A large oil reserve estimated 2 billion barrels has been found in the Albert region of Uganda by oil firms Tullow Plc and Heritage Oil & Gas Company. The people of Uganda including President Yoweri kaguta Museveni are elated about the discovery. This is good news and with efficient management Uganda can say good-bye to poverty. Uganda can now increase her GDP and foreign reserve.
The oil discovered in Uganda contains less sulfur which is good but it is waxy with high viscosity. It does easily coagulate at room temperature making it difficult to extract and transport. Therefore it might be expensive to extract and refine. It is estimated that Uganda needs $8 billion to develop its oil infrastructure. Uganda does not have such enormous capital instead she will turn to foreign financiers and international financial institutions. Uganda must be deliberate, careful and calculative in order not give up her new found wealth by payment of high interest rate and arrears on loans for financing the oil development.
The East African country - Uganda is a poor country with majority of the population surviving with less than one dollar a day. In next two years the production, exploration and extraction of the oil will be in full force. Most of the oil produced will be geared towards internal consumption and the remaining will be for export.
Uganda is making arrangement with Norway to build a functional oil refinery in the country so she can process crude oil in her country and provide jobs to the citizens. Unlike Nigeria that refine her crude oil outside the country due the breakdown of her ill-equipped refineries, Uganda is making the right decision to use her oil to lunch industrialization in her country.
This is a big breakthrough for Uganda and 30% of the revenue to finance her budget comes from foreign donors. Therefore with this development Uganda will free herself from foreign donation and its attached strings. Uganda must live up to her international obligations with unwavering commitments to democracy, free enterprise and respect for human rights.
Uganda government and managers can now formulate economic policy to transform their country. President Yoweri kaguta Museveni has been talking about industrializing his country; with the new found resources he can lay down the industrial rudimentary that will prepare her country to take off industrially. The most important thing the government and policy makers can do is to train their work force with superior education that is needed to compete and perform efficiently in 21st century globalized economy.
With this new found wealth from oil, the country might be tempted to neglect the agricultural industry of the nation and relied on food importation to feed her people. It will be a big mistake with deplorable ramifications. The country must be vigilant and utilized the oil generated resource to booster agriculture in the country.
On agriculture, Emeka Chiakwelu, Principal Policy Strategist at Afripol said, "Agriculture is the future of Uganda and Africa for arable land must be cultivated. Oil can generated the capital to finance modern farming in Uganda. Africa must feed herself and Uganda can become food exporter. Oil is a limited and diminishing energy based commodity and its future is unstable with the emergence of renewable energy for 21st century. Uganda must diversify her economy, so she will not depend wholly on oil."
Uganda just like the rest of African countries is beset with poverty and corruption. If the government of Uganda is serious about improving the lot of their people, they must be aggressive in arresting the two mentioned problems. The government must explore the ways to improve the standard of the living especially in the rural areas. The basic needs of housing, light, clean drinking water and roads must be provided to ameliorate wellbeing in the urban and rural areas.
The environmental integrity of the nation must be upheld in spite of the temptation to relegate the issue of environment to the back burner. Oil exploration is associated with oil spill and air pollution that can pose a threat to the environment, which can devastate the ecosystem. Therefore this calls for standard of operation backed with best management practices to be formulated and implemented.
The issue of corruption associated with petrodollar is a reality in that part of the world. The poor people of African oil producing countries including Nigeria, Angola and Gabon are testaments and have not benefited from their country’s oil wealth.
The only panacea to corruption is transparency and open book. The news coming from Uganda that the government is not disclosing the contracts they signed with the oil companies is not encouraging.. Uganda claims to be a democratic nation and in democracy the power belongs to the people. There must be an open book, transparency and probity in order to avoid the curse of oil wealth in the east African country.
The Central Bank of Nigeria (CBN) announced at the beginning of the first quarter 2010 to keep and maintain 6 percent benchmark interest rate. The unchanged interest rate reassured and reaffirmed the commitment for pro-growth and credit availability policy pursued by governor of Central Bank, Sanusi Lamido Sanusi. While the monetary policy rate was left at 6 percent, the borrowing rate was lowered at 2 percent from previously 4 percent but the key interest was reserved at 8 percent. The business and financial community received it as good news to strengthen them in this period of credit uncertainty and banking instability.
Nigerian economy inspite of high unemployment rate and weak performing stock market is relatively healthy. Although the economy was affected by the global recession but the impact is mild because Nigerian economy is not wholly exposed to the global economy. In addition the revenue from oil is encouraging which has seen the rise in Nigerian foreign reserve to $44.04 Billion. The Nigerian foreign reserve was hovering above $50 Billion two years ago before the recession and prior to the failures of five major banks in Nigeria which resulted in credit shortage. The Central Bank of Nigeria funneled almost $4 Billion to the banking sector to rescue the troubled banks.
Inflationary trends were subdued and properly controlled with a monetary policy grounded in reality and probity. Higher inflation is not gaining momentum and CBN is doing the right thing to make sure that rising inflation will not have a new life. According to Nigerian Bureau of Statistic, inflation rate rose from 11.6 percent in October to 12.4 percent in November 2009. And Sanusi’s CBN anticipated that inflation rate will dip below 9 percent by the end of 2009. This can be possible with the end of the credit shortage and the banking crisis.
It is essential to maintain a moderately low interest to bring about the long needed liquidity into the capital market. The credit crunch will not be allowed to take the upper hands and in turn frustrate economic growth and wealth creation. The marketers and market need the flow of credit and with lower interest the banks will not hesitate to lend out money to traders and business community.
Dipping the interest rate to four percent might be better in order to comprehensively cure the credit crunch. But reasonable minds can understand that the quick flow of credit might trigger inflationary trends and that may not be leverage to safeguard the capital market at the long term. Therefore the 6 percent benchmark interest rate looks reasonable to get the job done without undermining the capital market and diminish the attraction of capital into the market.
Sanusi’s CBN must look outside the guarded financial and banking house to make some decisions. In as much, that politics must not be determinant benchmark for making decision but the principles of political economy must not be deemphasized. Nigeria standing in the global geo-politics is affecting our economy particularly the world perception about Nigeria and the problem of the image of Nigeria.
