Post by Sahara Reporters.
Friday, August 1, 2014
Thursday, January 5, 2012
Nigeria and the Book of Lamentations
Nigeria and the Book of Lamentations
When one takes a retrospective look at happenings within the country, one cannot ignore the endless streams of bitter tales and complaints that have become part of the daily narratives of the average Nigerian. Just like the book of lamentations in the bible which is replete with the sorrows and lamentations of a once great city full of life that had become desolate and a shadow of itself, so is the tragic story of this once great country that held a lot of promise with high aspirations of becoming a beacon of light and bastion of hope to the rest of the black race, I am deeply convinced in my heart that the book of lamentations was probably written with Nigeria in mind.
Nigeria is a paradox; so wealthy, yet so poor; so endowed, yet so deprived. Nigeria makes more money than many countries of the world but unfortunately is ranked as the world’s 20th poorest country apparently because most Nigerians (over 70%) live below the poverty line as they subsist on less than $2 a day. If one takes a look at the statistics on Nigeria’s human development report, one would suffer more heartache, as it is even more depressing. In spite of the abundance of human and natural resources, one thing Nigeria has sourly lacked is visionary and progressive leadership, the leadership gap has proven to be the single most potent factor threatening the corporate existence of Nigeria. The fact that Nigeria is a country of immense ethnic and religious diversity has made efforts to coalesce the country into one cohesive and tightly bonded corporate entity a daunting task, which is only exacerbated by its self serving leadership.
Nigeria, a country plagued by one of the worst kinds of leadership the world has ever seen. Its leaders may not be as physically brutal and repressive as the Taliban were in Afghanistan, or what is obtainable in Myanmar or North Korea, but I am sure the average Afghan would prefer to live with a brutal Taliban regime than the corrupt Nigerian government. For one to fully appreciate the enormity of the Nigerian situation, one has to come to terms with some statistics that exposes the stark realities, hypocrisies and idiosyncrasies off the Nigerian government. Nigeria experiences a near absence of governance at every level (Federal, State or Local government).
This has had the consequence of turning the entire society on its head. Walking into a government office to request a basic service, you are confronted by a member of staff who may not even bother to reply to your greeting and barely has time to listen to you; the policeman that should protect you on the road block, stops you and demands for bribes and has no qualms shooting dead any motorist that refuses to part with a few cents; the customs officer at the border who is supposed to stop smuggling takes a bribe and actually connives with the smugglers to bring in banned products into the Nigerian market, while harassing the traveller entering Nigeria with two new pairs of shoes; the hospital staff member that, contrary to every professional oath, refuses to attend to dying patients because they are on strike; the soldiers who get so bored that they occasionally go on a rampage, using policemen for target practice. These are all to buttress the points made by a Nigerian musician in his song titled “jaga jaga” a few years ago, in which he chorused “Nigeria jagajaga Everything scatter scatter Poor man dey suffer suffer...” and all of these bag of woes has been foisted on the Nigerian people by the bad governance since the inception of the Nigerian state some 51 years ago, the decline has never been worse than it has been in the last 12 years of democratic rule which started in 1999.
Let us take a look at some of the perks of the saintly and good intentioned President Jonathan who desires to save Nigeria from the precipice. 75% of the country’s budget is spent on recurrent expenditure. Of this; over 25% goes as the salaries of its 460 member National Assembly. In 2012, Nigeria’s president allocated for himself a feeding allowance of over $6.2 million for just one year of food in the presidential villa, while also ensuring that his cars and that of his cohorts in the presidency will enjoy another $10 million worth of fuelling. Compare this staggering sum to the paltry $400,000 salary of President Obama who still gets to pay from his own meagre salary for the food him and his family eats in the White house. The Nigerian president’s feeding allowance for one year, which is exclusive of his salary will pay the American president’s salary for 15 years and two months. This is not to talk of the $1.2 million our dear president will spend on watering the gardens of Aso rock; certainly the American president wouldn’t mind being the gardener of the Nigerian president.
Nigerians elect a total of 360 members to the House of Representatives and 109 senators to make laws and enhance good governance by checking and balancing the excesses of the executive arm of government. For this privilege, the 469 members of the federal legislature and their support staff at the National Assembly will spend $940 million in 2011. An even more interesting statistic is the cost of maintaining every legislator annually. Each Nigerian legislator gets about $2 million salary per year as at last year, which works out to about $8 million for the 4 year stay in the national assembly. No wonder machetes, guns and thugs are used at will to "win" primaries and the elections. How many new or even established businesses can achieve a turnover of $8 million within four years with a net tax-free profit in excess of 50 per cent? Is this social justice?
For the National Assembly, even the amount of $940 million above is just what we can see easily but is not broken down for further analysis or accountability. The Nigerian Senate President earns enough money as salary to pay president Obama’s salary for eight years. While President Obama gets to be taxed on 87.5 per cent of his “meagre” pay, Nigerian public officials pay less than 12 per cent on their fat salaries.
Now with the Nigerian economy in dire straits partly due to declining revenue for which the recently dim global economic outlook can be blamed, the Nigerian government now see the urgency to become more prudent with its fiscal policies.
In paragraph six of the Nigerian president’s 2012 budget speech, he reiterated the need for this: “We cannot subject the well-being of Nigerians to such large fluctuations and must therefore protect ourselves by managing our finances prudently including by adopting a conservative benchmark oil price for our budgets.” And part of the strategy for this prudent management of Nigeria’s finances is the removal of the long controversial (which existence is often doubted by major analysts that have confronted the government with factual analysis) oil subsidy. Nigeria’s oil subsidy is the only form of indirect social security that gets to over 70% of Nigerians who subsist on less than $2 a day, and yet the Nigerian government in its wisdom and compassion for its extremely poor citizen decides to remove it so that the Nigerian economy can be saved for the sake of the future of the Nigerian.
The government brings in its apostles of “cuts” Dr. Ngozi Okonjo Iweala et al. backed by the much hated International Monetary Fund (IMF) to do the dirty job of throwing more Nigerians into poverty and deeper hardship. Nigerians must make sacrifices, but not by its leaders. One often wonders if Dr. Okonjo Iweala is not privy to the ridiculous and criminally absurd cost of maintaining the lifestyle of his boss and that of other elected politicians and public office holders. But it is the impoverished Nigerian that must make the urgently needed sacrifice. Were we to cut the pay of these officials by say 70 per cent, Nigeria would save about $550 million.
Dr. Okonjo Iweala needs to learn some urgent lessons of how subsidies are used to guarantee social justice, it’s not always about the balance sheet, and it’s often more about the peoples’ welfare. Perhaps she is ignorant of the agricultural subsidies implemented by much of the EU and OECD countries just to give their farmers some competitive advantage in global markets, or that Alan Greenspan subsidised the cost of borrowing at very low rates just to ensure that Americans had access to cheap credit for nearly 19years as chairman of the Federal Reserve Bank.
The government has since agreed that it is being held down by a cabal in the oil industry but have only fallen short of admitting their lack of will to tackle same, perhaps another explanation for this inability is that the government is the cabal itself, only using a coalition of willing business persons who lack scruples to execute the subsidy scam. The Nigerian government has an age long tradition of serving itself and protecting only its interest at the expense of the Nigerian people, this has always remained the story of governance and most shamefully that of its democratic experiments. Simply put, it is always the same old story of a political-industrial complex which seeks to feed fat off the rest of the system.
Avoiding the diplomatic niceties of civil language, Nigerian politicians are nothing but thieves who see political office as an opportunity to rob the state and its people. The tragic lack of compassion and enlightened self interest on the part of Nigeria’s ruling elites may be the undoing that will eventually see its end. Their failure to understand that it is in their own best interest to ensure that the rising incidence of poverty in the country is urgently tackled and reversed if peace, security and stability must be maintained. They always believe that the Nigerian cannot rise up in rebellion and that he will continue to endure whatever hardship is thrown at him, but eventually they will realise that this line of thought will not endure eternally.
Nigerians are dying more of the indirect consequences of poverty than any other causative factor, poverty forced on them by their leaders. A cowardly government which fails to tackle the thugs which it groomed (Boko haram, the Movement for the Emancipation of the Niger Delta, etc) but has no qualms in using brutal force in dispersing peaceful protesters demanding their legitimate rights. Irrespective of their various political affiliations (PDP, ACN etc) they all remain the same thieving political class determined to punish those who elected them.
One needs to come down to Lagos to see what the once glorified government of Babatunde Raji Fashola of the ACN who cannot seem to be able to shake off the pressure of doing the bidding of his god father and ACN king maker, the glorified kleptocrat Bola Tinubu has reduced governance to. Lagos roads have become nearly impossible to drive on with the numerous pot holes that dot the landscape, just a single day of rainfall and the entire city went under water, not because any major rivers or dams over flooded but because of blocked or non existent drains. Now the new strategy is to use public private partnerships (PPP) the new infrastructure development mantra, to outsource their responsibilities by building a 48km stretch of road at an outlandish cost of $312.5 million, just normal roads, with no rails, no fly-overs, nothing extraordinary to justify the ridiculous contract sum for which the people must pay a minimum $2 toll (for driving to and fro on the road) for the next 30 years . And ofcourse, it’s an open secret who owns the contract for the construction of the road and even the major stake holders in the company that got the concession (Lekki Concession Company).
Nigerian political leaders, in collaboration with its elites both in the public and private sector have now become adept at inventing new forms of economic enslavement for the hopeless and socio-economically disenfranchised citizens. Removal of the fuel subsidy is just a tip of the iceberg of the social injustices Nigerians have had to endure in the hands of their leaders, but it may eventually prove to be the straw that breaks the camel’s back. Nigerians need to take advantage of this tiny window of opportunity not just to make demands on this corrupt political class but to eventually do away with them to make a clean, decent start. Nigeria’s entire system of governance, politics and democracy has been rigged from its foundation, there will never be credible elections, and its democracy will never produce accountable leadership or good governance. The entire status quo has to go for meaningful change to come to Nigeria.
When one takes a retrospective look at happenings within the country, one cannot ignore the endless streams of bitter tales and complaints that have become part of the daily narratives of the average Nigerian. Just like the book of lamentations in the bible which is replete with the sorrows and lamentations of a once great city full of life that had become desolate and a shadow of itself, so is the tragic story of this once great country that held a lot of promise with high aspirations of becoming a beacon of light and bastion of hope to the rest of the black race, I am deeply convinced in my heart that the book of lamentations was probably written with Nigeria in mind.
Nigeria is a paradox; so wealthy, yet so poor; so endowed, yet so deprived. Nigeria makes more money than many countries of the world but unfortunately is ranked as the world’s 20th poorest country apparently because most Nigerians (over 70%) live below the poverty line as they subsist on less than $2 a day. If one takes a look at the statistics on Nigeria’s human development report, one would suffer more heartache, as it is even more depressing. In spite of the abundance of human and natural resources, one thing Nigeria has sourly lacked is visionary and progressive leadership, the leadership gap has proven to be the single most potent factor threatening the corporate existence of Nigeria. The fact that Nigeria is a country of immense ethnic and religious diversity has made efforts to coalesce the country into one cohesive and tightly bonded corporate entity a daunting task, which is only exacerbated by its self serving leadership.
Nigeria, a country plagued by one of the worst kinds of leadership the world has ever seen. Its leaders may not be as physically brutal and repressive as the Taliban were in Afghanistan, or what is obtainable in Myanmar or North Korea, but I am sure the average Afghan would prefer to live with a brutal Taliban regime than the corrupt Nigerian government. For one to fully appreciate the enormity of the Nigerian situation, one has to come to terms with some statistics that exposes the stark realities, hypocrisies and idiosyncrasies off the Nigerian government. Nigeria experiences a near absence of governance at every level (Federal, State or Local government).
This has had the consequence of turning the entire society on its head. Walking into a government office to request a basic service, you are confronted by a member of staff who may not even bother to reply to your greeting and barely has time to listen to you; the policeman that should protect you on the road block, stops you and demands for bribes and has no qualms shooting dead any motorist that refuses to part with a few cents; the customs officer at the border who is supposed to stop smuggling takes a bribe and actually connives with the smugglers to bring in banned products into the Nigerian market, while harassing the traveller entering Nigeria with two new pairs of shoes; the hospital staff member that, contrary to every professional oath, refuses to attend to dying patients because they are on strike; the soldiers who get so bored that they occasionally go on a rampage, using policemen for target practice. These are all to buttress the points made by a Nigerian musician in his song titled “jaga jaga” a few years ago, in which he chorused “Nigeria jagajaga Everything scatter scatter Poor man dey suffer suffer...” and all of these bag of woes has been foisted on the Nigerian people by the bad governance since the inception of the Nigerian state some 51 years ago, the decline has never been worse than it has been in the last 12 years of democratic rule which started in 1999.
