Economic Meltdown in Nigeria: Without Toxic Assets?
Written by Paul I. Adujie
New York, United States
The world partied and Nigeria did not join or was not invited; now, we are told that Nigeria is engaged in the heavy-lifting of cleaning-up the global meltdown? How so? Why? If the world’s economic players were students in a class, Nigeria was absent from that class, how then can an absentee student be punished alongside or with other students who were actually engaged in noisy unruly disruptive behavior, Nigeria was not the class!
If the world’s economic players were drivers being sanctioned for over-speeding, Nigeria abandoned her car at home and so, no sanctions for over-speeding; Nigeria did not partake in the drinking, how come then, we are being told that Nigeria will suffer massive hangover over other peoples’ drunkenness?
The current global economic meltdown was precipitated by over-leveraging and over securitization of mortgages principally in America. These leverages and over-securitizations were snapped up by banks, investment houses and sundry financial institutions in Europe and Asia.
Singapore is a known hub of financial and business transactions, among others, a major mid-shipping point. It is understandable that Singapore will feel the lull in shipping and global transactions
China is a major manufacturer and exporter of goods to the world, it therefore logical for China to feel the pangs of the global slowdown in demand, as economies are recession globally
India has publicly stated that the effects of the global economic meltdown will be mild or tepid because she does not export a lot and besides, India more than Nigeria is a recipient of foreign direct investment
How many banks, investments houses and other financial institutions in Nigeria invested or purchased securitized mortgages? How many Nigerian individuals were participants in the global gluttony which transpired during the last decade in America? How many banks in Nigeria actually practice mortgage banking in sizeable quantity? Nigerian banks unlike their American counterparts, do not invest sufficiently in housing or student loans for education, why should Nigerian banks suffer from a shock that may arise from investment specialty not practiced be Nigerian banks and from which Nigerian individuals do not and have not derived benefits?
How many mortgages did Nigerian banks write in the preceding ten years? How many student loans?
Nigerian banks for the most part, specialize in buying and selling the dollar! Hence they make huge profits year after year, while they have not investment in mortgages, no investment in agriculture, commerce or industry, and or student loans. Nigerian banks have not investment in the productive sectors of the Nigerian economy; they specialize in speculation on the daily fluctuations of Naira against the dollar! This ensures the impossibility of Naira dollar parity during the past twenty years!
It is also common knowledge that there were no influx and infusion of sizeable foreign direct investment, outside of the much vaunted GSM telephony. In view of that, what then will be foreign direct investments leaving Nigeria or what foreign direct investment will drying up? None! We never had them.
The Nigerian Stock Exchange is not known to be a global player. In fact, it might just be safe to say, that the NSE is not known at all, globally. The Nigerian economy is and has been in isolation. The value of the Naira, our national currency, has been in downward spiral since September, 1986.
It is not an overstatement to say that the Nigerian economy and economic “managers” does not respond to usual economic factors, parameters and indices. It is therefore a surprise to learn that an isolated economy is reacting to, and is affected by the topsy-turvy of modern economies.
Nigeria is not a major export of anything other than crude oil petroleum. Nigeria is not a manufacturer of anything. Other economies are affected by low demands for their manufactured goods and their exports. None of these are applicable to our monolithic crude oil based economy! Why then should Nigerians gird for the cataclysmic effect of a global economic meltdown?
There were, already in Nigeria, hyperinflation and high rate of unemployment. There were already slowed pace construction new public infrastructures or a nonexistent of expansion or rehabilitations of old ones. Our national car was already in the parking lot. We were not on the road driving like everyone else. How can we join those who have been driving and who are now out of gas? As it is, it is the case that Nigerians and Nigeria did not participate in the boom, in the pleasure of the drive while it lasted!
How then that when others now complain of the fatigue of their overdrive, we too are complaining? We never left the garage or parking lot with our car, let alone to have engaged in overdrive and it’s after effects! How is it possible for Nigeria to be seeking treatment for the securitization virus, when Nigeria was never infected in the first place?
Nigeria of course operates within the global market and financial system. It is understandable to expect some shocks and after shocks from the global meltdown, reverberating in Nigeria. But we are not manufacturers facing low demand for our products from overseas consumers. And Nigeria is not an exporter which faces low export volume due to lowered consumer confidences in a downturn.
Why the talk in Nigeria about the likelihood of a severe economic meltdown? Economic meltdown in Nigeria as a result of what Pension Plans or Health Insurance or Mortgage and overvalued housing market, from what bad investments or toxic assets anyway?
The ostentatious talk of economic meltdown in Nigeria is just galling. I am quite astonished! What investment portfolios and financial instruments were Nigerians holding in millions of dollars that could translate into this smorgasbord of financial ruin for individuals and institutions in Nigeria?
Nigeria maintains a foreign reserve, managed by banks or financial institutions which are not in bankruptcies as at the time of writing. What exactly seem to be the problems of those glib talkers?
Why therefore are Nigeria political charlatans-leaders and heads of banking and financial institutions claiming benefits or losses when they were infinitesimal players or when they were not market participants at all? Why are they selling their inefficiencies and ineffectiveness so loudly? All, in order to appear concerned; while pretending, that they are feeling the pains like the rest of the world? This is probably another excuse to loot and plunder the treasury, and then, blame the global meltdown?