The flow of foreign capital into Nigerian economy might be restricted due reservations unrealistically harbored by foreign investors. Therefore CBN have to be ready to liquefy the economy and grease the economy with credit liquidity to deter another impending credit crunch. At the long run, lower interest at four percent even three percent might act as a shield to makeup for the paucity of foreign capital in the economy.
The lower interest rate at six percent is still good enough to ensure and consolidate any gain made in the economy and prepare the economy for long term growth. The lending of loans by the financial institutions to traders and business community may be dampened by the psychology of the troubled banks. The lower interest notwithstanding, there must be a level of trust in the banking sector; so that confidence will return and normalize the banking sector. Governor Sanusi Lamido Sanusi and CBN are laying foundation, a prospective for long term growth and capital market appreciation.
In the snowy winterland of Davos, Switzerland, eminent personalities and global leaders from diverse walks of life and different countries gathered for the annual economic summit. The August visitors to Davos include Presidents of countries, CEO of major corporations, civic leaders, top academicians and politicians. The purpose of the gathering is to review the state of the global economy.
The organizer of the conference, “The World Economic Forum is an independent, international organization incorporated as a Swiss not-for-profit foundation. The organizer, “believe that economic progress without social development is not sustainable, while social development without economic progress is not feasible.”
African leaders and bureaucrats are never missing in the conference. These leaders especially Nigerian and South African presidents are always present together with their entourage of the central Bank chieftains, finance ministers and top government officials. It is impressive to see them engage in table conferences and discussions, an enlightened exercise that displayed the side of Africa that is rarely seen. African leaders must be pragmatic if not realistic and must separate the wheat from the chaff in order to bring a meaningful and tangible result to their people waiting for them in Africa.
Beyond brainstorming and intellectual exercise the leaders of the world should formulate ideas backed with practical steps to ease the burden of poverty in Africa and developing nations. The reason for poverty in Southern hemisphere has been analyzed enough, the time has come to do something reasonable that will improve the status quo and re-introduce a pragmatic capitalism.
A global fund for small business can be created that will directly lend small loans to small scale industries and medium enterprise in Africa and developing countries that will bye pass interference from governmental bureaucracy of respective African countries. Funding must go directly to small business owners that lack the conventional know-how and collateral security for raising capital from financial institutions.
As for African leaders they must be respectful but shun diplomatic shenanigans in Davos and tell leaders of international banks and corporations that African countries are in the midst of economic depression therefore creditors of African debts have to find effective methods to ease the burden of the debt. Africa needs injection of credits and grants to deter credit crunch in the market. African leaders can justify this by arguing that sound African economy is good for the stability of the world especially in their own hemisphere. The most important is the re-introduction of capitalism and free enterprise in Africa with fairness, efficiency and justice.
The world economic forum at Davos is not the venue for easy talk, tabloid and entertainment news. It was displeasing to hear about the issue of President Jacob Zuma of South Africa and his wives. President Zuma was even compared to Tiger Wooden the fallen golf superstar. Davos is too important for the global community to have such news emanating from it. There is time for everything; President Zuma came to the summit to attract foreign investors to his country not to discuss the issue of polygamy in South Africa.
There have been good things happening in Davos and conference is living up to expectation. In the 2008 forum, Bill Gates spoke about creative capitalism, emphasizing how free market and capitalism can work for average citizen and developing countries. The band front man of U2, Bono also spoke about debt cancellation for poor highly indebted countries that cannot continue to make payment on their foreign debt with burden of poverty, prevalence of AIDS and hyperinflation.
The application of creative capitalism can be a force in tackling instability in some restive regions of the world. Take for instance the case of Niger Delta, the big oil companies do not necessarily have to wait for the native government to act, they can aid in solving problems by acting responsible and providing technology, jobs, schools and amenities to the locals. "We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well," Gates told an auditorium packed with corporate leaders and politicians at the 2008 meeting of the World Economic Forum.
The greatest threat and the major contributory factor in the undermining of a given economy and its currency is inflation. The monetary well being of a nation can go under and deteriorated drastically when inflation rears its ugly head and a once buoyant economy can become sicken with depressing currency, GDP and lower productivity. But in most cases Inflation could become a tool to erode the debt of a nation; a country with large domestic and foreign debts can utilize the inflationary trends to reduce the burden of its debts. In the 2006 negotiation for the payment and the final settlement of the Paris Club debt, Nigeria was granted the famous 18% write-off that reduced the debt. But the reduction that inflation could have offer was not wholly taken advantage by Nigerian negotiators. Inflation with regards to debt can be use to grind down a given debt. Nigeria do not have to be necessarily overjoyed and satiated with the 18% write off because net debt would have gone down to 45-50% by the application of inflation – debt ratio. The bad era of the double digit inflation would have be effectively utilized and applied to erode the country’s debt.
Nigeria would not be the first country to inflate away her debt; America did it during Great depression, Second World War and in 1970s debilitating recession. Renowned economists Joshua Aizenman and Nancy P. Marion stated in a paper that “Inflation can rise, eroding the real value of the debt held by creditors and the effective debt ratio.” Aizenman and Marion in the 2009 paper emphasized that “we examine the role of inflation in reducing the Federal government’s debt burden. We conclude that an inflation of 6% over four years could reduce the debt/GDP ratio by a significant 20%.”
Therefore we can extrapolate that Nigerian payment of the foreign debt in 2006 would have been way lower, the so-called 18% write off notwithstanding. Applying the model used by Joshua Aizenman and Nancy P. Marion, the Nigeria’s average inflation since the IMF’s structural Adjustment Program (SAP) to the time of the debt settlement was hovering between 15%-25% that will significantly and drastically reduced the total payments that Nigeria made to both Paris and London Clubs of Creditors.