Let us take a look at some of the perks of the saintly and good intentioned President Jonathan who desires to save Nigeria from the precipice. 75% of the country’s budget is spent on recurrent expenditure. Of this; over 25% goes as the salaries of its 460 member National Assembly. In 2012, Nigeria’s president allocated for himself a feeding allowance of over $6.2 million for just one year of food in the presidential villa, while also ensuring that his cars and that of his cohorts in the presidency will enjoy another $10 million worth of fuelling. Compare this staggering sum to the paltry $400,000 salary of President Obama who still gets to pay from his own meagre salary for the food him and his family eats in the White house. The Nigerian president’s feeding allowance for one year, which is exclusive of his salary will pay the American president’s salary for 15 years and two months. This is not to talk of the $1.2 million our dear president will spend on watering the gardens of Aso rock; certainly the American president wouldn’t mind being the gardener of the Nigerian president.
Nigerians elect a total of 360 members to the House of Representatives and 109 senators to make laws and enhance good governance by checking and balancing the excesses of the executive arm of government. For this privilege, the 469 members of the federal legislature and their support staff at the National Assembly will spend $940 million in 2011. An even more interesting statistic is the cost of maintaining every legislator annually. Each Nigerian legislator gets about $2 million salary per year as at last year, which works out to about $8 million for the 4 year stay in the national assembly. No wonder machetes, guns and thugs are used at will to "win" primaries and the elections. How many new or even established businesses can achieve a turnover of $8 million within four years with a net tax-free profit in excess of 50 per cent? Is this social justice?
For the National Assembly, even the amount of $940 million above is just what we can see easily but is not broken down for further analysis or accountability. The Nigerian Senate President earns enough money as salary to pay president Obama’s salary for eight years. While President Obama gets to be taxed on 87.5 per cent of his “meagre” pay, Nigerian public officials pay less than 12 per cent on their fat salaries.
Now with the Nigerian economy in dire straits partly due to declining revenue for which the recently dim global economic outlook can be blamed, the Nigerian government now see the urgency to become more prudent with its fiscal policies.
In paragraph six of the Nigerian president’s 2012 budget speech, he reiterated the need for this: “We cannot subject the well-being of Nigerians to such large fluctuations and must therefore protect ourselves by managing our finances prudently including by adopting a conservative benchmark oil price for our budgets.” And part of the strategy for this prudent management of Nigeria’s finances is the removal of the long controversial (which existence is often doubted by major analysts that have confronted the government with factual analysis) oil subsidy. Nigeria’s oil subsidy is the only form of indirect social security that gets to over 70% of Nigerians who subsist on less than $2 a day, and yet the Nigerian government in its wisdom and compassion for its extremely poor citizen decides to remove it so that the Nigerian economy can be saved for the sake of the future of the Nigerian.
The government brings in its apostles of “cuts” Dr. Ngozi Okonjo Iweala et al. backed by the much hated International Monetary Fund (IMF) to do the dirty job of throwing more Nigerians into poverty and deeper hardship. Nigerians must make sacrifices, but not by its leaders. One often wonders if Dr. Okonjo Iweala is not privy to the ridiculous and criminally absurd cost of maintaining the lifestyle of his boss and that of other elected politicians and public office holders. But it is the impoverished Nigerian that must make the urgently needed sacrifice. Were we to cut the pay of these officials by say 70 per cent, Nigeria would save about $550 million.
Dr. Okonjo Iweala needs to learn some urgent lessons of how subsidies are used to guarantee social justice, it’s not always about the balance sheet, and it’s often more about the peoples’ welfare. Perhaps she is ignorant of the agricultural subsidies implemented by much of the EU and OECD countries just to give their farmers some competitive advantage in global markets, or that Alan Greenspan subsidised the cost of borrowing at very low rates just to ensure that Americans had access to cheap credit for nearly 19years as chairman of the Federal Reserve Bank.
The government has since agreed that it is being held down by a cabal in the oil industry but have only fallen short of admitting their lack of will to tackle same, perhaps another explanation for this inability is that the government is the cabal itself, only using a coalition of willing business persons who lack scruples to execute the subsidy scam. The Nigerian government has an age long tradition of serving itself and protecting only its interest at the expense of the Nigerian people, this has always remained the story of governance and most shamefully that of its democratic experiments. Simply put, it is always the same old story of a political-industrial complex which seeks to feed fat off the rest of the system.
Avoiding the diplomatic niceties of civil language, Nigerian politicians are nothing but thieves who see political office as an opportunity to rob the state and its people. The tragic lack of compassion and enlightened self interest on the part of Nigeria’s ruling elites may be the undoing that will eventually see its end. Their failure to understand that it is in their own best interest to ensure that the rising incidence of poverty in the country is urgently tackled and reversed if peace, security and stability must be maintained. They always believe that the Nigerian cannot rise up in rebellion and that he will continue to endure whatever hardship is thrown at him, but eventually they will realise that this line of thought will not endure eternally.
Nigerians are dying more of the indirect consequences of poverty than any other causative factor, poverty forced on them by their leaders. A cowardly government which fails to tackle the thugs which it groomed (Boko haram, the Movement for the Emancipation of the Niger Delta, etc) but has no qualms in using brutal force in dispersing peaceful protesters demanding their legitimate rights. Irrespective of their various political affiliations (PDP, ACN etc) they all remain the same thieving political class determined to punish those who elected them.
One needs to come down to Lagos to see what the once glorified government of Babatunde Raji Fashola of the ACN who cannot seem to be able to shake off the pressure of doing the bidding of his god father and ACN king maker, the glorified kleptocrat Bola Tinubu has reduced governance to. Lagos roads have become nearly impossible to drive on with the numerous pot holes that dot the landscape, just a single day of rainfall and the entire city went under water, not because any major rivers or dams over flooded but because of blocked or non existent drains. Now the new strategy is to use public private partnerships (PPP) the new infrastructure development mantra, to outsource their responsibilities by building a 48km stretch of road at an outlandish cost of $312.5 million, just normal roads, with no rails, no fly-overs, nothing extraordinary to justify the ridiculous contract sum for which the people must pay a minimum $2 toll (for driving to and fro on the road) for the next 30 years . And ofcourse, it’s an open secret who owns the contract for the construction of the road and even the major stake holders in the company that got the concession (Lekki Concession Company).
Nigerian political leaders, in collaboration with its elites both in the public and private sector have now become adept at inventing new forms of economic enslavement for the hopeless and socio-economically disenfranchised citizens. Removal of the fuel subsidy is just a tip of the iceberg of the social injustices Nigerians have had to endure in the hands of their leaders, but it may eventually prove to be the straw that breaks the camel’s back. Nigerians need to take advantage of this tiny window of opportunity not just to make demands on this corrupt political class but to eventually do away with them to make a clean, decent start. Nigeria’s entire system of governance, politics and democracy has been rigged from its foundation, there will never be credible elections, and its democracy will never produce accountable leadership or good governance. The entire status quo has to go for meaningful change to come to Nigeria.
Friday, February 25, 2011
Why we don’t need GEJ as Nigeria’s President for 2011 and beyond.
I once was a Jonathan aficionado. I had never had any reason to doubt his ability to preside over the affairs of the Nigerian state, nor did I have any informed reason to oppose his presidency or presidential aspirations. This was just part of the fixated mindset which that the man Goodluck Ebele Jonathan or GEJ as he is fondly called, been divinely destined and anointed to be Nigeria's next president. Some local political leaders have even resulted to demagoguery in a bid to stamp a seal of approval on the presidency of GEJ by ascribing his ascendancy to God; they even went as far as telling Nigerians that any attempt to resist Jonathan would amount to resisting God.
However, it is in my view that in a democracy, making an informed choice is a fundamental right of the people and thus it must be guaranteed and protected by all concerned. As events continue to unfold in my country within the last few months, especially with the worsening security situation across the land typified by the endless killings in Jos (Plateau state, Nigeria) and the endless and unresolved bomb blasts, doubt started to gradually creep into my mind.
A whole lot of us started to ask ourselves if GEJ was the man my troubled country desperately needed to get it out of the woods. It wasn't until the 23rd of February, 2011 when I stumbled upon a publication of the highly respected World Economic Forum (WEF) that my views of the abilities, person and intentions of GEJ took a complete reversal
In just about 8 months of GEJ’s presidency, our dear country has witnessed significant slide down almost all indicators used by the World Economic Forum (WEF) to measure the competitiveness of countries. In the just 2010 – 2011 WEF Global Competitiveness Report (GCI) saw Nigeria plunge to 127th position from the 99th position in the 2009 – 2010 ranking.
The GCI report contributes to the understanding of the key factors determining economic growth; it helps to explain why some countries are more successful than others in raising income levels and opportunities for their respective populations, and offers policymakers and business leaders an important tool in the formulation of improved economic policies and institutional reforms.
At the inception of late Umar Musa Yar’Adua’s presidency, we were ranked 94th, he lost 5 places but GEJ has remarkably lost 28 places in just a few months. Now here is how the GCI summarized Nigeria’s performance:
“Nigeria has plunged in the rankings this year to 127th position, the result of a weakening across many aspects of the Index, most notably in the assessment of the institutional environment and the country’s macroeconomic stability. Indeed, while the macroeconomic environment was previously the country’s greatest strength, its ranking has gone from 20th last year all the way down to 97th this year.
A large fiscal surplus has turned to deficit, the interest rate spread has increased measurably, and the country credit rating places Nigeria 91st out of all countries covered. There has also been a measurable weakening in measures of Nigeria’s institutional environment, ranked 121st, down from 102nd last year. There are significant and increasing concerns about the protection of property rights, ethics and corruption, undue influence, and government inefficiencies. Private institutions also receive a worsening assessment, with poor corporate ethics (125th) and weak auditing and reporting standards (130th) of particular concern.
The security situation in the country continues to be dire (ranked 123rd). Additionally, Nigeria receives poor assessments for its infrastructure (135th) as well as its health and primary education levels (137th). In addition, the country is not harnessing the latest technologies for productivity enhancements, as demonstrated by its low rates of ICT penetration.
While the situation is therefore difficult, it is important to note that Nigeria also has a number of strengths on which to build its competitiveness. The country benefits from a relatively large market (30th) providing its companies with opportunities for economies of scale, as well as businesses that are sophisticated by regional standards (76th), with some cluster development companies that tend to hire professional managers and delegate decision-making authority within the organization.1”
Some of the key points we should note are:
• Weak institutional environment
• Fiscal irresponsibility
• Rampant and pervasive corruption (traceable to weak police force, judiciary and other government institutions responsible for contain the menace of corruption. Nigeria’s corruption dilemma has entered a “free for all” phase)
• Increasing power of a few who can easily influence GEJ’s government (cartels, god-fatherism, and various interest groups)
• Government inefficiency (which is still tied to weak institutional environment)
• Worsening security situation.
GEJ has the worst economic team, Segun Aganga may have done well for himself, considering the fact that he rose in his career to MD of Goldman Sachs UK, but apparently he cannot be said to be managing Nigeria’s finances prudently, not to talk about the insatiable greed of our political class, especially those in the national assembly (the honourable senators and legislators, honourable thieves perhaps.)
Imagine a country with a large fiscal surplus (large foreign reserve) transformed to a debtor nation just in a couple of months. Nobody is telling Nigerians the truth about how our country is being run, this explains why the honourable thieves are so reluctant to pass the Freedom of Information Bill (FOI), and so no one gets to ask questions. We continue to toe a dangerous fiscal path, because we are running an unsustainable economy.
Imagine an economy run on generators and yet GEJ claims to have increased power output by 4000megawatts, even for those who can afford to buy generators, the high cost of diesel is exerting a heavy toll on them and lest I forget the diesel and generator cartels, they are his friends, so he protects their interest. Imagine the price of crude falls from the high price of today to about $30 per barrel, Nigeria’s economy will quickly return to the 70s and 80s style economic recession which made Nigeria broke and forced us into debts.
We seem to have forgotten Shagari’s austerity measures and IBB’s structural adjustment programs and the hardship they brought along to Nigerians in those days. The primary cause was fiscal irresponsibility which we are witnessing today at an alarming rate under GEJ’s government and his economic team.
Weak institutional environment is just a subtle way of saying GEJ is ineffective, he cannot exert himself as Nigeria’s president. He has failed to exert his personality or influence over his ministers and other subordinates, for those of us who thinks GEJ is the best thing that has happened to us simply because his name is Goodluck, should better wake up from their dream because great nations were not built out of good luck or luck as the case may be. GEJ the jamboree president, that’s what I think he is. With his empty rhetorics.
Nigerians should in the light of the available facts make an unbiased and honest assessment of the man called GEJ, his political party (the ruling Peoples Democracy Party – PDP) and their ability to preside over the affairs of this troubled nation. Speaking for myself, and bearing in mind the antecedents of the PDP, I doubt that any good thing can come out of that political party. If in less than a year as president, he has managed to reverse all the gains of the Obasanjo years (even though Obasanjo’s presidency was flawed in its own way, he is far better than what we have today, and I can rate him as a genius when compared to GEJ) imagine what he will deliver to us in 4yrs. Since the only thing we seem to know how to do is mine and export crude oil, God help us that the price does not tumble on our heads, because if it does, we would simply go back to the oil doom years.
Nigeria’s pain is made worse by the fact that there seems to be very little in terms of a credible alternative to the PDP and Jonathan, the foremost opposition party, the Action Congress of Nigeria (ACN) which is being led by the ubiquitous godfather; Bola Tinubu seems to be running it as his personal fiefdom. An opposition party which claims itself to be a better option to the PDP, but yet it lacks internal democracy were candidates for political post emerge on the party platform without primaries, simply because Tinubu dashes out the ticket to friends and family members2. In all of this, one is forced to ask, what is the way out for Nigeria?
