians “treat policies purely as a means to the attainment of their private ends, which they reach only by being elected.” The parties are, therefore steeping stone for the expropriation of the nation’s scarce resources.

 

The ruling PDP has transformed itself into a conglomeration of people with diverse interests and ideological leaning. The availability of political heavy weights, juggernauts, and men of timber and caliber in the party make it a party to beat in the political contests since 1999. It is a class phenomenon formed and dominated by the bourgeoisie. As all bourgeois parties, PDP has a single objective of protecting capital and capital accumulation. The party is a reactionary political organization, which bends on implementing policies that could satisfy the western powers and the domestic bourgeoisie. The party grew out of the desire of routing out the military from political leadership, conserving, and consolidating the inherent system of inequality and oppression of the weaker class.

 

In spite of this fact, the PDP is personified as President Obasanjo has turned it into another parastatal under his office. The party has lost its autonomy. Its organizational structure, strategy, and program have become so irrelevant that the party leadership and followers are no more discussing the political party but the President. It is becoming hard by the day to differentiate between the interests, views, and aspirations of the President with that of the party. He is able to perpetuate his leadership because he is at the fountainhead of wealth. As the Nigerian state is not only the centre of authority but economic power controlling it avails the President the singular muscle to enrich supporters.

 

The PDP has become a “state” within the Nigerian state. Despite this fact, the nation is not witnessing a dictatorship of the ruling party but that of President Obasanjo who is not only dictating the tunes play but also the dance steps taken in the party and the government. This was a party formed with a vision for a free and brighter Nigeria. However, the party has been losing this vision by substituting what it stands with the wishes and aspirations of the President. Most of those involved in the initial formation of the party are either frustrated out or made extraneous within it. Individuals such as, Soloman Lar, Abubakar Rimi, Alex Ekwueme, Lawan Kaita, Iyorchia Ayu, Dr. Suleiman Kumo, Professor Ango Abdullahi, Issac Shaabu, etc. (who were members of G34 the precursor of the PDP) are now out of the party which they contributed in forming. Many joined other parties such as Action Congress (AC), Democratic Peoples’ Party (DPP), etc. Those who remained in the party, such as Professor Jerry Gana and Adamu Ciroma are relegated to the background with no influence.

 

The All Nigerian Peoples’ Party (ANPP) on the other hand is a caricature of a party. Although bourgeois inspired, the party is undecided since inception. It lacks reliable organizational structure and clear ideological position on many issues, which contribute in no small amount to the confused state the party, has found itself. Its lack of specific and purposive goals leads its leadership to take wider political view. This explains more than anything else, its interest in aligning with the Alliance for Democracy (AD) in the 1999 elections and the present move towards the AC for the upcoming 2007 elections. Nevertheless, General Buhari’s membership of the party has boosted it morale, thereby promoting it to be considered as an alternative and contestant for national power. Personal integrity of General Buhari who is its presidential candidate has become the dominant factor in the party. ANPP is no more the issue of discussion but, the General. It is in realization of this, the General setup “The Buhari Organization” (TBO) in order to give the party a sense of direction. The TBO is composed of technocrats whose responsibilities are to provide a policy blue print for the General and at the same time mobilize party members.       

 

Alliance for Democracy (AD) is a party formed by an ethnic group for the purposes of leading its members either to the centre of national politics or towards the formation of a new republic within the nation’s territory. The Southwestern part of the nation has for decades transformed ethnicity to be the determining factor in its politics. The party began its existence by appealing and through raising the sentiments, sensibilities, and interests of the Yorubas. This background worked against the party in the last two national elections. It is a party that, has no plan for the future. Its program and structure were aimed at the present, which was to install a Yoruba as the president of the nation. This explains its recent disintegration into nothingness. With President Obasanjo at the helm of affairs of the nation, its purpose of existence becomes undependable even by the initiators of the party. Bola Tinubu, who is the only Governor elected under the party during the 2003 national elections has packed his baggage and join the AC.

 

Action Congress (AC) is a child of circumstance as its leading members were those frustrated out of the PDP due to either political differences or power play. It is a party so much linked to the political interest of the Vice President Atiku Abubakar. Atiku is now the prevailing factor in the party. A man of immense wealth and political experience, Atiku is now the Presidential candidate of the party.

 

DPP is another party, which is visible in the political field. Although, the party is yet to make its impact on the national level, it is picking up the pieces left by the other parties as those who left ANPP found a resting ground there.  The other registered political parties are paperweights.   

            

 CONSTITUTION

The Nigerian constitution, it seems, is directly facilitating rather than obstructing the rise of despotic rule. What we are now witnessing under President Obasanjo attests to this. The Executive disregard of the judiciary and the legislative arms is legendary. To survive, the other arms look-on undisturbed as far as their shares of the loot are coming regularly. These arms are losing their moral value as arbiters and final ports of call in case of constitutional abuse. While the legislature is “given up to talk for special purpose of fooling the common people,” the judiciary bends towards protecting and maintenance of the bourgeois political system.