In furthering thesis of the application of inflation as a tool to inflate away debt, it makes sense to understand what inflation is all about. According Economist Onosewalu Okhiria , “Inflation is one of the most frequently used terms in economic discussions, yet the concept is variously misconstrued. There are various schools of thought on inflation, but there is a consensus among economists that inflation is a continuous rise in the prices. Simply put, inflation depicts an economist situation where there is a general rise in prices of goods and services, continuously. It could be defined as .a continue rise in prices as measured by an index such as the consumer price index (CPI) or by the implicit price deflator for Gross National Product (GNP). Inflation is frequently described as a state where .too much money is chasing too few goods. When there is inflation, the currency losses purchasing power. The purchasing power of a given amount of naira (currency) will be smaller over time when there is inflation in the economy. For instance, assuming N10.00 (Nigeria unit currency) can purchase 10 shirts in the current period, if the price of shirts double in the next period, the same N10.00 can only afford 5 shirts.”
But it must be made perfectly clear that nothing good comes from inflation except the decimation of standard of living with surplus but devalue currency that do not worth the value of the paper it was printed on. This is not a new paradigm in economics where inflation is celebrated, but far from the truth, even with its debilitating effect it can reduce or wipe-off of a given debt. The people of Zimbabwe are testament to the disaster inflation can bring to a nation. The dire poor health of the economy caused by inflation makes lives unbearable. To buy a loaf of bread, one can carry cartoons of the worthless paper notes currency to do the purchase. Even some war historians argued that hyperinflation in the Weimar Republic were among the causative agents of the Second World War making it possible for some Germans to become vulnerable to the manipulations of the Third Reich.
The payments and servicing of Nigerian foreign debts owned to both Paris and London Creditors did not happened for the first in 2006. Prior to the final settlements of debts to both international syndicates – Paris Club of Creditor and London Club of Creditors, Nigerian government in early 1990s have started to buy back Nigerian debts and Naira from foreign creditors. But finally the government of President Obsanjo took the initiative to payoff the debts owned to the creditors. Of course it was a good thing to settle the debt for it did help to booster the economy and stimulate the economy due to availability of disposable resources. By this Nigeria will use her resources she accumulated by saving not borrowing to stimulate her economy. The only issue was the payment she made to Paris Club of Creditors was a large sum of money, without putting into account the dynamics of inflationary trends that kicked in after Nigeria borrowed the money from foreign institutions.
In the paper by Joshua Aizenman and Nancy P. Marion on “Using inflation to erode US public debt” - the two academic intellectuals illustrated with graphs shown below how inflation was used to erode US debts in both scenarios of the during Second World War of 1940s/50s and recession of 1970s.
“Figure 1 depicts trends in gross federal debt and federal debt held by the public, including the Federal Reserve, from 1939 to the present. In 1946, gross federal debt held by the public was 108.6%. Over the next 30 years, debt as a percentage of GDP decreased almost every year, due primarily to an expanding economy as well as inflation. By 1975, gross federal debt held by the public had fallen to 25.3%.”
Figure 1. Debt as a share of GDP
“The immediate post-World War II period is especially revealing. Figure 2 shows that between 1946 and 1955, the debt/GDP ratio was cut almost in half. The average maturity of the debt in 1946 was 9 years, and the average inflation rate over this period was 4.2%. Hence, inflation reduced the 1946 debt/GDP ratio by almost 40% within a decade.”
Figure 2. US debt reduction, 1946-1955
(Graphs and figures by Joshua Aizenman and Nancy P. Marion)
Nigerian government in the year 2006 paid almost $20 billion (including the human capital invested in the negotiation) to two giant international syndicates: Paris Club and London Club of Creditors to settle her foreign debts. The government of President Obasanjo, made the arrangement and secured the $18billion debt relief for Nigeria from the Paris Club of Creditors, and Nigeria pay off her $36 billion foreign debt. Nigeria's total foreign debt stood at $35.916billion as of June 2005. The largest chunk of the debt $31billion was owed to 15 of the 19 creditor-countries of the Paris Club.
Nigeria paid off $12.4 billion in arrears and debts as was stipulated to fulfill arrangement and concord reached with the Paris club in June 2006. Nigeria paid the final installment of $4.518billion to exit the Paris Club.
Federal government of Nigeria finally paid off the last batch of outstanding debts owed to the London Club amounting to $2.15 billion. For the settlement of both Paris Club and London Club of Creditors, Nigeria paid off almost $20 billion. This is one of the largest transfers of wealth by a third world nation to the first world nations.
Recognizing the impact of inflation in the piece: “Understanding the Nigeria’s debt situation” the then Minister of Finance, Dr. Ngozi Okonjo-Iweal wrote: "We have been implementing our own home grown reform program – NEEDS - and the results for last year have been quite positive. GDP growth was 6% compared to a 5% target. Average annual inflation came down from 22% to 15%, while point to point inflation (December to December) came down from 23% to 10%. This was not the single digit inflation we targeted but we came pretty close at 10%. The fiscal deficit at $25 a barrel was 1.9% of GDP, better than the 2.1% we targeted and the reserves recorded healthy growth again from $7 billion to $19 billion thus ensuring that our exchange rate remains fairly stable.”
By this she acknowledged the severity of inflation in the country and its disablement with their policy. Therefore the negotiators for settlement of Nigeria’s foreign debt must have made their case or override making the case of justifying lower settlement because of inflation.
But in some cases according to Professor Alan Auerbach of University of California, inflating away debt may not be possible because, “Sudden inflation can only inflate away the debt that is (1) not indexed, the way TIPS are; and (2) not very short term (i.e., not T-bills), so that the interest rates cannot be reset to much higher rates that would compensate for inflation.” Nigerian foreign debt was not indexed against inflation; maybe all the conditional ties appropriated to the debt were not unearthed by the citizens of the country.
To further extrapolate the issue with regards to inflation, Nigeria final payment to both Paris and London Clubs would have been smaller had inflation-debt ratio been applied.
Inflationary trends and inflation were devouring Nigerian economy in 1970s and 1980s and the era of oil boom notwithstanding. The Statistical bulletin of the Central of Nigeria was keeping statistics of the rate of inflation. In 1970s and 1980s inflationary trends were becoming explosive except in 1972 and 1973 inflation was modest hovering between 3% - 5%.
