The abyss facing Nigeria in the face of the growing world crisis of capitalism

Just a few months ago all the talk was of Nigeria avoiding the effects of the world crisis of capitalism, the idea being that the local economy was not as integrated into the world financial markets as the more advanced economies. Then suddenly things started to change...

At the beginning of 2008 the Nigerian economy was growing at a rate of 6% per year, high by average international standards. Over a nine-year period, between 1999 to the middle of this year, the price of crude oil shot up from US$20 per barrel to US$147. During that same period the production of crude oil in Nigeria increased four-fold to 2.5 million barrels per day. Huge amounts of revenue were flowing into government coffers, allowing the paying off of the foreign debt and the accumulation of $64billion in foreign reserves.

Just a few months ago all the talk was of Nigeria avoiding the effects of the world crisis of capitalism, the idea being that the local economy was not as integrated into the world financial markets as the more advanced economies.

Then suddenly things started to change. In March the Nigerian stock exchange entered into a free fall losing 3.4 trillion Naira (around 25 billion dollars). Nigeria no longer appeared as immune as some clever economists would have liked us to believe. The reason for this is not hard to find. Nigeria gets 97% of her foreign earnings from oil exports. In just a few months the price of oil has gone down from the high of US$147 per barrel to less than US$50, with demand plummeting.

Last year, faced with a powerful general strike, the newly elected Yar Adua administration backed off from an all-out confrontation with the Nigerian working class (See Nigeria: General strike is called off at same point as previous: "When it is a question of Power"). It could afford to do so because it was still riding high on the wave of the world boom. That boom is now over and we are looking at the prospect of what may be the worst recession since the 1930s. It could even be worse.

This situation directly affects the ability of the Nigerian government to manoeuvre in the face of growing social discontent. It is already creating difficulties in drawing up the 2009 budget. In the recent period, the government always fixed a "benchmark" price of oil that was well below the actual market price. In that way they could leave room for any fall in price on world markets and still be guaranteed the income to cover their projected expenditure. The benchmark for the 2009 budget was recently fixed at US$45 per barrel, when the real price was just above US$50. Now the real price has fallen to around US$45 and could fall further in the present climate, which underlines the serious financial situation the Nigerian government is going to find itself in in the coming period. Add to this the fact that while foreign reserves are still quite high, the internal public debt has reached US$20 billion. This is made up mainly of debts to the banks.

Faced with this situation, the Nigerian government has been considering increasing VAT on goods and also increasing the price of fuel at the pumps, the logic being that with revenue from oil exports going down they must find the revenue elsewhere. At the beginning of this year the government attempted to increase VAT from 5% to 10% but after a battle the government was forced to retreat and revert to the 5% level. In the situation that is opening up the government will be forced to push for the increase again early in 2009.

This means that just as the price or crude oil is going down so sharply the Nigerian workers and poor will be asked to pay more for fuel and basic goods. This alone can have an explosive effect on Nigerian society. We have seen many general strikes since "democracy" was ushered in in 1998 precisely over the question of the fuel price going up.

As if this were not enough, a whole series of other measures is also being considered. For example in Lagos State they have come up with the idea that everyone must send in their Income Tax Returns. In Europe this would seem reasonable, but in a country like Nigeria where the informal economy is huge and millions of people do not have regular work it is nothing but a provocation. The proposal is that if the police stop someone on the street and they cannot prove they have lodged a tax return they can be expelled from the State. This will affect street sellers, bike riders who offer a cheap taxi service and many other informal workers. They are even discussing introducing up to twelve different land use taxes and a new road tax.

Unbearable conditions

Life for the overwhelming majority of Nigerians is already unbearable enough, with 70% of the population living on one dollar or less per day per head. Most people lead a hand-to-mouth existence, not knowing how they are going to feed their families from one day to the next. In spite of its oil wealth, Nigeria is ranked amongst the least developed countries according to the list of countries by Human Development Index. It stands at position 158 out of 177 countries (2007 figures). Youth unemployment stands at 60%, a quarter of these being university graduates. Life expectancy stands at a miserable 46 years. Food inflation, which affects the poorer layers of society stands at 64%.

