Life Without Debt

"Moneylenders oppress my people and their creditors cheat them" -Isaiah 3:12; Good News Bible.

culled from GUARDIAN, August 14, 2005

Are there any macro-economic theorems which help us to make sense of the past, present and future of the global economy? Yes, there are. In fact, there are three theorems in all, two for the macro-economics of exclusion and one single theorem for the macro-economics of inclusion. Thus, for instance, the interest parity theorem and the import parity pricing theorem are the two theorems of macro-economic exclusion which, respectively, make global moneylenders and creditors of the financial convertible currency nations of the West and global money-borrowers and debtors of the non-convertible currency nations of the South, Nigeria inclusive. But, the purchasing power parity theorem is the single theorem of macro-economic inclusion which makes every commercial convertible currency nation of the globe to embrace the Rothschildian ethos of "neither a lender nor a borrower be" and to then go on to live without debt.

Besides, just as the interest parity theorem is the nature and cause of the wealth of the financial convertible currency nations of the West and the import parity pricing theorem is the nature and cause of the poverty of the non-convertible currency nations of the South, Nigeria inclusive, so is the purchasing power parity theorem the nature and cause of the wealth of every commercial convertible currency nation of the globe.

Therefore, it is the import parity pricing theorem, which has ruled Nigeria since October 1, 1960, that forces the non-convertible currency Nigeria to keep and manage her international reserves in the banks of the West and to thereby use her savings to fund the phenomenal growth of local content in the West and also forces Nigeria to trade and pay abroad with the currencies of the West and to thereby expatriate all forms of economic middlemanship: commercial, financial, industrial and technological, from Nigeria to the West. And, for as long as Nigeria continues to manage her international reserves in the banks of the West and to use the financial convertible currencies of the West to trade and pay abroad, for so long will Nigeria be oppressed by Western moneylenders and be cheated by Western creditors as Prophet Isaiah tells us as in the above reference from the Good News Bible.

So, it is crass failure of imagination for many a Nigerian economist to devote valuable time today to discuss the Paris Club debt relief and debt management mechanisms which will only keep Nigeria under the oppressive and cheating thumbscrew of the import parity pricing theorem and the West. Rather, what should task the imagination of proactive Nigerian economists is what Nigeria must do here and now to make debt and poverty history for any Blackman anywhere on the globe.

And, in this regard, it is very idle of any Nigerian economist to expect the West to commit economic suicide by helping Nigeria to grow exponentially in local content. For where will the West find the captive markets for their home made goods and services when Nigeria begins to use her own resources to satisfy what she needs of goods and services? In reality, therefore, any Nigerian debt relief or debt management strategy, seen from the perspective of the import parity pricing theorem, is a colossal disservice to the economic well-being of the Blackman anywhere on the globe because Nigeria cannot grow in social and material plenty on this basis. What Nigeria needs now and forever is a debt consolidation and debt liquidation strategy which goes naturally with the liberation territory of the purchasing power parity theorem. For it is this that will unleash the brimming entrepreneurial spirit of the Blackman upon the whole world.

In fact, no one should ever think that there is any ambiguity about what should be done to get Nigeria out of the economic woods of joblessness, disease, starvation, violence and hopelessness. What it will take to get Nigeria coasting along, in style and comfort, is that the various localities and regions of Nigeria are encouraged to show their mettle and to go the extra-mile in using local resources to satisfy local needs. And in order that this may come to pass, the economic managers of Nigeria must realise that unless a virile, countrywide and entrepreneur-friendly structure of capital markets is set up in Nigeria, the country will never begin to grow in jobs, good and services. It is a countrywide structure of markets for medium-to-long naira, equity naira in short, that will galvanize local and rural Nigerians to excel in making use of their local and rural savings to self-finance themselves into food and job security.

And just think about what this will do to Nigeria's human geography and physical landscape! The debilitating rural-urban drift of young Nigerian labour and the urban Okada menace will be stemmed; the embarrassing deluge of Nigerians at the consular offices of the West in Abuja and Lagos, who want to find the jobs that their exported savings create in the West, will disappear as the torrent of the brain-drain from Nigeria to the West will be reversed.