We cannot feel unconcerned about the status quo particularly considering the popular uprisings of the people in North Africa and the Middle East3. While we continue to ponder what way forward for our dear country, recent global events should also serve as a clear message to those who have held the nation hostage to their arbitrary will, that no matter how long it may take, a time will come when those who have been dispossessed will eventually turn around to demand what is rightfully due to them. For Nigeria, that time may not be too far away.
Bibliography:
1World Economic Forum’s GCI report 2010 - 2011:
http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2010-11.pdf
2 The House Tinubu Built:
http://www.saharareporters.com/article/house-tinubu-built
3 Popular uprisings in Arab nations not tilting towards fundamentalism:
http://www.asianews.it/news-en/Popular-uprisings-in-Arab-nations-not-tilting-towards-fundamentalism,-Islam-expert-says-20821.html
However, it is in my view that in a democracy, making an informed choice is a fundamental right of the people and thus it must be guaranteed and protected by all concerned. As events continue to unfold in my country within the last few months, especially with the worsening security situation across the land typified by the endless killings in Jos (Plateau state, Nigeria) and the endless and unresolved bomb blasts, doubt started to gradually creep into my mind.
A whole lot of us started to ask ourselves if GEJ was the man my troubled country desperately needed to get it out of the woods. It wasn't until the 23rd of February, 2011 when I stumbled upon a publication of the highly respected World Economic Forum (WEF) that my views of the abilities, person and intentions of GEJ took a complete reversal
In just about 8 months of GEJ’s presidency, our dear country has witnessed significant slide down almost all indicators used by the World Economic Forum (WEF) to measure the competitiveness of countries. In the just 2010 – 2011 WEF Global Competitiveness Report (GCI) saw Nigeria plunge to 127th position from the 99th position in the 2009 – 2010 ranking.
The GCI report contributes to the understanding of the key factors determining economic growth; it helps to explain why some countries are more successful than others in raising income levels and opportunities for their respective populations, and offers policymakers and business leaders an important tool in the formulation of improved economic policies and institutional reforms.
At the inception of late Umar Musa Yar’Adua’s presidency, we were ranked 94th, he lost 5 places but GEJ has remarkably lost 28 places in just a few months. Now here is how the GCI summarized Nigeria’s performance:
“Nigeria has plunged in the rankings this year to 127th position, the result of a weakening across many aspects of the Index, most notably in the assessment of the institutional environment and the country’s macroeconomic stability. Indeed, while the macroeconomic environment was previously the country’s greatest strength, its ranking has gone from 20th last year all the way down to 97th this year.
A large fiscal surplus has turned to deficit, the interest rate spread has increased measurably, and the country credit rating places Nigeria 91st out of all countries covered. There has also been a measurable weakening in measures of Nigeria’s institutional environment, ranked 121st, down from 102nd last year. There are significant and increasing concerns about the protection of property rights, ethics and corruption, undue influence, and government inefficiencies. Private institutions also receive a worsening assessment, with poor corporate ethics (125th) and weak auditing and reporting standards (130th) of particular concern.
The security situation in the country continues to be dire (ranked 123rd). Additionally, Nigeria receives poor assessments for its infrastructure (135th) as well as its health and primary education levels (137th). In addition, the country is not harnessing the latest technologies for productivity enhancements, as demonstrated by its low rates of ICT penetration.
While the situation is therefore difficult, it is important to note that Nigeria also has a number of strengths on which to build its competitiveness. The country benefits from a relatively large market (30th) providing its companies with opportunities for economies of scale, as well as businesses that are sophisticated by regional standards (76th), with some cluster development companies that tend to hire professional managers and delegate decision-making authority within the organization.1”
Some of the key points we should note are:
• Weak institutional environment
• Fiscal irresponsibility
• Rampant and pervasive corruption (traceable to weak police force, judiciary and other government institutions responsible for contain the menace of corruption. Nigeria’s corruption dilemma has entered a “free for all” phase)
• Increasing power of a few who can easily influence GEJ’s government (cartels, god-fatherism, and various interest groups)
• Government inefficiency (which is still tied to weak institutional environment)
• Worsening security situation.
GEJ has the worst economic team, Segun Aganga may have done well for himself, considering the fact that he rose in his career to MD of Goldman Sachs UK, but apparently he cannot be said to be managing Nigeria’s finances prudently, not to talk about the insatiable greed of our political class, especially those in the national assembly (the honourable senators and legislators, honourable thieves perhaps.)
Imagine a country with a large fiscal surplus (large foreign reserve) transformed to a debtor nation just in a couple of months. Nobody is telling Nigerians the truth about how our country is being run, this explains why the honourable thieves are so reluctant to pass the Freedom of Information Bill (FOI), and so no one gets to ask questions. We continue to toe a dangerous fiscal path, because we are running an unsustainable economy.
Imagine an economy run on generators and yet GEJ claims to have increased power output by 4000megawatts, even for those who can afford to buy generators, the high cost of diesel is exerting a heavy toll on them and lest I forget the diesel and generator cartels, they are his friends, so he protects their interest. Imagine the price of crude falls from the high price of today to about $30 per barrel, Nigeria’s economy will quickly return to the 70s and 80s style economic recession which made Nigeria broke and forced us into debts.
We seem to have forgotten Shagari’s austerity measures and IBB’s structural adjustment programs and the hardship they brought along to Nigerians in those days. The primary cause was fiscal irresponsibility which we are witnessing today at an alarming rate under GEJ’s government and his economic team.
Weak institutional environment is just a subtle way of saying GEJ is ineffective, he cannot exert himself as Nigeria’s president. He has failed to exert his personality or influence over his ministers and other subordinates, for those of us who thinks GEJ is the best thing that has happened to us simply because his name is Goodluck, should better wake up from their dream because great nations were not built out of good luck or luck as the case may be. GEJ the jamboree president, that’s what I think he is. With his empty rhetorics.
Nigerians should in the light of the available facts make an unbiased and honest assessment of the man called GEJ, his political party (the ruling Peoples Democracy Party – PDP) and their ability to preside over the affairs of this troubled nation. Speaking for myself, and bearing in mind the antecedents of the PDP, I doubt that any good thing can come out of that political party. If in less than a year as president, he has managed to reverse all the gains of the Obasanjo years (even though Obasanjo’s presidency was flawed in its own way, he is far better than what we have today, and I can rate him as a genius when compared to GEJ) imagine what he will deliver to us in 4yrs. Since the only thing we seem to know how to do is mine and export crude oil, God help us that the price does not tumble on our heads, because if it does, we would simply go back to the oil doom years.
Nigeria’s pain is made worse by the fact that there seems to be very little in terms of a credible alternative to the PDP and Jonathan, the foremost opposition party, the Action Congress of Nigeria (ACN) which is being led by the ubiquitous godfather; Bola Tinubu seems to be running it as his personal fiefdom. An opposition party which claims itself to be a better option to the PDP, but yet it lacks internal democracy were candidates for political post emerge on the party platform without primaries, simply because Tinubu dashes out the ticket to friends and family members2. In all of this, one is forced to ask, what is the way out for Nigeria?
We cannot feel unconcerned about the status quo particularly considering the popular uprisings of the people in North Africa and the Middle East3. While we continue to ponder what way forward for our dear country, recent global events should also serve as a clear message to those who have held the nation hostage to their arbitrary will, that no matter how long it may take, a time will come when those who have been dispossessed will eventually turn around to demand what is rightfully due to them. For Nigeria, that time may not be too far away.
Bibliography:
1World Economic Forum’s GCI report 2010 - 2011:
http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2010-11.pdf
2 The House Tinubu Built:
http://www.saharareporters.com/article/house-tinubu-built
3 Popular uprisings in Arab nations not tilting towards fundamentalism:
http://www.asianews.it/news-en/Popular-uprisings-in-Arab-nations-not-tilting-towards-fundamentalism,-Islam-expert-says-20821.html
Monday, December 6, 2010
The Danger lies in the Dominant Story, not in the Single Story.
Last week, I was opportune to watch Chimamanda Adichie’s Technology, Entertainment, and Design Conference (TED) presentation titled: The Danger of a Single Story1. Although she made the presentation at the TED conference sometime in July 2009, it wasn’t until last week Friday 3rd of December, 2010, when a friend shared the link to the presentation online that I had the privilege of listening to this brilliant Nigerian writer speak about an issue as sensitive as presenting a one sided view of a subject.
It was an intellectually packed speech filled with real life illustrations of her personal experience; I was also impressed because it was no doubt both incisive and instructive in its depth, so much so that I had to ponder upon it thoughtfully for over 24hrs before I could muster a response to it. As she illustrated with her personal stories of her childhood reading and writing experience, Fide (her family house help), her college experience in America, and her Mexican travel experience.
There is no doubt about the fact that when a particular story is associated with a particular person or group, there arises a danger of misconception of that person or group which may eventually lead to negative stereotypes or otherwise as the case may be. As Miss Adichie puts it in her presentation: “Show a people as one thing, as only one thing over and over again, and that is what they become.” Prof. Hans Rosling of the Karolinska institute and founder of Gapminder.org also alluded to the dangers of a “single story” in his own TED conference presentation by making reference to what he called “pre-conceived ideas” which has its origins from the single story.
In as much as we revile the single story because of its unfortunate negative flavour as it concerns us, what if that single story did a wonderful public relations stunt for us by portraying us positively? The flavour of the single story is inconsequential to me at this point. What Miss Adichie did not address in her speech is the origin of the single story, which is akin to dealing with the fruits of a problem rather than dealing with the roots of the problem.
In my view, the danger lies more significantly in the origins of the single story, which is the “dominant story” rather than the single story itself. The dominant story gives birth to the single story; it makes it impossible to have a balanced assessment of any situation. Using a simple analogy of a two plates weighing scale, if one side is loaded with a substance of more weight than the other side, the inevitable consequence is that the scale is tilted to the side bearing more weight than the other, and thus, the weightier substance is held to more significance than the other.
This simple analogy explains the negative perception attached to a country like Nigeria, which is routinely perceived as corrupt, anarchic, unpredictable and stagnated, and it is simply because the majority of stories that emanate from Nigeria are negative. How will Nigeria’s politics and democracy not be viewed as a sham, in spite of the well intentioned efforts of a few good men like Gov. Fashola of Lagos State, when his elected colleagues in other states and Nigeria’s national assembly are busy robbing Nigeria blind?
The particularly spectacular case of Nigeria’s Senators and Law makers (legislator) who without an iota of conscience award themselves ridiculous salaries and bonuses, which was even recently corroborated by the governor of Nigeria’s central bank when he stated that Nigeria’s national assembly with less than 800 members, consume about 25% of the Nigerian government’s recurrent budgetary expenditure per annum. It is on record, that the average Nigerian senator or legislator2, earn more money (both salary and ridiculous allowances) than Mr. Barack Obama, America’s president.
This democratic robbery is being inflicted on a country which has over 70% of its citizens living on less than $1 a day, a country with an employed minority of workers with a minimum wage of about $120 per month3. It is only natural that when the single story is of the negative flavour, that we be embarrassed and discomforted by it. This is a denial inspired reaction to the embarrassment of the single story.
I believe that if the single story is properly harnessed, it can serve to illuminate on salient and critical issues concerning a subject. It is in our best interest to appreciate our single story and do something about it, if it is not an impressive story rather than attempt to suppress with other less significant story, if Fide’s family was creative, then why hadn’t that creativity been transformed to wealth for his family? Why was the poverty still there? Rather than appreciate their creativity, if we were so concerned, then we should be thinking of interventions that will transform that creativity to prosperity, rather than trying to balance or counter the poverty story with a creativity story. This is tantamount to trying to force an unbalanced scale into an artificially balanced position.
Phillip Emeagwali, Prof. Wole Soyinka et al, are highly vaunted Nigerians renowned for their scholarly achievements, but we must not forget in a hurry, that are an infinitesimal minority, in our efforts to present Nigerians as academic achievers, shall we now continually trumpet their achievements in an effort to suppress the endless tales of woes emanating from Nigeria’s educational system, which now witnesses a mass exodus of young Nigerians seeking quality education in destinations as near as Ghana and the Republic of Benin?
In our well intentioned efforts to gain a more balanced perspective of a subject, we risk to arrive at the “celebrations of mediocrity” associated with recognizing small achievements. The danger as I have stated before lies in the dominant story which gives birth to the single story and it will be a grand mistake to attempt to suppress the single story without interventions that will eventually eliminate the dominant story. In the single story, we find an illuminator that should help us re-order our priorities.