 

Our democracy has a foundation of sand. With this foundation, the present government is basing its perception on the present and not the future. Therefore, what we are witnessing between the President and his Vice indicates the moral bankruptcy of the system and the leadership. Obasanjo is calling Atiku a thief and Atiku condemning Obasanjo as a bigger robber while the two arms watch in amazement. The citizens are discussing the issue daily and are beginning to realize that the fight is over the spoils of office and not over their welfare. Instead of democracy bringing a responsible government receptive to the aspirations of the majority, the nation is settled with “grafters” and a “boss.” The nation definitely does not bargain for a “vulture democracy” when fighting the military dictatorship. It bargained for a system that could nurture a people with strong moral fiber, integrity, industry, self-reliance, etc. Instead, we have a system where the leadership is fighting amongst itself for the spoils of office in the name of democracy.

 

Thus, the politics of today is projecting the nature and thinking of the leadership. This leadership has no interest in the development of the productive forces or in the search or generation of viable ideas for the development of the nation. For the last seven years, the government has been seeking foreign investment, joint ventures, and protection of capital accumulation through privatization of public enterprise. Nothing indicates progress in the present setup, as the condition of the poor has not improved despite the billion of dollars earned by the government

 

CONCLUSION

It is natural, as argued by Lenin, “for a liberal to speak of democracy” in general, but a Marxist will never forget to ask, “for what class?” This question is significant for commentators and political scientists. What is happening in the country clearly exposed for which class is Nigerian democracy working? It is a democracy for the bourgeoisie and not the have-not. It is a “vulture democracy” where the strong patiently devours its victims at the full glare of domestic and international communities.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                   THE POLITICS OF DEBT RELIEF:

                        Before the Euphoria Dies Down

                                                    By

                                        Dr. Ibrahim Braji

                                (dribrahimbraji@yahoo.com)

The topic of currency in Nigeria is the recent claims by the Federal Government that it has received a debt relief of $18 billion from its creditors. However, before involving ourselves in the present discussions and euphoria, there is the need as political economist to analyze the root causes of the debt burden, its implication, and the probable outcomes of the debt relief to Nigerian Economy. With this euphoria on, few cares to ask, what were these loans for? What impact could we see from the huge loans we are now celebrating of having relief from paying? Is there any debt relief?

 

THE NIGERIAN ECONOMY IN A POST COLONIAL ERA

 

The Nigerian economy is an integral part of the world capitalist economy. It is a dependent economy, which is subjected to international capitalist exploitation and dictation. The State economy operates primarily for the benefit of international capital, first and then the domestic bourgeoisie. In fact, this is not surprising as the Nigerian State was nurtured by international capital. The economy has been servicing international capital even to the detriment of domestic capitalist development. In the process of performing this role, the State becomes an investor State for the growth of and sustenance of capitalist development. The Nigerian State involves itself in capital investments for the promotion and expansion of both the international capital and the local dominant class. Thus, the state dismantles its economic and financial barriers in the interest of the dominant class and international capital.

 

In fact, the domination of the world by the capitalist mode of production and the needs for raw materials for the advanced countries’ industrialization entail international divisions of labor. The division leads to a polarized development of the world’s productive forces. At one end, there exist the advanced, dominant and industrial countries, and at the other, the underdeveloped, dependent and dominated countries. The dominated countries are converted into the suppliers of raw materials and importers of finished products.

 

Therefore, the country’s role in the international division of labor is that of exporter of raw materials and importer of almost everything from commercial goods to industrial raw materials. Decades of foreign, investments and the emergence and consolidation of domestic bourgeoisie have in no way modified the terms of its international trade. Based on the above facts, the dominant class in Nigeria is left with two options, either to use the State to create public property, which it can control indirectly through its control over the State, or use the State to expand private property, which it would control directly through ownership. The dominant class in Nigeria co-opted the two options, thereby turning the State into a useful avenue for capital accumulation.

 

The main items of export for the nation since the 1970’s have been the petroleum products, which account for more than 90% of the nation’s foreign exchange earnings. Nevertheless, despite this dependence, the sector is under the control of foreign firms. Added to this, international capital is also dominating the other sectors, thereby making possible the transfer of contradictions and crisis from the world advanced capitalist centers to the Nigerian nation. What, this statement is implying is that, Nigeria cannot escape the contradictions and crisis of global capitalism. The country does not exist even for a minutes in a vacuum, outside the world capitalist system. Through the activities of transnational corporations, the structural contradictions of the West have been woven into the fabric of the nation’s economy.

 

It is, however, true to argue that concentration and accumulation of capital is greater every minute and is becoming more sophisticated from the era of pre- monopoly-to-monopoly capitalism. However, the system has never been free from crisis. It is in-built. It occurs periodically. A scholar claims that crisis occurs at about ten year intervals. Capitalist system has its ups [booms] and downs [depressions, recessions, crises, etc]. In time of booms, the capitalists find that the demand for their products is increasing more than their production capacity. While in times of slump, demands will be very low leading to the crisis of over-production.