One can best illustrate how the markets for medium to long term naira will arise to extricate the gung-ho and enterprising Nigerian populace from the current debt and poverty trap of the import parity pricing theorem by way of the flow-of-funds or central banking model of national economic management. From this perspective, the Nigerian economy is made up of two halves of moneyflows. The one half is the Nigerian markets for savings mobilization and distribution where the naira is created and managed in the hope that it will be used to make economic life more abundant for every Nigerian. The other half is the Nigerian markets for goods and services where Nigerian goods and services are waiting to be bought and sold and where Nigerian labour is waiting to be hired in the process.

What the import parity pricing theorem has continued to do with the flow-of-funds structure of the Nigerian economy is that it forces its two halves of financial and industrial naira flows to keep away from each other and to thereby lose local-content-growing contact with each other. This it does by making the Nigerian public sector the main indirect-financing end user of Nigeria's domestic savings. So, it is futile for anyone to expect the Nigerian economy to grow in goods, services and jobs unless and until the Nigerian public sector makes way for the Nigerian private sector to become the exclusive direct-financing end-user of Nigeria's domestic savings. In effect, for as long as the import parity pricing theorem dedicates the bulk of Nigeria's domestic savings to the Nigerian public sector use through short, medium and long term public sector debt instruments, for so long will Nigeria continue to be oppressed by Western money-lenders and cheated by Western creditors.

The chain of causation in this regard is quite clear. It is what goes on within Nigeria that brings about changes in Nigeria's external economic circumstances. For, as the Nigerian public sector is constrained by the import parity pricing theorem to seep itself into the domestic debt trap, so is the Nigerian public sector also constrained to seep Nigeria into the external debt trap. It follows, therefore, that the key to freeing Nigeria from external debt peonage lies with the consolidation and liquidation of the public sector domestic debt pile and with the Nigerian public sector becoming budget-balancing and self-financing thereafter. And the result of this will be that the Nigerian private sector will have the unfettered opportunity, through the countrywide structure of capital markets, to use Nigeria's equitised domestic savings to grow Nigeria into social and material plenty.

Naturally, as the Nigerian public sector ceases to crowd out the Nigerian private sector from having access to the bulk of Nigeria's domestic savings, so does a dramatic change occur in Nigeria's external economic relations. Nigeria's economic managers will begin to realise that she has never needed any foreign capital in order to grow in goods, jobs, and services, and that what she has always needed is her own domestic capital which the import parity pricing theorem has continued to export abroad. After all, the development talk of the day is that the NEPAD Nigeria project is going to be owned and led by Nigerians. But, Nigerians cannot own what they do not fund and cannot lead what they do not own. So, if we must live by the financing scheme that is implicit in the NEPAD Nigeria project, then Nigeria must begin right away to grow and develop a country wide structure of markets for equity or self-financing. These are markets for medium-long naira.

In effect, under the prodding of the purchasing power parity theorem, Nigeria's economic managers will become alive to the necessity for a new brand of the Nigerian market for currencies which will enable Nigeria to use the naira to conserve Nigeria's domestic savings for Nigeria's domestic use. This is the real substance of the much abused but little understood concept of resource control:resource conservation for balanced domestic use. And, inevitably, Nigeria will opt for her international reserves to be managed in Nigerian banks at home and abroad and for the naira to become an international medium of trade and payments so that all of Nigeria's economic middlemanship is domesticated within Nigeria. Thus, under the influence of the purchasing power parity theorem, the economic managers of Nigeria will find that the gold or commercial convertibility of the naira is a non-negotiable precondition for Nigeria to live without debt and so to grow exponentially in local content.

Therefore, I say it, without any fear of contradiction whatever, that the history of economic thought and practice does not support the idea that Nigeria can recover into growth in local content on the basis of the import parity pricing theorem which not only exports her savings to the West and keeps her currency non-convertible but also conditions her to be oppressed by Western money-lenders and cheated by Western creditors. Rather, the history of economic thought and practice supports the idea that Nigeria will recover into exponential growth in local content only when the purchasing power parity theorem enables her to keep her savings at home for her own balanced domestic use, to use her currency, the naira, for her external trade and payments and so to live without debt and quite beyond the oppressive and cheating reach of the money lenders and creditors of the West.

Indeed, it is time the global economy, and, especially, the international community, hearkened to the wise words of the late Pope Paul the Sixth on global resource control as follows: Si vis pacem, cole justitiam: If you want peace, cultivate justice

Egom is an economist.