#OccupyNigeria: Between 'Strike' & 'Protest'

As 2011 rounded up with the fall of the 40-year-plus totalitarian Libyan regime, many observers reached the conclusion that such a revolution would wreck the fragile social fabric of sub-Saharan Africa if it ever happened to occur in the 'frontier' region. That scenario is currently being tested as Africa's biggest oil exporter - Nigeria - is currently under 'occupation', ironically, by her own citizens.

However, there are clear divergences between the triggers that sparked the Arabian Spring and the Nigerian case. In north Africa, these massive uprisings were mostly initiated by the citizens with decades of suppression and sinister containment of the citizenry by government serving as the main catalysts. In Nigeria, on the other hand, the protests - actually a strike action by the labour unions - can be safely approximated to knee-jerk reactions to the removal of subsidies on Petrol Motor Spirit by an 8-month old government, even though it may have served as an opportunity to protest against the wider corruption, excesses and inefficiencies of government. This divergence is particularly noteworthy because it is inconceivable that Nigerians may be asking for the resignation of President Jonathan - a duly elected leader - under a year into his administration. The #OccupyNigeria movement is increasingly becoming laced with an unfortunate lack of focus and concentration on the issues at hand. As is obvious from various sections of the nationwide protests, political opponents of the Jonathan administration have seized the opportunity to appeal to the fancies of the protesters. A growing challenge has become the dynamics of managing the protesters by the leaders of the labour unions. It is also remarkable that the more common word on the streets is now PROTEST, not STRIKE, even though it was initiated under the legal framework of the latter. The strike action initiated by the national labour unions is slowly slipping out of the control of the union leaders. I perceive that a call to end the strike by the union leaders may not necessarily end it since a critical reference point has been developed in the mind of the common protester - the Arab Spring mentality - which essentially usurps the initial motivation for the mass action. The situation is becoming more fluid and getting potentially difficult to place a timeline on when and at what point the protest will really end. 

The Subsidy Quasi-Revolution

Nigeria may be likened to a foster child who has been rotated through a sequence of irresponsible parents and when 'seemingly' responsible parents come along, the child ceases to believe that his interest and welfare has become the priority of the new parents. With a reference to typical human behaviour, that reaction is perfectly normal.

Unfortunately, Nigeria will have have to choose between the devil and the deep blue sea under the current circumstances. Many Nigerians protesting under the idealistic inclinations of the 'Arab Spring' fail to realize that historically, REVOLUTION tends to redistribute POVERTY more than it redistributes WEALTH...

Selective Cleansing

In the on-going onslaught on the Nigerian state, the perpetrators of violence and mayhem have maintained an obvious MO; waste the masses, bomb social and religious institutions, but RAID the banks. Apparently they must be in short supply of the necessary funding to keep their engine of indoctrination and violence running. The raiding of the banks is also not as frequent as the destruction of human lives. That systematic destruction needs funding. 

By engaging in SELECTIVE institutional cleansing, it is clear to the average Nigerian that an agenda more complicated than the headline news tells the citizenry is being carried out, with the intelligence of the malicious activities increasing linearly as the days go by.

Africa's Data Problems

Obtaining reliable data from many places on the African continent is still a big challenge. Economic data published by the UN and other related agencies give workable estimates, yes, but to achieve near-uniform development across sectors, a breakthrough in data collection, organization and analysis is imperative. The failure of a majority of state institutions of National Planning to achieve remarkable results in sub-Saharan Africa has its foundations in the fractured framework of data handling and analysis in African nations. Consequently, where there is no dearth of political will, the governments still lack the crucial information they need to drive sustainable growth in many African states. We cannot continue to rely on the estimates of international agencies to come to the knowledge of ourselves and our environment. This protracted dependence will do no good to African states in the long term. Africa must 'own' and drive the growth she wants. Nigeria provides an example. 