Bibliography:
1. Chimamanda Adichie: The danger of a single story, TED Conference, 2009 http://www.ted.com/talks/lang/eng/chimamanda_adichie_the_danger_of_a_single_story.html
2. What a Senator Earns in Nigeria - Do or Die Affair N 29 479 749 Per Year, Nairaland, http://www.nairaland.com/nigeria/topic-276078.0.html
3. Nigeria sets big jump in minimum wage after strike, Reuters, http://www.reuters.com/article/idUSTRE6AO35N20101125
It was an intellectually packed speech filled with real life illustrations of her personal experience; I was also impressed because it was no doubt both incisive and instructive in its depth, so much so that I had to ponder upon it thoughtfully for over 24hrs before I could muster a response to it. As she illustrated with her personal stories of her childhood reading and writing experience, Fide (her family house help), her college experience in America, and her Mexican travel experience.
There is no doubt about the fact that when a particular story is associated with a particular person or group, there arises a danger of misconception of that person or group which may eventually lead to negative stereotypes or otherwise as the case may be. As Miss Adichie puts it in her presentation: “Show a people as one thing, as only one thing over and over again, and that is what they become.” Prof. Hans Rosling of the Karolinska institute and founder of Gapminder.org also alluded to the dangers of a “single story” in his own TED conference presentation by making reference to what he called “pre-conceived ideas” which has its origins from the single story.
In as much as we revile the single story because of its unfortunate negative flavour as it concerns us, what if that single story did a wonderful public relations stunt for us by portraying us positively? The flavour of the single story is inconsequential to me at this point. What Miss Adichie did not address in her speech is the origin of the single story, which is akin to dealing with the fruits of a problem rather than dealing with the roots of the problem.
In my view, the danger lies more significantly in the origins of the single story, which is the “dominant story” rather than the single story itself. The dominant story gives birth to the single story; it makes it impossible to have a balanced assessment of any situation. Using a simple analogy of a two plates weighing scale, if one side is loaded with a substance of more weight than the other side, the inevitable consequence is that the scale is tilted to the side bearing more weight than the other, and thus, the weightier substance is held to more significance than the other.
This simple analogy explains the negative perception attached to a country like Nigeria, which is routinely perceived as corrupt, anarchic, unpredictable and stagnated, and it is simply because the majority of stories that emanate from Nigeria are negative. How will Nigeria’s politics and democracy not be viewed as a sham, in spite of the well intentioned efforts of a few good men like Gov. Fashola of Lagos State, when his elected colleagues in other states and Nigeria’s national assembly are busy robbing Nigeria blind?
The particularly spectacular case of Nigeria’s Senators and Law makers (legislator) who without an iota of conscience award themselves ridiculous salaries and bonuses, which was even recently corroborated by the governor of Nigeria’s central bank when he stated that Nigeria’s national assembly with less than 800 members, consume about 25% of the Nigerian government’s recurrent budgetary expenditure per annum. It is on record, that the average Nigerian senator or legislator2, earn more money (both salary and ridiculous allowances) than Mr. Barack Obama, America’s president.
This democratic robbery is being inflicted on a country which has over 70% of its citizens living on less than $1 a day, a country with an employed minority of workers with a minimum wage of about $120 per month3. It is only natural that when the single story is of the negative flavour, that we be embarrassed and discomforted by it. This is a denial inspired reaction to the embarrassment of the single story.
I believe that if the single story is properly harnessed, it can serve to illuminate on salient and critical issues concerning a subject. It is in our best interest to appreciate our single story and do something about it, if it is not an impressive story rather than attempt to suppress with other less significant story, if Fide’s family was creative, then why hadn’t that creativity been transformed to wealth for his family? Why was the poverty still there? Rather than appreciate their creativity, if we were so concerned, then we should be thinking of interventions that will transform that creativity to prosperity, rather than trying to balance or counter the poverty story with a creativity story. This is tantamount to trying to force an unbalanced scale into an artificially balanced position.
Phillip Emeagwali, Prof. Wole Soyinka et al, are highly vaunted Nigerians renowned for their scholarly achievements, but we must not forget in a hurry, that are an infinitesimal minority, in our efforts to present Nigerians as academic achievers, shall we now continually trumpet their achievements in an effort to suppress the endless tales of woes emanating from Nigeria’s educational system, which now witnesses a mass exodus of young Nigerians seeking quality education in destinations as near as Ghana and the Republic of Benin?
In our well intentioned efforts to gain a more balanced perspective of a subject, we risk to arrive at the “celebrations of mediocrity” associated with recognizing small achievements. The danger as I have stated before lies in the dominant story which gives birth to the single story and it will be a grand mistake to attempt to suppress the single story without interventions that will eventually eliminate the dominant story. In the single story, we find an illuminator that should help us re-order our priorities.
Bibliography:
1. Chimamanda Adichie: The danger of a single story, TED Conference, 2009 http://www.ted.com/talks/lang/eng/chimamanda_adichie_the_danger_of_a_single_story.html
2. What a Senator Earns in Nigeria - Do or Die Affair N 29 479 749 Per Year, Nairaland, http://www.nairaland.com/nigeria/topic-276078.0.html
3. Nigeria sets big jump in minimum wage after strike, Reuters, http://www.reuters.com/article/idUSTRE6AO35N20101125
Tuesday, November 30, 2010
Captive Country: The Nigerian Conundrum.
One of the Nigeria’s greatest sons, Herbert Macaulay, wrote that the dimensions of the colonial masters looking after the interests of Nigerians were “algebraically equal to the length, breadth and depth of the white man's pocket."
Regrettably, that attitude still applies today but replace the white man with Nigerian politicians.
It is very doubtful that Herbert Macaulay would have foreseen the day that Nigerians would be denied the basic rights of life - education, healthcare, personal security, the right to elect, and not select, their leaders and the pursuit of happiness - by fellow Nigerians. It is obvious to all that our leaders have failed to deliver time and time again on any of these as more than 100 million Nigerians still live in penury (Obi Igbokwe, 2009).
In the 80’s, Nigeria’s military ruler of that time was criticized by the late king of Afrobeats music; Fela Anikulapo Kuti in a song titled “Beast of no nation” for his acerbic criticism of the average Nigerian. He lyrically spoke these words “Mek you hear dis one… War against Indiscipline o Nah Nigerian government ooo, dem dey talk o my people are useless, my people are senseless, my people are indiscipline.”
The dictator may have been insensitive and careless with his verbal bashing of the Nigerian then, but taking a retrospective look at Nigeria and the Nigerian today, one may be tempted to agree that those stinging words nearly accurately describe the reality of the typical Nigerian, and thus you will be left with no other choice than to ponder if there is anything wrong with being a Nigerian. Perhaps the reason why the late Anikulapo Kuti found those words unpalatable is because as humans, there is a proclivity to ostracized truth and virtue at the slightest opportunity. This habitual inclination is shared by all humans, irrespective of race, religion, sex or any other differentiating factor, so the Nigerian should not be perceived as holding the bragging rights for it.
This is not an attempt to disparage the Nigerian, but rather, to take a contemplative look at Nigeria and the Nigerian, x-ray his mindset and ultimately to try to grasp why progress in Nigeria only seems to be by sleight of the hand. It may sound a bit extreme but judging the trend of events as they unfold in Nigeria, I hold the view that it is either Nigeria will continue in this endless loop of progressive stagnation or it may eventually retrogress in such a manner as to confine this straggling nation of disparate nationalities to the pages of history books.
In today’s Nigeria, we have a paradox in progress, looking back at the last ten years of pseudo democratic governance in Nigeria, we observe that while all the major indices used to gauge the health of a country’s economy has witnessed remarkable improvement for Nigeria, the corresponding indices used to measure the quality of life of the human being, in this case the average Nigerian citizen has been on a consistent decline. From life expectancy, to infant and maternal mortality, to the number of people living on less than $1 a day, the performance is no doubt disturbing. For those of us intimately familiar with Nigeria, we are well aware that the major cause of death in the country today is not malaria or the dreaded HIV/AIDS, but hardship and suffering caused by chronic and endemic poverty across the country. Today, Nigerians are dying of hunger and diseases that could be cured with as little as $10.
The Nigerian government agency charged with the responsibility of collating national statistical data puts unemployment rate at about 19.7%, which is astronomically high by any standard, however, I consider this figure is as a joke and not a true reflection of the joblessness in Nigeria today, all that is required to find it lacking in correctness to take a tour of Nigeria’s most important commercial city (Lagos) on a normal work day and you will be shocked by the large army of jobless people of working age loitering the streets with little or no hope of getting a job anytime soon. Bearing in mind that Lagos is Nigeria’s most vibrant, commercial and cosmopolitan city, where everything seems to happen, where job seekers from every nuke and cranny in the country converges in search of the proverbial “greener pasture” and if Lagos is so unemployed, you can only imagine what goes on in the other smaller towns across the country, perhaps they would be more correct if they called it the employment rate. Take a cross country drive around Nigeria; lying before you is a vast expanse of idleness and dormant capacity.
Nigeria’s politicians, with their mercantilist ruling style, extract more from the people than they ever give to them. In more than 10 years of uninterrupted democratic rule, the country’s citizens have found themselves worse off than they were in the past. Nigeria is a country struggling to become a nation, in its quest; it has found itself beholden to powerful forces that continue to undermine its efforts at making appreciable progress. The twin forces of religion and ethnicity constitute the dorminant factors, with corruption in the most recent times also emerging as a major contender, as it reinforces its lethal grip on the health of the country by serving as a huge drain on the meager resources of the Nigeria.
A third world country with majority of its citizens living in abject poverty that still finds it comfortable to spend millions of dollars to finance Christian and Muslim pilgrimages to Jerusalem and Mecca, yet there are frequent religious crisis which claims hundreds of lives year on year across the country, makes me to wonder the rationale for government patronage and financing of religious extravaganzas knowing fully well that religion is supposed to be a private affair. But it is clearly evident why governments in Nigeria patronize the religious establishment, because they use religious leaders to achieve a measure of control over their followers and also to manipulate such ignorant followers.
The same control and manipulation structure is used by governments through the so called traditional rulers, Obas, Emirs, the Sultan, Igwes etc scattered across the length and breadth of Nigeria. Needless to say, realising their power and importance in the scheme of things in Nigeria, the religious leaders and traditional monarchs now form a parallel power block in Nigeria, trying hard to maintain their hold over their sphere of influence, because they understand that the only way they can remain relevant and maintain government patronage is if they can maintain their grip on their geographic power base. Thereby continually undermining the Nigerian state to ensure their survival. In modern Nigeria, these parallel and informal institutions have no relevance, how do you integrate monarchs and religious leaders into a system supposed to be founded on government of the people, for the people and by the people? Or a religious leader who thinks he is the rightful representative of God upon the earth and thus not subject to questioning? Institutions which by their very nature are absolute and totalitarian. With their unchecked strength and continued relevance, the Nigerian state has been left in tatters, carved up into fiefdoms and spheres of influence which continue to grow stronger. And because, we continue to wallow in self denial, we refuse to confront the most significant, albeit shadow structural issues that continue to undermine the modern Nigerian state.
The contribution of the cabals both in Nigeria’s business and political environment is also noticeable. Nigeria’s business environment, which is supposed to provide the main engine of growth for the economy has become a captive of influential business men with political ties and politicians who also have numerous business interests. Electricity, road and rail transport, and the oil and gas sectors are the major victims of these cabals who operate with “Mafioso business plans”. Nigeria’s business environment is under siege of the cartels, the generator and diesel business cartels ensure that electricity generation and distribution on the national grid never works; thereby ensure that what we have in this country is a run economy, virtually everybody or company owns at least one generator, in some cases you find households owning a backup generator to serve while the main generator is down. The refined petroleum products import cartel ensure that Nigeria’s four refineries that which in the 80s and early 90s operated optimally, are today ghost towns, producing at barely 20% of installed capacity, the haulage business cartels with their tens of thousands of trailers and tankers ensured that the Nigerian Railway
Corporation, which used to be Nigeria’s largest and most prestigious employer of labour in the 60s and 70s is today a completed dead organization, in spite of all efforts to rehabilitate it. Geopolitics teaches that the foundation of a national strategy is the existence of a nation. This is an obvious fact, but there is something that needs to be pointed out in within Nigeria’s boarders, we have people living in it who call themselves Nigerians, but the reality on ground is that Nigeria is a state with many competing nationalities, living in a chaotic order difficult to resolve. The average Nigerian sees himself first as a Christian/Muslim or being affiliated to one ethnic group (which has one monarch as its head and sole authority), this has made submission to the collective interest of the Nigerian state difficult or nearly impossible, ever wondered why zoning of the presidency or the so called federal character (which seeks a representation of all the ethnic groups in government and national appointments) hot issues in Nigeria today? It is imperative that these structures be dismantled as a matter of urgency. There is hardly any room for a middle of the road approach or a compromise for a side by side existence for them and Nigeria. Religion is a private affair and, it must remain so.
This is not to say that Nigeria cannot evolve a sense of nationhood and identity. The truth is that such things take a long time to create and rarely emerge peacefully. In Nigeria’s reality, these powerful forces continue to make the creation of a Nigerian nation difficult if not unachievable simply because it does not serve their self interest; Nigeria’s case is made even more difficult because of high attrition amongst its people. This explains why corruption thrives because institutions meant to punish the corrupt are already captive to forces. The same goes for democratic and governance. Apart from these macro factors, the “not my business” attitude adopted by the average Nigerian citizen has only helped to aggravate the situation; it has helped to sustain corrupt and unaccountable leaders in power.
