The world is currently suffering from the recklessness of a minority few who believe that it is their right to dictate the direction we all must follow. A deep financial crises has been rocking the foundations of stock markets everywhere, crippling industries and leading to economic recession. And there appear to be no end in sight. Some analysts in major economies have predicted that the financial crises could become worse and only comparable to the Great Depression of the 1930s.
There has been noticeable panic in Asia, Europe, Australia and the Americas, and the governments of the G-20 most industrialised countries have foreseen the likelihood of a protracted recession beyond 2009. In a recent summit of the G-20 held in the U.S, decisions were reached to have a global coordinated effort in tackling the crises that has eroded the confidence of the ordinary people, who have watched with bewilderment their life savings washed away by the tides of the financial crises.
Various reasons has been adduced for the cause of the global financial meltdown, and top of which includes corruption, greed and irresponsible behaviour among operators of the free market economy, who have carried on their avarice for so long enriching themselves with little or no regulatory checks by government.
While addressing the French people in September 2008 on the cause of the global financial meltdown and the far reaching implication for France, President Nicolas Sarkozy unequivocally stated:
''.......The idea of the all-powerful market which wasn't to be impeded by any rules or political intervention was a mad one. The idea that the markets are always right was mad. For several decades we created conditions in which industry operated with the aim of achieving short term profitability. The growing risks people were forced to take to obtain increasingly exorbitant profits were concealed. Remuneration systems were put in place which drove dealers to take more absolute reckless risks. People pretended to believe that by pooling the risks they made them disappear. Banks were allowed to speculate on the markets instead of doing their job which is to mobilize savings for economic development and analysing the credit risk. The speculator rather than the entrepreneur was financed. The rating agencies and speculative funds were left totally unsupervised. Firms, banks, insurance companies were forced to write down the value of their assets in the accounts at market prices which go up and go down at the whim of speculators. Banks were subjected to accounting rules which provide no guarantee on the proper management of the risks but which, in the event of a crises, contribute to exacerbating the situation instead of cushioning the shock. It was a madness for which we're paying the price today. This system, where someone responsible for a disaster can leave with a golden parachute, where a trader can lose his bank 5 Billion Euros without anyone noticing, where people demand from businesses returns three or four times higher than the growth of the real economy----this system has created inequalities, has demoralized the middle classes and fuelled speculation on the property, commodities and agricultural markets. But this system---this has to be said because it's the truth---isn't the market economy, it isn't capitalism. The market economy is a regulated market, a market serving as a tool for development, serving society, serving everyone. It isn't the law of the jungle, it doesn't procure exorbitant profits for some and make everyone else make sacrifices. The market economy means competition, reducing prices, eliminating the huge dividends gained without effort, and benefiting consumers. Capitalism isn't a system for the short term; it's for the long term, the accumulation of capital and long term growth. Capitalism isn't a system giving primacy to speculators. It gives primacy to entrepreneurs; capitalism rewards labour, effort and initiative. Capitalism isn't a system for diluting ownership and for widespread irresponsibility; capitalism means private ownership, individual responsibility, personal commitment, a code of ethics, morality and institutions......The financial crises we are experiencing today isn't the crises of capitalism. It's the crises of a system which has distanced itself from capitalism's most fundamental values, which has betrayed the spirit of capitalism.......''
Those were strong words from someone who should know better and who holds himself responsible for the well being of his people. President Sarkozy agrees that the cause of the current global financial meltdown isn't capitalism, but the irresponsibility that has attended the operation of capitalism. Call it irresponsible capitalism. This view is shared by many including political leaders in the West and in Asia. And decisive steps are being considered to forestall a future reoccurence of the crises.
No one is leaving anything to chance anymore in the effort to push through the financial meltdown through effective reforms. The protection of the middle class has become paramount in advanced climes and would dictate the direction of government policies in the coming months.
In all of these, African countries appear to be complacent, bluffing in their delusion that the global financial meltdown isn't affecting their economies. The response of Africa to the crises is that of lukewarmness, to say the least. Little wonder that the organisers of the G-20 summit declined invitation to any African country, though some African leaders frowned at that gesture.
I have listened with dismay to government officials and top officials of the monetary authorities in Nigeria, who have argued that Nigerians have no reason to worry as far as the global financial crises is concerned. But under our nose, we have all watched the Nigerian capital market shrunk by more than 40% in the last few weeks. And we are also witnessing the global price of crude oil fall in an unprecedental manner to below US$50 per barrel from over US$150 per barrel in few months. It is a known fact that the Nigerian economy is oil dependent.
