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THE BRETTON WOODS CRUSADE OF PRIVITISATION ,FREE MARKET AND DEVELOPING ECONOMIES
Privitisation has become a thorn in the flesh of developing economies and the vanguard of intellectual terrorism that underpines its global usage is somewhat a misplaced priority in the region adopting it and some sort public theft laden with moral abuse by irresponsible leadership.Ibikunle Laniyan the Editor of the Blogger in this piece observes the storming nature of privitisation in the developing society and how succesful is it with the benefit of history -a lesson for Nigeria.
UNDERSTANDING THE CONCEPT OF PRIVITISATION=Part 1
The modes of economic development vary markedly across the world but the velocity of growth and the distribution of wealth across social classes is much more significant to the unity of the state and the practice of nation building than the ideological safeguard of market neoliberalism .To be candid,methinks that privitisation is the most volatile western economic textbook terrorism tool, highly politicised and the most misunderstood trade concept in the developing countries and its parlous usage has contributed immensely to economic quagmire in the region in general .The nation is at risk of unprecedented economic crisis similar to what happened in Argentina or Latin America in general after the deregulation of the 80s and 90s if this trend of intellectual trauma instigated by Bretton Woods imperial neoliberal system and the moribund political class in the land being tormented by neorotic astigmatism and impenetrable carapace of western hallucination and sangfroid imbecility of the soul is not curbed at the appropriate time.Given the enormity of our capacity building challenges the role of governmental planning in economic development as enshrined in our constitution must be revived that characterised the 60s and 70s succesful national development plans ;is there still any need for it First, we shall observe the intricacy involved in the ideological undertones and etymological appeal that underpines its brash usage and clanger practice worldwide in addittion to its phenomenal explosion ,global prominence including the strategic impact from the ancient into the mordern civilisation.
First and foremost let us define privitisation .Several meanings and definitions can be adduced and attributed to the word .Primarily , according to wikipedia ,it is the process of ownership transfer of business enterprise ,a public service ,an agency or a public property or public utility into the control of the private sector after outright divestiture from the public sector .It may be handed over to a profit or non profit oriented companies .Outsorcing of services also fall within this range of roles and functions outsourced to a specialised vehicles or firms such as revenue collection ,law enforcement and property management .Secondarily ,it also pertains to several distinctive modes of operation that govern it in practice.Transactions such as the purchase of public companies by private equity and the demutualisation of mutual organisation or cooperatives into or to form joint stock company are strictly held within the confines of privitisation programme .It also implies change and reversal of the state participation and involvement in certain economic activities.Some activities that had been historically handled by the State such as Postal services,telecoms water services ,or Public transportation such as public parks or hotels and Airways have beeen shifted into the control of private sector .
In this context , four major methods have been widely used .This includes share issue privitisation;Asset sale privitisation ;voucher privitisation and privitisation from the bottom or below as found among start ups of small companies in the socialist economies .While asset sale involves the purchase of a whole or part of a company by strategic investor either by auction or through Treuhand model ,share issue method involves selling shares on the stock market .Voucher privitisation entails share distribution of ownership to every citizen often for free or at affordable low prices .
In less developed capital market , share sale can be used to broaden the shallow market .and deepen market liquidity ;grow turnover and promote rapid economic growth .This may not be possible in underdeveloped markets ,due to underdeveloped nature of the institution ,inability or difficulty at finding adequate buyers and transaction cost may be higher .So listing in international bourses such as the Euronext ,New York exchange, London and Hongkong exchanges provides a better option for many government.
The developing countries due to incessant bouts of higher political and economic or currency risk detering foreign investors experience asset sales methods more than the transition economies of Central and Eastern Europe includingPoland Czech,Russia and Slovakia where voucher model is dominant .In this region privitisation from bottom is also prominent driver of economic growth.
In the firist two method bidders compete offer for the highest price generated both privitisation proceeds and taxes to the state coffers.The latter involves authentic transfers of assets to the general public generating mutual form or mutual sense of economic participation ,economic security and financial inclusion and if the transfer of vouchers is allowed ,a market in vouchers could be audible as permitted ,a market in vouchers that could be created with companies offering ready cash to pay for them...
Though ,in some forms of privitisation, transaction has been heavily interrogated in form of public debt and criticised as particularly noxious exercise.In this context the privisation proeeds correspond to the principal loans amount in addittion to the proceeds that should correspond to the secured interest payments from the underlying asset in transaction that can considered as roughly the same as secured loan even though structured as sale .For instance in 2008 ,the sale of proceeds belonging to Chicago parking meters for 75 years was argued to be motivated by politicians ,in a clandestine desire and move to borrow due to limited option of finance as a whole .
In 1930s The Economist Magazine first introduced the term or as a word rediscovered and recoined it to cover the German war economic policy
It however remains debatable whether privitisation actually originated from the ancient Greece.The Greeks contracted almost everything to be handled by the private sector .In the Roman Empire ,Diverse forms of activity including army supplies ,collection of taxes ,religious sacrifices ,postal services including the majority of public sector activities were handled by the private sector individuals and corporations .Infact they also created state owned enterprises -SOEs and almost all the grains were produced by the Emperor s estates The epileptic cost of bureaucracy was partly responsible for the fall of Roman Empire.
The ideological movement in the ancient China during the period of the golden age of the Han 's Dynasty was one of the first globally acclaimed record and evolution of privitisation in history-a period in which Taosm came to prominence for the 1st time as a state and laissez faire principles of Wu Wei that literally means do nothing.It became a way of life .The sacerdotal pedagogy of the period admits that the political strength of the period was the ferocious impact and the invincibility of leadership authoritarianism .
The rest of Europe was still under feudal epoch proned economic model , with the emergence of the Renaisance era-1300s-1600s.The rise of Ming Dynasty in China later opposed this method and reintroduced privitisation concept to the real sector .The Song Dynasty that followed closely reversed this trend in favour of once again the vigorous and all-encompassing state socialism
The Churchillian era also introduced privitisation shortly after the government of Clement Atlee-a succesful socialist regime that nationalised the bank of England in 1946 .The British Steel industry was privitised in in 1950s as opossed to large scale privitisation embarked upon by the German regime of the period in which the then govt. sold its stake in Volkswagen to a group of small investors in a public share offering in 1961 .
When Margaret Thatcher came to power in 1979,the Great Britain entered into unprededented phase of her privitisation history .In 1980s under her irongate leadership ,the same with Reagan during the period in the U.S.A .massive privitisation waves gained impetus worldwide. Virtually almost everything was privitised in Britain ,where a handful of public utilities were taken to the cleaners .This includes-British Airways in 1987;British Petroleum gradually privitised between 1979-1987;British Aerospace -1985-87;British Gas-1986;Rover group -formerly British Leyland -1988;British Steel -1988;British Telecom-1984;Sealink Ferries -1984;Rolls Royce -1987; and when there was nothing left to privitise she turned to water .In most cases regional water authourities were privitised in 1989;shortly after NDIC was founded .Councilhouse tenants in the U.K.were given option to buy their homes After 1979 ,almost a million houses had been sold by 1986.Likewise the privitisation of British rail happened under John Major in 1993.While France Telecom had largest share offering in France ,the British Telecom public share offring was the largest in the .U.K..during the 80s.
This storm attracted general revolt and widespread uproar among the general public and the parliament including the former Prime Minister Harold Macmillan who lamented and likened it to the sale of ''family silver.''.
