Chapter Two – Failure of Neo-Liberalism

Anti-Corruption Crusade?

During his campaigns and at the early period of his tenure, President Obasanjo was waxing eloquent on the need to stamp out corruption in government. This is a mere verbal crusade as the corruption “business” continues to flourish, as usual. While a few minor government officials have been arrested and put on trial, the big-time corrupt politicians and public servants are still treated as sacred cows. A graphic example is Lieutenant-General Jeremiah Useni (rtd), the former minister for federal capital territory and close ally of the late General Sani Abacha. Though he confessed to having unjustly acquired dozens of choice landed properties in the federal capital city, Abuja, he has never been prosecuted. Equally, General Ibrahim Babangida, who presided over one of the most corrupt regimes in Nigeria’s history, still lives freely in his 50-room mansion in Minna, Niger State and even visits Aso Rock to consult with President Obasanjo. Also, in a very rotten and disgraceful deal, the Obasanjo government has agreed that the Abacha family should keep $100 million out of the money looted by the late dictator and his cronies from the Nigerian treasury.

Hundreds of billions of naira has been voted for electricity, road construction, etc. by the various tiers of government. Nonetheless, electricity supply remains epileptic for most of the 30% Nigerians that have access at all to light. As usual, most of the money voted for these projects has been looted by top government officials in collaboration with their local and foreign capitalist contractors. This is aside from the fabulous salaries and allowances that are being paid to top executives and parliamentarians across the country. While the masses groan under excruciating poverty, top government officials, from president to local councilors, and their wives, continue to embark on frivolous foreign trips drawing large allowances and estacodes in dollars, from public purse.

Endless Nightmare

Overall, economic life and prospects have remained in a state of stupor and decay. The real value of naira continues unabated along the path of systematic decline. In May 1999, when the Obasanjo regime came to power, ₦85 was needed as an exchange for $1. Today $1 exchanges for ₦145. At 35%, the prevailing bank exchange rate forecloses the possibility of long term borrowing by the real sectors of the economy. There have been reports that industrial capacity utilization has risen slightly from about 34% to 40%. But this calls for no cheer as it must be evaluated against the background of the reduced capacity caused by the closure of several factories and plants over the past two decades that the economy has been in recession. This Day newspaper of April 13th, 2002 reported the president of Manufacturers’ Association of Nigeria, Charles Ughwu, as saying that Nigeria’s Gross Domestic Product (GDP) grew by 3.8% in 2001 according to official estimate. But this figure falls far short of the national plan target of 10% growth rate.

It is significant that this year is the 20th anniversary of the ending of the “oil boom” and the first austerity package of the Second Republic announced by the then President Shehu Shagari. The history of the whole period since Nigeria’s so-called independence in 1960 has been capitalism’s inability to develop Nigeria. Even technically simple things like providing clean water, sanitation, continuous electricity and good transport have proved too much for weak Nigerian capitalism to provide and not profitable enough for imperialism to invest in.

But the leaderships of the six registered political parties (PDP, ANPP, AD, UNPP, NDP and APGA) have said, times without number, that “market force”, private enterprise and foreign investment will continue to constitute the central planks of the country’s economic strategy.


Plainly put, Obasanjo and virtually all members of the capitalist ruling class across the parties see privatization of the commanding heights of the economy and the liberalization of the entire economy in compliance with the dictates of imperialism and finance capital, as the best solution to problems of economic decay and underdevelopment. If it may be stressed, there is nothing new either about this counter-productive strategy or its particular implementation in Nigeria. The only thing that could be said to be new is the unprecedented, neck-breaking speed with which the Obasanjo regime has been selling collective resources and heritage to a few capitalist corporations in the name of privatization! Of course, more than ever before, the Obasanjo regime and the Nigerian capitalist elite in general, have been under pressure from imperialism to “open up” the economy further.

A major factor for this is the change in world situation. When Nigeria’s oil industry was nationalized in 1975 the Nigerian bourgeoisie, like others in the neo-colonial world, was able to a limited extent to balance between the two super powers. But, following the collapse of the USSR, imperialism has dominated the world. Although it may be possible, in the future, to play off one group of imperialists against another, this will really only be possible when serious conflicts develop between the different bandits, and even then it will have the character of only getting brief breathing spaces. In the 1990s we have seen the general drive of all the imperialist countries to open markets etc. The key point for a country like Nigeria is that it cannot follow the same path of development that Western Europe, the USA and Japan undertook. This is because today the imperialist countries already dominate the world economy and developing countries are faced with already developed competitors. Countries like South Korea and Taiwan that have developed in the last period were exceptions because there were strategic political reasons for the main imperialist powers to encourage their development. Of course the imperialist countries can undertake operations or production etc. in the neo-colonial world, but they are only subsidiaries.

The first two years of the Obasanjo regime was devoted to sales of public corporations in several key sectors of the economy, including petroleum, construction, insurance, hotels, cement industry, telecommunications, etc. So far, only a meager sum of N19 billion has been realized as proceeds from privatization of assets that cost tens of billion dollars originally! If only for this fact, privatization is nothing but an act of legal looting of public assets by a few capitalist elements and multinational corporations.

The inefficiency, poor performance and corruption that characterize public corporations such as NITEL, NEPA, Airways, etc. are what are being used as pretexts for their privatization. But the capitalists who are selling and buying these public assets are the ones responsible for their failure in the first instance, through their acts of under-funding, mismanagement, nepotism and looting. Having run these public assets aground, they now want to sell them to themselves cheaply at rock-bottom prices!