 

The failure of capitalism to improve the lives of majority has given way to prolong chronic depression period affecting most developed and developing nations. However, capitalist crisis does not necessarily lead to the breakdown of the system as suggested by some renowned socialist thinkers. Some crises are warnings to the capitalist to adjust or be prepared. Adjustments differ. Some involve restructuring of the economy either through increased investment, opening up the economy for foreign control, contracting of additional loans, devaluation of the local currency, lay off of workers, and annihilation of some portion of capital by closing down factories or merging unprofitable ones with bigger ones, etc.

 

Nigeria has been in economic crisis for decades. However, this is not the first to be witnessed by the nation. The first world economic crisis was that of 1847 which effect was limited to the then rising capitalist nations. However, the most destructive ones to the capitalist relations of production were the crises of 1920-21, 1929-33, and 1937-38. Nigeria, a country since the colonial period formally integrated into the world capitalist system, was from that period subjected to the dictation of the general world capitalist system of development and crises. As early as 1929-30, the country’s mining and agricultural sub-sectors of the economy were affected by the world capitalist depression. The background cause of the depression was the trade recession in America, which spread to the rest of the world. We need not forget how the world depression of the period destabilized the tin industry of the country, which we do not need to go over here. Other sectors of the country’s economy were not left alone. In fact, the country’s principal commodities collapsed rapidly thus affecting the fortunes of some of the colonial trading companies, the income of the Nigerian farmers and intermediaries and social expenditure of the State. Besides the fall in the price of all export crops, there was also a drop by more than fifty per cent of the volume of export earnings. During that period, the total value of exports declined from ₤17.8 million to ₤8.8 million, while the total imports declined from ₤13.2 million to ₤6.5 million. In addition, within this period, 1929-1931, domestic purchasing power dropped by over 38%.

 

PETROLUEM RESOURCES AND THE NIGERIAN ECONOMY

 

However, with the discovery of petroleum in commercial quantities, which is a raw material of importance for the developed nations’ industrial drive, the nation became a fertile ground for foreign capital.  The discovery changed the agrarian basis of capital accumulation in the country. Petroleum has too many advantages over other products. First, nothing brings so much profit. Secondly, no other raw material draws so much attention in international politics. It dictates the pace of things in the world.  The most unfortunate thing, however, is that, although production increased every year since its commercial exploitation, bringing in huge foreign revenue, it depended above all on the United States of America and other European markets.

 

With improved production, the nation joined the Organization of Petroleum Exporting Country [OPEC] in 1971, thereby becoming a member of a cartel. In fact, before the formation of OPEC and the Middle East War of 1973, the pricing of the products was formerly under the control and manipulation of the big seven oil corporations; Standard Oil of New Jersey, Shell, Anglo-Iranian [now British Petroleum], Mobil, Gulf, Texaco and Standard Oil of California. The use of oil as a political weapon against the West for supporting Israel by the Arab nations made the organization the center of world politics. Prices changed which improved the revenue earning of the nation. While in 1960-1970, the country was receiving $1.80 per barrel, but with the war the price leaped to $5.12. In 1979, 1981 and 1983 the nation was earning $14.59, 44.00, and 29.00 per barrel respectively. On the same level, the nation’s oil production increased from a mere 396 million barrels in 1970 to as high as 842 million barrels in 1979. It dropped to 754 million, 522 million and 475 million barrels in 1980, 1981 and 1982 respectively.

 

Its contribution to GDP rose from 0.31% in 1960 to 3.71% in 1965. By 1970, the share had risen to 11.12%. This continued up to the period of oil glut. On the other hand, the share of non-oil export decreased. Though in 1960, agriculture accounted for over 97% of the export earnings, by the 1980s, it had declined to less than 5%. Thus, revenue from oil becomes the dominant source of Federal finances. The increase in revenue led to a tremendous rise in the nation’s capital expenditure. Decades of foreign investment in the oil sector and the emergence and consolidation of the bourgeoisie have in no way modified the nation’s economy.

 

DEPENDENT ECONOMY

 

Based on the above explanation, the Nigerian economy becomes an integral part of the World capitalist economy. It is an economy that is not only subjected by the international capitalist exploitation and dictation but, also in every ramification a rootless one, which floods with the wave of time and changing policies. Nevertheless, with so much dependence on oil revenue by the State, it becomes a dream to expect the country to survive any decline of the price or demand of petroleum products. It is, therefore, not correct to disassociate the actual decline in oil revenue between the 1980 and 1982 with the economic crisis of President Shehu Shagari’s period, as some scholars would wish us to believe.

