COVID 19 DEEPENS NIGERIA’S ECONOMIC CRISIS: For Socialist Change
As the world economy faces its worst crisis since 1929 Great Depression, Nigeria as a neo-colonial capitalist country, could be among the worst hit. Already the government itself has projected a worst case scenario of the GDP falling in between -4.40 per cent and -8.91 per cent. That is the projection of Vice President Yemi Osibajo led Economic Sustainability Committee (EAC) if the government does not take necessary measures in form of stimulus package against the effect of coronavirus crisis on the economy
By Peluola Adewale
However, regardless of what is done by the government, Nigeria, according to Minister of Finance Zainab Ahmed, cannot escape recession. In her words, “if we apply all that have been proposed and we are able to implement it we might end up with a recession that is -0.4%. But in any case, we will go into recession but what we are trying to do is to make sure that it is shallow so that we will quickly come out of it come 2021’’.
CRISIS HAS BERTHED
For the working people and poor masses, the crisis has already berthed, not a question of projection or an official recession. The prices of essential commodities including food items have gone up astronomically in some cases as much as one hundred percent. Transportation fares have almost doubled. In a nutshell, cost of living has increased beyond the capacity of many ordinary people.
Even the official survey conducted in May 2020 by the Nigeria Bureau of Statistics (NBS) on the impact of Covid-19 reveals that “some households struggled to purchase staple foods like yam, rice and beans during the 7 days prior to the interview with 35-59% of households who need to purchase these staple foods reporting that they were not able to buy them. 26% of households reported not being able to access medical treatment when they needed it during the same period.” (NBS June 5, 2020)
Also, hundreds of thousands have lost their jobs already or have to accept wage cuts to remain at jobs as the bosses are desperate to preserve their profit. For instance, banks that declared super profits in their last financial year ended in December 2019 immediately set out to throw out hundreds of workers just at the outset of the Coronavirus crisis. Similarly Dangote Cement, owned by Aliko Dangote (Africa’s richest man), which had earlier in the year at its AGM declared a profit per share reportedly in June 2020 sacked about 3000 workers.
According to the NBS, the impact of Covid-19 on “employment and income has also been widespread. The impact of COVID-19 has been most strongly felt in the commerce, service and agriculture sectors”. The report also reveals that 42 percent of the respondents said they were not working during the survey. The Osibajo committee itself projects that unemployment may rise to a disastrous 33.6% or about 39.4 million people by the end of 2020.
LABOUR MUST LEAD A FIGHT BACK
Unfortunately, the response of labour has been very weak as they appear helpless acting as if they can only appeal to the conscience of the private employers. For instance, NLC President Ayuba Wabba said, “They [companies] should be able to put in part of what they counted as profit in the past years to serve as mitigating measure to protect those jobs”. (Daily Trust June 8, 2020).
Wabba is right that companies have made profits in the past years but it is asking for the moon expecting capitalist employers to willingly sacrifice their profits to protect jobs. Without struggles including strike, picket and mass protest private companies, which are in existence primarily for profits and not social needs, will sack workers or cut salaries in order to protect the profit. So rather than appealing to the conscience of employers of labour, labour leadership including industrial unions should begin now to mobilise workers for struggle including strike and occupation of workplaces in order to protect jobs, wages and public services.
Though the government has not yet started attacking jobs and salaries, with exception of Kano in May and Kaduna where salaries of some categories of workers were cut, given the decline in oil revenue and attendant monthly allocation to states, this attack including non-implementation of N30,000 minimum wage is not ruled out to start any moment. Also President Buhari has approved the implementation of Oronsaye report which in the final analysis will mean retrenchment of workers. Labour must be prepared to lead workers to resist all these attacks.
Beyond pays and jobs are attacks on public education and health which must also be resisted. While the plan to hike electricity tariff has been shifted to 2021, fuel price has now been increased to between N140 and N145 per litre. Working people should be prepared to fight against any hike in electricity tariff and fuel price. Indeed, given the monumental failure of electricity privatization, trade unions and working people should go on offensive to demand re-nationalization of the electricity companies. But to avert the debacle of old NEPA and PHCN, they have to be placed under a democratic control of workers and consumers.