No doubt, the Nigerian authorities are being economical with the truth regarding the impact the current global financial meltdown has on the Nigerian economy.
While banks in Nigeria continue to report huge profits, the real and agricultural sectors are made to groan under financial burden informed by outrageous borrowing interest rates which could be in excess of 35%. Firms are unable to access funds for expansion, and the SMEs sub-sector is worst hit. What is worrisome is that the government appear not to be bothered and the monetary policy regulators remain indifferent.
The question I want to ask therefore is: Can Nigeria become one of the top 20 economies in the world by the year 2020 [ which is the National aspiration ] when presently the economy cannot be said to be competitive? The cost of production soars frequently in the country due to infrastructural deficiencies, power outages [ leading firms to source for alternative power supply ] and high cost of borrowing from banks.
The scenario replicates in many African countries. African economies are not competitive. And that is the truth. And I think that is why Africa can afford to bluff at the global financial crises because nothing appear to be at stake for the continent. Really?
Where is the middle class in Africa? Isn't it a case of the opulent rich and the extreme poor?
The corruption and greed in Africa is more than being phenomenon. It is a thriving institution that governments on the continent are unwilling to abolish. It is a theory whose proponents thrive on the ignorance and massive illiteracy of their people. The people take and believe whatever explanation given to them by their political leaders on any issue. And the courageous African media has endeavored to filter truth from falsehood, given the harsh environment under which they operate, to better educate the masses. But how many people can afford to buy newspapers regularly or own a TV/RADIO set. Majority of Africans live below a dollar per day.
The emergence of the middle class in Africa would be a task for future African political leaders who would muster enough will to do what ought to be done. And as time begins to fashion that out, it is imperative to stress that the market economy is a good model for Africa's growth, so long as operators and regulators do their bits in a responsible manner. The economy should not be left in the hands of the private sector alone, the views of the World Banlk/IMF notwithstanding. That to me is the biggest lesson that the global financial meltdown has taught.
Finally, it is time for businesses in Africa to operate with morality, even as it is also time for politicians on the continent to play politics with morality and govern with morality.
In the words of Mikhail Gorbachev,
''.....without a moral component, any system is doomed to fail.''
Africa must stop bluffing and begin to act right for the sake of future generations.
Adedayo Adetoye
Tel: +234 805 191 2385
e-MIAL: adetoyeadedayo@googlemail.com
There has been noticeable panic in Asia, Europe, Australia and the Americas, and the governments of the G-20 most industrialised countries have foreseen the likelihood of a protracted recession beyond 2009. In a recent summit of the G-20 held in the U.S, decisions were reached to have a global coordinated effort in tackling the crises that has eroded the confidence of the ordinary people, who have watched with bewilderment their life savings washed away by the tides of the financial crises.
Various reasons has been adduced for the cause of the global financial meltdown, and top of which includes corruption, greed and irresponsible behaviour among operators of the free market economy, who have carried on their avarice for so long enriching themselves with little or no regulatory checks by government.
While addressing the French people in September 2008 on the cause of the global financial meltdown and the far reaching implication for France, President Nicolas Sarkozy unequivocally stated:
''.......The idea of the all-powerful market which wasn't to be impeded by any rules or political intervention was a mad one. The idea that the markets are always right was mad. For several decades we created conditions in which industry operated with the aim of achieving short term profitability. The growing risks people were forced to take to obtain increasingly exorbitant profits were concealed. Remuneration systems were put in place which drove dealers to take more absolute reckless risks. People pretended to believe that by pooling the risks they made them disappear. Banks were allowed to speculate on the markets instead of doing their job which is to mobilize savings for economic development and analysing the credit risk. The speculator rather than the entrepreneur was financed. The rating agencies and speculative funds were left totally unsupervised. Firms, banks, insurance companies were forced to write down the value of their assets in the accounts at market prices which go up and go down at the whim of speculators. Banks were subjected to accounting rules which provide no guarantee on the proper management of the risks but which, in the event of a crises, contribute to exacerbating the situation instead of cushioning the shock. It was a madness for which we're paying the price today. This system, where someone responsible for a disaster can leave with a golden parachute, where a trader can lose his bank 5 Billion Euros without anyone noticing, where people demand from businesses returns three or four times higher than the growth of the real economy----this system has created inequalities, has demoralized the middle classes and fuelled speculation on the property, commodities and agricultural markets. But this system---this has to be said because it's the truth---isn't the market economy, it isn't capitalism. The market economy is a regulated market, a market serving as a tool for development, serving society, serving everyone. It isn't the law of the jungle, it doesn't procure exorbitant profits for some and make everyone else make sacrifices. The market economy means competition, reducing prices, eliminating the huge dividends gained without effort, and benefiting consumers. Capitalism isn't a system for the short term; it's for the long term, the accumulation of capital and long term growth. Capitalism isn't a system giving primacy to speculators. It gives primacy to entrepreneurs; capitalism rewards labour, effort and initiative. Capitalism isn't a system for diluting ownership and for widespread irresponsibility; capitalism means private ownership, individual responsibility, personal commitment, a code of ethics, morality and institutions......The financial crises we are experiencing today isn't the crises of capitalism. It's the crises of a system which has distanced itself from capitalism's most fundamental values, which has betrayed the spirit of capitalism.......''