With the sale of public properties after 1979,about 6 million shareholders were created in U.K. by 1985 doubled the previous record of 3 million recorded when she took over. Prior to the emergence of John Major in 1990 it stood at 10 million shareholders in the U.K.alone.
Subsequently ,riding on the waves of western impetus privitisation was exported to Latin America where it also became the rave of the 80s and 90s driven by market neoliberal princples of Frederick Von Hayek and Proffesor Milton Friedman especially under the governance of Augustus Pinochet in chile and also took the rest of the region by storm .Almost all the commanding heights of economy were massively privitised.There are so many instances with the evidence of history .For instance according to Newsweek in 1996 ,the enactment of landmark hydrocarbon law in the poor Andean country led to the sale of 51 percent of share in the gas sector to multinationals such as Royal Dutch Shell,Spain's Repsol YPF so that the attempt lowered collection of gas royalty rate to 18 percent from 50 percent .This conducive but profiteering gullible environment attracted 0ver 500million dollars worth of FDIs into Bolivia,between 1998 -2002 By the end of the usury period it was widely known that Bolivian proven natural gas ballooned almost nine times having the largest reserves in Latin America after Venezuela.
Moreover in this headlong rush ,governments from Venezuela to Mexico and Argentina followed the same direction and liberalised their energy sectors to foreign investment including water ,telecom transport etc sold off.In 1990 alone privitisation proceeds as a percentage of Latin American GDP was 6 percent of GDP .compared to private investment which grew to 360.5 billion dollars in 2001 from 150billion dolars in 1990 alone .
Prior to the privitisation it had contributed immensely to the economic boon and state coffers.The energy sector is primely treasured in this region and the oil and gas reserves are as valuable as the pre-columbian artefacts and a central part of national patrimony .It functions as cash cows to the oil exporting government of the region.Huge states owned corporations surveyed during the period contributed tremendously to state coffers like in Venezuela and and Mexico grossed about 75percent and 35 percent respectively of their public sector revenues .
Although Pemex -Petroleos Mexicanos still enjoys longstanding monopoly over the economy and its sector.Nowhere has that been more true than in Mexico where the monopoly has persisted ever since the nationalisation of its oil industry having been forced by circumstances and expropriated the U.S.AND British companies in 1938.When public utilities were sold off during the period Pemex still stayed in the hands of government.In Brazil Petrobras produces over 85 percent of oil that Brazil uses compared to 1970s when it imported 85 -a startling turnround -you may say.It is regarded as the latin American oil company-the biggest in the region.In 2004 three quarters of electricity distribution in Brazil is handled by private utilities but the government still controls 80 percent of power generation .Think about that .Why did Argentina under late Nestor Kirchner decided to return energy sector back to state capitalism Was he kiddling and how sustainable was the tarrif and spiral of tarrif hikes of the 90s We shall touch impact review. But the question is this ;How succesful was it
THE BRETTON WOODS CRUSADE OF PRIVITISATION ,FREE MARKETS AND THE DEVELOPING ECONOMIES-Part 2
THE NEED FOR SOCIAL OVERHEAD CAPITAL ;NOT PRIVITISATION AS A TRADE CONCEPT
Privitisation in the advanced countries was succesful because they had at least thousands of years of experience and trials in contrast to China s that had similar exposure but decided to toe the rigid ideological lineage of a socialist enclave had since paid off-a populous boon to the mainland ,now 2nd largest economy in the world .Robust legal framework ,good governance and advanced institutions were responsible factor for its success.After millenia of government intervention in the economy ,the public sector deemed it fit to privitised family silvers.But Africa is not yet ripe or mature to absorb western excreta .
The reason is simple if at all, it is justifiable because it will take decades for it to happen .China recognised this imperative and a major reason why government is expanding there and not retreating and she has over 200,000 public enterprises and how many have been privitised so far compared to Nigeria with alittle above 2,000 SOEs In fact from the time of the invasion of the Normans in1066 at Hastings ,France was under fiery control of market socialism fronted for by monarchy up till the time of congress of Vienna 1815 that ended Napoleonic Dynasty , government was everywhere.Even till today the most socialist minded Europeans on earth are the French and they detest capitalism like plague though they claim otherwise.This apathy was instrumental to the rise of Mitterand who spent 14 years at the Elysee palace and the rise of Hollandais in the latest dispensation .They never ceased to bulldoze Mascdonald stores and American vestige in their land to demonstrate their acrimony and further consolidate on the hatred against capitalism .
Generally speaking the private sector in developing countries especially Africa is very weak or too weak.This discourages any potential success in its favour.The private sector was either too backward or slow to take advantage of new and emergent opportunities nor exhibit adequate capacity to grow new businesses .This informed the decision of public sector to intervene in the economy and established the state owned enterprises on the continent in the 1960s and 1970s in addittion to the fact foreign investors were not interested in the market with highly underdeveloped price system.This was later crushed by external aggressors .Whereas similar measures as noted in the so called Marshall plan was used to save western Europe from economic crisis during the 2nd world war .Rooseveltian New Deal that saved Americans from the great depression of the 1930s cannot be forgotten in a jiffy .If in the developed economy with developed price system they still need government presence and interventionist policies like the Clintonian boom of the 90s and the recent regime of Obama] i.e Obamacare],how much more for the developing countries that lack social overheard capital
The greatest problem America has was the privitisation of money creatiofrecentral bank owned and controlled by wall street banksters.So in real sense of the world, the American government under Pressident Obama does not have a central bank because the Fed belong to these fraudsters.In the article written by Brian Browne published on The Nation Sunday-oct,20,2013 pg.12],entitled; America and its debt showdown;Mad dash into lunacy-Browne exhume the evils of the private sector in a concise incendiary.He unveils the evil of ;
;Government'' that ''borrows its own money as part of an elaborate scheme to ensure profits to the biggest players in the financial system.These large financial houses hold most of the bonds government issues .These bonds are virtually risk free .Govt.has the unlimited liability to redeem them because government can issue curency to pay the debt obligation.Through this roundabout system government borrows its own money ,government guarrantees sure profits to large bondholders .This is a form of corporate welfare dwarfing the welfare the poor the destitute obtain'' .This speaks volume of the evils inherent in the privitisation of Fed .since it opened office in 1914-a major architect of great depression and the meltdown and a war profiteer and had firmly remained under control of Wall street as the most fraudulent financial institution in the world .The public safety is under siege .Now they the tea party guys-the racist kluklux klan enclave in the Republican party , threatened to shut down Obama because of the colour of his skin and the evil system coronated by Fed.because it control America 's economic power .The privitisation of money creation in the U.S. can be likened to the greatest financial scandal of all time-a major cause in which 99 percent of A mericans controlled 1 percent of America 's wealth compared to 1 petrcent of U.S. wealth controlled by 1 percent of Americans-the greedy wall street Banksters . So,what are they privitising in Nigeria ,when public safety is under siege and it would have been better for it to be liberalised like what we had in the telecom success .
Although Adam Smith believed and enthused that introduction of easy taxes ,transparency and honesty good governance and the rule of law would lead to economic development .John Stuart Mill also added improvement in public intelligence gathering and foreign arts and external technology introduction could break even but in a cultural lag as appended by Charles KindleBerger in his book -Economic Development',government has to lead the way intervene in the economy beyond Smith and Mill' s assumption..This was what happened in the case of Africa in 6os and 70s .
