RECESSION OVER BUT ECONOMIC CRISIS AND POVERTY CONTINUE
Working Masses Must Resist Capitalist Attacks and Fight for Socialist Alternative
Officially Nigeria has exited recession with an anaemic 0.11 percent growth in the fourth quarter of 2020. This was announced by the National Bureau of Statistics in February 2021. The economy had slipped into its second recession in four years in the third quarter of 2020 following the contraction of GDP for the second consecutive quarter. The GDP recorded negative growth of 3.62 per cent in the third quarter of 2020, having recorded a 6.10 per cent contraction in the second quarter.
By Peluola Adewale
It was not as a result of the economic wizardry of Buhari government that the economy quickly exited a recession which is said to be the worst economic decline since the 1980’s. It was the slump in oil prices and plunge in economic activities as a result of the Covid-19 lockdown which triggered the recession in the first place. With the oil prices on the rise and the return of economic activities at full throttle the economy grew again
However, for working people and the poor, there is nothing to celebrate as all social indicators point to the quality of life in a terrible condition. The inflation at 16.47 percent in January is 33-month high and the food inflation at 20.57 percent is even worse – it is said to be the highest level since the 2009 Consumer Price Index (CPI) series began. These are not mere statistics as the reality of excruciatingly high cost of living is even scarier. Food prices are now double what they were five years ago (Business Day, February 12). While manufacturing is one of the sectors which contributed to the positive sluggish growth, this is specifically by food and tobacco sub-sector. So the unemployment remains high while many of those who lost jobs or regular earnings as a result of the Covid-19 pandemic lockdown have not regained them.
It is bad enough that the recovery is weak. The sharp economic inequality as a result of the crisis of capitalism especially in a neo-colonial economy like Nigeria, which explains why the masses did not benefit even at a period of economic boom with the high growth rate as much as between 5 and 7 percent in the period before the third quarter of 2014, means that the masses will be hit harder. According to ‘World Poverty Clock Report’ the number of Nigerians living in poverty rose from 73 million in 2016 to 85 million in 2018 (ThisDay, February 17) while Minister of Humanitarian Affairs Sadiya Farouq says that 10m more Nigerians may fall into poverty this year (Nation, February 17).
Workers and the poor masses have to be prepared to resist the anti-poor policies and actions of the government at all levels that worsen the living conditions. These include hike in fuel price, hike in electricity tariff, increase in taxes, non-payment of salaries, non-implementation of minimum wage, etc.
MORE CAPITALIST ATTACKS
Buhari government which did not care a hoot before hiking the fuel price and electricity tariff at the height of Covid-19 economic crisis is prepared to unleash further attacks. The minister of state for petroleum resources, Timipre Sylva has already brazenly asked Nigerians to brace up for higher fuel prices given the increase in the price of crude oil ($60 per barrel) in the international market (Leadership, February 19). The oil marketers have also warned Nigerians to expect higher petrol price of N195 per liter (Vanguard, February 22). As of February 2021 the average price is N165, which represents more than 100 percent rise in fuel price since Buhari assumed power. However, the NNPC said there were no plans to increase price in February. In other words, there could be increase as from March 2021.
Nonetheless, the current petrol price as well as electricity tariff, whose new increase in January 2021 was suspended due to public outcry, after a previous hike in November 2020, have already contributed immensely to the current inflation which have further weakened the purchasing power of the working masses.
Yet, a majority of states have not even paid the new minimum wage, agreed nearly two years ago, which has already been eroded by inflation. The NLC, arising from its NEC meeting on February 18, 2021, has already issued threat of strike actions in the affected eighteen states. Unfortunately, these could be a mere hot air as the current leadership seems to have lost any serious interest in struggle to drive home demands. Even if workers in any of the affected states go ahead with the strike they may be left on their own strength as there may be little or no solidarity action from the central leadership. Nonetheless, workers and trade union activists must mount a sustained pressure on the leadership to lead the way or stand aside for those who will seriously struggle for the implementation of the minimum wage.