YEAR INFLATION RATE %
1986 5.4 2
(Central Bank of Nigeria Statistical bulletin).
Naira was very strong in 1970s and early 1980s even with high inflation. Why this scenario? Because of financial and economic mismanagement, incoherent and uncoordinated monetary and fiscal policies. Together with overtly importation as Nigeria becomes the center of the dumping of foreign made commodities. It does look like that the party will last forever but then comes the oil bust and the crash of the oil price. Nigeria went on borrowing insanity to appease her spending appetite. Then it happened: IMF stepped in with its structural adjustment programs that encourages the devaluation of the naira. At this juncture inflation shoots up to 22%. Therefore, Nigerian negotiators would have exploited the inflationary paradigm tool for eroding debt; probably the final payment to the foreign creditors in 2006 would have been half or even one third of what was paid to the foreign syndicates.
In classical physics, the study of fundamental principle of matter gave us the law of conservation of matter which states that matter can neither be created nor destroyed. Water is a matter and the quantity of water in Nigeria has not been altered. Therefore when we say that we lack water in Nigeria, it is a false premise because the rivers, lakes, streams and waters of Nigeria have not disappeared. What we lack is the clean and drinking water in Nigeria. Our government inability to deliver drinkable water to the citizens at the dawn of 21st century is one of most difficult thing to fathom.
In terms of provision of drinking water to poor populace, we do not have to necessarily compare Nigeria to America, Britain or Western countries. African countries and third world countries with GDP one third of Nigeria have adequate and clean water supplies to its citizenry. NO! We cannot journey oversea to make the comparison, we can just start from Nigeria’s neighbor in West Africa – countries like Ghana, Togo, Chad and many others are providing sanitized tap drinkable water to its citizens but the so-called giant of Africa with its enormous resources and huge foreign reserve cannot do it.
Nigeria of 1960s, 70s and even early 80s was doing it and providing treated drinking water to the people of Nigeria. But at a point with bulging population, poor planning and corruption diverted the professionalism of the Ministry of Water Works and turned into an incompetent and do-nothing entity.
Nigeria has abundant fresh water: Groundwater, rivers and lakes that can be channeled into Ministry of Water Works or Treatment plants. With application of chlorination and filtration procedures it will be ready for human consumption. The human capitals in terms of technical know-how are available and the technology for water purification is not an intricate methodology. Nigerians with GCE ordinary levels and secondary education can operate and manage water treatment plants.
The costs of setting up water treatment plants are minimal compare to the waste that Nigeria accumulated when she lunched the fallen satellite (NigComSat-1). The multi-million dollar Nigerian satellite (NigComSat-1) built and launched by the Chinese in May 2007, was shut down to prevent it spinning out of control and damaging others in orbit. The satellite project an example of a "white elephant in space" was a waste of time and resources. The billions of naira invested in the satellite technology can be utilized to solve the earthly problem of the supply of borne tap water to struggling villages in the interior of Nigeria.
UNESCO documented that, “Water-related diseases are among the most common causes of illness and death, affecting mainly the poor in developing countries. They kill more than 5 million people every year, more than ten times the number killed in wars. The diseases can be divided into four categories: water-borne, water-based, water-related, and water-scarce diseases.”
The consequences of drinking contaminated and polluted water in Nigeria come with a terrible and devastating cost. The cost and damage brought by drinking of parasite infected water with its borne diseases are very expensive which mostly affect new born babies and children. This is a major contributory to the abysmal high infant mortality rate in Africa and Nigeria in particular. This cannot be write off easily in same manner Nigeria treat anything important to the wellbeing of the nation.
Waterborne diseases have causative agents and “are caused by pathogenic microorganisms which are directly transmitted when contaminated fresh water is consumed. Contaminated fresh water, used in the preparation of food, can be the source of food borne disease through consumption of the same microorganisms. According to the World Health Organization, diarrheal disease accounts for an estimated 4.1% of the total DALY global burden of disease and is responsible for the deaths of 1.8 million people every year. It was estimated that 88% of that burden is attributable to unsafe water supply, sanitation and hygiene, and is mostly concentrated in children in developing countries. Waterborne disease can be caused by protozoa, viruses, or bacteria, many of which are intestinal parasites,” according to Wikipedia.
Nigeria according to UN's IRIN humanitarian information unit, “Guinea worm and onchocerchiasis( River blindness) are endemic water-borne diseases in certain parts of Africa's most populous country (Nigeria) of more than 120 million people. UNICEF had decided to emphasise water and environmental sanitation after realising that the occurrence of diarrhea, a major childhood killer in Nigeria, could decline by 15 percent if water quality was improved, Ackers said in the capital Abuja. Increasing the quantity of available water, he added, would lower the incidence of diarrhea by 22 percent. In combination with improved hygiene, the incidence could further drop by up to 35 percent while adding safe disposal of feces would lower this by 40 percent.”
In search of drinking water Due to the government inefficiency especially on the State and Local government levels, the energetic and pragmatic Nigerians are restoring to digging water boreholes for our children and families to quench the water thirst. The people cannot wait any longer for their elected officials, who refused to do the job of providing clean water to their neglected constituents.
Gradually the governments are joining the people in digging water boreholes and even appointing commissioners who channel funds for the project. This might look good even sounds good but the government in this case is in the wrong direction. The government should go and resuscitate the dormant water work plants and rebuild them. Then start providing tap drinking water and not digging boreholes.
Most of these boreholes are exposed to underground pathogens and pollutants especially E-coli that is responsible for stomach upset that comes with diarrhea and massive lose of fluids. In the undergrounds the water might also be exposed to the natural radioactive nuclides and nature’s occurring hazardous metals (As, Cd, Co, Cr, Cu, Hg, Mn, Ni, Pb, Sn, and Tl) these heavy metals as they are called are toxic with carcinogenic properties. Therefore it is highly recommended and intrinsic that water from the boreholes is sampled for laboratory analysis and bio-chemical analytical before consumption.
