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17 July 2017

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ERGP: No Illusion in another Pro-Capitalist Agenda

By Peluola Adewale

To address the current economic crisis, one of the worst in the history of Nigeria, Buhari/Osinbajo government launched the Economic Recovery and Growth Plan (ERGP) in February 2017. The plan which covers a period between 2017 and 2020 has been presented by the government and many bourgeois economists to the masses as the magic wand to resolve the monumental economic problem of Nigeria. The working people should refuse to be cajoled into reposing any hope in the plan. The ERGP will no doubt suffer the same futile fate as its forebears e.g. NEEDS of Obasanjo, 7 Point Agenda of Yar'Adua and Transformation Agenda of Jonathan.

All things being equal, it is possible for the economy to continue to witness improvement in some economic indicators like GDP, inflation and exchange rate and exit recession by the end of the year. But this will obtain largely in spite of the ERGP. Rather, it is fundamentally dependent on the prospect of oil income which accounts for over 95 percent and over 70 percent of the government revenue but whose prices are not dictated by the country.

This apparently explains why the fate of the plan is largely tied to "oil revenues which are expected to grow by 176 percent in 2017, and then an average of 13 per cent per year until 2020". This is on the expectation that "ongoing dialogue with militants in the Niger Delta will ensure that peace returns to the Niger Delta, and there will be an increase in daily crude oil production". (ERGP Document)

However, what the plan does not consider is the fact that, even if it is able to secure peace in Niger Delta and increase oil production, the government does not control the volume of oil it can sell or the prices of oil. Though the plan price projections are aligned with the forecast from reputable international organisations, the world economy has not fully emerged from the current global crisis of capitalism while the shale oil and oil glut still pose downward pressure on oil prices.

Worse still, despite the expectation of modest oil prices the government with the plan still wants to plunge the country into external debt overhang as the end of high oil price period means that, on the basis of capitalism, the government has to borrow substantially to fund the budget. This may throw the country back to external debt crisis that was eased off with the gifting of $12bn to the Paris Club in 2005. At present, external debt constitutes about 26 percent of debt stock. The foreign financing, which at present constitutes 28 percent of borrowing, is expected to rise to 72% by 2020. This also means that external debt will increase accordingly.

PRIVATE SECTOR

According to the plan, this is to ensure that "domestic financing sector will then be more available and accessible to the domestic private sector, thus avoiding crowding out and according the private sector a leading role in driving growth". Therefore, the Buhari government through the ERGP accordingly ties achieving the aspiration of the country to "have a rapidly growing economy with diversified sources of growth, increased opportunities for its people, and a socially inclusive economy that reduces poverty and creates jobs for the millions of young people entering the labour market annually", to its establishing a "dynamic, competitive environment that enables the private sector to thrive".

This apparently because the ERGP is "articulated with the understanding that the role of government in the 21st century must evolve from that of being an omnibus provider of citizens' needs into a force for eliminating the bottlenecks that impede innovation and market based solutions". In other words the government is saying that private profit will rule and decide everything as it turns over the provision of the people's 'needs' to the 'market'. This is also why part of the plan is "privatizing selected public enterprises/assets".

But to expect the so-called private sector including banks to drive growth and development will prove to be utopian in a neo-colonial capitalist economy like Nigeria. Unfortunately, it is the masses that will be made to pay for this economic fiasco. In the face of pervasive decay in infrastructure (electricity, etc) and attendant high cost of doing business, the risk to banks etc. of granting loan to the real sector is higher than necessary. Under capitalism financial institutions are in business to make super profit; a point that has been justified by the CBN governor Godwin Emefiele.

When asked if the CBN would consider forcing the banks to lend to the real sector, Emefiele said, "Unfortunately, the DMBs [Deposit Money Banks] are in business to make money and we cannot regulate their interest rate. And so, it can be difficult to really force them to lend to a particular set of people. ….. So, it is a free market and we cannot really compel them as it is expected" (Punch, January 27, 2016).

In other words, reducing government's domestic borrowing will not guarantee that banks will lend money to the real economy or small businesses. When they lend money at all, it is to specific areas like oil etc. and blue chips companies like telecommunication while the manufacturing sector is denied access to credit due to prohibitive interest rate. This is because making profits is easier in the extractive industries and some consumer industries like food and telecoms compared with manufacturing which has to compete directly with huge international companies. In any case, the madness of capitalist economy means that the same government through CBN will borrow with fabulous interest the same idle funds that banks have refused to lend to the real sector or businesses under the guise of mopping up excess liquidity.

Therefore, all these prove that banks in their current profit-first oriented form and by extension the private sector, especially in a neo-colonial economy, cannot play a leading role in driving growth let alone the drivers of socio-economic development as envisaged by the ERGP and similar pro-market agenda. Even United Nation Conference on Trade and Development (UNCTAD) had stated in a report on Africa in 2007 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). This is why socialists demand that the banks and financial institutions have to be put under public ownership with open democratic control and management by the working people so that the resources at their disposal could be deployed for economic development and the benefit of the vast majority.