The Nigerian economy has been projected to exceed that of South Africa, the continent’s largest economy, in a little over a decade (though it might happen sooner with the current plans to use the reference year for computing Nigeria’s real GDP as 2008). A cursory survey of both economies brings an apparent disparity to the fore: the informal economy in Nigeria is largely unaccounted for compared to that of South Africa. This of course has fostered the flourishing of a cancerous culture of tax evasion in Nigeria over many years. In the place of the Federal Inland Revenue Service (FIRS), the ‘taxes’ are paid to a unique set of amateur regulators who have instituted themselves as protectors of certain informal enterprises.  In the end, such loopholes filter through to the central government with the result that insufficient resources weaken not just fiscal policy, but wreck the national development plan even while it is still in black and white.

Seemingly, the UN (or the IMF or the World Bank), with all its mandates and great responsibilities (with the result that it should probably be busier than any other non-profit entity in the world), has more information about a country than the country itself. Of course state information is an essential resource for the delivery of its mandate, but do the international agencies desire prosperity more for any African state than the state desires for itself? 

For Africa's real transformation, a revolution in our capacity to collect, interpret and analyze data – all done correctly – will catalyze and accelerate the process of African development. The tools are available already, what needs developing is our capacity – African Education – and the right deployment of this capacity in high probability setups for not just lifting Africa from poverty but also going forward to being able to tackle 21^st century challenges. The rest of civilization provides Africa with a rich history of invaluable lessons. The opportunities are tremendous. 

Finally, the educational system of the typical African state leaves a lot to be desired. As more  investments are projected to flow into Africa in the coming decade, the local management of such investments becomes a priority. The 'rich' human resources in Africa may NOT be useful if incompetence is the order of the day and the inability to handle economic prosperity is as pervasive as oxygen. 

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Africa and the Chinese Question [4]

“The world is in the middle of a huge demographic transition that will have a significant effect on long-term economic trends”

– Mapping the Markets, The Economist (2006)

Part 3 of this series was concluded with the idea that a new benchmark index must be formulated by African societies that will serve the following purposes: first, as a basis for compromise during sector-investment negotiations and finally, as a guide for deeper integration with other emerging markets. The definition and adoption of a sound contextual framework are key steps in African economic policy development and should not be misconstrued as conspiratorial efforts to place the welfare of the African above that of her trading or investment partners. Instead, the framework should be viewed as a necessary underpinning that will highlight the foibles of the current system of doing business, correct them and move to guarantee 21^st century mutual benefits for all parties involved.

Since the dawn of the 20^th century, the demographic standing of any geographical region has become a critical economic factor in determining sector-resource allocation, the future directions of that region and the ripple effects of regional activities on the larger global economy. With the growth rate of the ageing populations of the developed world projected to continue northward (as a result of low infertility and increased life expectancy), there will be an unvoiced demand on Africa and other developing states to export her teeming youth to run and maintain the established systems of advanced economies. This demand arises from the obvious pressures of the generic African society, not necessarily from developed nations. The underlying mechanics of this human-capital export scheme are not novel. Noticeably, shifts in geographical locations have become unnecessary as technology becomes more interleaved with business activities – more young Africans are going to be working for multinational corporations of western origin domiciled in Afro-localities. Africa must grow and develop, but as long as the current structure that impels GDP growth persists, her prosperity will largely be determined by the business cycles of advanced economies, whose interests the multinationals represent (understandably), and emerging markets.

As mentioned earlier, the characteristic African growth trend is high GDP growth rates and meagre HDI growth. According to a 2011 economic report released by a synergy between the African Union and the United Nations Economic Commission for Africa,

The improved economic performance achieved over the last decade has not been translated into commensurate reductions in unemployment and poverty, nor significant progress towards the Millennium Development Goals (MDGs), especially in sub-Saharan Africa. The continent is experiencing a jobless recovery; apparently perpetuating a fundamental feature of its previous growth spell...the [African] development process has to be planned for several reasons. The changes required are substantial and therefore the decisions cannot be optimally made by free market forces...

Without trivializing the preceding sections of the AU-UN report, I choose to prey on the secondary clause that contains “free market forces”; this brings the Chinese to the fore again, albeit in a way that demands we take a superficial look at their economic growth model.

