How Buhari can put economy back on track (3)

President Muhammadu Buhari

Continued from Tuesday

Magnus Onyibe

Compare the Chinese situation decades ago, when Western powers tried dissuading her from building the three gorges dam; how the leaders spurned the advice viz-a-viz the current pressure on Nigeria to devalue the naira, then you can discern how gutsy the Chinese leader, Xiaoping, was.

With a robust local industrial capacity, owing to steady electricity power, vast organisational structure derived from long practice of rigid communism system and enormous potential for agricultural development, modest but modern road infrastructure development, plus badly needed foreign investment inflow, Xiaoping made up with a former foe but industrious Japan; former communist ally, Russia and Western super powers; the USA and the UK.

Thereafter, China wisely joined the World Trade Organisation in 2001 and her economy became the fastest growing in the world and the rest is now history.

Fifteen years after engaging with the rest of the world through the WTO, with a $10tn sized economy, China is the second largest economy by GDP value in the world.

It is being projected that the USA’s $17tn GDP may be overtaken by China in 2050.

That is not impossible with Alibaba- massive online trading platform, competing with the USA’s Amazon, Huawei-giant technology company challenging Microsoft and Xiaomi-smartphone giving Apple and her iPhone and other hi-tech products, a run for their money. So the projection of China trumping the USA economy in about 30 years may not be a pipedream, as some doubting Thomases are wont to believe.

Let’s now look at the third model- Republic of Georgia ($36.4b GDP).

This is the poster child of development often vaunted by the West as represented by the IMF and the World Bank.

Georgia is a small country with a population of less than five million people that was hived off the defunct Union of Soviet Socialist Republics.

The country came under Soviet rule in 1921 but seceded in 1991 under the leadership of Eduard Shevardnadze.

It’s noteworthy that unlike the development paths taken by Dubai, the UAE and China, the IMF and World Bank are driving the development in Georgia and this is remarkable in a lot of ways which we will get to later.

When market-driven economic policies were embraced following structural reforms, pushed by the aforementioned multilateral agencies, the authorities deliberately posted young men and women to senior government posts to drive the reforms as was the case in Singapore, led by Lee Kuan Yew.

Under the IMF/World Bank influence, budgetary and tax reforms were introduced, just as support for small and medium scale enterprises was boosted and attempts were made to curtail the influence of the parallel market which was about 50 per cent of the Georgian economy.

Like Nigeria, low tax collection and delay in payment of salaries and pensions are identified drags to the economy but the IMF/World Bank reforms resulted in reduction in budget deficit etc.

Of course, the improvements did not come without the price of the devaluation of the Lari, the Georgian  currency, in 1998.

This happened despite the fact that Georgia is a country that the Western powers are projecting as a success story in terms of transition to capitalist and market forces driven economy as opposed to the communist/socialist centrally controlled economy from which she emerged from in 1991.

The consequence of devaluation of the Lari was liquidity challenge in the banking sector similar to the situation currently being witnessed in Nigeria. Resort to borrowing from abroad was Georgia’s fallback position. It was easy for European and American banks to lend money to Georgian banks because it was being propped up as a beacon of hope and model to other East European countries under the yoke of Russian socialism. Can Nigeria benefit from such Western powers largesse, if she devalues and suffers liquidity crunch? Although former President Olusegun Obasanjo was able to secure a debt write-off at the nascent stage of our return to democracy in 2005, things have changed since that time and my sense is that such commitment would be difficult to extract from Western creditors now, especially in the light of the falling price of oil/gas which Nigeria relies on for fx income.

Whereas foreign direct investment reached $224m in 1998,the momentum has not been sustained as no “major” oil/gas firm has signed any agreement with Georgia till date and despite the devaluation of the Lari, export has remained depressed and that is being attributed to the dismal performance of the global economy.

Diaspora remittances especially of Georgians working in Russian is about nine per cent of the GDP and has surpassed foreign direct investment.

Clearly, the pattern of development of the Republic of Georgia is in stark contrast with that of Dubai and China especially because that country’s development has been led by the Bretton Wood institutions and that’s why neither the current president nor the prime minister is mentioned in the development narrative. Unlike Dubai and Chinese leaders, they had no leadership initiative of their own, except to execute IMF/World Bank directives.

If Nigeria should buckle under the pressure of the same multilateral agencies that have been driving the Georgian growth, our country could go the way of Georgia. Given the not-so-excellent accomplishments recorded there despite the extraordinary NATO and European banks support, ( forget the hype about superlative accomplishments) and considering that Georgia is only about the size of Delta State, which is about 4.9m in population, it would not be an optimal decision for Nigeria to model her growth and development after the tiny Eastern European country of Georgia.

In the light of the foregoing, the preferred model for development for Nigeria, in my view, would be a combination of the Dubai, UAE and Chinese models that have been proved to be sustainable and resilient.

Dubai formulated futuristic policies and had the tenacity of purpose via her visionary and purpose-driven leaders like Sheik Rashid, his son, Maktum, and his brother, Mohamed, to vigorously pursue the initiatives until the dream became reality. By the same token, China resolved to grow her local muscle to compete by being insular and only unleashed her power after organisational capacity had become deeply entrenched owing to her erstwhile communist structures before venturing out to compete internationally.

Deng Xiaoping was purged from office thrice-like Buhari who is now reincarnating- before he literarily reinvented China.

To be concluded

Onyibe, a former commissioner in Delta State, is an alumnus of Fletcher School of Law and Diplomacy

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