2011 BUDGET: CONSOLIDATION OF NEO-LIBERAL CAPITALIST ATTACKS ON THE ORDINARY PEOPLE
2011 BUDGET: CONSOLIDATION OF NEO-LIBERAL CAPITALIST ATTACKS ON THE ORDINARY PEOPLE
By Peluola Adewale
For the poor and working people there is nothing cheerful in the proposed 2011 budget presented by President Goodluck Jonathan on December 15, 2010. Just like the previous ones it is meant to continue a regime of capitalist neo-liberal attacks and legalise the looting of public resources by elements in government and their fronts called private sector. The president speech on the budget which is tagged “budget of fiscal consolidation, inclusive economic growth and employment generation” was rich in bombastic self-praise, false promises and utter deception. What the budget intends to consolidate is the failure or inability of the primitive capitalist elites to use the wealth of the country for the benefit of the poor working people.
The utter deception in the speech was accentuated by the claim of Jonathan that the proposed budget is the first to be based on Vision 2020 national implementation plan. When the so-called vision was invented in 2007 it was estimated that Nigeria would have to record a growth rate of at least 13 percent every year to actualise the dream. But in this budget the estimated growth rate is 7 percent. Besides, there are some bootlegs in the speech. It appears the drafter of the speech borrowed some lines from the budget speech of the Prime Minister of Malaysia titled “Budget for Vision 2020” presented two months earlier. Indeed, the concept of Vision 2020 is original to Malaysia which has conceived it since 1991.
However, despite these long years of hope, many analysts have concluded that attaining the vision of world’s 20th biggest economy is a pipedream for Malaysia which is presently 38th, three levels above Nigeria, and with superior infrastructure. From all existing social and economic indicators Nigeria cannot meet the target. However, besides the utopian and deceptive nature of the “vision”, it should be stressed that the size of economy usually measured in GDP does not tell the reality of social inequality and access to social needs. This explains, for instance, why Nigeria which is the 41st biggest economy in the world is 158th in term of human development indices. What the working people need is the economy that guarantees basic needs of life and social infrastructure for human and economic developments. But this cannot be realised on the basis of a capitalist economy.
While the government continues to accumulate the revenue from oil whose price reached $100 per barrel recently, it has abandoned its responsibility to provide infrastructure and social needs of the population. This means that the rising wealth is held in trove as the preserve of the looters in government and so-called private sector, which relies on public resources as the main source of their opulence. It is from these profit-first private vampires that the government expects a magic wand to turn around the economy and improve living standards of the people.
ABANDONING RESPONSIBILITY TO PROFIT-FIRST PRIVATE VAMPIRES
For example, according to Jonathan, “employment generation” which is said to be a cardinal goal of the budget will depend on the “energy and initiative” of the private sector while he has “directed that the private sector be incentivised to train and employ new graduates.” The private sector is also expected to provide critical infrastructure like power, road, etc which actually create enabling atmosphere for job creations and improved living standards. Jonathan says his government’s Infrastructure Roadmap has “identified over 50 priority projects that must be executed in order to boost productivity. Appropriate sources of funding for the projects have also been identified and while some are included in the budget, we will look to the private sector for the majority of the capital requirement.”
The major preoccupation of the government is consumption of oil revenue with jumbo pay and corruption opportunities for its extremely bloated top functionaries. Jonathan for instance has about 44 ministers and over one hundred advisers and assistants. This explains why recurrent expenditure (N3.2trillion) constitutes about 76% of the budget leaving about 24% for the capital projects (1 trillion). Indeed, the capital expenditure is reduced by 43% in comparison with last budget figure. All this has further shown that the government is irresponsible and thieving. There cannot be a better deal for the working masses from a government run on anti-poor neo-liberal capitalist programme which has proved to be a nostrum for development world over.