Cultural lag can also be linked to low performing institutions and the inadequacy of industrial entrepreneruship .As noted by Albert Hirshmann that the scarcest decision in the developing countries is decision making and as capacity that grows with practice may be difficult for entrepreneurs in the region to take advantage of new emergent opportunities without an enabling environment created and the risky nature of a capital intensive venture.Kindleberger then noted that 'if the central authorities can induce pressures for decisionmaking they will advance growth breaking bottlenecks'.
Nevetheless conflicting opinions and ideological differences never cease to abound among economists and policy makers alike that price system that price system cannot work effectively in both developed and developing countries .While other dis agreed and proved the importance of government intervention and the provision of social overhhead capital .They believe there is no need for economic planning to be replaced by price system initially or at best scantily cooperate with as emergent institutions evolve .Some argued government planning and direct allocation should replace price system in both climes .The view that direct allocation should proceed to stimulate competitve price system is not only proven by theoretical permutations but well proven on the pages of history .So price system is less likely going to work in underdeveloped societies unlike the advanced countries with more social overhead capital .The malfunctioining of price system was equivalent to the absence of social overhead capital in the region and inspite of its high capital output ratio the provision of social overhead capital is worthwhile as it stimulates broad based private sector activity and a concrete basis for productive investment .For instance lack of transport in most developing countries in the 60s such as China and parts of Latin A merica was bridged by government investment .The various national development plans in Nigeria shared similar characteristics.Whereas such shortage was hard to find in South Esstern Europe of the period but certainly government investment had preceded this kind of positive development
So Hirschmann was right that decison making is the scarcest resource in the region -an onus that governmnet can take to provide this enbling enviroment for private initiative to thrive.So in such clime privitisation may not an immediate priority and it would have been liberalisation to create the needed competition rather than passing public monopoly into private monopoly .Come to think of it ,can the private sector raise such enormous capital needed to create giant complexes like Ajaokuta Steel cxomplex and a host of other badly needed heavy industries,refineries and pipelines founded in the 60s,70s and the 80s .In critical period of history governments are meant to intervene .
Marshal plan was successful in the post world war reconstruction of Europe.No wonder it still remains a major reference point today In his book -Earth in The Balance ,chapter -14--A New Common Purpose..Al Gore, U.S. -former vice president in 1990s calls for the advancement and extension of Marshall Plan to the whole world. Macarthus blueprint for the reconstruction of Japanese society and the economy and in 1947 point four assistance was extended to Greece and Turkey including NATO and other military alliances shared similar objectives -spread free trade . These are some of the factors that led to cold war rivalry until the fall of Berlin.
THE BRETTON WOODS CRUSADE OF PRIVITISATION ,FREE MARKETS AND THE DEVELOPING ECONOMIES -Part 3
THE GLOBAL STRATEGIC IMPACT OF PRIVITISATION IN THE DEVELOPING ECONOMIES
Privitisation concept nevertheless has become one of the major features of free market economy at full blast and a common phenomenon that unify the developing and developed nations together in general.Its global prominence is justified by the evidence of historical antecedence .Between 1988 and 1993 ,roughly 2,700 state owned enterprises were privatised with total privitisation proceeds of about 270billion dollars in over 95 countries.In the first half of the 1980s , over 227 firms were privitised in the whole of Africa with thrree quarters located in about 6 six countries with five including Cote d' ivoire ,Gambia ,Guinea Niger, Togo located in West Africa .12 out of 18 SOEs in Franco phone Africa also had privitisation programme in place .Ghana had liquidated or sold off about 159 SOEs between 1991 and 1995 .Nigeria in like manner had also privitised 55 small scale state owned enterprises between 1988 and 1993 .Though the total number of privitised entities were not fully identified in this official data but it is proved that about 847 SOEs were privitised between 1980 and 1995 .
When Washinghton Consensus was coined in 1989 by English economist-John Williamson he had 10 major points in mind ,described as a set of economic policy prescriptions .With these prescriptions,he devised standard package for reform to alleviate challenges and problems facing crisis ridden economies .THis standard package was later adopted by Washinghton D.C. Bretton Woods institutions including the U.S. treasury .These prescriptions include;macroeconomic stabilisation;economic liberalisation;in terms of trade and investment ;Redirection of public spendiing and subsidy removal ;Tax reform such broadening of tax base and the adoption of marginal tax rates;market determined but cheaper interest rates ;free flow of foreign direct investment ;the privitisation of state enterprises 'Deregulation;and the possession of legal security for property rights ;Opening up import by rwemoval of restrictive trade barriers ;fiscal policy discipline ;Competitive exchange rate ; the growth of free market in these.......contd
Subsequently Williamson narrowly defined term ''Washinghton Consensus ''had been broadly redefined with neoliberal tract placed upon it and inordinately abused.This term was first presented at the institute for international economics -an international think thank based in Washinghton .He used the term in a synopsis of commonly shared policy advice with Latin American politicians and economists and adopted by the Bretton Woods institutions ,This was believed to aid the the recovery of latin A merican economies form the financial and economic crisis of the 80s. How far has the privitisationin fared in the attainment of its objectives
According to Mancala-2013 privitisation processes have taken place in nearly every continent of the world developing and developed world at different periods in time and this pace has been affected by either historical events-decolonisation effort,postwar reconstructioneffort and political and ideological predilection of such climes such as the 1980s liberalisation or the 2008 economic downturns .Several compelling reasons were given by the diverse nations for its adoptions and the potential incentives .
First the proponents disputes their critics that it can be used as an avenue for fund raising generating much needed revenue for the state .Secondly, privitisation brings in invested capital to the privitised companies and reduces corrupt government roles in the economy ;promote wider share ownership ;open up the market to competition,boosting growth in productivity and efficiency as well as heightening competitiveness.These are essential factors in the ability of the nations to harness growth factor to generate wealth creates jobs and raise wages .-Kulasekera;Public Enterprise Reform Commission of Sri Lanka .,Annual Report ,1996 ] .
With the review of historical antecedence antiprivitisation critics seemed to have upper hands. With empirical evdences have been able to justify the claims that it should not be seen as an end in itself but a mere means of policy choices and policy process to attain certain or specific policy objectives and whose luck depends on fate may or may not be feasible in relation to context ,be it econmic or social ,the industry target and available methods to be used for the accomplishment of the objectives .As we shall see how succesful is it in the reduction of poverty or inequality of wealth or the attainment of its policy objectives as projected given the available conditions and the magnitude of its challenges .
According to Mancala-2013,the three major objectives of privitisation noted behind this imperial Bretton Woods programme include-fiscal objectives ;the attraction of foreign direct investment -FDI;and the introduction of competition or competitive markets .In the first objective , Mancala disproved its success and argued that the notion behind the reduction of budgetary deficit and the generation of more funds into the state coffers as a predominant reason was not misplaced but also unsuccesful .
Privitisation they contend generates resources than when they were in the control of public hands .In a pre-privitisation survey ,the SOEs generates financial flows to the state in form of taxes and dividends while the states provides investment and subsidies .On the other hand taxes are provided to the state and privitisation proceeds are received one-off from the buyer .So the positive nature of post privitisation effect had been critiqued .Privitisation by princple should increase productive sector transfers to public sector such as the tax genrated revenue from newly privitised vehicles be fficient alongside savings from on subsidies and privitisation proceeds should be be higher than dividends loss According to Davis et al 2000 ,the evaluation and critical assesment of such fiscal impact is highly complex especially the total amount generated by the state coffers as a consequence of privitisation .