The Chinese system of socialism, interlaced with some features of free market ideology, has elevated her economy from the doldrums that resulted from the fall-out of the Cultural Revolution of the mid-sixties. 1983 circa, marked a year of opening for the Chinese market to the world when Deng Xiaoping reversed some of the debilitating policies of Chinese revolutionary, Mao Zedong. However, the state retained control of the economy and continued to counter Harvard economist, Joseph Schumpeter’s theory of “Creative Destruction”, as the state played a central role in allocating resources to sectors of the Chinese economy based on partisan prejudices. Hinging her economy on exports and being fully aware of the tides of floating exchange rates, China adopted a fixed exchange rate policy to encourage her local industries and keep her exports competitive on the international market. Discounting the relative closed-door, policy stance maintained by the Chinese economists, it is clear that China’s currently enviable, economic position cannot be diametrically attributed to the interplay of “free market forces”. 

Without ambiguity, the required structure that will lift Africa economically and socially cannot be left to the whims of the global economic order. I do not, by this submission, suggest that African economies implement fixed exchange rates or close our doors to foreign trade – indeed foreign trade is in our best interest – but we must become proactive and act ‘offensively’ (rather than defensively) to the mercurial landscape of global economics. A major transition occurred in China’s economic fundamentals when more emphasis was placed on the intellectual evolution of the ordinary Chinese and the development of a strong knowledge economy while manual labour was and is gradually (but progressively) being relegated to the back-seat. The US and Japan have been the early champions at converting raw intellectual capital to great products and services, while the former imperialist machine – the United Kingdom – has been playing catch-up, choosing the financial services space instead. The global trend is clear; at a point in its economic history, the United States manufactured a great percentage of its goods in the US until China and other Asian economies presented themselves as cheaper manufacturing destinations, with great human populations and low-wage regimes playing the role of process catalysts. China’s dominance in the global outsourcing manufacturing sector can only continue for as long as the Chinese knowledge-economy reaches a globally competitive stage. As Chinese demographic data suggests, this is inevitable. In a few years, the Chinese economy will morph into a high-capacity service-based economy with mass goods manufacturing outsourced to Africa and other developing Asia-Pacific economies. Whether Africa will be able to play that role is a different matter altogether. Currently, however, Africa does not show any desire to follow this historical developmental trend. Another source of pressure for Africa will emerge as a consequence of the current economic crisis ravaging the industrialized world.

In coming to terms with her unfavourable demographics and dwindling reputation for innovation, the United States is making serious attempts at reviewing her immigration laws and policies; the idea is to strengthen the United States’ position on the pinnacle of innovation in the world. According to history, I believe the US will reassert that enviable position, by word and by action. Job growth and unemployment are major issues as the 2012 US election year looms. Some states have taken steps to increase the retirement age – putting more of the population to work and reducing social services expenditure. Everything will be done to attract the world’s best – again. Developing economies will have to work harder to keep their professional and skilled citizens or else they will be at the losing end of the intense global competition that will result when the current crisis is over. With the demographic data tilting towards an exponential growth of retirees in advanced economies like the US and the UK, the tendency is for a gradual but steady exodus to occur from the southern hemisphere to the northern hemisphere. The cerebral elite of many African states have become conscious global citizens. They cannot be pinned down to a distressing geographical location for too long, besides the legacy atmosphere of Afro-nationalism continues to wane by the day. They will, by choice or by the pressures of the environment, move to places in the world where their life and work are treated as assets of first priority.

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Africa and the Chinese Question [3]

"We shall [here] define PROGRESS as the increasing CONTROL of the environment by LIFE." - from The Lessons of History by Will & Ariel Durant 