A good number of Nigerians prefers to be sycophants and praise singers, than to demand service and accountability from public office holders, there is an urgent sense and desire for immediate and self gratification at the expense of the collective good. Funds meant to build or maintain a public infrastructure can be easily diverted in Nigeria; so far a few relevant persons can get a share of the booty, which also trickles down to a few lesser significant persons, who does the same in a pyramid structure. This pattern of greed, corruption, eye service and patronage has even compounded the already bad mess the country finds itself in, thereby making life worse for the average Nigerian.
No where in the world is Garret Hardin’s epic essay “the Tragedy of the Commons” so brazenly replicated as in today’s Nigeria. The country’s wellbeing is nobody’s business, pursuit of self and group interest reins supreme, and as it naturally follows in Hardin’s essay, when such self interest becomes paramount, the commons start to decline irreversibly. Nigerians need to start placing their collective interest above their individual or sectional interest, the reason why the rulers remain aloof to the responsibilities is simply because the followers have refused to demand service and accountability, there are many ways by which people can speak out and demand what is rightfully theirs, it doesn’t matter the methods they adopt, so long as it achieves the right results of ensuring good governance, prosperity and progress for Nigeria and Nigerians, as Deng Xiaoping said, “It doesn't matter if a cat is black or white, so long as it catches mice.” If we continue to defer, and the status quo continues, Nigeria will be the loser. That we are still one nation 50 years after independence is an act attributable to divine providence, it must not be taken for granted.
Regrettably, that attitude still applies today but replace the white man with Nigerian politicians.
It is very doubtful that Herbert Macaulay would have foreseen the day that Nigerians would be denied the basic rights of life - education, healthcare, personal security, the right to elect, and not select, their leaders and the pursuit of happiness - by fellow Nigerians. It is obvious to all that our leaders have failed to deliver time and time again on any of these as more than 100 million Nigerians still live in penury (Obi Igbokwe, 2009).
In the 80’s, Nigeria’s military ruler of that time was criticized by the late king of Afrobeats music; Fela Anikulapo Kuti in a song titled “Beast of no nation” for his acerbic criticism of the average Nigerian. He lyrically spoke these words “Mek you hear dis one… War against Indiscipline o Nah Nigerian government ooo, dem dey talk o my people are useless, my people are senseless, my people are indiscipline.”
The dictator may have been insensitive and careless with his verbal bashing of the Nigerian then, but taking a retrospective look at Nigeria and the Nigerian today, one may be tempted to agree that those stinging words nearly accurately describe the reality of the typical Nigerian, and thus you will be left with no other choice than to ponder if there is anything wrong with being a Nigerian. Perhaps the reason why the late Anikulapo Kuti found those words unpalatable is because as humans, there is a proclivity to ostracized truth and virtue at the slightest opportunity. This habitual inclination is shared by all humans, irrespective of race, religion, sex or any other differentiating factor, so the Nigerian should not be perceived as holding the bragging rights for it.
This is not an attempt to disparage the Nigerian, but rather, to take a contemplative look at Nigeria and the Nigerian, x-ray his mindset and ultimately to try to grasp why progress in Nigeria only seems to be by sleight of the hand. It may sound a bit extreme but judging the trend of events as they unfold in Nigeria, I hold the view that it is either Nigeria will continue in this endless loop of progressive stagnation or it may eventually retrogress in such a manner as to confine this straggling nation of disparate nationalities to the pages of history books.
In today’s Nigeria, we have a paradox in progress, looking back at the last ten years of pseudo democratic governance in Nigeria, we observe that while all the major indices used to gauge the health of a country’s economy has witnessed remarkable improvement for Nigeria, the corresponding indices used to measure the quality of life of the human being, in this case the average Nigerian citizen has been on a consistent decline. From life expectancy, to infant and maternal mortality, to the number of people living on less than $1 a day, the performance is no doubt disturbing. For those of us intimately familiar with Nigeria, we are well aware that the major cause of death in the country today is not malaria or the dreaded HIV/AIDS, but hardship and suffering caused by chronic and endemic poverty across the country. Today, Nigerians are dying of hunger and diseases that could be cured with as little as $10.
The Nigerian government agency charged with the responsibility of collating national statistical data puts unemployment rate at about 19.7%, which is astronomically high by any standard, however, I consider this figure is as a joke and not a true reflection of the joblessness in Nigeria today, all that is required to find it lacking in correctness to take a tour of Nigeria’s most important commercial city (Lagos) on a normal work day and you will be shocked by the large army of jobless people of working age loitering the streets with little or no hope of getting a job anytime soon. Bearing in mind that Lagos is Nigeria’s most vibrant, commercial and cosmopolitan city, where everything seems to happen, where job seekers from every nuke and cranny in the country converges in search of the proverbial “greener pasture” and if Lagos is so unemployed, you can only imagine what goes on in the other smaller towns across the country, perhaps they would be more correct if they called it the employment rate. Take a cross country drive around Nigeria; lying before you is a vast expanse of idleness and dormant capacity.
Nigeria’s politicians, with their mercantilist ruling style, extract more from the people than they ever give to them. In more than 10 years of uninterrupted democratic rule, the country’s citizens have found themselves worse off than they were in the past. Nigeria is a country struggling to become a nation, in its quest; it has found itself beholden to powerful forces that continue to undermine its efforts at making appreciable progress. The twin forces of religion and ethnicity constitute the dorminant factors, with corruption in the most recent times also emerging as a major contender, as it reinforces its lethal grip on the health of the country by serving as a huge drain on the meager resources of the Nigeria.
A third world country with majority of its citizens living in abject poverty that still finds it comfortable to spend millions of dollars to finance Christian and Muslim pilgrimages to Jerusalem and Mecca, yet there are frequent religious crisis which claims hundreds of lives year on year across the country, makes me to wonder the rationale for government patronage and financing of religious extravaganzas knowing fully well that religion is supposed to be a private affair. But it is clearly evident why governments in Nigeria patronize the religious establishment, because they use religious leaders to achieve a measure of control over their followers and also to manipulate such ignorant followers.
The same control and manipulation structure is used by governments through the so called traditional rulers, Obas, Emirs, the Sultan, Igwes etc scattered across the length and breadth of Nigeria. Needless to say, realising their power and importance in the scheme of things in Nigeria, the religious leaders and traditional monarchs now form a parallel power block in Nigeria, trying hard to maintain their hold over their sphere of influence, because they understand that the only way they can remain relevant and maintain government patronage is if they can maintain their grip on their geographic power base. Thereby continually undermining the Nigerian state to ensure their survival. In modern Nigeria, these parallel and informal institutions have no relevance, how do you integrate monarchs and religious leaders into a system supposed to be founded on government of the people, for the people and by the people? Or a religious leader who thinks he is the rightful representative of God upon the earth and thus not subject to questioning? Institutions which by their very nature are absolute and totalitarian. With their unchecked strength and continued relevance, the Nigerian state has been left in tatters, carved up into fiefdoms and spheres of influence which continue to grow stronger. And because, we continue to wallow in self denial, we refuse to confront the most significant, albeit shadow structural issues that continue to undermine the modern Nigerian state.
The contribution of the cabals both in Nigeria’s business and political environment is also noticeable. Nigeria’s business environment, which is supposed to provide the main engine of growth for the economy has become a captive of influential business men with political ties and politicians who also have numerous business interests. Electricity, road and rail transport, and the oil and gas sectors are the major victims of these cabals who operate with “Mafioso business plans”. Nigeria’s business environment is under siege of the cartels, the generator and diesel business cartels ensure that electricity generation and distribution on the national grid never works; thereby ensure that what we have in this country is a run economy, virtually everybody or company owns at least one generator, in some cases you find households owning a backup generator to serve while the main generator is down. The refined petroleum products import cartel ensure that Nigeria’s four refineries that which in the 80s and early 90s operated optimally, are today ghost towns, producing at barely 20% of installed capacity, the haulage business cartels with their tens of thousands of trailers and tankers ensured that the Nigerian Railway
Corporation, which used to be Nigeria’s largest and most prestigious employer of labour in the 60s and 70s is today a completed dead organization, in spite of all efforts to rehabilitate it. Geopolitics teaches that the foundation of a national strategy is the existence of a nation. This is an obvious fact, but there is something that needs to be pointed out in within Nigeria’s boarders, we have people living in it who call themselves Nigerians, but the reality on ground is that Nigeria is a state with many competing nationalities, living in a chaotic order difficult to resolve. The average Nigerian sees himself first as a Christian/Muslim or being affiliated to one ethnic group (which has one monarch as its head and sole authority), this has made submission to the collective interest of the Nigerian state difficult or nearly impossible, ever wondered why zoning of the presidency or the so called federal character (which seeks a representation of all the ethnic groups in government and national appointments) hot issues in Nigeria today? It is imperative that these structures be dismantled as a matter of urgency. There is hardly any room for a middle of the road approach or a compromise for a side by side existence for them and Nigeria. Religion is a private affair and, it must remain so.
This is not to say that Nigeria cannot evolve a sense of nationhood and identity. The truth is that such things take a long time to create and rarely emerge peacefully. In Nigeria’s reality, these powerful forces continue to make the creation of a Nigerian nation difficult if not unachievable simply because it does not serve their self interest; Nigeria’s case is made even more difficult because of high attrition amongst its people. This explains why corruption thrives because institutions meant to punish the corrupt are already captive to forces. The same goes for democratic and governance. Apart from these macro factors, the “not my business” attitude adopted by the average Nigerian citizen has only helped to aggravate the situation; it has helped to sustain corrupt and unaccountable leaders in power.
A good number of Nigerians prefers to be sycophants and praise singers, than to demand service and accountability from public office holders, there is an urgent sense and desire for immediate and self gratification at the expense of the collective good. Funds meant to build or maintain a public infrastructure can be easily diverted in Nigeria; so far a few relevant persons can get a share of the booty, which also trickles down to a few lesser significant persons, who does the same in a pyramid structure. This pattern of greed, corruption, eye service and patronage has even compounded the already bad mess the country finds itself in, thereby making life worse for the average Nigerian.
No where in the world is Garret Hardin’s epic essay “the Tragedy of the Commons” so brazenly replicated as in today’s Nigeria. The country’s wellbeing is nobody’s business, pursuit of self and group interest reins supreme, and as it naturally follows in Hardin’s essay, when such self interest becomes paramount, the commons start to decline irreversibly. Nigerians need to start placing their collective interest above their individual or sectional interest, the reason why the rulers remain aloof to the responsibilities is simply because the followers have refused to demand service and accountability, there are many ways by which people can speak out and demand what is rightfully theirs, it doesn’t matter the methods they adopt, so long as it achieves the right results of ensuring good governance, prosperity and progress for Nigeria and Nigerians, as Deng Xiaoping said, “It doesn't matter if a cat is black or white, so long as it catches mice.” If we continue to defer, and the status quo continues, Nigeria will be the loser. That we are still one nation 50 years after independence is an act attributable to divine providence, it must not be taken for granted.
Wednesday, September 15, 2010
Japan: Making the Sun Rise Again.
Overview:
Japan knows what to do to get itself back on track, it needs no advice from anybody, it has all the human resource required to identify and tackle its current problems. The Japanese know how to fix Japan and I have no doubt in their ability to get things right.
Those who know Japan, have an eternally abiding faith in the ability of the country to get out of mess, they say that the country always seems to shuffle its feet but then snaps into action when faced with a crisis. It did so in 19th century, adopting modern ways to avoid being colonized, and again after the Second World War. Japan was the world's second largest economy for 40 years. But the qualities that made it an economic power house in the 20th century: easy capital, big companies, excellent education, disciplined and efficient management, and stable lifetime jobs for male breadwinners- are out of fashion with the 21st century.
Japan's biggest obstacle today is itself.
In the recently released global ranking of Newsweek magazine’s 100 Best Countries in the World, Japan was placed a not quite impressive 9th position of the overall ranking. Except in the health category which Japan undisputedly holds the 1st position, it hovered around 4th to 10th position for other categories such as education, economic dynamism, quality of life and happiness.
Its reluctance to change has become has led to an anticlimax for this once economic power house. Just some few weeks ago, when the global media was abuzz with the news of China overtaking Japan as the world’s 2nd largest economy, the general mood in Japan was resignation and hopelessness, it is understandable why such mood can overtake a people once proudly revered for their once enviable achievements.
Despondency and resignation is only naturally expected after being faced with two lost economic decades characterized by a protracted deflationary cycle, declining growth and an aging population.
But we must also remember that "faith without work is dead". Without dramatic reform, Japan will slip swiftly to number four, five and beyond.
However, we still need to take a look at Japan to see if we can identify any new or hidden issues militating against efforts to revive this ailing giant. For this, we need to take a deep retrospective look at Japan through its remarkable history. Starting from the Tokugawa shogunate, the first and second Meiji restoration, the modern era, until the great wars that humbled an ambitious Japan and subsequently its re-emergence as a global economic and industrial power house, and finally, to the current economic challenges that has plagued it.