In the calculation by Berthelemy et all-2004 of the sales values of privitised entities in Africa in terms of government revenues allocation and gross domestic ratio in about 36 African countries between 1990 -2000 the post privisation impact appeared negative and mired with bleak results .Its annual sales value on the avaerage stood at 0.36 percent of GDP and the value as percentage of government revenue stood at 2.20percent and when compared to OECD region total proceeds from the programme was below 9 billion dollars .Nevertheless the advocates were not satisfied with such findings and debunked these figures that were bereft and shortchanged of longterm outlook impact of privitisation ranging form the impact of subsidy cut and forecast revenue increase in form of corporate tax etc.
Both the internal and external influence factors have been noted as a motivating impulse behind the reduction of budgetary deficits .Besides financial crisis that retard economic activity reduce tax revenues and the motivation of new sources of revenues that ordinarily through such climate in certain cases created the need, the influence of external aggressors also in some cases such as the need induced by the European Union countries to comply with criteria for convergence and membership of monetary union built impetus into privitisation waves.,Above all the Bretton Woods have been largely responsible for its global prominence imposed over developing countries with draconian measures .This was included as part of reform processes in the region -an intergral part of country strategy papers -CAS ; a policy conditionality to approve and sanction lending operations .
What is the size of FDI s generated in the post privitisation era This can also be debated .
It is therefore necessary to observe that poverty level had increased exponentially in the regions that adopted the Washington confusion ........contd.
THE BRETTON WOODS CRUSADE OF PRIVITISATION ,FREE MARKET AND DEVELOPING ECONOMIES Part-4-
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The mass liberalisation and deregulation of the Nigerian economy following the introduction of structural adjustment programme -SAP on September 1986 brought phenomenal privitisation waves into the country .
The partial and full privitisation including commercialisation programme ,began in 1988 and the 1st set of both options took off as government selected 111 public enterprises including 35 enterprises .87 of of these 111 public enterprises were identified for partial or full privitisation by 1995 and succesfully processed .25 financial institutions including 14 insurance companies ,11 banks and 20 companies in the real sector including 6 food processing companies ,3 textile companies ,3 cement plants ,2 salt companies ,22 agroallied businesses and a host of others.These SME-DOEs operated in both in the real sector and the service sector but excluded the tsrtegic sector of the economies.The privitisation programme experienced a break in 1994-97 period and by 1998 with the return of the programme under a new tag -''guided privitisation '',it had two elements those that occur not in batches but in SOE at a time -an attempt that was described as experential method of learning .
With the emergence and renaisance of democracy in May 1999,the
then government of President O.Obasanjo flagged off the programme in
earnest and national council of privitisation -NCP under the chairmanship
of vice-president A.Atiku.However ,the success of the programme with
the tireless and clueless efforts of successive regimes leaves
much to be desired.We need not contend any longer the common knowledge
that SOEs in the country had become a conduit pipe for corruption
and an avenue to siphone state funds where money was voted for the public
parastatals and SOEs without truly spending this fund on the targeted
institutions as claimed by political class and the beauracracy.According
to El-Nasir Rufai the former BPE Czar between 1973 -1995 the federal
government expended over 100billion dollars on public enterprises but
their returns stood at 0.5percent per annum costing over 256billion
naira to maintain per annum .
As at June 2001 ,NITEL debt stood at a staggering 300billion naira
.Railway had consumed 826.6 million dollars on phoney contract
between 1997-2007.As at June 2004, some 300million dollars had been
looted by the sabotaged TAM operations in the nation's refineries
.The kaduna refinery alone gulped 12billion naira annually on salaries
and emoluments,yet it functions next to nothing .Between 1999-2003 it
gulped about 254million and 400million dollars on rehabilitation
of refineries and pipelines all in the name of TAM operations
.
The natural corollary is to privitise them but on the other hand our
hands is tied given the fact that the trials of privitisation
over the last 30 years or so ,leaves so much to be desired.For instance
,out of 122 so far privitised as at november 29 none has been succesful
besides NAFCON or probably Nigerian stock exchange-NSE.NITEL failed
and the telecom was not privitised but was truly opened or liberalised.Infact
, the vice-president N.Sambo corroborated senate report on privitisation
at the inauguration of the new board for national council of privitisation
on November 24.So who is deceiving who If the senate adhoc committee
report said that the privitisation process has been severely flawed
and outcome unsatisfactory ,only a fool would disgree.Daily Times ,Ajaokuta
,ALSCON,Delta Steel company-DSL,NICON ,Sunti and Bacita sugar companies
respectively and a host of others .What more can we say
Solgas an American energy company and another fraudulent
company Global Cif Holdings with sinister motives came donw
to Nigeria and massively cannibalised the 4.5billion dollars Ajaokuta
steel complex .Pentascope equally swindled Nigerian telecommunication
company -- NITEL with global system for mobile communication and its
subsidiary --MTEL .ALSCON was valuedat 3.5billion dollars and put into
market for sale by bureau of public enterprise -BPE for privitisation
.BANCORP FINANCIAL GROUP a Nigerian-American consortium became
the highest biddder in the bid for ASCON..It initially emerged with
highest bid with the price of 400milion dollars for the majority stake
in the company .
Somehow along the line the bid was overruled by a quirky spirit of
resistance still remained a riddle till today .Two years the second
bid was won by United Company RUSAL -UCRUSAL-a Russian company with
75 percent stake worth -205million dolars .One should not forget the
strange circumstances that disqualified BFIG were somewhat controversial
due to alleged bribery involved and allegation and refusal
in relation to 10percent of the monumental fraud and proposed bid price
to be paid within the stipulated price ;not forgeting also the undue
political influence wielded by the Presidency over BPE -a carry over
norm from successive regimes .The 1999-2003 was a period in which Nigerian
Airways was sold to Aerowing Aerospace -a company whose existence was
riddled in falsehood bought over the Nigerian AIrways .But in this case
was quite different in that BFIG-a COMPANY with proven track record
had taken the matter to court against BPE ruling which ended in BPE
's favour . The last resort was the supreme court that enforced the
reversal in 2012.......................
It is becoming clearer that privitisation of SOEs is geared towards
selling of family silvers especially profiting heavily from it
s fixed assets .Because after the 75percent stake --a price far less
than the amount generated from the fixed assets of the company .It hardly
expended or risk any capital on the aluminium plant having the sale
of the company assets to raise 115billion naira raking in the
profit of 513.8m dollars that was hardly shared with a Government that
owned 15percent in the company .So , in the name of privitisation ,it
is profitable for the owners and buyers to sell off company fixed
assets after taking over .It has become a norm in the privitisation
exercise in this part of the world .With swindling predilection acquisition
proceeeds are beating down under controversial circumstances ,selling
off the assets , downsize the workforce and milked heavily SOEs that
they are supposed to transform .