DEBT TRAP

 

Nevertheless, the most disturbing part of the politics of Nigeria is the squandering of the nations’ hard-earned revenue and the contracting of foreign loan for further spendthrift. It is true, that external loan is one of the means through which development projects could be financed. However, up to 1977, the nation was careful in contracting it. Thus, external loan was never a problem. In fact, the total external loan of the country in 1960 was a paltry N82.4 million. This rose to N435.2 million in 1965 and N488.8 million in 1970. There were three important features of the loans. First, they were project-tied i.e. for providing infrastructural facilities, for the development of the country, such as the construction of Dams, Water Supply, Railway, Lagos Main Land Bridge etc. Secondly, the loans were long-term development soft loans from Western Europe and U.S.A. Thirdly; the terms for which the loans were contracted were favorable to the nation since their interest rates were as low as 2 per cent, with a grace period of 3 to 10 years and a repayment period of 10-40 years.

 

However, with the exploitation of oil, external loan which reached up to N489 million in 1970 decreased to less than half in 1971, to N215 million. Nevertheless, by 1976, foreign debt rose to N375 million. General Obasanjo made external loans a fundamental source of financing projects. The military regime under General Obasanjo negotiated a jumbo loan of N1200 million in 1978. Another N600 million was contracted in 1979.

 

This singular action by General Obasanjo altered the structure of the country’s debt, which formerly was comprised of soft concessionary loans from the World Bank and other multilateral and bilateral sources. Before that action, debt service ratio was as low as 1.1 per cent in 1960, 3.7 per cent in 1965 and 1970.

 

Thus, this jumbo loan prepared the ground for the nation’s present predicament. The nation since that period has found itself in the capitalist nations’ debt trap. A trap other regimes that followed failed to come out from.

 

It is our belief that there was no rationale for the military at that material time to negotiate for such a loan, since the country was not doing badly, due to the accruing petrol dollars. To understand the wisdom behind the contracting of the loan, we should first look at the international level. The developed nations are forced to lend their excess fund in order to create markets for their commodities. Through credit, as Karl Marx stated, international capital “seeks to break through its own barriers and to produce over and above its own limits”. Truly, without lending, some of the capital held by international finance might not have been employed at all. By that, capital might stagnate which in the end may lead to its degeneration. Thus, the export of loan is a necessary part of capitalism. It turns out to be an excellent business for the capitalist nations. As capital, loan found its way into the developing nations; it thereby stimulates and improves the purchasing power of the recipient, and subsequently improves the prospects of export industries of the lenders.

 

Thus, the gains are numerous. In a project-tied loan for example, the recipient will be under the obligation to import major if not all part of the goods, such as machines, technological expertise, etc, needed for the project from the start to finish. Project-tied loan is never a one-day affair. So does the loan. Most of these loans are under the control and direct supervision of the lenders. In addition, since the main issue is not only of establishing the project but also of maintaining it, a permanent market for the lender is thereby opened for exploitation. The prospect of additional orders for replacement of parts in order to keep the project viable is always there. Besides opening up reliable employment opportunities for the lenders’ staff, it also eliminates competition from other nations. This becomes possible, because the lender controls the supply of the inputs needed by the project. It is reliably confirmed that loans from such banks as Export-Import Bank and International Development Bank require that at least half of the inputs should be made in the United States. This explains the reason why loans go to where conditions for its profitable employment exist.

 

Thus, it is not a matter of interest accruing on a loan, although of significant importance itself, but the control over a nation’s economy. Through loans, the developed nations send men, capital, norms and dependent projects. Presently, there is no field, which is profitable into which international capital does not find its way either through investment or through credit facilities. It dominates the construction of dams, steel complex, expressways, etc.

 

Through external finances, the independence of the nation becomes meaningless. Because foreign interests easily have access to dictate and manipulate the debtor nation. In fact, International Finance Capital uses IMF, IDB, and IBRD, etc. loans to control and decide the economic policy of the countries asking for credits. On many occasions, they got hold of all the economic and financial data of nations, and thereby have direct access to their Central Banks and Finance Ministries. They not only dictate the economic policy, but also influence the appointment of the people to handle the affairs of sensitive ministries such as Finance, Economic Planning, and the Central Bank. Relevant examples are the case of Liberia under Samuel Doe, who handed over the nation’s Central Bank to IMF; and Nigeria under General Babangida, whose economic policy was dictated and came under the direct control of the IMF and the World Bank. A situation was reached whereby the international financial institutions influenced the appointment of Finance Ministry as witnessed under General Babangida and President Obasanjo governments. Under this government, as stated by The News Magazine of 18-July 2005, the Minister of Finance, Dr. Ngozi Okonjo-Iweala and the Director-General of Debt Management Office, Dr. Mansur Mukhtar are all staff of the World Bank. These individuals, with direct support and inputs from Professor Charles Solude, a former Director of AIAE as the Governor of Central Bank, are now directly running the nation’s economy. This is a reflection of the General Babangida’s era when Kalu Idika Kalu a staff of the IMF was appointed to pilot the Finance Ministry. 