Those were strong words from someone who should know better and who holds himself responsible for the well being of his people. President Sarkozy agrees that the cause of the current global financial meltdown isn't capitalism, but the irresponsibility that has attended the operation of capitalism. Call it irresponsible capitalism. This view is shared by many including political leaders in the West and in Asia. And decisive steps are being considered to forestall a future reoccurence of the crises.
No one is leaving anything to chance anymore in the effort to push through the financial meltdown through effective reforms. The protection of the middle class has become paramount in advanced climes and would dictate the direction of government policies in the coming months.
In all of these, African countries appear to be complacent, bluffing in their delusion that the global financial meltdown isn't affecting their economies. The response of Africa to the crises is that of lukewarmness, to say the least. Little wonder that the organisers of the G-20 summit declined invitation to any African country, though some African leaders frowned at that gesture.
I have listened with dismay to government officials and top officials of the monetary authorities in Nigeria, who have argued that Nigerians have no reason to worry as far as the global financial crises is concerned. But under our nose, we have all watched the Nigerian capital market shrunk by more than 40% in the last few weeks. And we are also witnessing the global price of crude oil fall in an unprecedental manner to below US$50 per barrel from over US$150 per barrel in few months. It is a known fact that the Nigerian economy is oil dependent.
No doubt, the Nigerian authorities are being economical with the truth regarding the impact the current global financial meltdown has on the Nigerian economy.
While banks in Nigeria continue to report huge profits, the real and agricultural sectors are made to groan under financial burden informed by outrageous borrowing interest rates which could be in excess of 35%. Firms are unable to access funds for expansion, and the SMEs sub-sector is worst hit. What is worrisome is that the government appear not to be bothered and the monetary policy regulators remain indifferent.
The question I want to ask therefore is: Can Nigeria become one of the top 20 economies in the world by the year 2020 [ which is the National aspiration ] when presently the economy cannot be said to be competitive? The cost of production soars frequently in the country due to infrastructural deficiencies, power outages [ leading firms to source for alternative power supply ] and high cost of borrowing from banks.
The scenario replicates in many African countries. African economies are not competitive. And that is the truth. And I think that is why Africa can afford to bluff at the global financial crises because nothing appear to be at stake for the continent. Really?
Where is the middle class in Africa? Isn't it a case of the opulent rich and the extreme poor?
The corruption and greed in Africa is more than being phenomenon. It is a thriving institution that governments on the continent are unwilling to abolish. It is a theory whose proponents thrive on the ignorance and massive illiteracy of their people. The people take and believe whatever explanation given to them by their political leaders on any issue. And the courageous African media has endeavored to filter truth from falsehood, given the harsh environment under which they operate, to better educate the masses. But how many people can afford to buy newspapers regularly or own a TV/RADIO set. Majority of Africans live below a dollar per day.
The emergence of the middle class in Africa would be a task for future African political leaders who would muster enough will to do what ought to be done. And as time begins to fashion that out, it is imperative to stress that the market economy is a good model for Africa's growth, so long as operators and regulators do their bits in a responsible manner. The economy should not be left in the hands of the private sector alone, the views of the World Banlk/IMF notwithstanding. That to me is the biggest lesson that the global financial meltdown has taught.
Finally, it is time for businesses in Africa to operate with morality, even as it is also time for politicians on the continent to play politics with morality and govern with morality.
In the words of Mikhail Gorbachev,
''.....without a moral component, any system is doomed to fail.''
Africa must stop bluffing and begin to act right for the sake of future generations.
Adedayo Adetoye
Tel: +234 805 191 2385
e-MIAL: adetoyeadedayo@googlemail.com
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