To justify this fraud various reasons have been adduced and advanced
against the viability of ALSCON industrial technology with claims
that they were outdated and needed replacement .Those claims have been
made by seasoned proffessionals and engineers which appeared to hold
no waters.In the case advanced against ALSCON ; the long term
price of Aluminium is declining ,production cost escalates were cited
.The infrastructural inadequacies in the country such as epileptic
power supply and the notion that production of metals like Aluminium
does not condone power outages that would cause unfinished products
and hot ore to be stuck in various parts and plants during production
process while cooling that can cause monumental damage to the plants
while cooling also does not hold waters .Similar arguments have been
advanced against Ajaokuta steel complex purposely motivated to discourage
and demarket this plant that is the engine room of the nation s technological
revolution .The claims that the steel complex is outdated and should
be scrapped is a part of high level international conspiracy going
on in Ajaokuta.We shall give each of these SOEs ,a special
treatment in our subsequent reports .
But it may be true that mordern technology in use has led to the decline
of international price of Aluminium but it is not enoough reasons for
the huge capital investment of the plant to go down the drain and its
fixed asset auctioned for the benefit of the political class or discarded
on the basis of outdateed technology and old machines .While it sis
true that new technologies are being emerged and devised but the old
machines and existing plants have ben used by other similar aluminium
companies to generate money or capital necessary in the purchase
of the new technologies.
Nigerians have been deceived for so long that the blast furnace
technology was outdated .This was corrected several times by the original
company -Tyasypromexexport that constructed the steel company.This
Russian company was instrumental at it s peak for the construction of
60 percent of world steel plants Managing the existing technology
using what you have even though plastico metal offers the latest technoiology
The spillover effect of coldwar rivalry and intense ideological free
competition immensely contributed to whittle down the steel complex
economic relevance and influence -a sure panacea to our much anticipated
industrial revolution..These arguments are politically motivated .
THE BRETTON WOODS CRUSADE OF PRIVITISATION
,FREE MARKET AND DEVELOPING ECONOMIES -PART 5
THE NIGERIAN PORT AUTHORITY -NPA,AND PRIVITISATION ARGUMENT
In an open letter to the Presidency published in Thisday ]on
Sept.2000 pg.74] that the Nigerian Port Authority was slated for privitisation
according to the statement credited to the then Minister of information.Contrary
to various presentations made bythe house unions to the authority on
the fact that the ports should not be privitised based on several which
include --
-------That the federal government had good intentions in setting
up the port solely as government paratatals ;subject to promulgation
of of the Decree 25 of 1988 reviewed in 1999.
-----That in the said decrees ,the ports were not listed
for full priivitisation but for full commercialisation ]ref.to the letter
from the Presidency --ECD/5/13/VOL.11/349--dated 21ST May,1999 and addressed
to the President of General Maritime Workers Union of Nigeria]attested
to this fact .
Against this assurance and pronouncement by National Assembly ,priviledged
people -the cabals running the country were still bent on selling the
ports in which the national security not paramount to them.
Already the Nigerian Port Authority --NPA had performed above board
and there was no reason to cite inefficiency as major factor factor
to privitise it because it cannot be counted among the inefficiency
lot even though there was still need for improvement .According to the
reprot in 2000 it had over 12,000 and 60,000 employeess directly and
indirectly on its payroll fully engaged in sundry port works with over
20 billion dollars in assets and a prized property of the over 160 million
nigerians .
It sound so horrible,disheartening and uninformed why would a rational
mind attempt or tinker to privitise probably the only government parastatal
under the ministry of transport able to fend for its self without receiving
any subvention whatsoever from government Williamson 's 10 point agenda
probably did not include such except for the brazen act of brigandage
.It is on record since its full commercalisation in 1991 it had received
no subsidy form governemnt .meeting evry target set for it by governemt
paying into the coffers of govt as well .
The federal government had often guranteed its loans borrowed on her
behalf and had not failed to repay as when due even though the loans
were secured on the altar of politoical expediency ..With the exception
of oil subsector ,with its seaports had controlled
99.2percent and 95percent of total import value into the country between
1984 to 2000.It had contributed immensely to national foreign exchange
earnings in the country with some 30 percent released to the NPA
to meet its offshore financial obligation .It had also been able to
embark on massive port development betrwen 1975 to 1985 asides its huge
share investment in various companies and reputable bainks in the country
.Its pension schemes still remained one of the best in the country with
some over 2 billion naira put in care of pensioneers .The commercialisation
decrees give it wide powers and mandate to invest and venture into businesess
as a way to grow its revenue base .This led to the establishment of
continental shipyard and the seaview properties .
Why would a company noted as a chicken that lays the golden egg and
with robust management and such monumental assets second only to oil
sector in the country that huge contribution to the economy be slated
for privitisation Here is an institiution that had given financial assistance
to Nigerian Railway ,Daily Times or some ailing government parastatals
to name a few .According to the open letter signed by Peter O.Abolarin
the general secretary of SSA NPA Branch these cabals and
their foreign cohorts were bent on transfer of ownership of NPA to private
hands ''in outright defiance of the enabling Decree 25 of 1988 and Decree
38 of 1999'' and flagrant abuse of the constitution.''This is clear
intention of a few powerful ''moneybags '' trying to own
the whole land '' while the rest of us become poor tenants 7.Such a
situation must be resisted by all and sundry ''It then concluded -''we
want to stae that the same individuals who have failed in their private
businesses in the past are the apostles of privitisation today''.
RoRo port was in priviate hands before or was formerly privitised
but how succesful was it It has often been sued as as a yardstick or
to exhume the flaring testimony of privitisation anatthema
in the sector and the econonmy at large .
RoRo terminal was once managed and jointly owned by Messrs Akindele
and Hoeglline for many years without any concrete result .Although the
fake investors claimed to have gennerated a paltry 58 million naira
monthly and about 80 percent of the income -some 54 million naira was
spent on salalries and sundry exoenses This does not appeal to common
sense .6million naira profit for the NPA and only 50 percent was
paid to the NPA.Fortunately enough when it was taken over by the NPA
,IN THE FIRST MONTH OF OPERATIONS raked in 60million naira and salaries
and emoluments consumed only 6millionnaira contrary to previous
claims by private fraudsters and generated 54milion naira into government
coffers .This same fate is likely going to befall NEPA..
Moreover the reckless antecedence of the foreign port consultants
such as the container terminal company and the Hamburg port consultants
specialists in port management that handled the A papa and Tin
Cna Island port s respectively cannot be forgotten in a jiffy as a tireless
''saboteaur to the socioecononmic growth of this country''.
World Bank as a major advocate of Washinghton Consensus faced
with the radical attempt at revitalising and rehabilitating and
the maintenance of of plants at the Lagos Ports also ended in
total failure ..Out of the total 40 plants given to World Bank
to revitalise within a period of 3 years rottening away in its custody
only 4 were revitalised.The resultant efdect of vandalisation had crippled
the remaining which were later sold as scraps by the port authority.These
are the evils of the private sector .Even the four plants that were
rehabilitated could no longer be operated
It is shameful for the world bank not to know its right from three..It
had a poor history in the management of pritivised utility and the direction
which economy had bled profusely.Which magic will it now perform in
the case of NEPA that has not been seen
Richard Sundry and Peter Tunrbull of LeedsB UNiversity in the
U.K. in their meticulous research and comparative analysis as noted
in their book -Private Profit ,Public loss ;The Financial and
Economic Performanc of U.K. Ports ''that the privitised ports has totally
failed in the U.K.compared with the management of public managed ports
.
The ports of Singapore, Dubai Shanghai etc with full autonomy were
fully commercialised ,controlled by government ,award winning and among
the best in the world .In year 2000 , Shanghai Port was ranked as 5th
best in the world in term of efficency and productivity .In view of
the fact that ports play a major role in the defence of the nation ,the
privitisation attempt at the ports can be likened to nothing less than
a threat to national security .Imports of arms and munitions and
the control of port operations by private jetties portends calamity
for the nation such as the Gideon Orkar coup of the 90s was perpetrated
by private jetties .They are still fresh in our minds.