The ubiquitous drilling and digging of the ground soil for water may weaken the soil surface with an enhanced porosity. With such vulnerability and lesser cohesion, the ephemeral soil might trigger erosion. These erosion gullies are already prevalent in Anambra State and southeastern Nigeria; therefore further drilling of water boreholes may thicken the situation.
On this World Water Day, Nigerian government must understand the ramification of abandoning its basic responsibility to the people. The government should provide to the people of Nigeria treated and drinkable water.
Dedicated to the World Water Day
Emeka Chiakwelu is the Principal Policy Strategist at Afripol Organization.Africa Political and Economic Strategic Center (Afripol) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa.
Nigerian Foreign Minister Ojo Maduekwe told a meeting of ECOWAS foreign ministers in Abuja, "We cannot walk away from the challenges of assisting the authorities in Guinea to return to constitutionality. In the African spirit of being our brother's keeper, ECOWAS shall support and reward every sincere move in Guinea to ensure the emergence of a democratically elected government within the year." The Nigerian official was reacting to the recent military coup in Guinea after the death of the democratically elected president. The military juntas are now in charge in Guinea.
Dr. Maduekwe the current chairman of the ECOWAS Security and Mediation Committee, also said Guinea would need the support of its neighbours in the coming months inorder to be a stability in the country. He reiterated ECOWAS policy on coups, his words: "There is a need for us to speak with one voice, that in Africa, the era of making a distinction between a good coup and a bad coup is over. There is no patriotic coup as distinct from an unpatriotic coup. The ECOWAS protocol we are all parties to, leaves no room for those distinctions.”
The National Council for Democracy and Develop-ment (CNDD) - a junta led by army captain Moussa Dadis Camara - seized power in Guinea on December 23 following the death of autocratic President Lansana Conte, who had ruled since 1984. Major donors including the United States and European Union have called for a return to constitutional rule, while the African Union has suspended Guinea.
But the junta has tried to reassure nervous neighbours that it poses no threat, sending representatives to Guinea-Bissau, Mali and Sierra Leone to explain the takeover. Senegal and Libya have publicly indicated they would be ready to work with Camara. The junta, which was welcomed by ordinary citizens in Guinea as a break from Conte's corrupt and nepotistic administration, has appointed a civilian transition government and initially promised elections in 2010. But Senegal's President Abdoulaye Wade, who endorsed the coup leaders, has suggested polls could be held earlier, while French Secretary of State for Cooperation, Alain Joyandet has said Camara had agreed to hold polls within 12 months. The Nigerian government is trying to get the support of other West African leaders to oppose the subterranean support being given by the Libyan leader, Mu’ammar Gaddafi and Wade to the Guinean coup leaders. President Umaru Yar’Adua is insisting that the support being given to the plotters is against the African Union Constitu-tional Act and that African leaders should not seek to extend their influence by promoting the subversion of democracy.
Nigerian government in the year 2006 paid almost $20 billion to two giant international syndicates: Paris Club and London Club of Creditors to settle her foreign debts. This transfer of wealth by a relatively poor nation contradicts the entire prudent financial judgment and rudimentary economic disposition preached to Nigeria by the rich donor nations that babbles about the ills of capital flight in developing nations.
The government of President Obasanjo, the Nigerian ex-Head of state made the arrangement and secured the purported $18billion debt relief for Nigeria from the Paris Club of Creditors, which became the inducement for the country to pay off her $36 billion foreign debt. Nigeria's total foreign debt stood at $35.916billion as of June 2005. The largest chunk of the debt $31billion was owed to 15 of the 19 creditor-countries of the Paris Club.
On Friday, April 21, 2006 Nigeria paid the final installment of $4.518billion to exit the Paris Club. Earlier, Nigeria paid off $12.4 billion in arrears and debts as was stipulated to fulfill arrangement and concord reached with the Paris club in June 2006.
In addition, the federal government of Nigeria finally paid off the last batch of outstanding debts owed to the London Club amounting to $2.15 billion. For the settlement of both Paris Club and London Club of Creditors, Nigeria paid off almost $20 billion. This is one of the largest transfers of wealth by a third world nation to the first world nations.
On the global financial scale and rating, there is no doubt that Nigerian payment of her debts makes her a credit worthy nation with - BB- rating from Standard & Poor's. But for a country with enormous internal economic problems; with 70% of the population mired in penury poverty with increasingly educational and health challenges to repatriate such a wealth to the west is not a prudent decision. Without doubt, Nigeria was compelled to do so by those nations that supposedly are the partners in fighting poverty in Africa.
In 1985, Nigeria owned $8 billion to Paris club creditors, out of $19 billion of its foreign debt.
By the end of 2004, Nigeria owned Paris club $31 billion out of $36 billion of its foreign debt. Since 1992, Nigeria has not received any loan from Paris club. So, where is the justification for the increase of the debt? Blame it on the malleable interest rate, interest arrears and interest charged on the arrears. Maybe the political and monetary instability did contribute to the debt increase, but it is beyond the control of poor Nigerians who bear the brunt of poverty. The Paris Club would have cancelled the total debt, rather than requiring for the debt buy back of the 40% of the remaining debt. Nigeria has a good record of servicing and meeting its debt obligations, and has paid its principal and reasonable interest on the debt, that can justify 100% cancellation.
Britain the former Nigerian colonial ruler was the largest creditor of the debt; she received $3 billion from Paris Club. United Kingdom declined the request of Archbishop Desmond Tutu and development charities including The Jubilee Debt Campaign to return the share of her debt payment to Nigeria. Britain was criticized for accepting the payment from developing country Nigeria. (To finalize the debt payment deal, Nigeria made the total payment of $12.4 Billion to Paris Club and Britain the largest creditor received $3Billion).