It is a misfortune for working people and the poor in Nigeria – world’s sixth biggest exporter of crude oil –that they are made to suffer regardless the crude oil prices – either high or low. Crude oil accounts for about 90 percent of foreign exchanges and 85 percent of revenue of the country. So low oil prices trigger monumental economic crises in Nigeria as a result of low revenue and foreign exchange liquidity crisis in a highly import dependent economy. The last two economic recessions were principally as a result of the slump in oil prices while there were little fiscal buffers – foreign reserves and excess crude account. At the same time, whenever the oil prices are high the working masses pay higher for fuel price because Nigeria does not have functional public refineries and have to import refined petroleum products.
Successive Nigerian governments have not built a new refinery for more than 30 years not because there are no resources. Indeed, the return of civil rule coincided with the period of commodity supercycle and Nigeria was so awash with petrodollar such that Obasanjo could easily gift the Paris Club a whopping sum of $12.4bn under the guise of debt relief. So, it is a result of the embrace of the Structural Adjustment Programme in 1989 by the military, something which has continued with the neo-liberal economic program and principle since the return to civilian rule in 1999 with an economic philosophy that government does not have business in business that a new public refinery has not been built. It was for the same reason Jonathan government canceled an agreement with China to build four public refineries.
Buhari government has counted on the private Dangote refinery, whose date for completion has been repeatedly shifted, as the way out of the shameful act of having to import fuels for domestic use. But for the working masses when the refinery comes on stream it will not be hurrah such as it is the case in all basic commodities like cement and sugar whose production Dangote enjoys a near monopoly. Driven by the quest to make super profit, Dangote has already disclosed that his refinery will charge international prices for its products.
IMF AND WORLD BANK
Indeed, the coming period calls for a fighting leadership of labour movement to mobilise mass resistance of the working people given capitalist attacks that may be intensified despite the so-called recovery. Even the imperialist organs such as IMF and World Bank have not minced words to alert the country to the heightening of the economic crisis.
The World Bank in December 2020 warned that Nigerian economy is at risk of ‘unravelling’ and added that the impact of pandemic will send personal incomes in the country back four decades (Financial Times (London), December 10, 2020). On its part, the IMF in its report in February 2021 said the Nigerian economy is at a critical juncture, having been weakened by falling per capita income, double-digit inflation, limited buffers, significant governance vulnerabilities, and the global pandemic (Premium Times, February 8).
The IMF also acknowledges that “socio-economic conditions have deteriorated, with rising food inflation, elevated youth unemployment, mass protests in October 2020, and surveys show worsening food insecurity with a significant impact on the vulnerable.”
In a similar vein, the World Bank said, Nigeria is uniquely vulnerable because of its precarious pre-pandemic economic situation — in which unemployment and inflation were already rising and incomes were falling (Financial Times (London), December 10, 2020).
And what did they prescribe for the country as measures to confront this doomsday situation? The IMF said, “In light of high poverty, staff recommended revenue measures that are progressive and efficiency-enhancing” What are these revenue measures? These include “increasing the VAT rate to at least 10 percent by 2022 and 15 percent by 2025” and “increasing rates for excises and broadening the base”. Last year, Buhari government raised VAT rate to 7.5 per cent from 5 per cent. The IMF also recommend devaluation of naira and continuation of “notable reforms undertaken in the fiscal sector, including removal of the fuel subsidy and steps to implement cost-reflective tariff increases in the power sector”
Similarly, Shubham Chaudhuri, head of the World Bank’s mission in Nigeria, praised Buhari government for making “some pretty politically courageous decisions” last year, “for the first time in many years” and added that, “the key is to keep the momentum on those”. What are those decisions? They are “government’s efforts, spurred by the pandemic-related economic crisis, to remove a fuel subsidy that costs the government billions of dollars a year, raise electricity tariffs and move towards a market-driven exchange rate” (Financial Times (London), December 10, 2020).
It is clear that the above solutions both the IMF and World have proffered for the economic crisis in Nigeria are akin to asking a person suffering from hemorrhage to donate blood. It is the same naira devaluation, tax increases and increase in electricity tariff and fuel price which have heightened the cost of living and cost of doing business that are put forward as the measures to confront the same crisis of capitalism. This appears absurd. But it follows the logic of capitalism. The challenge for capitalist ideologues, policy makers and institutions is not identifying social and economic crisis but to find solution to them within the same profit-first, iniquitous system. Usually what is proffered as solution compounds the same problem or triggers another crisis.