However, it should be stressed that the main problem with the budget is the fact that little is allocated to capital projects and social service like education and health care, and also the fact that the allocations are not always judiciously spent. Capitalist politicians see money voted for projects as another avenue for looting in connivance with the fabled private sector. This is a major revelation of the infamous power projects in which $16bn reported spent has gone down the drain. Indeed, there is litany of such fictitious and over-priced projects littering around the country. Therefore, it is not enough to call for allocation of huge public resources to capital projects. It has to be matched with a demand for open democratic control of such allocations and projects with elected committees of the working people, communities and relevant professionals. Similarly, in the education and health sectors, the demand should be adequate funding and democratic management by the elected committees of workers and other interest groups.
Private sector driven infrastructure development is utopian particularly in a third world country like Nigeria. This explains why the United Nation Conference on Trade and Development (UNCTAD) had in a report in 2007 lamented the utter incapacity of private sector as the driver of development. The report states inter alia, “the widespread market failures, along with the huge financial resources involved in implementing the earlier stages of development imply that private sector cannot be expected to play lead role” (BBC September 27, 2007).
But determined to help the private sector vampires with start-off finance, Jonathan government has set aside $500 million recently raised in international capital market and other public funds for them as loan facilities and guarantees. This has shown that the so-called private sector lacks capacity to raise finance to develop infrastructure. The government is therefore providing them with funds to finance infrastructure and make huge profit from the users; while the Nigerian working masses will be saddled with new international debts.
However, the fact is that the parasitic capitalist ruling elements do not have use for infrastructural development as much as its absence or appalling state does not affect the flow of petrol dollar which constitutes about 85% of the government revenue and therefore their main source of looting. Besides, on the basis of neo-liberal capitalist economic programme of privatization and deregulation being implemented, the ruling elites are not expected to use public resources for provision of infrastructure and basic needs. It is the responsibility of the private sector to provide them in pursuit of profit or in conjunction with government on the basis of private public programme (PPP) where government puts down the public resources for private sharks to make profit.
RELAPSE INTO DEBT BURDEN
Another goldmine for the private sector is allocation to debt servicing put at N542 billion which is higher than the entire capital spending on power, roads, health and education put together. This fact alone shows the utter bankruptcy of capitalism prioritizing debt repayment to both international and local finance speculators at the expense of critical economic and human needs! Just in 2005, a whopping sum of $12.4bn was paid to international capitalist vampires under the guise of debt repayment and with a false promise of a debt free Nigeria. Indeed, after the Paris Club “debt relief”, the total debt stock of Nigeria was reduced to $12.9bn comprising $3.9bn external debt and $9bn domestic debt. Today the debt stock outstanding has skyrocketed to $34.7bn comprising $4.7bn external and $30bn domestic debt at a period of oil windfalls!
The repayment for funds raised by the government at the bond market constitutes the major proportion of this debt servicing. Yet, there is nothing to show as areas where such funds have been invested. According to Olusegun Aganga, the Minister of Finance, more than 77% of the loans currently outstanding against Nigeria are spent on Health & Social Sciences, Agriculture; Education & Training, Transport and Power. This is a blatant lie. To the working people these investments only exist in government books and the fat bank accounts of its top functionaries and cronies, there is nothing on the ground to justify the purported spending. The fact is that debt service payment is just another means of siphoning public funds into the private sector. This position is confirmed from the unlikely quarter, David Mark, the Senate President. “One of the sources of public debt is public private partnership,” the senate president said. “They look attractive on the surface but if faced with challenges it becomes a debt on government”. (Next November 14, 2010)
That borrowing is a policy thrust to serve the profit-first interest of private vampires is further underscored by the fact that the debt was accumulated at a period the country was enjoying its longest run of oil boom and therefore did not have any cause, except on the basis of logic of capitalist malady, to borrow to finance capital projects. In fact, in addition to this outrageous borrowing, both the foreign reserve and its component, excess crude account, have been criminally depleted by the government. The excess crude account, which is meant to save oil revenue above budget benchmark, has fallen from $20billion four years ago to $300m at present! Indeed in the last year alone it dwindled by about $7bn despite the increasing price of crude oil and rise in production level to two million barrels a day after Niger Delta militants stopped activities. According to the government the huge fund was spent to defend currency against increased dollar demand and fund projects in the power sector and other infrastructure. In essence the beneficiaries of this spending are currency speculators, government contractors and looters in government and not the ordinary people who have not seen any fundamental improvement in term of infrastructure including electricity and roads, and living conditions.