“The British government has drawn sharp criticism from development charities for taking a debt repayment from Nigeria which dwarfs the UK's entire annual aid budget for the African continent. Charity Jubilee Debt Campaign says the payments mean the G7 will receive more in six months from Nigeria than the 2005 Gleneagles G8 deal will provide to poor countries in a decade. The G8 is the G7 plus Russia. Trisha Rogers, Jubilee's director, said: "It is obscene for G7 countries to take billions of dollars from one of the poorest countries on earth. In particular this means the UK will take from Nigeria almost exactly twice as much as it is giving in aid to the whole of Africa in 2005." In his letter dated 27 January 2007, Tutu said: "While it is to be welcomed that much of the debt has been wiped off the books, it is unacceptable that 40 per cent ($12.4 billion) must be paid in a one-off payment.”
"For rich creditors to be claiming such a vast amount of Nigeria's savings at this time smacks of a meanness of spirit which stands in stark contrast with so many of the sentiments expressed in 2005.” (In 2005 G8 leaders gathered at Glenglades in Scotland and pledged to effectuate debt remission for Africa). Prime Minister Tony Blair replied that Britain will keep the debt payment and will not refund any money to Nigeria.
It's perplexing to comprehend why Britain’s former Prime Minister Tony Blair refused to adhere to the appeal from eminent personalities of Desmond Tutu and Trisha Rogers caliber. The then Prime Minister Tony Blair had good credentials on Africa. He highlighted Africa in his leadership of G8 in 2005 and said that Africa's plight was "a scar on the conscience of the world." He also championed the cause of Africa with the formation of the Commission for Africa. During his leadership of G8 he recommended massive aid and debt remission for Africa, which has not been fully implemented due to the reluctance of some of G8 nations to oblige to their pledges. Africa is a continent beset with dire problems - Diseases, wars and instability are ravaging the continent. The least thing Africa needed is enormous capital flight. Every penny is needed to curb the problems and alleviate quality of life in the most populous nation in Africa. Britain and Blair understood Africa's political landscape and indeed Nigeria; particularly its sociological-economic needs more than the rest of the G8 and Paris Club members because of her colonial rule in Nigeria. Yet they participated in sharing the wealth from poor Nigeria.
The billions of dollars that Nigeria paid was larger than the donations the rich nations will be providing to poor countries in a period of ten years. The money paid to the rich nations of Paris Club and London Club of Creditors would have found its best use in Africa, if not in Nigeria.
Alhaji Umaru Musa Yar’adua, the Executive Governor of Katsina State, was born in Katsina Town, Katsina State in 1951. He started his primary education at Rafukka Primary School, Katsina in 1958. He left Rafukka for Dutsinma Boarding Primary School in 1962 from where he completed his primary education in 1964.
Between 1965-1969, Umaru Yar’adua was at Government College, Keffi in present-day Nasarawa State for his secondary education. He then moved to the famous Barewa College Zaria for his Higher School Certificate between 1970-1971. For his university education, Yar’adua attended the Ahmadu Bello University (ABU) Zaria from 1972-1975 where he obtained the B.Sc Education/Chemistry. He returned to the same University from 1978-1980 for his M.Sc Degree in Analytical Chemistry.
Umaru Yar’adua’s working career began at the Holy Child College, Lagos for the mandatory one year National Youth Service Corps (NYSC) between 1975 and 1976. He was a Lecturer at the Katsina College of Arts, Science and Technology, Zaria between 1976 and 1979. He moved to Katsina Polytechnic, also as a Lecturer in 1979 and was there until 1983 when he left the public service.
Yar’adua’s movement to the private sector started at Sambo Farms Ltd in Funtua, Katsina State as its pioneer General Manager between 1983-1989. He served as a Board Member, Katsina State Farmers’ Supply Company between 1984-1985, Member Governing Council of both Katsina College of Arts, Science and Technology Zaria and Katsina Polytechnic between 1978-1983, Board Chairman of Katsina State Investment and Property Development Company (KIPDECO) between 1994-1996.
Umaru Yar’adua served as a Director of many companies, including Habib Nigeria Bank Ltd. 1995-1999; Lodigiani Nigeria Ltd. 1987-1999, Hamada Holdings, 1983-1999; and Madara Ltd. Vom, Jos, 1987-1999. He was Chairman, Nation House Press Ltd, Kaduna between 1995-1999.
Yar’adua’s foray into party politics began as a Lecturer when he became an active member and mobilizer for the defunct Peoples’ Redemption Party (PRP). During the Transition Programme of President Ibrahim Badamasi Babangida, Yar’adua was one of the foundation members of the Peoples’ Front, a political association under the leadership of his elder brother, the late Major-General Shehu Musa Yar’adua. That association later fused to form the Social Democratic Party (SDP). Yar’adua was a member of the 1988 Constituent Assembly. He was a member of the party’s National Caucus and the SDP State Secretary in Katsina and contested the 1991 Governorship election, but lost to the candidate of the National Republican Convention.
At the inception of General Abdulsalam Abubakar’s transition in 1998, Yar’adua founded the K34 political association which later teemed up to form the Peoples Democratic Party (PDP). He contested and won election as Governor of Katsina State in 1999 and was re-elected in 2003.
Governor Yar’adua is best remembered as the first Governor to publicly declare his assets and has promised to do same again at the end of his tenure.
During his tenure as Governor, the state has gone through an unprecedented development, culminating in profoundly transformation of the educational and health institutions, provision of rural and urban roads, electrification, water supply and agriculture. Today, people of Katsina State can boast of a Governor with proven record of prudence, accountability and transparency. Under his leadership, Katsina State now has a surplus of N6.5billion from a near empty treasury and back log of debts in 1999. No wonder, Umaru Yar’adua won the National Primary Education Productivity Merit Award in 2004 and the Central Bank of Nigeria (CBN) Best Governor Award under the Agricultural Credit Guarantee Scheme (ACGS) in 2005. Yar’adua’s primary health care delivery system and primary education policies have become models with compelling national appeal. His determination to make taxation the major source of public finance in Katsina State has currently pre-occupied his administration with implementation of plans to process and make viable neem production in the State. This is expected to bring in export revenue in excess of USD2billion to farmers and people of Katsina State. The Governor further expects 25% of this or USD500 million to accrue to the state treasury as revenue for the sustenance of his efforts. He was honoured with many other awards for prudence and accountability, among which are NUJ Abuja Council (2003); NUJ Kaduna Council (2005) and Leadership Watch (2004).
