Microfinancing in a time of war
When many people get killed by the gun almost daily, homes are destroyed and refugees mount then a war is going on. Many parts of Nigeria are in this state but it may be repugnant for many to agree that our country is in the middle of major wars.These are very bad times for economic analysts and writers in Nigeria. And so it is for microfinance institutions, especially in the frontlines of the current wars raging almost all over the country. The terms, war and frontline, may sound strange, especially for those of us in the deep southern parts or in the North-West, where the wars have not fully manifested. Some may even deny completely that there is any cause for concern and probably brand others alarmists. However, there is cause for concern and government had better believe it. Things are moving so fast in the wrong direction that it is unpatriotic for anyone to pretend all is well.
Our stock market may have hit the roof reaching a nine-year high and we are probably number two in the world ranking on burses. But election is by the corner and as we all know governance has actually ended and electioneering has begun. We need not be deceived. We also know that portfolio investment is nothing to be so happy about for an economy like this. Soon we will know where the money that poured into the exchange came from, and for what purpose. The reality is that this economy is broken and now functions in compartments. While some show signs of growth, others manifest every trapping of distress and recession.
It is also a bad time for the rarely available “one-handed” economists who seek precision and certainty in their forecasts and do not hide under the popular phrase “other things being equal” to tell you something on the one hand and another on the other hand.It is so hard to be a one-handed economist right now in Nigeria. All the elements of economic forecast are either in a spiral, up or down, or out rightly discoloured to be of any analytical value.
It is doubtful if any other economy in the world, except may be Afghanistan and some of the other war-thorn countries, is experiencing what the Nigerian economy is passing through. It has been assaulted by all manner of evil that have made it impossible for any meaningful progress to be recorded. From currency devaluation that altered the educational plan of many youths, killing their dream of quality education (but did not kill wasteful medical tourism) to a recession whose consequences are still unfolding. The Nigerian economy remains a mystery, and as former President Babangida said, nobody can tell why it has not collapsed.
As far back as 1986, one-time Minister of Finance, Budget and Petroleum, Dr Chu S.P. Okongwu, one of Nigeria’s brightest living minds, wrote a booktitled “The Nigerian Economy: An Anatomy of a Traumatised economy …” It was one of the most incisive works on the Nigerian economic condition and was widely consulted. But now we know wrote too early. The Nigerian economy was anything but traumatized in 1986, from what we now know and see.
The real traumatization of the economy has now unfolded. This has reflected in every aspect with growth crashing from an average of about 7 per cent a decade ago to several quarters of consistent negative growth. There has been, and probably still is, a massive recession thrashing every sector and institution, largely as a result of very poorpolitical leadership at all levels. We seem to have elevated silence and the do-nothing attitude to a high art. We do nothing about everything. Nigeria is currently in a state of war.There can be no progress in a state of war and disharmony. The disharmony we face today may have been accentuated by the leadership style of the present government but it did not begin with it. But we don’t solve problems in Nigeria. We kick the can down the alley. I have no doubt that the next president will find the can on the way and still kick it.
The current state of unemployment, poverty and indeed rampant social dislocations are not a happenstance. It is mostly a result of human activity. Although much is being done, especially in the field of poverty alleviation and economic inclusion, much cannot be achieved under the present state of affairs in which we take one step forward and many steps backwards. As we provide microfinance and poverty remediation and lift people out of poverty, at the same time we make Internally Displaced Persons (IDPs) of a greater number of others. The rank of the latter grows geometrically while the former grows arithmetically. This is why nobody seems to know what the microfinance banks are doing. Their effort has paled in the face of the challenge. It is not possible to reduce poverty under our present circumstances.
For much of 2016 and 2017, we ran what I described then as a Treasury Bill (TB) economy in which the federal government muscled out the private sector and cornered all the funds in the system through high yielding bills. Towards the end of last year, somebody realised that the banks were rapidly transiting from DMBs to mere Treasury bill agents of the federal government. The TB rates were crashed perhaps to help the banks get back to banking. If this was the plight of the DMBs then one can only imagine how cash-strapped the microfinance banks are. The result is that distress has been planted widely in the economy and we are probably surviving on Regulatory Creativity, whereby regulators device their own means of either denying reality or parrying it. Soon we shall have the numbers to truly show the world that an economy devastated by wars can quickly come out of recession, even as the wars get bigger and spreadto more fronts. Miracles happen a lot, especially in the realms of economic statistics.
Our microfinance efforts at poverty reduction is being washed away by our poor political and economic management strategies. It is actually becoming so hard to write about the Nigerian economy – a compound of many things – politics, religion, culture and even civilization. Once these elements are not in sync with the environment, economic thinkers face some conflicts. Microfinance is not a war-time economic strategy. It focuses on the active poor. Refugees are now everywhere. The farmers in my village who can no longer farm are refugees, only they have not been camped. Refugees do not take loans and if they do it is a gift. The rate at which people are losing their economic activity due to the attack of herdsmen calls to question the essence of government. Truly, looting the treasury is bad but allowing Nigerians to be killed like chicken is worse.
Emeka Osuji