Due to sinister motives ,the cabals are bent on port privitisation
.In the recent times renewed attempt has been made and 3,000 jobs
in NPA as government plans to privitise Marine services department and
a host of others .The NPA 's engineering ,security and fire services
department as currently may go .After the concessioning of the Port
in 2006 these are the major services left remaining ,now they are slated
for privitisation and when this is done the authority is finished .Ports
in the hands of buccanneers indicates that the Nation today is unsafe
to live and is potentially under threat of external aggressors .Already
iunvitations are under way welcoming competent investors to take over
the remains of its carcasses .
Marine services involve-dreging and mainttenance of ports channels
;Quay's cargo handling ;ships berthing and unberthing at the pots
;tallying of goods and storage services;ships repair, stevedoring
and cargo surveilance among others would now be provided by the private
sector .Citing our earlier instances of poor handling of port services
we can be sure that the economy is headed dunghill. ;
According to the letter signed by the Acting Director General of the
BPE-Bureau of Public Enterprises Benjamin Ezzra Dikki sourced from thye
Nation Newspapers dated January 18 and addressed to NPA Managing Director,the
success of the reform and the colosal gains from Port concessioning
informed the decision and the planned extension of the reform initiatives
into the marine services.
The port concessioning under erstwhile government Of Presient O.Obasanjo
led to retrenchment of ovedr 8 ,000 workers in 2006.The
semnio staff association through their leader comrade Umar Jimoh kicked
against the move .They are certainly going to have their given the failed
attempt of the unionists in the past
We shall have to treat the oil and gas reform separately and a host
of other sensitive sectors of the econnomy if time and space permit
us .Let us move on briefly to PHCN and the unbundling saga
With the passage of PHCN to the private sector i feel
dejected and confused that public sector monopoly has been turned
into private sector monopoly .This is a setback to the 80s trying to
experience and retest what latin American economies had tested
and vainly experimented with no result .
A monopoly is a monopoly it can never be efficient and is meant by
orientation to short change its customers. Our antitrust
laws and competition policies equivalent of Clayton and Sherman acts
in the United States are barely in existence at best at its infancy
.The transfer is imperial and people are not satisfied and happy
from manufacturers association of Nigeria-MAN to national unions,virtually
everybody disagreed .one , it is against the constitution
because the constitution says that the public sector must control commanding
height of the economy .Two , In the last 5years 30billion dollars
was put on power or other source put it succinctly about 3.5billion
dollars was spent annually in a decade yet we have not been able
to generate 1 000 MW.but Brazil put 10billion dollars in power and generated
10,000MEGAWATTS MW.The issue is corruption .It cannot worrk . NITEL
failed , Ajaokuta failed Daily times.ALSCON failed. The previous senate
report said privitisation had failed .Infact privatisation of the banks
had failed because public sector funds of about 3 trillion naira had
been used to bail out banks .Now tell me which success have we
enjoyed since the advent of SAP or renaisance of democracy ? Practically
none Apart from NAFCON under control of Notore chemicals what have we
?Let s call a spade a spade
The problem is corruption using public sector stolen funds by the
same political class to purchase public utilities is the highest level
of brigandage in the history of Nigeria s economy .Nigerian has
the lowest per capital megawatt or energy per capital inthe world and
South Africa is one third of population and yet it generates
power that may not be generated or possible in Nigeria for the next
50 years-about 45 ,000MW more than enough for its population .
The administrative bottlenecks has beeen built up .The GENCOS are
owned by different owners and the same for DISCOS even though
theu under the same political power dynasty while another owner
-Manitoba -a canadian company controls transmisssion company of Nigeria
which does not even have a board .After the President has handed
the companies to new owners ,the gratuities of workers are to be paid
by the privitsation proceeds of over 2 billion dollars .
June 18, 2012
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June 8, 2012
THE NATURE OF MONEY
Money is fundamental to the exchange of goods and services in
modern society and object of virtue and
value and curse everywhere both to accumulate wealth and poverty .Money
itself by value hardly depreciates but the exchange of money perpetrated by
market forces too foreign to it , does change automatically but imperfectly to reflect this changing value
. When money by value declines , it is
the exchange that declines by value of its flow that is affected .The consequence
is that faith-a metaphysical fiduciary powers
reposed in paper money also declines .It is this faith in paper money being the original intrinsic and
extrinsic value which could be affected by the flow and exchange spiral,
leading to inflation and economic crisis . To curb this spiral and contagion
affecting the metaphysique of money and
to stabilize the value of money and make inflation positive –the only
phenomenon of economic growth , the liberalization of exchange of money , to
perfect SONACA is the only antidote , the commodity value can then spread wealth to every
consumer in an economy irrespective of economic status . Consumer spending
would hardly decline as long as exchange stability[stable money supply ] is maintained and sustained .Growth in consumer
spending would accelerate investment , boost savings in the long run
automatically tackle recession and maintain the economic boom until an economy
is willing to apply techno-cession .To
understand the stability of the word ‘money ’,we must understand change cycles
and its implication on other vital economic cycles and how they reflect on
monetary value .
When money changes hands , it is the value that is exchanged
.Exchange keeps swinging periodically affecting the monetary value even though
this value is stable .How do we preserve the value and spread the value and let
it bear on the exchange ? This we already resolved above .The commodity value
of money which is gloriously tied to the apron string of human faith is
ordinarily stable and a source of real wealth of commodity money that has not
been tapped .But the circulation value of money called money supply which abets
inflation influenced by unstable exchange often have an unbearing influence on
the general value of money and the economy controlled by credit arbitragers .So
. in real terms , the commodity value of money hardly or does not change hands to contribute real value . When
this happens , the word money adopts a different and repugnant nature discouraging real wealth creation , real
economic growth in place of nominal wealth and nominal growth that can only be
possible if commodity value is restricted in the dunghill.
If encouraged , this boosts the transparent flows of
disposable credit money in a robust
credit economy for the purpose of
universal welfare .
Basic Micro financial functions and economic exchange
The essence of microfinance ,not just the exchange of goods
and services but basically to redistribute wealth and circulate the commodity value
of money through disposable credit income to every needy economic agents .
Basic economy of exchange is sustained by extensive credit
arrangements albeit haunted by structural and institutional inadequacy .In determining the value and
volume of money exchanges , the annual
credit income per family and annual credit income per capital both determine
the quality of annual per capital national income per annum .What is the size
of this disposable national credit
income on a sustainable basis that can back up with each man ‘s naira or dollar
of gross and net national income ? What is the turnover rate of each naira or
dollar of disposable credit income annually ? Is it 5o times or 100 times
turnover rate per year ? It is this
ratio upward quality trajectory devoid of distress market and tight credit cycle
can ensure sustainability of desired economic growth on the SONACA Para-macroeconomic indicator .This is made possible by channeling savings into redistributionist investment though not
all is invested which is vital to grow standard of living .