And yet Nigeria is a country with an abundance of natural and human resources, being the 8th largest oil producer and holding the 6th largest deposit of natural gas in the world. With a population of around 140 million, it is the largest country in Africa and accounts for one-sixth of the black population worldwide. In spite of its oil and gas wealth the growth in Nigerian per capita income throughout the 1990s was zero. Since the 1990s some claims have been made to prove that poverty levels have gone down, but these ignore the extremely unequal distribution of wealth. Urban poverty in 2004 stood at 63.27% of the population.

There is extreme social polarisation. Data for 1995 show that in Nigeria the 10% poorest section of the population got 1.3% of the national product, while the 10% richer got 31.3%. Some sources now indicate that 80% of wealth is concentrated in the hands of just 1% of the population. The Nigerian Gini coefficient stands at 0.43 but in some parts of Nigeria it has reached the extremely high level of 0.63. The Gini coefficient is used to define the degree of inequality of wealth distribution. It is measured from 0 to 1. The higher the coefficient the more unequal is distribution of wealth. Anything above 0.40 is considered as a sign of potential instability and social and political turmoil.

At the height of the boom Nigeria began to witness some of the phenomena that were very familiar to people in the advanced capitalist countries, with credit becoming available to a certain layer of the population. The middle classes - a very small layer of the population - began having access to mortgages and credit to purchase such items as cars. The middle classes were also sucked into the stock market boom, with financial advisers pushing them to invest in stocks. But as we have seen the Nigerian stock market has all but collapsed. This has severely affected people's savings and therefore ability to spend.

Crisis of Nigerian banking system

The Nigerian banking system is not equipped to face the present credit crunch. Attempts have been made to streamline the system through a process of mergers, which has seen the number of banks reduced from 89 to 24, but if one looks at the overall capital base, all the Nigerian banks put together cannot match up to one South African bank, and this in a situation where the South African banking system is feeling the stress of the worldwide credit crunch.

Several Nigerian banks risk going under in this situation. GTB and Intercontinental (which has 100 billion Naira in bad debts), for example, are dependent on foreign credit lines and are feeling the squeeze. The first victim of this situation has been the inter-bank rate which has reached 47%! This is pushing some Nigerian banks over the edge and we could witness a serious banking crisis over the coming period.

Added to all this is rising unemployment levels as jobs are cut as the world crisis of capitalism is felt inside Nigeria. Official figures indicate that that the economy is still growing, although less than at the height of the boom. The latest figures available indicate growth stands at 4.3%, but all projections are for a slower rate of growth over the coming year.

The crisis gripping the Nigerian economy has now expressed itself in the recent devaluation of the Nigerian currency, the Naira. The Naira had in fact managed to maintain a degree of stability over the last three years, thanks mainly to growing oil revenues, but it suddenly fell against the dollar on December 2nd. The Naira, which opened for trading at the inter-bank market on December 1st at N119.50 to the dollar, depreciated to N126.50 and then hit an all-year low at N132.50 on December 11th. This, together with other factors, is now feeding through the system in the form of growing levels of inflation, which now stands at around 14%, the highest since 2002.

Parasitic Nigerian bourgeoisie

Things are looking very gloomy for the Nigerian economy. But even at the height of the recent boom, the increase in the price of oil only benefited a very small layer of the population. Per capita GDP today is actually lower than it was in 1960 when Nigeria became independent. The Nigerian ruling class has proven totally incapable of developing the country. Everything is dependent on oil, but even the oil revenue has not been used to develop the infrastructure and the rest of the economy. Manufacturing accounts for only 1% of exports, whereas the bulk of imports are made up of manufactured goods. The investment that does take place is mainly foreign. In 2006 Foreign Direct Investment (FDI) stood at US$5.4billion, mostly from the United States. But the significant point is that FDI contributes to 74.8% of capital formation in Nigeria, which further underlines how small is the role of the local bourgeoisie in developing the economy.

The past decade has provided a bonanza of wealth for the Nigerian elite and what have they done with it? The transport system is in a mess, education is becoming more and more a reserve of the wealthy who can afford the fees, healthcare is beyond the reach of most Nigerians, everywhere people have to suffer long periods of power cuts. The whole infrastructure of the country is in decline.

However, while there is this daily suffering of millions, a tiny minority within the elite have become millionaires and billionaires over the past period, many of them stashing there wealth away in New York, London or Switzerland. They will do anything with their ill-gotten gains but invest it in really developing the country.