Historical timeline of Japan:
Since 1854, when the Tokugawa shogunate first opened the country to Western commerce and influence (Bakumatsu), Japan has gone through two periods of economic development. When the Tokugawa shogunate was overthrown and the Meiji government was founded, Japanese Westernization began completely. The first cycle was during Pre-war Japan, the second cycle was during the period of Post-war Japan.
In the Meiji period, Japan, under visionary leadership, inaugurated a new Western-based education system for all young people, it sent thousands of students to the United States and Europe, and hired more than 3,000 Westerners to teach modern science, mathematics, technology, and foreign languages in Japan (O-yatoi gaikokujin). The government also built railroads, improved roads, and inaugurated a land reform program to prepare the country for further development.
In tandem with its objective to promote rapid industrialization, the government decided that, while it should help private business to allocate resources and to plan, the private sector was best equipped to stimulate economic growth. The greatest role of government was to help provide the economic conditions in which business could flourish. Essentially, government was to be the guide and business the producer.
In the early Meiji period, the government built factories and shipyards that were sold to entrepreneurs at a fraction of their value. Many of these businesses grew rapidly into the larger conglomerates. Government emerged as chief promoter of private enterprise, enacting a series of pro-business policies.
The development of banking and reliance on bank funding has been at the centre of Japanese economic development at least since the Meiji era.
In the mid 1930s, the Japanese nominal wage rates were 10 times less than the one of the U.S (based on mid-1930s exchange rates), while the price level is estimated to have been about 44% the one of the U.S.
Comparison of GDP per capita between East-Asian Nations and the U.S. in 1935:
Country GDP/capita, 1935$ (Liu-Ta-Chung [2]) GDP-PPP/capita, 1990$ (Fukao [1]) GDP-PPP/capita, 1990$ (Maddison [3])
U.S. 540 5,590 5,590
Japan (excl. Taiwan and Korea) 64 1,745 2,154
Taiwan 42 1,266 1,212
Korea 24 662 1,224
China 18 543 562
Oil crisis
Japan faced a severe economic challenge in the mid-1970s. The world oil crisis in 1973 shocked an economy that had become virtually dependent on foreign petroleum. Japan experienced its first post-war decline in industrial production, together with severe price inflation. The recovery that followed the first oil crisis revived the optimism of most business leaders, but the maintenance of industrial growth in the face of high energy costs required shifts in the industrial structure.
The subsequent result of the oil crisis was to increase the energy efficiency of manufacturing and to expand so-called knowledge-intensive industries. The service industries expanded in an increasingly post-industrial economy.
Structural economic changes, however, were unable to check the slowing of economic growth as the economy matured in the late 1970s and 1980s, attaining annual growth rates at only 4 to 6%. But these rates were remarkable in a world of expensive petroleum and in a nation of few domestic resources. Japan's average growth rate of 5% in the late 1980s, for example, was far higher than the 3.8% growth rate of the United States.
Despite more petroleum price increases in 1979, the strength of the Japanese economy was apparent. It expanded without the double-digit inflation that afflicted other industrial nations (and that had bothered Japan itself after the first oil crisis in 1973). Japan experienced slower growth in the mid-1980s, but its demand-sustained economic boom of the late 1980s revived many troubled industries.
Factors of growth
Complex economic and institutional factors affected Japan's post-war growth. First, the nation's pre-war experience provided several important legacies. The Tokugawa period (1600–1867) bequeathed a vital commercial sector in burgeoning urban centres, a relatively well-educated elite (although one with limited knowledge of European science), a sophisticated government bureaucracy, productive agriculture, a closely unified nation with highly developed financial and marketing systems, and a national infrastructure of roads. The build up of industry during the Meiji period to the point where Japan could vie for world power was an important prelude to post-war growth and provided a pool of experienced labour following World War II.
Second, and more important, was the level and quality of investment that persisted through the 1980s. Investment in capital equipment, which averaged more than 11% of GNP during the pre-war period, rose to about 20% of GNP during the 1950s and to more than 30% in the late 1960s and 1970s. During the economic boom of the late 1980s, the rate still hovered around 20%. Japanese businesses imported the latest technologies to develop the industrial base. As a latecomer to modernization, Japan was able to avoid some of the trial and error earlier needed by other nations to develop industrial processes. In the 1970s and 1980s, Japan improved its industrial base through technology licensing, patent purchases, and imitation and improvement of foreign inventions. In the 1980s, industry stepped up its research and development, and many firms became famous for their innovations and creativity.
Japan's labour force contributed significantly to economic growth, not only because of its availability and literacy but also because of its reasonable wage demands. Before and immediately after World War II, the transfer of numerous agricultural workers to modern industry resulted in rising productivity and only moderate wage increases. As population growth slowed and the nation became increasingly industrialized in the mid-1960s, wages rose significantly. However, labour union cooperation generally kept salary increases within the range of gains in productivity.
High productivity growth played a key role in post-war economic growth. The highly skilled and educated labour force, extraordinary savings rates and accompanying levels of investment and the low growth of Japan's labour force were major factors in the high rate of productivity growth.
The nation has also benefited from economies of scale. Although medium-sized and small enterprises generated much of the nation's employment, large facilities were the most productive. Many industrial enterprises consolidated to form larger, more efficient units. Before World War II, large holding companies formed wealth groups, or zaibatsu, which dominated most industry. The zaibatsu were dissolved after the war, but keiretsu—large, modern industrial enterprise groupings—emerged. The coordination of activities within these groupings and the integration of smaller subcontractors into the groups enhanced industrial efficiency.
Circumstances beyond Japan's direct control contributed to its success. International conflicts tended to stimulate the Japanese economy until the devastation at the end of World War II. The Russo-Japanese War (1904-5), World War I (1914–18), the Korean War (1950–53), and the Second Indochina War (1954–75) brought economic booms to Japan. In addition, benign treatment from the United States after World War II facilitated the nation's reconstruction and growth.
1980s
Throughout the 1970s, Japan had the world's second largest gross national product (GNP)—just behind the United States— and ranked first among major industrial nations in 1990 in per capita GNP at US$23,801, up sharply from US$9,068 in 1980. After a mild economic slump in the mid-1980s, Japan's economy began a period of expansion in 1986 that continued until it again entered a recessionary period in 1992. Economic growth averaging 5% between 1987 and 1989 revived industries, such as steel and construction, which had been relatively dormant in the mid-1980s, and brought record salaries and employment. In 1992, however, Japan's real GNP growth slowed to 1.7%. Even industries such as automobiles and electronics that had experienced phenomenal growth in the 1980s entered a recessionary period in 1992. The domestic market for Japanese automobiles shrank at the same time that Japan's share of the United States' market declined. Foreign and domestic demand for Japanese electronics also declined, and Japan seemed on the way to losing its leadership in the world semiconductor market to the United States, Korea and Taiwan.
Japanese post-war technological research was carried out for the sake of economic growth rather than military development. The growth in high-technology industries in the 1980s resulted from heightened domestic demand for high-technology products and for higher living, housing, and environmental standards; better health, medical, and welfare opportunities; better leisure-time facilities; and improved ways to accommodate a rapidly aging society. This reliance on domestic consumption also meant that consumption grew by only 2.2% in 1991 and at the same rate again in 1992
During the 1980s, the Japanese economy shifted its emphasis away from primary and secondary activities (primarily agriculture, manufacturing, and mining) to processing, with telecommunications and computers becoming increasingly vital. Information became an important resource and product, central to wealth and power. The rise of an information-based economy was led by major research in highly sophisticated technology, such as advanced computers. The selling and use of information became very beneficial to the economy. Tokyo became a major financial centre, home of some of the world's major banks, financial firms, insurance companies, and the world's largest stock exchange, the Tokyo Securities and Stock Exchange. Even here, however, the recession took its toll. In 1992, the Nikkei 225 stock average began the year at 23,000 points, but fell to 14,000 points in mid-August before leveling off at 17,000 by the end of the year.
1989 Economic Bubble: Enter the Lost Decades.
In the decades following World War II, Japan implemented stringent tariffs and policies to encourage the people to save their income. With more money in banks, loans and credit became easier to obtain, and with Japan running large trade surpluses, the yen appreciated against foreign currencies. This allowed local companies to invest in capital resources much more easily than their competitors overseas, which reduced the price of Japanese-made goods and widened the trade surplus further. And, with the yen appreciating, financial assets became very lucrative.
With so much money readily available for investment, speculation was inevitable, particularly in the Tokyo Stock Exchange and the real estate market. The Nikkei stock index hit its all-time high on December 29, 1989 when it reached an intra-day high of 38,957.44 before closing at 38,915.87. The rates for housing, stocks, and bonds rose so much that at one point the government issued 100-year bonds. Additionally, banks granted increasingly risky loans.
At the height of the bubble, real estate values were extremely over-valued. Prices were highest in Tokyo's Ginza district in 1989, with choice properties fetching over US$1.5 million per square meter ($139,000 per square foot). Prices were only slightly less in other areas of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped and Tokyo's residential homes were a fraction of their peak, but still managed to be listed as the most expensive real estate in the world. Trillions were wiped out with the combined collapse of the Tokyo stock and real estate markets.
With Japan's economy driven by its high rates of reinvestment, this crash hit particularly hard. Investments were increasingly directed out of the country, and Japanese manufacturing firms lost some degree of their technological edge. As Japanese products became less competitive overseas, it is believed that the low consumption rate began to bear on the economy, causing a deflationary spiral.
The easily obtainable credit that had helped create and engorge the real estate bubble continued to be a problem for several years to come, and as late as 1997, banks were still making loans that had a low guarantee of being repaid.
The time after the bubble's collapse, which occurred gradually rather than catastrophically, is known as the "lost decade or end of the century" (ushinawareta jūnen) in Japan. The Nikkei 225 stock index eventually bottomed out at 7603.76 in April 2003, moved upward to a new peak of 18,138 in June 2007, before resuming a downward trend. The downward movement in the Nikkei is likely due to global as well as national economic problems.
Japan’s problem are two fold: an intractable credit crisis which has inadvertently derailed the Japanese economy and a thinning labour force characterized by a fast aging population with a corresponding low birth rate that makes the prospect of replenishing the graying labour force harder to achieve.
The core problem of Japan is that it suffers from a gross misallocation of resources both financial and human. Japan has long kept the cost of capital low, to boost investment or help struggling companies. Since the financial crisis started, bureaucratic organs such as the Innovation Network Corporation (INC) of Japan and the Enterprise Turnaround Initiative Corporation (ETIC) have been allocated over $25 billion to revive ailing corporations. A good example of the misallocation of credit issue was the choice by ETIC of aiding a wireless operator which operates on archaic technology.
This is what can be described as “unnatural selection”, in Japan by agencies or lenders charged with the responsibility of providing credit to corporations that require funds. There exist perverse incentives for the allocating credit to needless sections of industry. The system almost guarantees that fresh capital goes to the losers of yester years. And because struggling companies rarely die, new ones do not form. Japan’s bankruptcy rate is half America’s; and the rate at which it creates new firms is only a third as high. Japanese venture capitalists are few. Japan’s bureaucratic allocation of credit seldom spurs animal spirits, instead it breeds zombies.
Japanese banks’ practice of continually extending credit to very weak or even insolvent firms. In Japan’s bank-centred economy, where banks often have the responsibility for corporate monitoring and governance, many lending decisions are strongly influenced by perceived duty to support troubled firms, rather than an objective, non-biased credit risk assessment, such as what is obtained in other developed economies. Both government policy and bank regulations in Japan actually encourage banks to keep extending credit to problematic borrowers, which is unofficially known as “evergreening of credit”.
Japanese banks fund firms to enable the firms make interest payments on outstanding loans, and thus avoid, or at least delay, bankruptcy. This practice allows the banks to have healthier “mirage” looking balance sheets, because the banks report fewer problem loans and make smaller loan loss provisions. The evergreening of bank loans for debt servicing purposes was widespread. With banks more likely to increase loans to firms with weaker financial health. With such practice widespread, banks had more incentives to extend additional credit to troubled firms with loans already outstanding as those same banks’ reported risk-based capital ratios neared their required capital ratios. What mattered most was the need to have a good appearance than the reality of best practices and adequate capital.
A second factor was, corporate connections made it even more likely that banks will extend such credit. Third, government-controlled banks were also more likely to increase loans to financially weak firms. Finally, the only firms that were not under pressure to evergreen loans to the weakest firms were non-affiliated, non-bank lenders. The evergreening of loans in Japan clearly insulated many troubled firms from market forces this may have prevented a bank credit crunch as at that time, instead it made economic problems worse by promoting the allocation of an increasing share of bank credit to many firms least likely to use it.
The pertinent question any observer would be forced to ask is: was there any regulator or were there no regulations to check such practices, or was there an apparent lack of foresight as to where such practices would eventually bring the Japanese economy to?
Japan had its own banking regulator as is definitely the practice. Forbearance by bank regulators had allowed the banks to neglect restructuring of non-financial firms.
Enter the Amakudari: “descent from heaven.”
The term’s literal meaning “descent from heaven” refers to the descent of the Shinto gods from heaven to earth. In modern usage, it refers to the upper echelons of civil service, the civil servants are seen as the deities, and the earth is the private sector corporations.