Changing
Pattern of Investment
In modern society ,we admitted those who promote creation of wealth do not
promote real wealth but rather nominal wealth back up by nominal GDP growth in
contrast to redistribution of wealth and circulation of commodity value of
money .Real wealth has been discouraged
with possible consequences of boom and burst cycles .Without real wealth , marginal savings can also take
place but not real savings to promote universal wealth based on heavily
restricted business opportunities. Promoters of investments have been able to dip their hands into these
savings not owned by them to promote concentration of wealth while original
owners of wealth languished in poverty .
There is constant flow of savings but the exchanges are not
vastly different and adequately efficient
in the circulation of commodity value
ranging financial and microfinancial instruments to communicate values
to agents . Consequently , a
non-redistributionist society does not parade a uniform credit cycle or
egalitarian cycle of credit arbitration in credit assets or credit evenly contracted and expanded its efficient
use to over every potential needy
project .LIBERALISATION OF THE ACESS TO CHEAP CREDIT is a fundamental challenge
to redistributionist oriented society than the former in which circular flow of
credit and credit money or income is evenly endorsed to promote capital development .This is a
fundamental basis of free market economy .No free market exists without a
robust national credit trade .
A free market economy until now hardly exists a farce an
illusion and impossible without a robust credit trade or credit economy with
extensive patronage of financial
sovereign intermediation .More than 200 years after Adam Smith free market is
yet to exist .This is a shame to western scholars and the pattern of investment
must be determined by the nature of this free market economy .Forget about
western neoliberalism .The first free market economy model is the neomarxist
free market which is represented by everyone an only be endorsed in redistributionist
society than a non-redistributionist oriented society that discourage
ordinarily even circular flows of funds among its citizens with incentives
pummeled by arbitraging bias .This is the very first reflection of free market
in mortal history and the 1st generation of seven free market macro
economic models evolved by market redistributionism as we endeavor to exit
modern age civilization to golden age civilization under Potage Golden
philosophical templates .
Mobilization of
Savings and Multiplier effect .
Loan able funds arise from disposable[net ] savings [money not needed by savers over a
period of times ] excluding gross savings are channeled to safe investment when
mobilized by third party .The facility usually regarded as credit has not been
well utilized for a long time as an instrument of wealth creation .What is the
proportion of net national disposable
savings to back up meaningful investment
per annum in an economy ? The use of disposability is termed as gross credit
oriented to promote credit income by the borrowers after a satisfactory
repayment .What is the proportion of
credit income required whether loans are rolled over or
not to promote a befitting
standard of living for the borrowers ? If sustainable after repayment , how can
credit and credit income be value added enough to continually run a marginal
project without recurring recourse to loans on a periodical basis ? It is
pertinent to observe as we know usually
that a repeated credit purchases
is necessary to improved business
performance .Guiding against credit risk even for tested borrowers is a great
challenge to microfinancial institutions .
Most importantly , the volumes and value of microfinancial
instruments to gulp the existing cumulative savings are a meager lot if not a rarity,
do not exist in the financial systems
world wide .The cost of mobilization of savings
is too cumbersome and the use of
savings does not really have value and
very costly in every sector of the economy .In real sense , in modern societies
, channels for their effective usage do not exist . channeling savings and net national savings to where
they are most needed at the right time , at the right place , at the mass and
at the right price with the least
cost and satisfactory convenience
to necessarily equate the targeted desired level of growth projected in an economy.
Micro financial
Management in the free market society
The movement of capital credit and credit income through various grass root
acts of exchanging goods and services profiting largely from disposable savings
,with the sole aim of grass root empowerment
and SMEs capacity building funds
deployment for optimum informal sector performance can be regarded as Micro
financial management .Though can be noted as
a branch of financial management having secured a foothold on its own
given some appreciable disciplinary evolution over the last 30 or 40 years is
finally charting its own course with
vital autonomy to enable it add more economic value to general economy.
Actually , microfinance is the origin of finance to say the
fact , in the much same way in
which we enthuse that micro credit is the origin
of the modern credit. Likewise , we
need observe that informal sector is the projector , the insulator and cradle of
the formal sector but as human economy grew complicated , the harbinger
was left behind and modern man regarded it as too naïve and a fugitive even in its backyard; and by
conniving with its siblings betrayed its
legacy , this they did in the much same way as they have regarded
freedom a fugitive in our world today . Informal sector was left to rot and die
if indeed it can rot and die .The reclassification in the modern times is
sequel to change and growth in the finance technology of the age bringing it
under the shadow of a new world of civilization .
Microfinance , if fully perfected academically , technically
and practically is far more effective , advanced and broader than mainstream
finance and should not be grouped under it in any way whatsoever even though
micro[grassroot/unbankable finance ] is
n’t much different from the word ‘finance’ but not with the same level of expertise especially
in developing countries with large informal sector economies . The larger spectrum of world society does not have access to it which indicates
the study of finance theoretically and practically is still evolving and can
only be matured until microfinance by usage and spread has found its final footing and bearing in the field of credit trade
which must be discovered and thus world
economy can now be rebranded and reclassified to have grown from the level of
western primitive finance and jungle finance textbook and moribund nature of
microfinance into the broadest field of macro finance , thereby giving birth to
macro financial system from the present wobbling and fumbling inhuman structure
of financial system that Robert Kiyosaki popularly regarded as a large ponzi
scheme scattered all over the world to the system in which every one is represented .This
inadequacy we may not know it and ignore
it , is the fundamental basis of world economic crisis .
Potage Golden templates
and its diverse types of macroeconomic and free market economy ’s models
is to guide in the transition from the
present stage of neoliberal age to the
final stage (in which macro financial system is fully matured –that is to serve
all) .Microfinance though gained renaissance in 1960-70s which originated
finance but was denied glory and social status by existing social forces and
betrayed by its own seed through the
noted arbitraging , crumpling its integrity
and dignity sunk for millennia before
the rediscovery by Muhammad Yunus , Grameen Bank and Accion in Latin America among
others in the new waves of finance technology sweeping the globe. Unfortunately
the credit trade arbitragers dominating world financial system were contented
to award only face saving Nobel prize to a world hero compared to Nobel price for economics despite
the fact he had more even more than or could be rated in the same category like
Adam Smith or Keynes .I really don t know why he had failed to receive such attention . Being the father
of unexplored microfinance macroeconomics ,
he is far more better than these fellows because his policy or
technology touches close to 80 percent of world population if well
exploited .Now that he had been unfairly removed from his position at Grameen
did not speak well of the way an hero should be treated .Is that how to make
relevant someone who had contributed to world peace than all of western finance
and economic professors put together ? To
be candid , it is the greatest discovery in the field of finance and economics
and the luminaries deserved noble prize for economics not once but even twice .The
rebirth markedly opened a new chapter in finance and economics revolutions and
a new dawn bringing finally to an end the lifelong denial by the mutineers to save world economy from landmines that
economic vampires had supplanted and unleashed on its well being for the entire
stretch of human history .
The way in which microfinance is being managed has a great
strategic impact and redefining powers
to revamp the characters of our socio-economic system and a revolutionary to affect its optimum
performance in a way to transfer wealth through the disciplines of the market
to the marginalized segment of humanity .This aims at maximizing the quality and quantity of economic freedom
over all , restructuring where possible for the purpose of universal welfare
.We shall have to evaluate existing customs and tradition out there from the
study of financial institutions to the reflection of the new role and new
development and set corporate governance rules for the budding micro financial
institutions among us or new ones as is possible and practicable in real world .
The Study of
Microfinance And Changing Technology Of Finance .