The Nigerian ruling class is utterly parasitical, and has proved totally incapable of developing the country in any meaningful way. It leeches off the investments of imperialism and serves as the latter's loyal local errand boy. It has applied the policies demanded by the IMF and the World Bank over the past decade, involving constant attacks on the workers and poor, cuts in subsidies on food and fuel, increases in school fees, attacks on pensions and healthcare and so on.

As one commentator in the Sunday Punch of November 30, pointed out, "So the gradual descent into the abyss has begun for Nigeria and Nigerians and from the look of things, our experiences between the 1980s and 1990s will be child's play."

Growing working class militancy

This has provoked a whole series of general strikes since "democracy" was ushered in ten years ago, the most recent being last year's powerful strike. But since then we have seen other important strikes. We had the NUT led teachers' strike. The NUT leaders were forced to call the strike under enormous pressure from the rank and file. Schools were closed for two months and in spite of the government's attempts to criminalize the striking teachers, the whole population rallied round the strike and stood firmly against the government. So strong was the support for the strike among other sections of the working class, that Abdul Wahab Omar, the president of the Nigerian Labour Congress (NLC), was forced to express backing for the teachers, at least in words. We had the oil workers' strike in October, the strike at Nigerian Airways three months ago over pensions, unpaid wages and privatisation, the ongoing struggle of the Chemical Workers' Union in Lagos State. Recently we also saw the Lagos doctors' dispute.

These are signs of the growing tension within society. A radicalisation of the Nigerian Trade Union movement is taking place in the present period. And most strikes have not ended in defeats, with either victories or compromises being reached. Thus we will enter the new year with growing levels of class struggle. The anger and frustration among the working and poor masses is building up and must find an expression very soon.

This is bad news for the Nigerian ruling elite, who need to launch a severe austerity programme in the coming months. This situation poses the question as to how the Nigerian ruling class is going to manage the situation. How can they impose on the working masses all the measures that are required by the needs of the system without provoking one almighty backlash by the workers? This is the dilemma they are facing.

The present political set up is seen as illegitimate by the masses. There was blatant and widespread fraud in last year's elections and no one really believes that the present occupants of the Nigerian  parliament (House of Representatives) really have a right to be there. This is a weakness in the system which makes it very difficult for the ruling elite to govern the country according to the needs of the capitalist class.

The National Question

One important issue that the Nigerian ruling class is totally incapable of resolving is the National Question. The only class that can offer a solution is the organised working class. Unless the Nigerian labour movement can offer the whole of society a way out the country could sink into ethnic conflict on a grand scale. Nigeria is a country of many languages, tribes and religions. In this situation of deepening economic and social crisis unless an answer is found to the terrible suffering of the millions of poor, at some point Nigerian can be turned against Nigerian.

The recent events in Jos (Plateau State) are a serious warning to the Nigerian workers of what can happen. On November 27 elections were held in the 17 local government areas of Plateau State. In the Jos North Local Government area there were protests claiming the election result had been rigged. The State Governor imposed a curfew but this did not stop the violence that was about to unfold.

The conflict very quickly assumed an ethnic/religious connotation, as one of the main candidates was Muslim and the other Christian. Very soon churches and mosques were being burnt in tit-for-tat revenge attacks. In the first bout of violence 50 people were killed, but in the following days over 400 ended up being killed.

Similar outbursts of ethnic based violence have occurred in different parts of Nigeria over the years. At present there is an ongoing conflict in the Niger Delta (see Niger Delta: the bankruptcy of individual terrorism and the historical crisis of capitalism and Niger Delta, the price of oil and the class struggle) a lot of people are being killed, and there is a proliferation of arms, which the central government seems incapable of doing anything about.

In this critical situation the government has been defaulting on the payment of soldiers' wages and that explains why the army in some areas is close to mutiny, as can be witnessed by the situation in Ondo State. Soldiers have even been involved in selling guns from the army's munitions depots!

Some international commentators have even pointed to the possibility that at some point in the future foreign military intervention may be required to tackle the situation in the Niger Delta. But no one should have any illusions that this would be to defend the interests of the people who inhabit the region. It would be presented as another extension of the so-called "war on terror" but in reality it would be to guarantee that the oil continues to flow out of the country to the benefit of the major imperialist powers.