 

LISTENING NATION

 

Nevertheless, it is not surprising to hear the representatives of Finance Capital in the 1980s’ saying that Nigeria was under-borrowed. They were digging a hole so deep for the nation to fall into their trap for their interests. That was exactly what happened. The nation listened and accepted the sweet talks of International Finance experts, that the nation should borrow more to execute projects. An instance could be given. There was a time when in 1981, the World Bank Regional Vice-president David Knot, was telling the then Minister of Finance, Victor Masi, that his Bank would happily increase Nigeria’s credit line from the existing limit of $500 million. Up to 1982, the World Bank’s resident representative in Nigeria, at that time, Mr. Owaisa Sa’adat, had been encouraging the nation to borrow more from the international capital.  Clearly, on 15 September 1982, the World Bank representative had been pressing the Federal government’s management of the nation’s economy as well as its external borrowing. He argued that Nigeria had not over borrowed.                                

 

A PARASITIC RULING CLASS

 

On the domestic level, increase in the nation’s external indebtedness could be attributed to the nature of the ruling class, which is parasitic. The dominant class in Nigeria in most cases planned and implemented development projects by using external finance as a major component, while domestically available resources played a minor role in the development process. One scholar explained in one of his expositions, that external indebtedness is being “seen as a salient characteristic and as a basic requirement of, the nation’s development strategy”.

 

The above statement, although true and to the point, but it runs short of our expectation. For a scientific understanding of the nation’s indebtedness, one has to look and seek deep down on the class motive of the ruling class in contracting the external loans. The ruling class in reality benefits from the foreign loans. In this case, the class has a direct interest in the indebtedness of the State. As dialectically argued by Karl Marx, the “State deficit was really the main object of its [ruling class] speculation and chief source of its enrichment”. External debts provide not only the possibility of formulating but also executing policies, which could directly benefit the dominant class. Because every new foreign loan contracted by the State “offered new opportunities for defrauding the State”. Each new agreement gives further opportunities to the ruling class to plunder the State resources. The huge sum of money negotiated as loan facilitates the siphoning of capital outside the country through open looting of the treasury, inflation of contracts, bribery, etc.

 

Scholars have indicated the link between foreign loans contracted by the Military regimes and the emergence of multimillionaire Retired Generals as owners of chains of business organizations from Banking, Insurance to Agriculture and Industries. There was even the argument that the jumbo loans contracted at the dying minutes of the General Obasanjo regime were meant to be a send-off cake for the military ruling elites.                                                  

 

It is, therefore, not unexpected that a few days after their retirement the leading figures of the Obasanjo government reappeared as owners of large scale agricultural projects, banking and industrial investments. Cases in point are the business acumen of Generals Obasanjo, Shehu Yar Adua, Yakubu Danjuma, etc. after retiring in 1979. General Obasanjo’s large-scale agricultural investment is well known requiring no further discussion. General Yar Adua invested and owned Habib Bank Nigeria ltd, African Shipping Lines, Sambo Farms, etc. General Danjuma, on the other hand is the owner of MEDIAFRICA Group [which is solely involved in the operation of private jetties such as Dantata jetty, Noli Jetty and Wimpy Jetty]. The Universal Trust Bank of Nigeria has also a substantial investment from Danjuma.   

 

It was not therefore, surprising that by the time the military handed over power to President Shehu Shagari, the nation’s debt had struck a level never anticipated in a country that had been careful in contracting loans. The military left a debt of N1611.5 million. However, it is worth noting that debt services had never been a problem to the economy because of the increased oil revenue and the debt ratio was 1.9 per cent while its economic burden was only 5 per cent.

 

SHEHU SHAGARI’S CIVILIAN GOVERNMENT

 

Shehu Shagari came in with his bandwagon of speculators and foreign exchange dealers, as such external loan became more entrenched in financing programs. The worst part of this era was the contracting of foreign debts by both the Federal and the State Governments. This led to a vicious circle of indebtedness. Loans progressively increased from the N 1611.5 million inherited from the Military in 1979, to N1866.8 million in 1980. The debt catapulted to N2331.2 million in 1981, N9051.4 million in 1982 and N12237.4 million in 1983.

 

One significant thing for us to note at that period is that while in 1979, the Federal Government was responsible for more than 90% of the external loan, by the time the civilian regime had settled, the percentage changed. For example, in 1982, the Federal Government accounted for 55.2% and the States 22.3% and Trade Arrears covered the remaining.

 

The governments, both at the State and Federal levels competed for external finances on every project available. The failure of the civilian to reduce or even control importation of goods and the falling oil revenue to execute projects, resulted in the accumulation of short and medium term international capital market loans. The disadvantage of this kind of loans is that they were contracted at floating interest rates with fixed margins above London Inter-bank offer rates [LIBOR] and with high agency fees, commitment and management fees. In fact, the civilians utilized very little of the loans facilities available in the World Bank and other bilateral agreements, which are naturally more favorable to the nation, than the one at the Europe Dollar market. In 1982 and 1983, only 5.9% and 4.6% of the loans received by the country was from the World Bank respectively. Bilateral and Multilateral loans were neglected. Bilateral loan accounted for less than 2% of the nation’s external finance in 1982 and 1983.