Therefore like finance and economics , Microfinance , micro
financial management and micro financial economics and its ilk’s must be
studied in virtually every tertiary institution of the world or relevant
studies of finance modified so as to promote and broadens technical and professional
expertise in the field .This is vital for a field that has more to offer in real world ,has great potential in
spreading real growth ,real wealth and real standard of living among citizenry
of the marginalized societies .We shall
have to inquire more and improve ways in which all this dithering models can impact heavily on fundamental human rights and individual empowerment enterprise lagging
behind in mainstream finance markets .
THE ROLE OF MICROFINANCE
Credit trade arbitraging
Money and finance are
twin face of an economy –a basis of development in modern societies .Not
many knew an economy is subdivided into
two based on this dual purpose
category .This subdivision in the long
run gives birth to dual macroeconomics
.This comprises of monetary and credit system .Redistributionism believed since they play a different role but
similar objectives facilitating economic development , they should each be given their separate
autonomy inasmuch as we have recognized their separate but complimentary role
strictly for ease of quality discharge of their obligation .
Though money and finance are strategic twin faces of an economy ,truly speaking they do
not reason the same due to the nature of risk transaction involved .The modern societies
have not come to term with it and the
least they can do is to virtually reform everything and how viable will they
be? A monetary system and a credit
system should operate differently .But because almost every economic
agents that are involved in the monetary system have also been caught in the web
transaction of credit system buying and selling debt to either prosecute or bail out marginal project
depending on timely investment decision .Along the line , due to lack of effective
model and poor perusal of change cycle, this dual purpose or twin faces were
complicated together in modern society
as the financial system even though have mingled for millennia .This was
instrumental to unprecedented human prosperity and also tussled with re-emergence of boom and burst cycles in an
economy has proved otherwise .
Initially , the dual nature of an economy had long been
recognized long before the merging bias by modern economists because credit and
money grew slowly with the first civilization in whatever form they might be
and the first generation whose cradle
arts and crafts were instrumental to
later development .This changing motive
was dictated by moral precedence of economists and policy habits later disputed
by successive rationalist economists .The dual model purpose still today has long
been neglected .It is true that if we
subject our financial system in to intensive study perhaps by public
commissions seeking to ascertain the
quality in the discharge of their obligation ,we would however found them
wanton with this original device. Economic crisis everywhere is a proof .This requires not regulatory changes really
per say since its abets inflation should be deemphasized , without a perusal of
its effect on inflation nor does it require a reform really but systemic
changes not reforms needed to put back the financial system on track.
The persistent modification in structure and the very
objectives of this volume stresses vital
reform not needed but rather systemic changes motivated to reposition the
financial system fairly well as the common asset of the public .We have come to
believe that the merging bias might not be the problem really but insensitive
pawn brokers and the economic vampires
who spill blood of the poor and constitute social threat to economic growth .
The inherent inequality of wealth that Marxism admits is the fundamental
erosion of social sanity is also the very
primogeniture and everlasting patrimony of business cycles . Revamping the financial system models and
modeling character is central to effective resolution of man ’s greatest
economic challenges . Nothing can be compared to efficient financial system in
which everyone is represented not one yoked by the repressionists avoiding a
large scale operation and undue patronage of ponzi scheme popularly regarded as
the financial system being run today is a task that must be done for the problem
not to persist and heavily curtailed even beyond the confines of mainstream
banking for the good of unsafe
posterity wherein we are headed .
The primordial role of microfinance is simply to strangulate
and possibly eradicate the credit trade arbitraging a worst form of development
arbitraging ever noted bud nipping its syndrome and banish this arbitraging
noted in modern societies .Those marginalized
from formal sector yoked with high indebtedness need not have the same mentality as those who profited
heavily from the ponzi scheme .
Merging
Bias : Credit Trade Arbitraging ( CETARB)
The dual face of an economy however from the antiquity to
the modern times basically shares this linkage .Credit income which is to draw
from surplus[savings ] mobilized is the
super structural linkage of the two
faces but the system of national credit income account (SONACA)
hardly exist and has not been considered even for once in the much same
way in which we have recognized system of national income account .In America , Simon Kuznets opened the way and gave us the latter .Who
will bail us out of this knowledge theft haunting humanity and humiliating
economists worldwide ? Hence all economic crisis can be resolved . This neglected
system is the most important resource and the final arbiter to bridge
inequality of wealth existing in human society .That is the original intention of market
redistribututionism .
A sound financial system rests largely on both legs but not
so with the whole [dual system] jumbled
together today .It can not be ignored
that both legs occupy the same level of importance to human body .An amputated
financial system whose credit economy is strictly cut off to be dominated by
inefficient banks can never avoid business cycles .The financial system
worldwide is resting on only one pony trick and the capacity of an amputee is
at best inadequate to support the level of market activity vital to ensure desired growth of an economy protruding from actual growth of a nation
..To boost desired growth not volatile
GDP growth and bridge against this arbitraging which ordinarily occurred
as a result of lack of effective dual
macroeconomics model , we must perfect
the system of national credit income
account [SONACA] first and its GAP[GDP] co-efficients bridging Kuznets missing
link [KML] , for a sound deregulated financial system which deals with circular
flows of fund in a redistribututionist economy
as opposed to non-redistributionist economy to be harnessed to serve as the common property of all a
sundry .The perfection would give us a robust credit economy and therefore the
attainment of dual macroeconomic stability is possible to effectively counter
business cycles for universal development not arbitraged development .
At the time the monetary and credit systems were lumped
together the pawn brokers and the usurers who have taken over the domains of
the fraudulent system totally failed to
accommodate the unbankables and marginal borrowers not because of lack of
credit history or something but due
to poor banking model whereas the
marginalized segment that control the
population base which is the real wealth and not the capital base
controlled by wealthy class which is the nominal wealth have refused largely to
relinquish their hold having profited
largely from the arbitraging trauma that supplanted the system which is the
fundamental causes of economic crisis in all of human antecedence .There is no
alternative unless those excluded from mainstream white bowl of porridges to be
eaten and consumed by all be fairly accommodated
.That both must be capitalists and owners and workers is the sole essence of a
neomarxist era .These porridges provided
by nature must be consumed by all humanity not for capitalist prosperity but
for universal or equalitarian prosperity
.
To restart free market economy all over again , which presently does not exist , we must go
back to the basic and create capacity for the two legs of macroeconomic
body each with its own autonomy and
ethonomy to walk effectively and
perfectly well and not like an amputee whose life dreams were long truncated by
terrible landmines – Then it cannot only crawl but walk , stroll, then jog and later run like a gazelle or greyhound
,slow down when it pleases and then speed up .Right now has not yet started to
crawl let alone adjust to walk and the
entire flexibility isn’t just there and a major reason behind intermittent
financial turbulence that comes not once
again every century , with the emergence of the great depression of the 1930s
to occur twice or thrice even in a
decade .Rampant economic crisis shall be
a thing of history when every one else eats
from this bowl of porridge .
This remains the fundamental aim of neomarxist era to be
maneuvered through the instrumentality of market redistributionism and
microfinance .To redistribute wealth in this context , we can crush the
arbitraging mendacity that separates indigent men from development market and
the inequalities that causes inflation –a fundamental economic problem .This is
a new dawn in the history of macroeconomic study and of mankind making the
world a safer and a friendlier world to live .Here , we have come , the intention of the book is known , let us
now begin from the scratch .
Next article - THE
NATURE OF MONEY
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