Privatization is thus nothing but a brazen act of robbing the poor to settle the rich. Never be deceived that the privatization program was designed to rid government of unproductive and unprofitable ventures. In practice, it is usually the other way round. Ponder this quotation from page 42 of The Guardian of March 24th, 2002: “NICON for ten years had been the most successful business. In 1999, NICON was posting a profit of N1 billion. While big insurance companies were selling out to competitors, NICON was expanding its trading interests in hotels, manufacturing and other areas in Nigeria. NICON is the largest insurance company in Africa with assets in excess of $1 billion. When the Yorkshire Insurance Company, a British firm in Nigeria, fell into bad times, NICON bought it over and made it a profitable business concern in the name of Niger Insurance Company. Why then must this company be privatized?”

This and other lucrative ventures and resources must be privatized because privatization, first and foremost is an organized racket wherein the most powerful foreign and local capitalist elements rob the public of its resources and wealth for little or nothing. Nothing shows this negative syndrome better than the recent purported sale of NITEL.

NITEL’s total purchase price was put at $1.185 billion. By the sales agreement, the successful bidder was expected to pay a sum of $136.7 million i.e. the equivalent of 10% of the purchase price as advanced payment. The rest 90% was to be paid after purchase agreement has been duly concluded and signed by the parties. However, when this was done, the successful bidder, Investors International London Limited (IILL) neglected/failed to pay the balance of the agreed sum. Certain reasons including political instability, sluggish economic climate, etc have been cited, amongst other things, as reasons why this company could not even pay the highly under estimated purchase price!

Even the 10% paid was gathered from different other capitalist corporations obviously looking for easy profits. First Bank of Nigeria Plc gave this fictitious parasitical company called IILL a huge sum of $96.2 million without consultation or permission of depositors, most of whom are middle class and working class people. Continental Holding SA of Hamburg put down a sum of $10 million, while SIOTEL Limited and Sunny Odogwu contributed $20 million.

Meanwhile, the original idea sold to the public was that these commanding heights of the economy would be sold to “core investors” who are expected to have sufficient technical knowhow and financial muscles. But what happens in reality?

Those that bought government shares in UNIPETROL are the ones bidding for government shares in AGIP. Their simple plan is to secure a loan of about N8 billion, which they will need to buy Agip, from bank(s). As soon as the deal sails through, the corporate headquarters of AGIP will be put up for sales to partly repay the purchase loan.

All these reveal how, under the guise of privatization, capitalist elements and their finance institutions buy public assets with public money and turn them into their own private properties.

It must always be stressed that the cardinal objective of privatization is to open new ways for profit making by the multinational corporations and their local allies. This will further deny the working masses and the poor segments of society access to the basic necessities of life such as food, education, medicare, jobs, etc. Thus, privatization is a recipe for permanent social crisis and violence amongst classes and nations of the world or that of a given country like Nigeria.

For instance, the world richest individual, Bill Gates, and other 2,999 super rich individuals are said to be richer than the poorest 2 billion people on earth. But according to United Nations Economic, Social and Cultural Organisation (UNESCO) and World Health Organisation (WHO), a sum of $40 billion, judiciously spent, is enough to wipe out curable diseases and illiteracy from the surface of earth. This US$ 40 billion is also less than the amount by which President Bush is increasing US military spending in the aftermath of the 11th September 2001 terrorist attacks in the US. The privatization drive is not concerned with the issue of how this sum can be raised but how to transfer the natural and human resources of the universe into the hands of a few super billionaires. Hence, the road of privatization is the road of mass poverty and the concomitant social crisis and violence.

Trade Liberalization

The other central plank of Obasanjo’s economic strategy is called trade liberalization. This is the same ruinous, counterproductive policy usually preached by international business monopolies and their cronies in governments and institutions such as World Trade Organization (WTO), World Bank and the IMF. The conventional argument is that trade and investments, and through this productivity and profitability, will only flourish when there is little or no trade and economic restrictions, by the different countries of the world. So everybody should be free to sell and buy from anywhere in the world. But in practice, this policy has shown to be more beneficial to the companies and countries of the advanced capitalist world to the utter disadvantage of the underdeveloped countries like Nigeria.

Under the guise of liberalization, the nation’s commanding heights of the economy are sold at giveaway prices to the highest bidder invariably a foreign company or local company backed by foreign business concern!

Simultaneously, the feeble local industries are usually destroyed by the more efficient and cheaper foreign competitors. This explains while a large proportion of so-called local industries and corporations do little these days beyond acting as conduit pipe for the importation and sales of goods produced outside the country. This is the basis of the perpetual low level of capacity utilization, as well as massive unemployment in society.

Yes, the economic and social emancipation of the working masses and mankind in general is a task that can only be fully actualized within the framework of international economic and social integration. However, this integration can only be able to attain its true, selfless potential only if the entire natural and human resources of the universe are democratically planned for the use of entire mankind and consideration for the environment as opposed to the prevailing practice of seeking to appease the insatiable and irrational profit greed of a few super billionaires.

This is the basic contradiction facing the working masses today. If the universe resources is not owned, controlled and managed democratically by the working people of each capitalist country and jointly in collaboration with the working peoples of all countries, it will inevitably be owned, controlled and dominated by a few capitalist corporations and their directors. This of course, as it had been pointed out before, can only be a recipe for perpetual misery and instability.