 

Scholars linked the rise in debt with the mad rush to accumulate foreign exchange abroad by the political elites. The growth of debt between 1981 and 1983, according to these scholars, was because of the scramble by the political class to loot and repatriate Nigeria’s wealth.

 

This alone, however, could not sufficiently explain the debt burden. There is the need to look into the amortization payments, which was just N6.2 million in 1980, but shot to N1211.3 million in 1981. In addition, by 1983, it reached N899.6 million. Besides that, we have also to bring the issue of interest payments, which was little in 1980, being N110.4 million, but hit N1335.2 million in 1983.

 

Therefore, the intensification of the debts problem was due to the increase in interest rates and debt services. Banks escalated interest rates at will, hence loans collected by developing nations at the period when interest rates was low, turned out without notice to be high. The worst part of the situation is that, most of the loans contracted by Nigeria were at floating interest rates tied to LIBOR. Thus, the rise in interest rate could be one of the important causes of the debt problem.

 

Towards the end of the civilian government, the country drifted into economic crisis. The President’s austerity measures notwithstanding failed to control or restrain the State Governors and business community from negotiating more loans. The economic measures failed to tackle the unfolding economic crisis confronting the nation. Thus, we witnessed a nation drifting into bankruptcy. The civilian era witnessed the nation external reserve falling from N2.58 billion in 1981 to N1.07 billion in 1982. By 1983, nation’s external reserve declined to N889 million. The country entered into a situation where debts accumulated dried up credit lines and exhausted the good will of foreign suppliers and financial institutions. The mismanagement of the economy gave rise to increase in budgetary deficits and acute shortage of foreign exchange reserves. The outcome was catastrophic; thus to the military coup of 1984.            

 

THE MILITARY

 

General Buhari inherited a nation facing debt crisis. The nation’s economy at the takeover period was on the verge of collapse, as foreign banks were refusing to honor its financial interactions. In the process of arresting the situation, the General planned to reduce government expenditure and imports, revive agriculture and resuscitate industries, stabilize prices and incomes, broaden the revenue base of government, and restore confidence in the Naira. Reading between the lines, one could easily see that the General was just restating the deposed Shagari’s economic recovery program, which the civilian regime failed to execute.

 

But nothing disturbed the military regime more than the debt it inherited from the civilians. Since it could not settle the debt nor refute it, the regime continued to honor all payments on medium and long-term loans. Moreover, between January and December 1984, total payments on principal and interest amounted to N2.63 billion. This strategy continued in the 1985 period, whereby 44% i.e. about N3.50 billion of the total estimated foreign exchange earning of the country was set aside for debt servicing. This was by all standards a higher ratio when compared with the 25% i.e. N2.63 billion of the nation’s foreign exchange which went to the payment of our external debt in 1984.        

 

Not satisfied with this strategy, the IMF continued to dangle its conditionalities as a recipe to the nation’s economic crisis. IMF is known to be a conspiracy to control, manipulate, and encourage dependency in the world system of exchange. Through its enormous resources, and because of its function as an international credit agency, the Fund is able to spread its tentacles in order to control the economy of the developing nations of the world. Its conditionalities impose stringent economic and political measures, which a recipient is obliged to implement before being certified to receive additional credits for its crumbling economy. In fact, all major sources of credit in this world depend on the advice of the Fund before lending loan to nations.

 

This explains the initial efforts of the General Buhari’s regime to implement few of the Fund’s conditionalities. The nation at that time was not in a position to dictate its needs vis-à-vis the Fund conditionalities. Nevertheless, General Buhari could not be forced to accept all the terms laid down by the Fund. Devaluation of the local currency, removal of Oil subsidy, liberalization of external trade and deregulation of prices were out rightly rejected by the regime. Because of this the dominant financial houses, the London and Paris Clubs refused to sustain Nigeria’s credit lines. The $2.5 billion loan promised to the nation as a bail out to offset some part of its debt was refused. Nor were the creditors ready to defer dates of debt payment, or slightly lower interest rates for the nation. Without a new loan facility, the nation’s financial situation became more precarious.

 

The regime looked inwards through counter trade and restraint public expenditure. These failed to sustain the nation’s needs. As the nation debt grew due to high interest rate, it became more vulnerable to the world financial institutions. It was under this situation that General Babangida toppled General Buhari with a promise to break the deadlock with the IMF.

 

With a Structural Adjustment program, which, was IMF tailored, General Babangida aspired to satisfy the creditors. The outcome was the depreciation of the Naira, inflation and the rise of the price of petroleum products. Despite that effort, the government was only able to negotiate debt relief programs with the creditors. This overstretched the repayment period of the debts. Through restructure, reschedule and re-financing its debts and other financial obligations, the government created a breathing space, but not without mortgaging the nation to international capital. The government claimed that these strategies became necessary because without them the debt services would have consumed 85% of the nation’s foreign earnings. In 1989 period, for instance, it was estimated that the country’s debt servicing amounted to $5.7 billion against the projected foreign exchange earnings of $6.7 billion. However, with the rescheduling of most of the debt, the debt-servicing obligation was slashed to a little over $3 billion.