The amakudari phenomenon partly explains the apparent weakness of Japanese regulators and regulations from preventing the initial factors that led to the present economic woes faced by Japan. Amakudari is the institutionalized practice in Japan, where Japanese senior bureaucrats retire to high profile positions in the private and public sectors. The practice is inherently corrupt and it is a drag on efforts to break the ties between private sector and the state which prevents economic and political reform.
Reforming the reformer (scrapping amakudari)
The relationship that exists between these senior bureaucrats and their former junior colleagues who would have replaced them fosters blind loyalty such as what is obtainable in the ranks of mobsters. It is in Japan’s best interest to break the blind loyalty between the regulators and the regulators, efforts at reform should first target institutional and cultural practices that sustain the greater and familiar economic crisis.
Amakudari and any of its variant (e.g. Yokosuberi or “sideslip” that is retiring to jobs at other government organizations) should be completely abolished. Such practices have proven over time to promote risky business practices. Regulations and proactive regulators are essential to healthy economic growth and sustenance. Japan lacks both because of those the descended from heaven. It is only wise to shut the gates of heaven before Japan is finally ruined by these angels. This will provide the vital first step which would ensure that other measures being muted by experts and economists will eventually get to be fully implemented without prejudice or interference that has always sabotaged such expert opinions.
The seniority and gender issues
Japanese society is one deeply built on respect and age based seniority. This has made Japan lose its knack for getting the best out of its human capital. Despite the superb literacy of its people, the cultural requirement of respect for seniority means that promotions go to the older, not the most able. Young executives with good ideas refrain from speaking up. Retiring presidents are also kept as chairmen or advisers, making it hard for the new boss to undo his predecessor’s mistakes. A rising executive at a big trading house says he was counselled by his seniors to keep his views hidden if he wanted to get on. Half of Japan’s talent is squandered. Only 8% of managers are female, compared with 40% in America and even China’s 20%. A manager at one of Tokyo’s biggest conglomerates says that 70% of qualified job applicants are women, but fewer than 10% are hired, since the work conditions may require visits to factories and mines, where they might perspire in an unladylike way.
Japan is also remarkably “racist” it maintains one of the purest race on earth with very few inter racial marriages. Japan is also not favourably disposed to foreigners and migrants. This has deprived it of the cheap labour offered by migrant workers seeking better living conditions. Instead, it has had to outsource manufacturing to other locations that offer cheap labour, whereas it could have exploited such cheap labour within its boarders. Bosses grouse that the young Japanese eschew overseas posts; even a foreign-ministry official confides that Japanese diplomats prefer to stay at home.
In an attempt to kick-start the Japanese economy again, the government of Japan took a cue from industrial-policy books of old. The trade ministry released a comprehensive new “growth strategy” which identified scores of vibrant sectors meriting government assistance, from overseas construction to attracting medical tourists and migrant workers. The report called for hundreds of reform, very extensive reform in some cases. But the bureaucratic egg heads responsible for drafting the report were promptly drafted to other jobs just a month later. Leaving observers in doubt about the sincerity of the government to implement the outcome of the reports.
This is a clear example of how the old static and “changeophile” Japan scuttles the new. Japan knows what is best for it.
References:
1.Fukao, Kyoji (2007) (PDF). Real GDP in Pre-War East Asia: A 1934-36 Benchmark
Purchasing Power Parity Comparison with the US. http://gpih.ucdavis.edu/files
/Fukao_Ma_Yuan.pdf.
2.Liu, Ta-Chung (1946). China's National Income 1931-36, An Exploratory Study.
The Brookings Institution.
3.Maddison, Angus (2003). The World Economy: Historical Statistics. OECD
Development Center, Paris, France. http://www.theworldeconomy.org/publications
/worldeconomy.
Japan knows what to do to get itself back on track, it needs no advice from anybody, it has all the human resource required to identify and tackle its current problems. The Japanese know how to fix Japan and I have no doubt in their ability to get things right.
Those who know Japan, have an eternally abiding faith in the ability of the country to get out of mess, they say that the country always seems to shuffle its feet but then snaps into action when faced with a crisis. It did so in 19th century, adopting modern ways to avoid being colonized, and again after the Second World War. Japan was the world's second largest economy for 40 years. But the qualities that made it an economic power house in the 20th century: easy capital, big companies, excellent education, disciplined and efficient management, and stable lifetime jobs for male breadwinners- are out of fashion with the 21st century.
Japan's biggest obstacle today is itself.
In the recently released global ranking of Newsweek magazine’s 100 Best Countries in the World, Japan was placed a not quite impressive 9th position of the overall ranking. Except in the health category which Japan undisputedly holds the 1st position, it hovered around 4th to 10th position for other categories such as education, economic dynamism, quality of life and happiness.
Its reluctance to change has become has led to an anticlimax for this once economic power house. Just some few weeks ago, when the global media was abuzz with the news of China overtaking Japan as the world’s 2nd largest economy, the general mood in Japan was resignation and hopelessness, it is understandable why such mood can overtake a people once proudly revered for their once enviable achievements.
Despondency and resignation is only naturally expected after being faced with two lost economic decades characterized by a protracted deflationary cycle, declining growth and an aging population.
But we must also remember that "faith without work is dead". Without dramatic reform, Japan will slip swiftly to number four, five and beyond.
However, we still need to take a look at Japan to see if we can identify any new or hidden issues militating against efforts to revive this ailing giant. For this, we need to take a deep retrospective look at Japan through its remarkable history. Starting from the Tokugawa shogunate, the first and second Meiji restoration, the modern era, until the great wars that humbled an ambitious Japan and subsequently its re-emergence as a global economic and industrial power house, and finally, to the current economic challenges that has plagued it.
Historical timeline of Japan:
Since 1854, when the Tokugawa shogunate first opened the country to Western commerce and influence (Bakumatsu), Japan has gone through two periods of economic development. When the Tokugawa shogunate was overthrown and the Meiji government was founded, Japanese Westernization began completely. The first cycle was during Pre-war Japan, the second cycle was during the period of Post-war Japan.
In the Meiji period, Japan, under visionary leadership, inaugurated a new Western-based education system for all young people, it sent thousands of students to the United States and Europe, and hired more than 3,000 Westerners to teach modern science, mathematics, technology, and foreign languages in Japan (O-yatoi gaikokujin). The government also built railroads, improved roads, and inaugurated a land reform program to prepare the country for further development.
In tandem with its objective to promote rapid industrialization, the government decided that, while it should help private business to allocate resources and to plan, the private sector was best equipped to stimulate economic growth. The greatest role of government was to help provide the economic conditions in which business could flourish. Essentially, government was to be the guide and business the producer.
In the early Meiji period, the government built factories and shipyards that were sold to entrepreneurs at a fraction of their value. Many of these businesses grew rapidly into the larger conglomerates. Government emerged as chief promoter of private enterprise, enacting a series of pro-business policies.
The development of banking and reliance on bank funding has been at the centre of Japanese economic development at least since the Meiji era.
In the mid 1930s, the Japanese nominal wage rates were 10 times less than the one of the U.S (based on mid-1930s exchange rates), while the price level is estimated to have been about 44% the one of the U.S.
Comparison of GDP per capita between East-Asian Nations and the U.S. in 1935:
Country GDP/capita, 1935$ (Liu-Ta-Chung [2]) GDP-PPP/capita, 1990$ (Fukao [1]) GDP-PPP/capita, 1990$ (Maddison [3])
U.S. 540 5,590 5,590
Japan (excl. Taiwan and Korea) 64 1,745 2,154
Taiwan 42 1,266 1,212
Korea 24 662 1,224
China 18 543 562
Oil crisis
Japan faced a severe economic challenge in the mid-1970s. The world oil crisis in 1973 shocked an economy that had become virtually dependent on foreign petroleum. Japan experienced its first post-war decline in industrial production, together with severe price inflation. The recovery that followed the first oil crisis revived the optimism of most business leaders, but the maintenance of industrial growth in the face of high energy costs required shifts in the industrial structure.
The subsequent result of the oil crisis was to increase the energy efficiency of manufacturing and to expand so-called knowledge-intensive industries. The service industries expanded in an increasingly post-industrial economy.
Structural economic changes, however, were unable to check the slowing of economic growth as the economy matured in the late 1970s and 1980s, attaining annual growth rates at only 4 to 6%. But these rates were remarkable in a world of expensive petroleum and in a nation of few domestic resources. Japan's average growth rate of 5% in the late 1980s, for example, was far higher than the 3.8% growth rate of the United States.
Despite more petroleum price increases in 1979, the strength of the Japanese economy was apparent. It expanded without the double-digit inflation that afflicted other industrial nations (and that had bothered Japan itself after the first oil crisis in 1973). Japan experienced slower growth in the mid-1980s, but its demand-sustained economic boom of the late 1980s revived many troubled industries.
Factors of growth
Complex economic and institutional factors affected Japan's post-war growth. First, the nation's pre-war experience provided several important legacies. The Tokugawa period (1600–1867) bequeathed a vital commercial sector in burgeoning urban centres, a relatively well-educated elite (although one with limited knowledge of European science), a sophisticated government bureaucracy, productive agriculture, a closely unified nation with highly developed financial and marketing systems, and a national infrastructure of roads. The build up of industry during the Meiji period to the point where Japan could vie for world power was an important prelude to post-war growth and provided a pool of experienced labour following World War II.
Second, and more important, was the level and quality of investment that persisted through the 1980s. Investment in capital equipment, which averaged more than 11% of GNP during the pre-war period, rose to about 20% of GNP during the 1950s and to more than 30% in the late 1960s and 1970s. During the economic boom of the late 1980s, the rate still hovered around 20%. Japanese businesses imported the latest technologies to develop the industrial base. As a latecomer to modernization, Japan was able to avoid some of the trial and error earlier needed by other nations to develop industrial processes. In the 1970s and 1980s, Japan improved its industrial base through technology licensing, patent purchases, and imitation and improvement of foreign inventions. In the 1980s, industry stepped up its research and development, and many firms became famous for their innovations and creativity.
Japan's labour force contributed significantly to economic growth, not only because of its availability and literacy but also because of its reasonable wage demands. Before and immediately after World War II, the transfer of numerous agricultural workers to modern industry resulted in rising productivity and only moderate wage increases. As population growth slowed and the nation became increasingly industrialized in the mid-1960s, wages rose significantly. However, labour union cooperation generally kept salary increases within the range of gains in productivity.
High productivity growth played a key role in post-war economic growth. The highly skilled and educated labour force, extraordinary savings rates and accompanying levels of investment and the low growth of Japan's labour force were major factors in the high rate of productivity growth.
The nation has also benefited from economies of scale. Although medium-sized and small enterprises generated much of the nation's employment, large facilities were the most productive. Many industrial enterprises consolidated to form larger, more efficient units. Before World War II, large holding companies formed wealth groups, or zaibatsu, which dominated most industry. The zaibatsu were dissolved after the war, but keiretsu—large, modern industrial enterprise groupings—emerged. The coordination of activities within these groupings and the integration of smaller subcontractors into the groups enhanced industrial efficiency.
Circumstances beyond Japan's direct control contributed to its success. International conflicts tended to stimulate the Japanese economy until the devastation at the end of World War II. The Russo-Japanese War (1904-5), World War I (1914–18), the Korean War (1950–53), and the Second Indochina War (1954–75) brought economic booms to Japan. In addition, benign treatment from the United States after World War II facilitated the nation's reconstruction and growth.
1980s
Throughout the 1970s, Japan had the world's second largest gross national product (GNP)—just behind the United States— and ranked first among major industrial nations in 1990 in per capita GNP at US$23,801, up sharply from US$9,068 in 1980. After a mild economic slump in the mid-1980s, Japan's economy began a period of expansion in 1986 that continued until it again entered a recessionary period in 1992. Economic growth averaging 5% between 1987 and 1989 revived industries, such as steel and construction, which had been relatively dormant in the mid-1980s, and brought record salaries and employment. In 1992, however, Japan's real GNP growth slowed to 1.7%. Even industries such as automobiles and electronics that had experienced phenomenal growth in the 1980s entered a recessionary period in 1992. The domestic market for Japanese automobiles shrank at the same time that Japan's share of the United States' market declined. Foreign and domestic demand for Japanese electronics also declined, and Japan seemed on the way to losing its leadership in the world semiconductor market to the United States, Korea and Taiwan.
Japanese post-war technological research was carried out for the sake of economic growth rather than military development. The growth in high-technology industries in the 1980s resulted from heightened domestic demand for high-technology products and for higher living, housing, and environmental standards; better health, medical, and welfare opportunities; better leisure-time facilities; and improved ways to accommodate a rapidly aging society. This reliance on domestic consumption also meant that consumption grew by only 2.2% in 1991 and at the same rate again in 1992
During the 1980s, the Japanese economy shifted its emphasis away from primary and secondary activities (primarily agriculture, manufacturing, and mining) to processing, with telecommunications and computers becoming increasingly vital. Information became an important resource and product, central to wealth and power. The rise of an information-based economy was led by major research in highly sophisticated technology, such as advanced computers. The selling and use of information became very beneficial to the economy. Tokyo became a major financial centre, home of some of the world's major banks, financial firms, insurance companies, and the world's largest stock exchange, the Tokyo Securities and Stock Exchange. Even here, however, the recession took its toll. In 1992, the Nikkei 225 stock average began the year at 23,000 points, but fell to 14,000 points in mid-August before leveling off at 17,000 by the end of the year.