Yar’adua is happily married to Hajia Turai Umaru Yar’adua and they are blessed with children.
He enjoys reading and playing squash.
Addis Ababa: The issue of climate change that we have come to discuss here today is of significant importance to the African Continent. Scientific projections unequivocally indicate that Africa will be hit hardest by the impacts of climate change as compared to other continents. Among other impacts, climate change will fundamentally affect agricultural productivity, increase the prevalence of diseases and poverty, increase water stress and trigger off conflicts and war. Africa's development aspirations are at stake unless urgent steps are taken to address the problem of climate change. It goes without saying that although Africa is least responsible for global warming, it is however suffering from the impacts of climate change. Therefore, Africa suffers most from the problem that it has not created!
The climate change challenge before us is enormous. However, Africa has faced even greater challenges in the past and I am confident that we shall prevail over this present challenge.
Given that Africa is already suffering from the severe effects of climate change, we all must urgently seek solutions. Fortunately, the international community is already engaged in a protracted process that will hopefully lead to an ambitious and effective international agreement to combat climate change at Copenhagen, Denmark in December this year. This is the time for Africa to aggressively engage in this process to ensure that Africa's concerns in this new international climate change agreement are effectively addressed.
Due to the great importance that the African Union attaches to the issue of climate change, the Heads of State and Government have recently taken important decisions on climate change.
Your Excellencies, Honourable Ministers, Distinguished Delegates, Ladies and Gentlemen, permit me at this stage to mention the important decisions on climate change that the African Union has taken in the recent past:
1. The 12th Ordinary Session of the African Union Assembly of Heads of State and Government in February 2009, held in Addis Ababa, Ethiopia adopted a historic decision on climate change the key elements of which include:
a)That the global carbon trading mechanisms that are expected to emerge from international negotiations on climate change should give Africa an opportunity to demand and get compensation for the damage to its economy caused by global warming and underlines in this regard the fact that despite contributing virtually nothing to global warming Africa has been one of the primary victims of its consequences.
b)That Africa needs to be represented by one delegation, which is empowered to negotiate on behalf of all Member States, with the mandate to ensure that resource flow to Africa is not reduced. The AU Commission was mandated to work out modalities of such representation.
2. The 13th Ordinary Session of African Union Assembly of Heads of State and Government held in Sirte, Libya in July, 2009 took another important and historic decision and established the Conference of African Heads of State and Government on Climate Change (CAHOSCC) comprising of the following:
The Chairperson of the African Union;
The Federal Democratic Republic of Ethiopia;
The Republic of Algeria;
The Republic of Congo;
The Republic of Kenya;
The Republic of Mauritius;
The Republic of Mozambique;
The Republic of Nigeria;
The Republic of Uganda;
The Chairperson of the African Ministerial Conference on Environment;
The Chairperson of the African Union Commission; and
Technical Negotiators on climate change from Member states.
Another key element of the 13th Ordinary Session of African Union Assembly of Heads of State and Government held in Sirte, Libya in July, 2009 is that the Assembly mandated CAHOSCC, all AU Ambassadors and African negotiators from member States attending the negotiation process towards the 15th Conference of Parties (COP 15) to make use of the approved African common position on climate change.
Your Excellencies, Honourable Ministers, Distinguished Delegates, Ladies and Gentlemen, you will all agree with me that the decisions that I have just mentioned signify a fundamental shift in the collective policy and practice of African States towards international negotiations on climate change.
First and foremost, the decisions articulate a key political message that should inform the content of Africa's common position on key climate change agenda items that are under negotiation.
Secondly, Africa will henceforth be represented by one delegation at international meetings on climate change. The Conference of African Heads of State and Government on Climate Change (CAHOSCC) will spearhead Africa's negotiations on climate change.
I now wish to take this opportunity to thank all our technical experts on climate change from all across Africa for the achievements they have registered in their endeavours over the course of years. I believe that CAHOSCC will build from these very achievements to move the process forward to ensure that our work proceeds in a coordinated and consistent manner.
It is the expectation of the AU Commission that this meeting will produce the first-ever AU-Summit sanctioned key political messages on climate change from Africa, which will be widely distributed in the continent and throughout the World. This output will be informed by various political processes on climate change taking place in the continent. Secondly, there will be a close alignment of technical positions being negotiated by the African Group with the political messages from the continent, especially from the CAHOSCC.
Te outcome of this meeting will inform the deliberations of the CAHOSCC meeting being planned on the sidelines of the Special Summit in Tripoli, Libya on the 31st August 2009. Hence your deliberations this afternoon is very important. I am sure that CAHOSCC will appreciate the quality of the report that you will present to it.
At this juncture, I take this opportunity to declare the Meeting of the Representatives of the Conference of African Heads of State and Government on Climate Change (CAHOSCC) and the African Experts on climate change open so that we can turn our attention to important issues on our agenda.
I thank you and wish you happy and fruitful deliberations!
* OPENING STATEMENT BY H.E DR. JEAN PING, CHAIRPERSON OF THE AFRICAN UNION COMMISSION, AT THE MEETING OF THE REPRESENTATIVES OF THE CONFERENCE OF AFRICAN HEADS OF STATE AND GOVERNMENT ON CLIMATE CHANGE (CAHOSCC) AND AFRICAN LEAD EXPERTS ON CLIMATE CHANGE; AUGUST 24, 2009 ADDIS ABABA, ETHIOPIA
Several climate regimes characterize the African continent; the wet tropical, dry tropical, and alternating wet and dry climates are the most common. Many countries on the continent are prone to recurrent droughts; some drought episodes, particularly in southeast Africa, are associated with El NiZo-Southern Oscillation (ENSO) phenomena. Deterioration in terms of trade, inappropriate policies, high population growth rates, and lack of significant investment-coupled with a highly variable climate-have made it difficult for several countries to develop patterns of livelihood that would reduce pressure on the natural resource base. Under the assumption that access to adequate financing is not provided, Africa is the continent most vulnerable to the impacts of projected changes because widespread poverty limits adaptation capabilities.