DIVERSIFICATION INTO AGRICULTURE

Another major plank of the ERGP is diversification into agriculture. This is good but despite all its advantages this would have the same or similar outcome as oil on the basis of capitalism. For instance, Minister of Agriculture Audu Ogbeh recently flagged off with pomp the export of yam tubers to Europe and United States while a majority of the population can barely afford a tuber. Ogbeh has argued that Nigeria is the largest producer of yam in the world and therefore there will not be scarcity of the food item at home. But this argument is specious.

On the basis of free market economy the big farmers who would soon dominate yam business will not produce for local market but for export in pursuit of super profit. Already, the prices of garri (cassava flake), a staple in Nigeria especially for the poor, have become exorbitant partly as a result of export of cassava tubers and pellets. So, if this emerging pattern persists and more widespread i.e. agricultural production geared mainly towards export, we could have a situation where scarcity and high prices of food items, with their global prices impacting local prices, drives inflation and undermine food security even in, though not likely, a situation of an economy sufficiently diversified away from oil.

Besides, diversification is being presented as the magic wand either to escape the periodic volatility of the global capitalist system or to better survive its manifestations. Meanwhile on the basis of the global crisis of capitalism, an agricultural economy like Cote D'Ivoire etc. can also suffer a commodity price crash that can have the same effect, or even worse, as the effect of the crash of crude oil price on Nigerian economy. In the same way as a neo-colonial capitalist economy like Nigeria does not control the price of crude oil, it will not control the prices of agricultural products. This is without accounting for vulnerability to drought, flooding, outbreak of pests and diseases and other natural disasters accentuated by unregulated capitalist production and lack of planning. This equally is apart from the unresolved herdsmen/farmers conflict that can punctuate the development of a thriving commercial agricultural sector.

Therefore it is only on the basis of socialist planning of agriculture as well as manufacturing, infrastructure, finances etc., that diversification of the economy can be beneficial to the vast majority of the population, not just another avenue for super profit of a few.

WORKING PEOPLE MUST FIGHT FOR IMPROVEMENT

By and large, the recent improvement in economic indices like GDP, inflation rate and exchange rate made possible by the relative improved oil revenue will be officially celebrated as the success story of the ERGP. But for the masses, this will not reflect in improvement in their living standards as the anti-poor policies of fuel price hike and devaluation of naira have kept the prices of goods and services high despite the slowing down in inflation and relative stability in foreign exchange. Besides, the recent crisis of Etisalat stemming from its inability to meet its debt obligation to a consortium of Nigerian banks shows, apart from exposing the illusions that those so-called international investors would put money into the economy, that the devastating effect of the economic downtown may still linger long after Nigerian economy exits recession.

So instead of reposing hope in the ERGP, the labour movement should offer an alternative economic and political agenda starting with mobilising workers and the masses to demand immediate payment of all outstanding salaries and pensions as well as a higher minimum wage without loss of a single job, adequate funding of public education and health care in order to make them accessible and affordable to the vast majority and re-nationalisation of power sector and placing it under democratic management and control of workers and consumers in order to guarantee regular and affordable electricity.

However, to achieve any of these demands will require mass actions including protest and strike. For instance, the Minister of Labour Chris Ngige has disclosed that the review of minimum wage by the yet to be inaugurated tripartite committee does not automatically mean increase in wage. Besides, despite collecting bail outs and Paris Club debt, state governors have refused to settle outstanding salaries and pensions. This is one of the reasons we of the Democratic Socialist Movement (DSM) have been calling on labour to declare a one-day warning general strike and mass protest as the immediate steps to force the government to pay salary and pensions arrears and meet the demand for N56,000 minimum wage.

FOR A WORKING PEOPLE ALTERNATIVE

More importantly, the working people must come to the conclusion that there cannot be a real change in the economy and living standard under the Buhari/Osinbajo APC government or any pro-capitalist government. Good enough, more and more working people are already drawing this conclusion. Therefore, it is now the task of the labour movement to spearhead the building of a formidable working people's political alternative. This with the view of wresting political power from the thieving ruling elite and form a workers and poor people's government on a socialist program.

Such government will place under public ownership the commanding heights of the economy including banks and financial institutions, oil and gas industry, power sector etc. with democratic management and control by the working people themselves as part of a general socialist planning of the society. This would allow a democratic plan to be drawn up to mobilise and use enormous human and material resources of the country to build infrastructure, guarantee food security and provide other basic needs (education, health care, cheap but decent housing, etc), create jobs and job opportunities, develop the economy and raise living standards.