Indeed, according to the Financial Times, the concerns by the investors over a huge outflow of money from the excess crude account (ECA), forced the government to pay investors higher yields on the $500m Eurobond than would otherwise have been expected. The 10-year bond priced with yields of 7 per cent, higher than other similar bonds from other sub-Saharan nations. Gabon and Ghana 10-year bonds trade at 5.8 per cent and 6.2 per cent respectively (Financial Times January 22)
Another component of debt service is the huge interest government pays from public resources to banks under the guise of mop-up excess liquidity. Whereas the so-called excess liquidity is the idle funds banks refuse to lend to the real sector and left in vaults knowing fully well that it would yield a huge return when government comes for them. However, it should be stressed that refusal of banks to provide credit facility to the real sector actually reflects the depth of socio-economic crisis in Nigeria. In the face of pervasive infrastructure decay and attendant high cost of doing business, to the banks the risk of granting loan to the real sector is unbearable.
Also in addition to debt repayment is another borrowing to finance the large part of budget deficit of N1.4 trillion. The borrowing in 2011 is projected at N865 billion which is 20.4% of the proposed budget. This is adding more deadweight on the overburdened working people. As the figures in the current budget has revealed this growing debt overhang incurred from loans that do not have positive impact on the working people or traceable to any development projects will be repaid at the expense of education, health, road, etc
WHAT LABOUR SHOULD DO
The working people should not expect fundamental improvement in infrastructure, living conditions and other basic needs of life from this neo-liberal capitalist budget of Jonathan government. However, on the basis of struggles of working people, the government could be forced to grant to some concession. For instance, it is the nationwide protest marches and a one-day general strike that compelled Jonathan government to include the cost of new wage minimum wage agreed with Labour in the budget.
The trade unions should however be prepared for a further struggle to ensure the implementation of the agreement particularly at the state level where various governments hide under the specious cloak of “true federalism” to deny workers a better pay. It should be noted that the much-vaunted true federalism does not prevent politicians in governments at the state level from receiving the same jumbo salaries across board as stipulated by a federal government agency, RMAFC. Unfortunately the new minimum wage is way below the N52,200 level that Labour agreed to fight for back in December 2008. Given that, and the relentless rise in prices, the trade unions should also demand that the agreed new national minimum wage of N18, 000 is subject to a regular review on the basis of rate of inflation and that no worker should lose his/her jobs as a result of the implementation.
Also important, trade unions should demand commitment of adequate public resources to public education, health care, road, power, integrated transport system, etc and an end to anti-poor neo-liberal programme of privatization and deregulation. However, such public spending must be subjected to open democratic control of elected committees of workers, communities and relevant professionals in order to prevent corruption and ensure judicious application of the resources.
But on the basis of capitalism, especially the neo-liberal variant, the government will resist meeting such demands despite huge resources at its disposal, and even if Labour wins some of its demands the government and bosses will seek ways to snatch these gains back. This is one of the reasons workers and poor masses have to join the struggle for formation of a mass-based working peoples’ party that could wrest power from the thieving ruling elite, irrespective of tribes, religions or political parties, and commit the huge resources of the country to provision of basic necessities like electricity, water, housing, road, education, decent jobs, health care, etc for workers and poor masses as well as infrastructural development that aids genuine economic growth.
However, for such party to be able to mobilise resources to actualise this programme on a lasting basis, it has to take into public ownership the commanding heights of the economy and resources of nature under democratic control and management of the working people themselves. We of Democratic Socialist Movement (DSM) have been consistently calling on the NLC, TUC and LASCO to facilitate the formation of such party or reclaim Labour Party and rebuild it as a fighting working class political platform with a socialist programme. We therefore call on workers and youths to join DSM in order to be involved in the struggle for a working people political alternative to the capitalist rots and for socialist reconstruction of the country and economy for the betterment of all.