A simple inference from previous parts of this work is that China has made relatively consistent progress over the last couple of decades. Historically high global commodity¹ prices lend credence to this fact. Africa, a rich haven of raw materials, has 'witnessed' her trade volume with China increase by more than 20% from $91billion in 2009 to $110billion in 2010². Turning the searchlight on Australia, a developed country, rich in commodities but running a substantially diversified economy, we see another resource-rich nation with high economic activities similar to that between China and Africa; between 2010 and 2011, Australian exports (with iron-ore constituting a great proportion) to China represented 33.05% of all merchandise exports to east Asia³. The value of exports to east Asia in monetary terms is put at more than A$170billion (around US$166billion) by the Department of Foreign Affairs and Trade of the Australian government. The high economic growth in China continues to demand ever more resources to fuel and encourage her staggering growth rates. I explain this further with the chart⁴ below:

The graph shows the relationship between two sets of data; China's GDP growth rate from 1999 to 2010 and the average yearly Commodity Metals Price Index for the same period. The green line represents the Commodity Metals Prices Index while the red line represents China's GDP growth rate. Immediately apparent is the steady, almost proportional growth of both data sets. A considerable depreciation in the price index (-7.8%) is observed between 2007 and 2008 when correspondingly China's growth momentum lost 4.6 percentage points. This was during the credit crisis. The calculated correlation is 63.85%, which I consider to be relatively high using the growth data of a single country.  

However, it is important to look though the screen of increased trade volumes and GDP to some other "less-news-making" data. The Human Development Index (HDI) serves a useful purpose in this regard. The question of its bias and inadequacy is an argument for another day. Australia has continued to remain in the top five of the HDI trend data while many African societies have continued to remain at the bottom. It is general knowledge that Africa has continued to grapple with the concept of a resource curse; the ability to convert her  favourable demographic status and raw materials to social prosperity has not been exploited (or is absent?). In Africa, we find that it has become commonplace to resist any comparison with the developed world (like Australia), but I ask, against what or who shall we compare ourselves? I see no point in belabouring the problems of Africa; my objective for this work is purely advisory. The thirteenth chapter of Will and Ariel Durant's book, The Lessons of History, bears the title, "Is Progress Real?". That question is blowing in the wind.

As is usual and normal for any entity, China will tend to tread a path of least resistance in her journey to sustained economic glory. More importantly, the necessary back-up structures and frameworks of redundancy will be created to guarantee that China is not stopped in her steps - why should China be stopped? With this in mind, I am constrained to infer that Africa's trade volume with China can only increase, as Africa (discounting all neo-imperialistic reasoning and general paranoia) presents little or no policy resistance to any malign trade conditions between herself and China. The events that have transpired in Zambia recently present a strong case study. China's growth has demanded more copper than ever before. Zambia happens to be a nation with one of the largest, export-grade copper deposits. The Chinese thinking in establishing a copper mining plant in the Zambian Copper-belt region is analogous to a multinational that decides to cut costs by procuring a commodity at the source of extraction, in the process bypassing the vagaries of the international commodities market.  All other (proclaimed) incentives such as GDP growth for the local economy, community development and social elevation are secondary. Of course that is understandable. China must grow. I resist the temptation of deliberating on the issue of the mine workers' demands and the ensuing political issues because I believe that the springboard of any mutual Afro-Chinese economic interplay must transcend the levels of an employee-employer relationship. 

However what is clear from the foregoing is that China's mission in Africa is one that is justified by the simple theory of natural selection. China must survive. Her ideological foundations must thrive and evolve. If Africa must play at a respectable level of international trade and negotiation, then as a matter of unequal priority, she must substantially improve her "Gross Intellectual Product". Africa will have to define a new index for collective progress and relate to China and the rest of the world based on that definition. Africa has survived for too long on instinct. Instinct has its place in human relations but when complex, human systems have been thought through and designed, instinct may become an individual's (or a people's) undoing. 

...to be continued

1 A commodity is a physical product such as grain (like wheat) or metal (like aluminium) which can be exchanged for a similar product and investors can buy and sell as a means of speculation and hedge against future risk through a futures exchange. 

2 Source: Standard Chartered

3 Source: data computed with inputs from the Department of Foreign Affairs and Trade of the Australian Government. 

4 Chart was plotted with China's GDP growth rate inputs from The World Bank Group and historical Commodity Metal Price Index inputs from The International Monetary Fund. 