1989 Economic Bubble: Enter the Lost Decades.
In the decades following World War II, Japan implemented stringent tariffs and policies to encourage the people to save their income. With more money in banks, loans and credit became easier to obtain, and with Japan running large trade surpluses, the yen appreciated against foreign currencies. This allowed local companies to invest in capital resources much more easily than their competitors overseas, which reduced the price of Japanese-made goods and widened the trade surplus further. And, with the yen appreciating, financial assets became very lucrative.
With so much money readily available for investment, speculation was inevitable, particularly in the Tokyo Stock Exchange and the real estate market. The Nikkei stock index hit its all-time high on December 29, 1989 when it reached an intra-day high of 38,957.44 before closing at 38,915.87. The rates for housing, stocks, and bonds rose so much that at one point the government issued 100-year bonds. Additionally, banks granted increasingly risky loans.
At the height of the bubble, real estate values were extremely over-valued. Prices were highest in Tokyo's Ginza district in 1989, with choice properties fetching over US$1.5 million per square meter ($139,000 per square foot). Prices were only slightly less in other areas of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped and Tokyo's residential homes were a fraction of their peak, but still managed to be listed as the most expensive real estate in the world. Trillions were wiped out with the combined collapse of the Tokyo stock and real estate markets.
With Japan's economy driven by its high rates of reinvestment, this crash hit particularly hard. Investments were increasingly directed out of the country, and Japanese manufacturing firms lost some degree of their technological edge. As Japanese products became less competitive overseas, it is believed that the low consumption rate began to bear on the economy, causing a deflationary spiral.
The easily obtainable credit that had helped create and engorge the real estate bubble continued to be a problem for several years to come, and as late as 1997, banks were still making loans that had a low guarantee of being repaid.
The time after the bubble's collapse, which occurred gradually rather than catastrophically, is known as the "lost decade or end of the century" (ushinawareta jūnen) in Japan. The Nikkei 225 stock index eventually bottomed out at 7603.76 in April 2003, moved upward to a new peak of 18,138 in June 2007, before resuming a downward trend. The downward movement in the Nikkei is likely due to global as well as national economic problems.
Japan’s problem are two fold: an intractable credit crisis which has inadvertently derailed the Japanese economy and a thinning labour force characterized by a fast aging population with a corresponding low birth rate that makes the prospect of replenishing the graying labour force harder to achieve.
The core problem of Japan is that it suffers from a gross misallocation of resources both financial and human. Japan has long kept the cost of capital low, to boost investment or help struggling companies. Since the financial crisis started, bureaucratic organs such as the Innovation Network Corporation (INC) of Japan and the Enterprise Turnaround Initiative Corporation (ETIC) have been allocated over $25 billion to revive ailing corporations. A good example of the misallocation of credit issue was the choice by ETIC of aiding a wireless operator which operates on archaic technology.
This is what can be described as “unnatural selection”, in Japan by agencies or lenders charged with the responsibility of providing credit to corporations that require funds. There exist perverse incentives for the allocating credit to needless sections of industry. The system almost guarantees that fresh capital goes to the losers of yester years. And because struggling companies rarely die, new ones do not form. Japan’s bankruptcy rate is half America’s; and the rate at which it creates new firms is only a third as high. Japanese venture capitalists are few. Japan’s bureaucratic allocation of credit seldom spurs animal spirits, instead it breeds zombies.
Japanese banks’ practice of continually extending credit to very weak or even insolvent firms. In Japan’s bank-centred economy, where banks often have the responsibility for corporate monitoring and governance, many lending decisions are strongly influenced by perceived duty to support troubled firms, rather than an objective, non-biased credit risk assessment, such as what is obtained in other developed economies. Both government policy and bank regulations in Japan actually encourage banks to keep extending credit to problematic borrowers, which is unofficially known as “evergreening of credit”.
Japanese banks fund firms to enable the firms make interest payments on outstanding loans, and thus avoid, or at least delay, bankruptcy. This practice allows the banks to have healthier “mirage” looking balance sheets, because the banks report fewer problem loans and make smaller loan loss provisions. The evergreening of bank loans for debt servicing purposes was widespread. With banks more likely to increase loans to firms with weaker financial health. With such practice widespread, banks had more incentives to extend additional credit to troubled firms with loans already outstanding as those same banks’ reported risk-based capital ratios neared their required capital ratios. What mattered most was the need to have a good appearance than the reality of best practices and adequate capital.
A second factor was, corporate connections made it even more likely that banks will extend such credit. Third, government-controlled banks were also more likely to increase loans to financially weak firms. Finally, the only firms that were not under pressure to evergreen loans to the weakest firms were non-affiliated, non-bank lenders. The evergreening of loans in Japan clearly insulated many troubled firms from market forces this may have prevented a bank credit crunch as at that time, instead it made economic problems worse by promoting the allocation of an increasing share of bank credit to many firms least likely to use it.
The pertinent question any observer would be forced to ask is: was there any regulator or were there no regulations to check such practices, or was there an apparent lack of foresight as to where such practices would eventually bring the Japanese economy to?
Japan had its own banking regulator as is definitely the practice. Forbearance by bank regulators had allowed the banks to neglect restructuring of non-financial firms.
Enter the Amakudari: “descent from heaven.”
The term’s literal meaning “descent from heaven” refers to the descent of the Shinto gods from heaven to earth. In modern usage, it refers to the upper echelons of civil service, the civil servants are seen as the deities, and the earth is the private sector corporations.
The amakudari phenomenon partly explains the apparent weakness of Japanese regulators and regulations from preventing the initial factors that led to the present economic woes faced by Japan. Amakudari is the institutionalized practice in Japan, where Japanese senior bureaucrats retire to high profile positions in the private and public sectors. The practice is inherently corrupt and it is a drag on efforts to break the ties between private sector and the state which prevents economic and political reform.
Reforming the reformer (scrapping amakudari)
The relationship that exists between these senior bureaucrats and their former junior colleagues who would have replaced them fosters blind loyalty such as what is obtainable in the ranks of mobsters. It is in Japan’s best interest to break the blind loyalty between the regulators and the regulators, efforts at reform should first target institutional and cultural practices that sustain the greater and familiar economic crisis.
Amakudari and any of its variant (e.g. Yokosuberi or “sideslip” that is retiring to jobs at other government organizations) should be completely abolished. Such practices have proven over time to promote risky business practices. Regulations and proactive regulators are essential to healthy economic growth and sustenance. Japan lacks both because of those the descended from heaven. It is only wise to shut the gates of heaven before Japan is finally ruined by these angels. This will provide the vital first step which would ensure that other measures being muted by experts and economists will eventually get to be fully implemented without prejudice or interference that has always sabotaged such expert opinions.
The seniority and gender issues
Japanese society is one deeply built on respect and age based seniority. This has made Japan lose its knack for getting the best out of its human capital. Despite the superb literacy of its people, the cultural requirement of respect for seniority means that promotions go to the older, not the most able. Young executives with good ideas refrain from speaking up. Retiring presidents are also kept as chairmen or advisers, making it hard for the new boss to undo his predecessor’s mistakes. A rising executive at a big trading house says he was counselled by his seniors to keep his views hidden if he wanted to get on. Half of Japan’s talent is squandered. Only 8% of managers are female, compared with 40% in America and even China’s 20%. A manager at one of Tokyo’s biggest conglomerates says that 70% of qualified job applicants are women, but fewer than 10% are hired, since the work conditions may require visits to factories and mines, where they might perspire in an unladylike way.
Japan is also remarkably “racist” it maintains one of the purest race on earth with very few inter racial marriages. Japan is also not favourably disposed to foreigners and migrants. This has deprived it of the cheap labour offered by migrant workers seeking better living conditions. Instead, it has had to outsource manufacturing to other locations that offer cheap labour, whereas it could have exploited such cheap labour within its boarders. Bosses grouse that the young Japanese eschew overseas posts; even a foreign-ministry official confides that Japanese diplomats prefer to stay at home.
In an attempt to kick-start the Japanese economy again, the government of Japan took a cue from industrial-policy books of old. The trade ministry released a comprehensive new “growth strategy” which identified scores of vibrant sectors meriting government assistance, from overseas construction to attracting medical tourists and migrant workers. The report called for hundreds of reform, very extensive reform in some cases. But the bureaucratic egg heads responsible for drafting the report were promptly drafted to other jobs just a month later. Leaving observers in doubt about the sincerity of the government to implement the outcome of the reports.
This is a clear example of how the old static and “changeophile” Japan scuttles the new. Japan knows what is best for it.
References:
1.Fukao, Kyoji (2007) (PDF). Real GDP in Pre-War East Asia: A 1934-36 Benchmark
Purchasing Power Parity Comparison with the US. http://gpih.ucdavis.edu/files
/Fukao_Ma_Yuan.pdf.
2.Liu, Ta-Chung (1946). China's National Income 1931-36, An Exploratory Study.
The Brookings Institution.
3.Maddison, Angus (2003). The World Economy: Historical Statistics. OECD
Development Center, Paris, France. http://www.theworldeconomy.org/publications
/worldeconomy.
Monday, June 21, 2010
Business 2.0: Business and Enterprise Going Micro
It first started with Microfinance, and then it forayed into Microinsurance. The general idea has been to harness the potentials of piecemeal financing schemes to better the lot of people who find themselves at the periphery of the mainstream economies of most developing countries.
Most people at the bottom of the economic pyramid in most societies have somehow been excluded from enterprise and the formal economy by a potent combination of factors which includes: lack of technical and administrative expertise, finance and access to markets.
This has had the unfortunate consequence of stunting their economic growth and caging the aspirations of social upliftment from the bottom of the pyramid (BoP), thereby forcing most of their micro enterprise into administration or being left to struggle with the inevitable prospect of folding up just a few years after starting out in business.
However, things are beginning to look up for most of these micro entrepreneurs with the advent of microfinance and microinsurance.
According to Wikipedia, microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services.
More broadly, it is a movement whose object is "a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers." Wikipedia Microfinance
The microfinance movement has rapidly taken root globally and has become a global movement especially among social entrepreneurs who see it as a veritable tool to eradicate endemic poverty.
Those who promote microfinance generally believe that such access will help poor people out of poverty.
On the other end of the table, microinsurance as it is also described by Wikipedia is “insurance characterized by low premium and low caps or low coverage limits, sold as part of atypical risk-pooling and marketing arrangements, and designed to service low-income people and businesses not served by typical social or commercial insurance schemes.” - Wikipedia Microinsurance
Microinsurance can be a very useful tool in ameliorating the suffering and hardship people at the BoP are often exposed to by the unfair realities and circumstances of life.
As Manuel Bueno discussed in his recent blog posting, microinsurance aims to help low-income people manage risk and reduce their vulnerability to shocks.
A useful examples of how microinsurance has helped poor people in need is the unfortunate case of Monica Kirunguru, a poor Kenyan woman who’s husband was hospitalized and eventually died.
Microfinance and microinsurance hold immense potentials as major tools for combating poverty, and if their potential is properly harnessed, the world could witness a dramatic revolution which would see the next billion rising from the BoP to the middle income level on a global scale.
Most people at the bottom of the economic pyramid in most societies have somehow been excluded from enterprise and the formal economy by a potent combination of factors which includes: lack of technical and administrative expertise, finance and access to markets.
This has had the unfortunate consequence of stunting their economic growth and caging the aspirations of social upliftment from the bottom of the pyramid (BoP), thereby forcing most of their micro enterprise into administration or being left to struggle with the inevitable prospect of folding up just a few years after starting out in business.
However, things are beginning to look up for most of these micro entrepreneurs with the advent of microfinance and microinsurance.
According to Wikipedia, microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services.
More broadly, it is a movement whose object is "a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers." Wikipedia Microfinance
The microfinance movement has rapidly taken root globally and has become a global movement especially among social entrepreneurs who see it as a veritable tool to eradicate endemic poverty.
Those who promote microfinance generally believe that such access will help poor people out of poverty.
On the other end of the table, microinsurance as it is also described by Wikipedia is “insurance characterized by low premium and low caps or low coverage limits, sold as part of atypical risk-pooling and marketing arrangements, and designed to service low-income people and businesses not served by typical social or commercial insurance schemes.” - Wikipedia Microinsurance
Microinsurance can be a very useful tool in ameliorating the suffering and hardship people at the BoP are often exposed to by the unfair realities and circumstances of life.
As Manuel Bueno discussed in his recent blog posting, microinsurance aims to help low-income people manage risk and reduce their vulnerability to shocks.
A useful examples of how microinsurance has helped poor people in need is the unfortunate case of Monica Kirunguru, a poor Kenyan woman who’s husband was hospitalized and eventually died.
Microfinance and microinsurance hold immense potentials as major tools for combating poverty, and if their potential is properly harnessed, the world could witness a dramatic revolution which would see the next billion rising from the BoP to the middle income level on a global scale.
Subscribe to:
Posts (Atom)