SEE NO EVIL, HEAR NO EVIL

Government is no doubt the biggest business in Nigeria, so it is in countries around the world. Exception is that in more economically developed lands, especially those that are inclined to the capitalist economic model, rather than government to directly engage in the economic arena, they provide an environment where individuals play the economy in pursuit of personal benefit for the good of society in accord with the policies and philosophy of government.

The Nigerian situation won’t pass the test of a capitalist model, what with the confusion that defines government roles in the productive and service sectors that had left public utilities in vicious spasm of a slow death.

The failure of the Nigerian government in business and provision of society’s essentials like potable water and electricity power is no longer controvertible, Nigerians have generally given up on their expectations from government in this regard, it is, however, troubling that government and its agencies now garb economic policy positions and thrusts with odious subterfuge and double speak.

Moments after, the economies of the United States of America and the United Kingdom went into a tailspin, even the most economically ignorant was able to conjecture that the global economy was on its way to a storm which consequences may surpass the storied damnation of the Great Depression that commenced in 1929. But officials of Nigerian government would rather see no evil, hear no evil. The two finance ministers and the Governor of the Central Bank of Nigeria assured that the country was immune to the vagaries of the devastation that had begun to shake the economic foundations of the United States, United Kingdom, Europe and Asia.

Yet, signs of malevolent economic change were becoming obvious. Price of crude oil, the nation’s mainstay natural resource suddenly took a dive southward from high in the $150 per barrel of crude oil to $44. Reason for this is obvious, one needs not be a Keynesian to rationalize that developed economies that are the major consumers of crude oil disciplined their appetite for crude oil which in turn reduced the pressure on the demand with attendant fall in price. For Nigeria the implication is grievous, reduced revenue collection, cut down in GDP growth projection, a cascading fall in value of the naira, the national currency, the direct deployment of the $58.11 billion foreign reserve as intervention to save an imperiled economy. And eventually, a life of further distress for the average Nigerian. You don’t need to be a professor of economics to anticipate this turn in the economic sphere.

Already, the scenarios are playing out, the national budget for 2009 is a deficit budget due to anticipated reduction in revenue, three weeks ago, the Naira took a hiding from speculators and others when it lost more than ten per cent of its value to the Dollar in three days; just as there are discomfiting indications of distresses in financial institutions.

The CBN, after its Monetary Policy Committee meeting announced it was going to intervene directly in the daily two way quote foreign exchange market with fund from the nation’s foreign reserve.

Apparently, government and its agencies lack economic anticipatory skill. Soon after the first sign of trouble in the west emerged, a more focused government and its agencies would have cobbled a fiscal and monetary policy position targeted at the eventual impact of the roiling global economic scene on the country.

It is not too late, rather than the piece meal attention to specific worrisome spectre of economic emergency, it is better for the CBN, finance ministry and whoever, to evolve policies and measures with strong anticipatory ingredient to address likely troublesome financial and economic scenarios that may impact the country in the next 12 months.

As it is, we lost the opportunity to seize the initiative of building a bulwark against the negative consequences of the global economic downturn by acting the ostrich with its head in the sand even as trouble raged.

Certainly, responsible and responsive countries around the world are girding their loins in anticipation of a long tenor of battling with the economic crises. For Nigeria, the consequences of the global economic troubles are yet to fully manifest in the country, it would, indeed, be a matter of common sense to put together measures and policies that can help stave the negatives of the eventual infiltration of the global economic crises. This is a better option than to continue to beat the chest in the assurance of the community enjoying certain immunity from the global crises.

We all know that Nigeria is not exactly blessed with enduring economic structures and initiatives that have the capabilities to self correct in the face of a crisis that slowly but inevitably heads toward the country.

Heavy Debt Burden: Banks suspend funding for Dangote’s cement project

A heavy debt burden and the anticipation of high profile competition for the share of the Nigerian cement supply side from Femi Otedola may have compelled Alhaji Aliko Dangote to call off investments with intent to expand production lines in his many cement manufacturing plants and to build new ones. Sources in the banking industry indicated that some bank’s exposure to Dangote have become quite high and more discomfiting for the banks in consideration of hurdles they would have to contend with in the effort to get the debt repaid.

Though Forbes Magazine had listed Dangote as the richest man in Nigeria in 2007, financial sector source said his total debt folio drawn from various Nigerian banks may add up to N622billion. According to the source, about N300billion was secured from a bank by Dangote to play in the stock market between February and March 2008 when prices of stocks were at their peak.

“Prices of stocks started falling soon after the investment in the stock market and the fall in prices have become protracted which has resulted in stock prices sliding to historic lows. This, apparently, has affected the repayment traction of Dangote and this had added to the depressing situation of the banks that gave out the fund,” the source explained.

According to the source, Dangote also secured a N75billion loan for Obajana Cement and N240billion for his cement production plant in Ibeshe while also funding his Alheri Engineering, the company that won the 3-G GSM licence and will manage the GSM telephony service provider in the Dangote group.

Dangote’s decision to beat a retreat from cement manufacturing besides Nigerian banks refusing to make their money available for his use, is the wholesale opening up of the supply side of cement through the cement importation scheme of the Federal Government.

Dangote had enjoyed near monopoly status on the supply side of cement in Nigeria, and not a few aspiring builders had protested persistent increase in the price of cement which got to a high of N1,800 mid 2008. The Federal Government under Alhaji Umar Musa Yar’Adua removed the protectionist policy of the Olusegun Obasanjo’s presidency which banned the importation of cement into the country and closed down some other Nigerian cement producing companies ostensibly to protect the manufacturing essence of Dangote Cement production subsidiaries and the other players in the sector.

“This did not help price at all, because just a few producers can come together to determine the price of a bag of cement,” an industry player told FORTUNE&CLASS Weekly.

The Federal Government’s bid to beat down the price of cement by flooding the market with imported brands may have started impacting the market as the price of a bag of cement has come down to about N1,500 even as the imported brands are yet to fully land in the country.

Industry buzz, however, suggests that Dangote may also be worried with the licence granted Femi Otedola by the Federal Government to import two million tonnes of cement into the country as part of the effort to crash cement prices.

“The Federal Government had to consciously look out for a Nigerian business that has enough cash to back up the importation. It would not make sense to allow for importation of cement when you don’t have high profile business people that can mobilize enough funds to flood the market in the shortest possible time. That is why I think the Federal Government gave Otedola the licence to be involved in the importation of cement and I think he has a commitment to the Federal Government to sell at very cheap rate to Nigerians,” a source in the Presidency said.