The government has appeared as if it is willing to mitigate the crisis with a N2.3trillion sustainability plan which is merely scratching the surface. Besides, on the basis of capitalist measures and the inherent corruption it is not likely that the plan will largely achieve its objectives. The Plan is expected to create massive jobs in addition to safe jobs through agriculture, public works and road construction, mass housing, delivering up to 300,000 homes annually and installation of solar home system, targeting 5 million households. The plan also includes lending support to the informal and small scale business sectors.
This plan which appears laudable on the surface will most likely end as one of the typical beautiful fantasies of Buhari government. The plan will be dogged by the usual excuse of lack of fund. And, even if finance is raised to implement any item of the plan, it will not be used judiciously but part of it will be looted.
Though, in response to the slump in the crude oil prices, the budget benchmark was reduced from $57 to $28. Also, the budget was cut by N71.5 billion or 0.6 percent from N10.594 trillion. However, two of the items which suffer the biggest cuts are primary health care and universal basic education under the guise that they are statutorily based on the consolidated revenue which is dependent on crude oil benchmark. For instance, in the executive bill, primary health care was cut by 43 percent! Health workers unions and community people must protest this cut as the primary health is the closet to the ordinary people at the grassroots. They should demand that the federal government as well as state governments should adequately fund the primary health care and allow democratic control of the funding by health workers and community people.
The revised budget proposal of N10.523 trillion has a deficit of N5.365 trillion which will be financed by both domestic and foreign borrowing. This will increase the debt stock of the country put at N27.4 trillion as at December 31, 2020. The Senate recently approved $5.513 billion loan which includes $3.4 billion obtained from the IMF by Buhari government. The growing debt has already become a burden. For instance, the allocation to debt servicing- N2.951tn is higher than capital expenditure budget- N2.488tn. From experience the capital expenditure will not be fully financed especially now in the face of the global crisis of capitalism that will make it impossible for Nigeria to meet its revenue target. However, every kobo of the debt servicing which are largely owed to banks and portfolio investors will be paid. Buhari government just like other capitalist governments exists to gratify the profits of a few at the expense of the working people and the poor masses and economic development.
WORKING PEOPLES’ ALTERNATIVE
The increase in borrowing is likely an attempt to avoid the problem and out of fear of how working people will respond to new austerity when living standards have not recovered from the 2016 recession. Given that this is a worldwide economic crisis, the scope for a quick recovery is even less than in 2016. What then is the way out?
As we have repeatedly said, Nigeria is a potentially rich country in terms of human talents and economic resources. The question is in whose interests is the economy run? The repeated failure of capitalist governments shows the need for a real system change based upon the public ownership and democratic management of the country’s key resources. On this basis, there is need for a socialist plan that will ensure that governance, production and distribution is based on the needs of the vast majority, not profit and greed of a few and the use of human and material resources of the country to set it on the path of development.
In order to reduce the debt burden and also implement capital projects, working people should demand the nationalization of banks under workers’ democratic control in order to direct their resources for production of basic needs, support for small businesses as well as development funding and also to cancel all the public debt with payment only to pension funds and small shareholders on the basis of proven need.
They also should demand that all projects by government at all levels should be implemented with adequately equipped and well-staffed public works run under a democratic control of workers as against the contract system where profits alone constitute a huge part of the contract sum. Also important is the demand for all public office holders to receive the average salary of a skilled civil servant in order to free up of resources that could be used for other important needs of the people.
Being a pro-capitalist government, neither Buhari nor any state governor will support or accede to the above demands. It is only a working peoples’ government on a socialist programme that will implement them together with nationalization and democratic management of all key sectors of the economy in order to mobilise adequate resources for a socialist plan and prevent an economic sabotage. This is why trade unions, pro-masses’ organisations, workers and the poor masses must support the formation of a mass working people’s party on a socialist program that will fight for basic needs and against capitalist attacks, identify with daily struggles of the working people and struggle to wrest power from the parasitic and primitive capitalist elite at all levels.