 

General Babangida era witnessed the rescheduling of London club of creditors debts of $5.8 billion over a period of twenty years in 1988.  In the same year, the Paris Club creditors with a debt of $12.9 billion, rescheduled $5.7 billion. The private creditors also rescheduled all of their debts amounting to $4.8 billion. Thus, toward the end of 1988, the government rescheduled about $16.3 billion of the total external debt of $29.6.

 

Despite this, the burden remained leading the government to apply other strategies such as, debt refinancing and conversion programs. In debt refinancing, the government contracted more loans to finance the services of debt. While under the conversion program, debts were converted into equity shares. The program had different forms, such as debt-equity-swap, debt-for debt, debt securitization, debt- buy- backs, debt for cash, etc. 

 

These programs adopted by the government had their side effects. Rescheduling, for instance, does not solve the debt problem, nor does it reduce the debt or the interest accruing by the day. What these programs were able to do was to push it to the future at higher cost because of the tendency for interest rates to rise. However, for the country to enjoy the rescheduling concession, it had to handover its economy to World Bank experts to manage.

 

Instead of these strategies to lessen the debt burden, the nation’s debt to GDP ratio more than doubled from 21.9% in 1985 to 51.0% in 1986. It again almost doubled in 1988 when the ratio reached 97.8%. This continued up to the time General Babangida stepped aside. In fact, by 1990 and 1991 the total external debt was $33.1 and $33.7 billion respectively. This indicated increase from the time he came into power. This is despite the oil windfall due to Middle East crisis of the 90s’.  The oil windfall did not benefit the citizenry nor reduce the debt burden. It was a period of planlessness, mismanagement and deficit budgeting.

 

It is true to say that the nation witnessed a slight drop in the debt burden in 1996 and 1997 period because of the efforts of General Sani Abacha to tame the economy by implementing rigorous programs of repayment and repurchasing of some debts. From a debt of $33.7 billion in 1991, it slipped to $28.0 billion and $27.0 billion in 1996 and 1997 respectively. With a debt service floating between $4.1 and $2.3, billion in 1991 and 1992 respectively, the nation continued to be groaning under the debt burden. The debt services also fell to $1.6 billion and $1.2 billion in 1995 and 1998 respectively during Abacha period.

 

Nevertheless, this drop in debt burden and interest rate witnessed during the Abacha era began to pickup since the coming of the present administration. In fact, the debt service payments in 2000 amounting to $1.7 billion, was higher then the Federal government budgeted, which was $1.5 billion. Out of the amount paid in the year 2000, $1.4 billion, $278 million and $23.6 million was for principal, interest and penalty payments respectively.  

 

 Therefore, the strategies implemented had failed to bring the expected permanent relief because of interest capitalization, drawdowns on new loans, undisbursed balances, and currency revaluation arising from the depreciation of the dollars.            

 

The civilian regime is not fairing better as the nation debt burden has been increasing daily. With about $34 billion external debt hanging on our head, the nation falls among the most indebted countries in Africa. This debt is 93 percent of the nation’s GNP.  What this indicates is the failure of the ruling class to manage the nations’ economy for the benefit of the people. The class derives direct personal benefits from its dependent relationship with the western nations. The mismanagement of the oil windfall exposes the fact that the socio-economic development of the nation is secondary to the personal greed of the leadership. The lack of a viable policy to lessen the debt burden and open corruption leads the nation into further economic crisis. Scarce foreign exchange earned through the exportation of petroleum products that should have been used for the development of the nation is dedicated to servicing of debt. However, servicing of debt does not reduce the burden but extent it further. The rise of interest rate, which at present has hit 14% and the inability of the nation to meet its debt service payments constitute sources for increased debt burden.       

 

THE PRESENT AND POSSIBLE FUTURE

 

At present, the nations’ external debt stands at $34 billion. Out of this amount, about $28 billion or 85% is owed to the Paris club as the Finance Minister was once quoted of saying. Moreover, 8% of the debt is owed to multilateral institutions. The London club of commercial creditors and holders of Promissory Notes owed the balance of 7%.  To service this debt, the nation will have to part with at least $3 billion. Out of this huge amount, the Federal Government is directly responsible of 75% of the debt service, leaving the remaining 25% to be serviced by the States. The amount to service the debt would in the near future leave very little for capital budget. This explains Obasanjo regime’s struggles to secure a debt relief from the creditors since coming to power.

 

The debt relief of $18 billion being celebrated by the Federal Government may only give temporary respite, which would backfire with a devastating blow. In fact, the government is not sincere for failing to inform the citizenry the real issue behind the relief, if there is any relief at all. I say this, because a document, which is the source of the news lingering on only, stated the readiness of the Paris club creditors to negotiate with the country on the possible debt treatment. Understand the word; possible. The club is only willing to negotiate and is yet to promise an exit plan for the country. The meeting is yet to take place. How the government comes about with a figure of $18 billion as the agreed amount to be reduced is still a mystery to us.

