Global economic Crisis: the fledgling democracy in developing nations is responsible

I wont be disappointed nor surprised if most of the persons that had read my first piece on this same issue, wherein, I had accused the United States of deliberately engineering it, on seeing this contrary topic, starts considering my opinions on issues to be as steady as the value of the naira against the dollar.

But like a former Nigerian senator once averred, I would advice that you ask me about my today’s opinion on an issue rather than yesterdays. After all, many dynamics—reflection, new information--abound that can change ones point of view in a world that is information driven.­­­­­­

Initially, when government officials in today’s developing nations particularly Africa, started the practice of misappropriating public funds—in hundreds and thousands---meant for the development of the region and carting same to the West which was still somewhat, in the throes of the economic hardship engendered by the second world war, for safekeeping, they the West, could not thank the heavens enough for their good fortunes, that needed funds were been provided for almost zero interest.

Pronto! The news spread out and there became a scramble amongst their banks for the accounts of these ignorant leaders. As the sources of inflow increased--through aggressive encouragement by and arm-twisting--so also, did the conceptualisation of projects until their economic frames were completely restored and expanded, and then, entered the glut. What to do?

Create credit cards and facilities for every imaginable consumable and non-consumable product and invite the public-including the jobless and semi-jobless--through attractive advertising to come and pick them up. True to their postulations, the public did scoop up these post paid cards.

Meanwhile, more Africans other than these leaders were now going to the West for studies and other reasons and seeing the wide gap between the two divide. Some returned home determined to do something about it by agitating for democratic rule—NADECO etc, --- and before long, success started attending some of these efforts in different parts of Africa, and the policing process for mother Africa’s fund began in earnest.

In Nigeria, one of the most reliable and highest contributors of such funds from the African continent, a process of reforms—privatization—which began during the military era was accelerated. So, rather than the normal practice, a larger percentage of newly misappropriated funds which would have gone into balancing the accounts of these banks became canalised into the acquisitions of state owned property and the remainder kept handy to fight re-election battles.

And so when it was to account to shareholders and the artificial millionaire and billionaires not meeting their obligations, the so-called world biggest firms could do nothing but declare bankruptcy and before long, it became respectable and fashionable for the rest of them to announce bankruptcy without qualms. The rest they say is history still unfolding. The more the democracy in the developing world, the less funds to back the theories from Harvard and the rest of such respectable institutions.

Way out of the quagmire? A reverse! Rather than this current idea of throwing invest able fund after potentially good firms with very messy liabilities, a reasonable percentage of such funds should be repatriated to the developing nations to help create the much needed middle class who would be in a position to create effective demands for both locally and foreign made goods and services.

The population of Nigeria alone is put at over a hundred million. If just forty percent of these can be transformed into middle class, the effects would be felt worldwide. Unlike Westerners, there is an inclination in us to primitively acquired assets—ask the GSM companies in Nigeria or the auto dealer like Coscharis and Elizade—whether needed or not. This can be vigorously exploited.

Unserviceable liabilities results when a company capital is misapplied; or there is a low turn over which severely affects a firms profit figure and consequently, it ability to service it liabilities. In the case of the current crisis, it is more of the latter than the former.

With Africa’s “big men” gradually been eased out of governance through death, old age, weariness, fatigue and even lose of interest, it would be futile for the West to imagine that the solution is principally about paying off bad debts for firms and buying into financial firms or forcing them to loan to the same characters that exposed their under belly. The solution lies in creating effective demand in those nations and helping to police the remainder of the dying thieving tribes hence their poisonous funds that creates lazy citizens in the West, finds it way back there.