Africa and the Chinese Question [2]

"The SOCIALIST system will eventually replace the CAPITALIST system; this is an objective law independent of human will. No matter how hard the reactionaries try to prevent the advance of the wheel of history, sooner or later revolution will take place and will surely triumph."

- excerpt from Mao Zedong's speech at the joint meeting of the Supreme Soviet of the USSR in celebration of the 40th anniversary of the Bolshevik Revolution (November 6^th, 1957).

[In order to achieve brevity in this series and focus primarily on the factors that I believe should inspire Africa's policies and handling of economic issues regarding China, I will skip the details of the fundamental ideologies and flash-points in the history of the People's Republic of China (PRC), but will make references to what I consider relevant to the current discourse]

In the first part of this series, I laid a general background describing the 'special' connection between the United States and China. The excerpt above, adapted from Chairman Mao's speech in the former Soviet Union, is very informative for our current economic epoch. It provides a necessary perspective into the unfolding relationship between the US, representing much of the developed world and China and how the dealings between the world's bastion of free markets and the increasingly prosperous socialists will form the framework which Africa might be forced to operate within over the next couple of decades.

As has been echoed from the political standpoint by the former US Secretary of State, Henry Kissinger and the private sector angle by Martin Sorrell, CEO of WPP Group, China is only a ‘returning’ world power. This is a view held by many. My opinion is that China is returning as a more open society compared to her pre-20^th century status as a relatively isolated, self-sufficient economy. I believe that China’s isolation could be attributed to the fact that the characteristically high, internal economic activities could sustain the nation and maintaining little or no contact with the West (mainly the British) assuaged her fears about imperialism which was sweeping across the entire world during the era. The infamous Opium Wars represented the first, concerted steps in the introduction of the Chinese economy to the world (it goes the other way too).  

With economic strength comes higher negotiating power and prestige in the arena of international politics. Needless to say, China currently possesses such capacity and resources in great proportions. However, China had previously assumed a back-seat position as the rest of the moved on, mainly due to the tightly-controlled economy and late catch-up to the digital directions of the world. China has managed her finances well over the decades, growing her economy from single to double digit growth rates by the mid-2000s as the graphical illustration below shows*.

While the rest of the world, especially the capitalist pack, throttled on, inventing ever-more complex financial debt instruments and subjecting their economies to series of booms and bursts, China for a large part of the two decades maintained a relatively silent, closed economy (only joining the World Trade Organization in 2001) and relying heavily on her power of exports. China's fixed exchange rate has helped her maintain competition in the international market for her cheap exports. By this I mean that China's exchange rate (to the US Dollar) is not left to float; with China's large pool of foreign exchange reserves, efforts are continually made to sell the yuan (or officially the Renminbi) while racking up greenbacks. Of course, the higher the supply of yuan in the Chinese economy, the lower the value and the less amount of goods a Chinese can purchase (and managing inflation becomes a challenge as a result). 

I consider it pertinent to state that China has attained her current status without adopting the innovation ideologies of capitalism and will, if she ever had any doubts before the credit crunch of 2007-2008 (till date), stick to her reformed socialism (with Chinese characteristics) principles. One could argue against Chairman Mao's statement, arming himself with the reality of the collapse of the Soviet Union in 1991, highlighting that we are inherently limited in our grasp of what the future holds. On the other hand, the same debater would be defenceless in the face of the current phase of the evolution of the global financial system. Yes, I consider it an evolution because since the Great Depression, the global financial order has witnessed various boom and burst cycles typified by credit expansion, miscalculation of risk, relaxation of lending rules and credit rating agencies, bubble growth, more credit expansion, bubble burst, higher regulation and the cycle repeats itself. 

It is also important to note that China's current position in the global marketplace was engendered to a large degree by the United States' consumer-driven economy. As the US and the rest of the developed world maintained the running of the capitalist engine, China grew and expanded with the free-market ideology as the main catalyst (even though de-localized). The capitalist system (with all its benefits and flaws) has abetted and proven 'successful' the socialist system (with Chinese characteristics). 

to be continued...

* Source: TradingEconomics.com, The World Bank Group.