However, the Buhari government has rejected the latest IMF recommendation for further devaluation of naira. Last year the government devalued the currency from N305 to a dollar to N379. In other words, Naira has lost about 100 per cent of its value against dollar since the inception of Buhari government in 2015. So a serious damage has already been inflicted on the working masses by the government. The government may be able to stave off in the immediate period the need to devalue naira. This is due to the rising oil prices which were over $60 in February, above $40 budget benchmark, and predicted to reach $100 by some trade analysists with JPMorgan Chase and Goldman Sachs in what is called a new supercycle trigged by stimulus spending especially in US (Financial Times February 16).
However, this is not cast in stone. Another devaluation this year is not ruled out. Already, Bismarck Rewane, a topmost economist and a member of Buhari’s Economic advisory team, has projected that the naira may depreciate to N420 against the dollar on the official window by the end of 2021. This, he said, is based on a worst-case scenario where Nigeria produces 1.5 million barrels per day (bpd) with an inflation rate of 16.15 percent in the full year (The Cable, February 1).
While Buhari government has rejected devaluation, at least in the meantime, it accepts other anti-poor measures (Hike in fuel price and electricity tariff, VAT increase, etc) put forward by the World Bank and IMF. However, this is beyond abiding by the dictate of IMF and World, the measures are in line with neo-liberal capitalist program which Buhari government like its predecessors subscribes to despite initially appearing to favour a “statist” approach. But Buhari was able to implement what the World Bank called “some pretty politically courageous decisions” because of the betrayal and capitulation of the leadership of NLC and TUC who shamelessly cancelled general strike and mass protest in September 2020 meant to challenge these anti-poor policies. Nevertheless, if Buhari unleashes any of these measures especially electricity tariff hike it is likely to attract mass resistance. Already, protests and mobilization against the current outrageous electricity tariff are currently taking place in many communities.
The massive #EndSARS protest which broke out in October showed the monumental degree of mass anger against Buhari government. But for the limitations of the often accidental, non-political leadership of the #EndSARS movement, it was strong enough to force Buhari government to reverse some of the anti-poor measures like hikes in fuel price and electricity tariff. But instructively, when the #EndSARS leadership expanded their demand to cover economic issues what they called for were proper oil deregulation and unregulated foreign exchange market. In other words, the treatment for a patient on hospital bed for injecting poison is administering more poison!
FOR FIGHTING LABOUR MOVEMENT AND MASS WORKING PEOPLES PARTY
The major weakness of the labour leadership who also formally accepted deregulation policy in September 2020 and sit on the National Council of Privatisation is that they do not have alternative program to capitalism. This together with the absence of a mass working people party with a socialist program means that there is not currently a mass consciousness for socialism as the viable alternative to capitalism despite growing anger against the manifestation of the system. Yet, the reason Nigeria literally and figuratively lie prostrate despite its enormous human and material resources is capitalism especially in a neo-colonial economy with primitive and parasitic capitalist elite who are incapable of even carrying out the basic tasks of capitalist development. It explains why Buhari and past presidents have failed. It is this failure of capitalism and capitalist elite that has manifested in the unending cycle of economic and social crises like insecurity and ethnic tension afflicting the country.
To halt the continued degeneration and begin to take the country out of the woods Socialists have called for a fighting labour movement with Marxist leadership and a mass working peoples party on a socialist program. This is necessary in order to effectively mobilise mass resistance against various capitalist attacks. More importantly, it makes it possible to link the struggle to building a revolutionary mass movement to end the rule of the thieving capitalist elite and their iniquitous system as a step towards building a better society where the needs of the vast majority, not the greed of a few, will form the basis of governance and economy. This will entail socialist planning including taking into public ownership, the commanding heights of economy like oil and gas, banks and financial institutions, aviation, maritime, steel sectors etc., with democratic management and control by working people. Such a socialist nationalisation would allow a democratic plan to be drawn up to mobilize adequate resources to develop the country, finance infrastructure, public education, healthcare, housing, etc., and raise living standards.
A successful socialist revolution in Nigeria can act as a break in one of the weakest links in the chain of global capitalism and begin to lay the basis for a worldwide socialist plan of resources to meet the needs of all.