Much has been said about the ‘global recession’ (an expression that now seems to be a catch all phrase for an economic downturn). Various explanations have been headlined for this phenomenon- suffice to say none fully engaged my probing mind. Economic jargons used merely sensitised my antennae to identify the underlying ‘untruth’. Shrinkage of the economy (recently announced in Britain- a contradiction of a previous announcement), reduced ‘GDP’, inflation/ deflation and so on are all a mask of a primary problem- too much borrowing, a result of bad decision-making during the period of perceived ‘plenty’ and easy credit (in the case of Europe and America). In the case of Nigeria, it is not clear how much the global recession has affected the economy (except perhaps on the OPEC front).

Until now, the boom at the Nigeria’s Stock Exchange made it possible for Soludo to veil banks’ underperformance, curiously also applauding the strength of the Naira against other major global currencies and never missing an opportunity to re-instate the ‘impressive’ low inflation rate in Nigeria (when it was clear to the ordinary man on the street that the cost of buying bread or ‘a cup’ of gari (never mind the cost of buying pure water sachets) was becoming unbearable! Sanusi now has the unenviable task of unpicking and unpacking some of these anomalies. To a degree, some margin-lending was responsible but then the stock exchange crashed having been propped up for so long! In the case of Britain, the Welfare System is the bane of the British economy- forcing the government into more and more borrowing and even ‘off-loading’ some of its gold reserves in order to prop up public spending; after considerations-no doubt, to the fact that tax payers are struggling to even breathe air without being surcharged- Corporation tax, Income Tax, VAT, Council Tax, the list is endless! Rightly or wrongly, many believe that you are better off claming state benefits and get everything free than work your long hours and give everything to Her Majesty’s Revenue and Customs.

Having said that, the welfare state has created generations (in some families- first, second even third generations of able-bodied people have not done a day’s work in their lives!) of lazy, unambitious, uninspired and unskilled people whose myopic criticism of British immigration policy is rooted in their own insecurity- failing also to realise that the so-called foreigners (being accused of taking jobs and houses) are responsible for the economy ticking over. The benefit system is a good thing if one looked at Beveridge’s blueprint for social security in the British post-war era. It was essentially birthed from the post-war reconstruction strategy at the time. The concept of Social Security itself imitates an insurance system where your contributions when you are earning (like any insurance premium) guarantees you certain level of cover for specific period of time. Candidly, this level of thought about improving the lot of the people needs to be imbibed by Black African governments.

I say ‘Black African’ because so far our leadership appear uninterested in the hardship of the poor. Nigeria is a prime example- a country with immense natural wealth and unmissable poverty on its horizon. This comment may be slightly unfair given that no society is devoid of poverty and it can also be said to be relative. Its relativity can best be described by this example- a Church of England Reverend once ‘contentiously’ said that in Hackney (an area of East London) poverty is defined by the lack of a plasma TV whereas in parts of Africa it is defined by the lack of food. I look at example of the Arabic Countries in the oil wealth cadre- the people are looked after by their governments. In the diaspora we often measure how well a people are doing by the extent of their visibility. For example, you would not find many Libyans as Nigerians working in Britain. Then again, you could argue that in France for example the numbers could be different. Nonetheless, citizens of Dubai, Bahrain or Saudi-Arabia presumably get some trickle of their oil-wealth albeit in a repressive way where ‘freedoms’ are restricted and rights are limited- an uncomfortable trade-off some would say.

The divergence probably ends there, a common factor in Nigeria and these countries is the erroneous perception that the Country’s wealth exclusively belongs to a clique of individuals. Coming back to the global economy, the world is perhaps experiencing the effects of post-capitalism! Look at the breakdown of Communist Russia for example and the emergence of Gorbachev’s twinned concepts of ‘perestroika’ and ‘glasnost’. My Russian friend reminisce about Communist Russia and talks about the splintering and unsightly humbling of the Russian people when butter was rationed and the imageries of starvation and poverty were beamed for the world to see at the aftermath of communism. I asked why he feels capitalism was bad for Russia; he said that at least communism guaranteed employment and a good living standard. I sensed the sadness in the tone of his voice when he trailed off saying ‘at least the government looked after the people’.

Of notable significance of post-communist Russia was the rise of Billionaire oil Oligarchs following the sell-off of previous government owned enterprises. In recent years, Britain has witnessed an influx of these Oligarchs who began to buy into British business entities. Abramovich, owner of Chelsea Football Club is an example. On the one hand capitalism has freed the markets globally and in some instances its positive effects are localised. Too much liquidity, access to easy-credit and too much interference with market mechanisms are some of the negative effects of capitalism- which are again felt locally. Over the last few years empires have been built on credit. Governments- even individuals over-extended themselves borrowing from Peter to pay Paul.

One could say there was recklessness in lending on the one hand and in borrowing on the other; collateralising debts no longer became an issue nor was credit-rating (the term ‘sub-prime’ comes to mind here). Investment traders had a free rein, high risk/ high returns were the order of the day. Recent events in the Nigerian Banking system are variants of this same culture. Collapse in Britain is attributed in part to similar banking excesses. But the alarm bells had been sounding from the time of the collapse of Barings bank in 1995 unheeded. Recent global events show that the rot was allowed to fester with the delusion that economies were ‘doing well’: In Britain, some of the indices used are misleading for example- prior to now Retail Price Index was used but currently Consumer Price Index is used. The problem is that consumer activities measured under both indexes are driven by credit- mortgage lending, credit card, store card, Hire Purchase etc. are credit driven! This leads me to ask if the bubble has finally burst or am I missing something?