The role of Adams Oshiomhole

As we have seen, the Nigerian working class is growing ever more militant. It is angry and is demanding serious action to solve the many problems working people face. Therefore the ruling class desperately needs someone who has authority, who has legitimacy and that can convince the workers to stand back.

Adams Oshiomhole, former president of the NLC (right) (Picture source: Wikipedia)
Adams Oshiomhole, former president of the NLC (right)

In this sense what recently happened in Edo State is of extreme significance for future developments in Nigeria. As well as national parliamentary elections last year, the local State governors were also elected. In Edo State Adams Oshiomhole, the former president of the NLC, (Nigeria Labour Congress, the main trade union confederation of Nigeria), stood as candidate for governor for the Action Congress party (AC), a bourgeois party that was set up in 2006 as a merger of several bourgeois forces.

Back in 2004 at the conference of the NLC the idea had been raised that Adams was to stand as the candidate of the Nigeria Labour Party, which had earlier been launched by the unions in 2002 as the Party for Social Democracy (later changing its name to Nigeria Labour Party). (See Nigerian Labour Party: What manner of Workers' Party? and also Can the programme of the PSD solve the problems of the Nigerian workers?)

Instead what we had was the confusing and anomalous situation whereby the Nigeria Labour Party stood bourgeois candidates in the elections. For example Femi Pedro, a former Deputy governor of Lagos State, stood as the Labour Party candidate for governor, having recently abandoned the Action Congress in protest against the AC's decision to stand Tinubu as its candidate in Lagos State. Thus we saw a bourgeois party like the AC standing Adams as its candidate in Edo State, while the Labour Party was standing bourgeois candidates.

In spite of the fact that Adams Oshiomhole stood on an AC ticket in Edo State, he is seen by the masses as "Labour", the reason being that up until recently he was the President of the NLC and is seen by the masses as having led all those general strikes of the recent period. He is very popular in Nigeria. Indeed he is probably the most popular politician in the country and has great authority among the Nigerian working class.

It was clear to everyone that Adams Oshiomhole won the gubernatorial elections in Edo State last year, but blatant fraud was perpetrated and he was declared the loser. Similar fraud was carried out elsewhere, but the main attention was focussed on Edo State, given the stature of Oshiomhole.

This time, however, the fraudulent result was challenged in the courts and the courts overthrew the official result and declared Oshiomhole the winner. This is unprecedented for Nigeria, but one can easily understand it if one reads the real mood that exists among the Nigerian masses. Someone had to give the Nigerian masses hope that some justice would be done by someone. In stepped the Judiciary. (See The Nigerian judiciary and electoral fraud).

Commenting on this The Guardian (Nigerian) published an interesting article on November 27 by Regis Uwakwe, which said the following: "The verdict [on the EDO State gubernatorial elections] also raised hopes that the judiciary is the last hope of the common man and the oppressed." The article goes on to say: "The relative peace we still enjoy in the country today in spite of the charade of the last general elections, stems from the renewed confidence that most Nigerians now have the hope that they would obtain justice from the courts and election tribunals."

As soon as Adams Oshiomhole was declared the rightful occupant of the State Governor's seat in Edo State he started making a series of announcements on job creation, the payment of back-wages to workers who have not seen payments for months, public spending, etc., which have raised even further the hopes of the Nigerian masses, not just in the State but right across Nigeria. How he is going to find the finance to back these proposals is another matter. He is after all only a local governor and depends on central government for funding.

He has, however, acted on some issues that give hope to many Nigerians. For example he has intervened on previously issued tenders for public works, drastically reducing the amount of money that private contractors would receive. This was possible simply because the previous contracts included huge amounts that were to go on lining the pockets of politicians and contractors rather than being spent on the actual projects.

Oshiomhole also insists on being referred to as "Comrade Governor", comrade being the term Nigerian trade unionists use to refer to one another. He does not wear fancy clothes, but continues to appear in his traditional khaki, so much so that even some governors in other states have started to copy him! This kind of behaviour adds to the already enormous popularity of the man.

In November the leaders of the NLC, and also the TUC (Trade Union Congress, that organises "senior staff") visited Oshiomhole and as The Guardian points out, "They... put their weight behind the [State] government with a call for the people to be patient as the government settles down."