 

It seems up to date the government is not even sure of the amount involved. The Director General of the Debt Management Office and the Minister of Finance have never been categorical in their numerous statements to the press. In fact, there is no agreement between the two on the figure involved. In an interview with the Weekly Trust of July 9-15, 2005, the Director General was quoted as saying; Nigeria is expected to clear its arrears of “$6 billion or a little over that”, while the Minister was saying the “arrears is about $6 billion”. Is it a little over or about $6 billion? With these kinds of statement the Director General and to a lesser extent the Minister are not damn sure of the amount to be paid by the country as arrears. Added to this is also the inability of the Debt Office to clearly inform the nation of the actual amount to be cancelled by the Paris Club. In the same paper, the Director General was quoted as saying that the cancellation “is of $18 billion or more”. This is a doubtful statement too. If the government is not too sure, why quote such a huge figure?  Added to that is the Club announcement stating that the debt relief would include a reduction up to Naples terms. What this statement is indicating is that the debt reduction is not on Naples terms. There is definitely a different between the expressions “up to Naples terms” which is not clear or precise statement and “on Naples terms”, which carry 67% debt reduction. The major question also yet unanswered by the government is: what are the conditions to be fulfilled before the nation enjoys the relief?  

 

However, reading between the lines, there is nothing as debt relief, but readiness for negotiation. The club is only expressing its readiness to negotiate with Nigeria on the debt owed to them. Even this could not be possible without the IMF on the table. The negotiation coming up is based on Nigeria’s willingness to conclude a Policy Support Instrument (PIS) with the IMF. The Fund is, therefore, expected to “intensify its monitoring of the nation’s economy” to quote a Federal Government representative.  We know what it means for the Fund to intensify its monitoring. This we do not need to go over. The government is not able to inform the nation what is awaiting us at the end of the tunnel. The nation had the experience of going through this process. It negotiations with the Fund during the Shagari, Buhari and Babangida regimes all failed to materialize to fruition, despite their efforts in implementing the laid down conditionalities of the organization. In fact, the Fund has standard conditionalities for a debtor nation, which are hard to implement. These include a curb on government expenditure, devaluation of the local currency, privatization and commercialization of public enterprises, rationalization of tariff structures, trade liberalization and phasing out of subsidies, e.t.c. Experiences have shown that rather than the economy improved after the implementation of the conditionalities by the previous governments, the debt increased. So did the interest charged. The nation entered a vicious circle of indebtedness. The nation continues to borrow not only to maintain the insatiable needs of the ruling class to loot and the flow of imports but also to service the debt. More debts are therefore, contracted to refinance maturing debt commitments.

 

It is true to say that Obasanjo government since inception, has been toeing the Fund line of policy, but with nothing to show. Everything being equal, the Fund will insist on vigorous implementation of its conditionalities, which may be tougher and harsher to the citizenry. In the end, the government will have to mortgage the nation to the Fund if it has not done so already.      

 

WHAT IS TO CELEBRATE?

 

A nation with over 75% of its people living below poverty line, despite its oil revenue says a lot about its leadership. The nations’ debt crisis informs the inability of the leadership to effectively use the accrued revenue and control external borrowing as a source of capital. Foreign debt has failed to be a source of financing development projects. Its turn out to be expropriated by the ruling class. Of recent, General Buhari [rtd] was quoted by Daily Independence Newspaper, of June 13, 2005, that “Nigerians have over $170 billion in overseas banks.” For this, the General is seeing no reasons for the creditors to forgive the nation debts. The most disturbing fact of this exposure is that the source of this foreign saving by Nigerians is the State and not from the productive private investments.    

 

The government under Obasanjo is known for its notoriety in not implementing a single budget approved by the National Assembly since its inception. And as the economy deteriorated with a collapsing infrastructure and lack of financial discipline, the relief even if it materializes will open wide the gate for further expropriating of the State by the ruling class and the transfer of the misappropriated money to foreign accounts. Added to that, the government lacks the sincerity and financial discipline to see this negotiation to fruition. In addition, in spite of the privatization of public institutions the economy is yet to pickup, since the amount used for the purchase comes from the expropriated State resources. Little is coming into the economy from external investors. The expected benefit is not appearing. It becomes clear if one compares the earnings of the nation in the 1970s and that of today with the living conditions of the people. Presently, the nation is earning more foreign exchange from the export of petroleum resources than the 70s, but the living conditions of the citizenry have not improved but deteriorate by the days. Nigerians were living more comfortably in the 70s than in this period of super petroleum pump price. Base on this, sooner than later, the nation’s external loan would grow in size rather than diminish. To date, there is no clear evidence that the National Economic Empowerment Development Strategy [NEEDS] as an economic policy would be able to stimulate domestic production either for export or for the domestic market. There is nothing, therefore, to celebrate, except a celebration that will expose our ignorance.  This is the least I expected from Nigerians.