Ecosystems: In Africa today, tropical forests and rangelands are under threat from population pressures and systems of land use. Generally apparent effects of these threats include loss of biodiversity, rapid deterioration in land cover, and depletion of water availability through destruction of catchments and aquifers. Changes in climate will interact with these underlying changes in the environment, adding further stresses to a deteriorating situation. A sustained increase in mean ambient temperatures beyond 1EC would cause significant changes in forest and rangeland cover; species distribution, composition, and migration patterns; and biome distribution. Many organisms in the deserts already are near their tolerance limits, and some may not be able to adapt further under hotter conditions. Arid to semi-arid subregions and the grassland areas of eastern and southern Africa, as well as areas currently under threat from land degradation and desertification, are particularly vulnerable. Were rainfall to increase as projected by some general circulation models (GCMs) in the highlands of east Africa and equatorial central Africa, marginal lands would become more productive than they are now. These effects are likely to be negated, however, by population pressure on marginal forests and rangelands. Adaptive options include control of deforestation, improved rangeland management, expansion of protected areas, and sustainable management of forests.
Hydrology and Water Resources: Of the 19 countries around the world currently classified as water-stressed, more are in Africa than in any other region-and this number is likely to increase, independent of climate change, as a result of increases in demand resulting from population growth, degradation of watersheds caused by land-use change, and siltation of river basins. A reduction in precipitation projected by some GCMs for the Sahel and southern Africa-if accompanied by high interannual variability-could be detrimental to the hydrological balance of the continent and disrupt various water-dependent socioeconomic activities. Variable climatic conditions may render the management of water resources more difficult both within and between countries. A drop in water level in dams and rivers could adversely affect the quality of water by increasing the concentrations of sewage waste and industrial effluents, thereby increasing the potential for the outbreak of diseases and reducing the quality and quantity of fresh water available for domestic use. Adaptation options include water harvesting, management of water outflow from dams, and more efficient water usage.
Agriculture and Food Security: Except in the oil-exporting countries, agriculture is the economic mainstay in most African countries, contributing 20-30% of gross domestic product (GDP) in sub-Saharan Africa and 55% of the total value of African exports. In most African countries, farming depends entirely on the quality of the rainy season-a situation that makes Africa particularly vulnerable to climate change. Increased droughts could seriously impact the availability of food, as in the Horn of Africa and southern Africa during the 1980s and 1990s. A rise in mean winter temperatures also would be detrimental to the production of winter wheat and fruits that need the winter chill. However, in subtropical Africa, warmer winters would reduce the incidence of damaging frosts, making it possible to grow horticultural produce susceptible to frosts at higher elevations than is possible at present. Productivity of freshwater fisheries may increase, although the mix of fish species could be altered. Changes in ocean dynamics could lead to changes in the migratory patterns of fish and possibly to reduced fish landings, especially in coastal artisinal fisheries.
Coastal Systems: Several African coastal zones-many of which already are under stress from population pressure and conflicting uses-would be adversely affected by sea-level rise associated with climate change. The coastal nations of west and central Africa (e.g., Senegal, The Gambia, Sierra Leone, Nigeria, Cameroon, Gabon, Angola) have low-lying lagoonal coasts that are susceptible to erosion and hence are threatened by sea-level rise, particularly because most of the countries in this area have major and rapidly expanding cities on the coast. The west coast often is buffeted by storm surges and currently is at risk from erosion, inundation, and extreme storm events. The coastal zone of east Africa also will be affected, although this area experiences calm conditions through much of the year. However, sea-level rise and climatic variation may reduce the buffer effect of coral and patch reefs along the east coast, increasing the potential for erosion. A number of studies indicate that a sizable proportion of the northern part of the Nile delta will be lost through a combination of inundation and erosion, with consequent loss of agricultural land and urban areas. Adaptation measures in African coastal zones are available but would be very costly, as a percentage of GDP, for many countries. These measures could include erection of sea walls and relocation of vulnerable human settlements and other socioeconomic facilities.
Human Settlement, Industry, and Transportation: The main challenges likely to face African populations will emanate from extreme climate events such as floods (and resulting landslides in some areas), strong winds, droughts, and tidal waves. Individuals living in marginal areas may be forced to migrate to urban areas (where infrastructure already is approaching its limits as a result of population pressure) if the marginal lands become less productive under new climate conditions. Climate change could worsen current trends in depletion of biomass energy resources. Reduced stream flows would cause reductions in hydropower production, leading to negative effects on industrial productivity and costly relocation of some industrial plants. Management of pollution, sanitation, waste disposal, water supply, and public health, as well as provision of adequate infrastructure in urban areas, could become more difficult and costly under changed climate conditions.
Human Health: Africa is expected to be at risk primarily from increased incidences of vector-borne diseases and reduced nutritional status. A warmer environment could open up new areas for malaria; altered temperature and rainfall patterns also could increase the incidence of yellow fever, dengue fever, onchocerciasis, and trypanosomiasis. Increased morbidity and mortality in subregions where vector-borne diseases increase following climatic changes would have far-reaching economic consequences. In view of the poor economic status of most African nations, global efforts will be necessary to tackle the potential health effects.
Tourism and Wildlife: Tourism-one of Africa's fastest-growing industries-is based on wildlife, nature reserves, coastal resorts, and an abundant water supply for recreation. Projected droughts and/or reduction in precipitation in the Sahel and eastern and southern Africa would devastate wildlife and reduce the attractiveness of some nature reserves, thereby reducing income from current vast investments in tourism.
Conclusions: The African continent is particularly vulnerable to the impacts of climate change because of factors such as widespread poverty, recurrent droughts, inequitable land distribution, and overdependence on rain-fed agriculture. Although adaptation options, including traditional coping strategies, theoretically are available, in practice the human, infrastructural, and economic response capacity to effect timely response actions may well be beyond the economic means of some countries.
Source:GRID-Arendal on Intergovernmental Panel on Climate Change