This is not at all a little detail in the Nigerian situation. The Nigerian working class is extremely powerful and it has shown its ability to mobilise several times in recent years. The recipe the Nigerian ruling class has in store for the workers will provoke widespread anger and resentment. A huge confrontation between the classes is being prepared. In this the Nigerian elite needs someone with authority, someone the masses can believe in. That explains why the courts declared Oshiomhole the rightful governor of Edo State.

Oshiomhole is seen as "Labour" even though he stood for the AC, and in future he may be called on to play a crucial role in Nigerian politics. Had Oshiomhole stood as the Labour Party candidate, last year's election result could have been radically different. With Oshiomhole at its head the Nigeria Labour Party would become an unstoppable force, harnessing the power of the millions of workers and poor of Nigeria. That in part explains why he did not stand on a Labour ticket; for had he been elected as a Labour candidate he would have aroused even greater enthusiasm. But he would also come under enormous pressure to act in the interests of the Nigerian masses. Such are the conditions in Nigeria that once the masses start to mobilise behind a credible candidate they will assume an unstoppable force. This would be extremely dangerous for the Nigerian ruling class.

They would of course prefer to keep Oshiomhole at the level of governor of Edo State. Many Nigerian bourgeois would resent such a man taking a leading role in Nigerian politics, but at some point in the future they may be forced to call on him to play a greater role. So long as they can hold the situation they will put off the day when they have to go own such a road. But such is the pressure that is building up within Nigerian society that some radical solution will have to be found.

In the past an impasse like the one that is being prepared would have led to a military coup, but in the present conditions where the working class has not been defeated and is preparing to flex its muscles once more that solution is not an immediate option. In the future a military coup is not ruled out, but several things must come to pass for such an option to become reality once more.

At the moment the working class is growing in strength. The middle classes also are being seriously affected by the economic crisis. In the rural areas poverty is on the increase. The social base of the regime is very thin. In such a situation the most likely outcome is that the trade union leaders will be called on to play more of a political role. Adams Oshiomhole has started this process.

For a genuine party of labour backed by the NLC

In such a situation what should be the approach of the Marxists? In Nigeria Adams Oshiomhole is looked up to by the working and poor masses, who have great hopes in him. Unfortunately the man decided to stand for a bourgeois party, a party that in no way can be used to defend the real interests of working people. He should have stood for the Labour Party. The combination of Adams Oshiomhole and the Nigeria Labour Party would have provided a powerful voice to the Nigerian working class.

He is now making promises and policy statements which lean in the direction of reforms for the workers. Marxists support any genuine reform that is beneficial to the working class. However, we also warn that closed within the limits of the AC party Adams Oshiomhole will not be able to solve the fundamental problems facing workers in Edo State. If Adams wants to really defend the interests of the Nigerian workers, he should break with the AC and put himself at the head of the Labour Party.

The other side of this equation is the present state of the Nigeria Labour Party. The Marxists in Nigeria called on the NLC leaders to form a Labour Party. When they did so they were derided by some for putting forward an "unrealistic" proposal. Eventually elements within the NLC did launch a Labour Party, but they did it in such a way as to give it no teeth, no real backing, no real publicity. On top of that they allowed bourgeois renegades from other parties to use the Labour Party to promote their own personal careers. In this way they have emasculated the Labour Party, sowing confusion within the movement.

What is required is a Labour Party without any of these bourgeois scoundrels. Let them leech off other parties, not the party that is supposed to represent the Nigerian working class. The Labour Party should be clearly presented as the political voice of the NLC. It should stand trusted workers' candidates under the control of the same workers who select them, and the party should campaign for a genuine programme of socialist transformation, which means calling for the nationalisation under democratic workers' control and management of the commanding heights of the economy.

Such a party has to be fought for, struggled for and campaigned for. The Marxists, while being sympathetic to the aspirations of the working masses in Nigeria and understanding why they look to Oshiomhole, are also duty-bound to always be concrete and tell the truth. If the ranks of the NLC took up such a position it would begin to lay the basis for finally providing the Nigerian workers with the party they deserve. That is what the Marxists struggle for within the Nigerian labour and youth movement.

See also: