The maiden October Lecture of the Association of Heads of Federal  Establishments (AHFE), Abia State Chapter, took place last year (on 20th October, 2009).

In his paper on the occasion titled “Global Economic Meltdown: Implications for the Nigerian Public Service”, 

the Lead Speaker, Vice Chancellor of Michael Okpara University of Agriculture, Umudike, Professor Ikenna Onyido, FAS, dwelt on vital issues which are still very relevant today. We publish below, excerpts from his paper. Please read on.

Introduction.

The term economic meltdown refers to the severe economic recession that is used to characterize the current global economic crisis. The concept epitomizes the current economic scenario where virtually all countries of the world have been severely affected. Consequently, the Gross Domestic Product (GDP) of countries has gone into the negative zone, generally characterised by severe liquidity crunch, giving rise to diverse economic intervention programmes. However, in Africa most steps being taken are lopsided when one considers the Chinese meaning of crisis, which aptly describes the current meltdown.

The word Crisis in Chinese is made up of two components "wei" which means danger and "ji" which means opportunity. Kasse (2009), reacting to the current global economic crisis, had argued that African governments have too often seen the economic crises only in the light of the first meaning whereas it is the second that is more crucial because every crisis has an inbuilt opportunity, a chance for change and adaptation. This year's public lecture by the Association of heads of Federal Establishments, Abia State Chapter was informed by the desire to fulfill the association's advisory and enlightenment functions to the nation, based on a thorough understanding of the genesis of the global economic meltdown, its nature and how to mitigate its residual effects on the public services.

Global economic meltdown is a topical issue because of its universal effect, it connotes near catastrophic circumstances necessitating scarcity or unavailability of otherwise available exploitable resources, thereby incapacitating political leaders from  meeting their campaign promises, targets, plans and programmes. It has many implications for both developed and developing economies. It is characterized by severe closures of companies, loss of jobs, the crash of share prices, and squeeze in consumer credit facilities, crumbling mortgage facilities among others.

In the case of the developing countries, Nigeria inclusive, the implications are manifest in the area of crash in share prices, dwindling revenues, and declining dividends from limited direct investments by developed countries. The universality of the impact of the crisis is a direct consequence of the information and communications technology revolution, which unified the world through the internet, global electronic media like the Cable News Network (CNN), the  African Independent Television (AIT), and revolutionary Technologies like the mobile phone, iPod, iPhon' and so on. These have facilitated interconnectivity of banks and stock exchange markets universally given that the world is now a global village where what affects one entity quickly impacts the  neighbours  (Stiglitz  2006).

Economic conditions in every country are strongly influenced by the development of the world economy. It makes itself felt through international trade, global production, and international finance. Other important sinews connecting the economies of different countries into one global entity include international migration, creating a migrant labour force, and the international diffusion of technologies. Consequently, there is a tendency for interest rates or the prices of securities, bonds and shares in one country to be affected by interest rates and financial prices in others. So, instead of one country's interest rates being wholly determined by its own conditions, they have become the outcome of world forces (Harris 2005, Stiglitze 2002).

The Root of the Crisis.

The crisis is a result of the developments in the world since Neo-Liberalism (Belaunde 2006) became the major guiding philosophy in pecuniary reforms. It is the existence of the ingredients of globalization, particularly globalised capitals that mastermind the financial institutions repeated borrowing, lending and collateralizing. Consequently, the real issue is discovering the conditions that led the financial institutions to lure the unsuspecting consumers to carry excessive debt burden and not why the consumers acted recklessly by agreeing to take on intractable, choking risks. The US President Barack Obama and renowed monetary experts have exonerated borrowers and everything to do with the fancy financial packaging and creative marketing techniques that the debt originators resorted to. Many of the loans and mortgages were made lo look artificially alluring through teaser rates.

The upward setting of the interest rates resulted in a larger debt service burden for the same size loans and the additional sums of money required to finance the newly set rates had to be found somewhere. The credit crunch affected project finance by placing constrains on the market, higher funding costs, tighter, financial covenants, lower leverage, wider spreads, and fewer banks in the market, leading to increased costs of lending,. Likewise, the collapse of Lehman Brothers weakened the market and had a negative effect on the project finance market. The implications of an additional debt service burden combined with relatively stagnant wages and negative personal savings rate are close to devastating and the public service was worse for it.

Economic Meltdown in Nigeria.

In these trying times, the economic meltdown has caused the crumbling of many businesses including otherwise formidable corporate giants across the world. In Nigeria, the crisis stumbled on the existing pervasive and convoluted business environment. At the pinnacle is an intractable power crisis.

Other numerous factors astringent to business growth include rising cost of refined petroleum products, high interest rate, chaotic ports and intensifying crime rate. The public service sector was not immune to the destructive consequences of the global economic meltdown. As a developing country, the only attractive way the additional debt service payments resulting from the crisis can be made is to spend less on food, transportation, medical care and other expenditures that are deemed to be necessary.

The Public Service.

For expediency, we will use the term Public Service to describe the group of elites that administer the Federal, State, Zonal and Local Governmental/ International agencies (system). It can also refer to the use of available resources in administrative units in the systems through team efforts to achieve the service objectives of the government or international agencies' systems (Boesky 2006). Our definition includes the use of public servants as government workers, usually hired on the basis of competitive examinations and in this case the Civil Service are those branches of public services that are not legislative, judiciary, or military and in which employment is usually based on competitive examination and criteria (Houghton Mifflin Company 2009). So, the Civil Service could be considered as the ideas-generating arm of sovereign nations, and generally draws from a country's most inimitable talent pool; from its establishment knowledge centres comprising the entire educational institutions and the research institute systems, which generate ideas for creating and continuously revamping the charter and task of nationhood (Nwakanma 2009).

The sets of Nigerian civil servants inherited from the British colonial masters from 1957 were carefully recruited directly to the colonial Administrative Service preparatory to independence. Their recruitments were based on merit, not on quota system, modeled after the best tradition and value of its inherited British service. However, midway into the postcolonial era, the service lost its direction and was further degraded and corrupted by subsequent military interventions with the military leaders co-opting the Civil Servants in their regimes, Hence what emerged by 1970, and thereafter, can be described as a collapsing paradoxical service that is largely uninformed, unimaginative, over bloated and careerist  and this has elicited the collapse of most national strategic establishments, The latter is made up of the entire public service and the nonpublic service systems including the judiciary and the police.

A component of this decline is attributed lo poor remuneration packages as they appear to be the most disadvantaged and depressed wage earners in Nigeria. Public Service salaries and wages are very poor in relation to the rising cost of living and what is required for reasonable subsistence. For example the gap in salaries between the public and private sector could be as much as 300-500 % (Babura 2003). The global economic crisis has severely exacerbated the already precarious situation of the Nigerian Public Servant.

With this understanding the main issue in this lecture is to identify the impact of the present global financial crises on the public services in Nigeria and suggest the way out of the economic quagmire. Consequently, government intervention may be justified when the characterization of public and private goods and services is based on the criteria of economic theory. In the latter, market failure is the standard economic rationale for government intervention in an economic crisis situation. The private sector tends to underinvest when the prospects of outfit are slim as in the case of agricultural research and the present economic and financial crisis, because the private sector is generally averse to long term, large-scale and risky enterprises. However, in the case of negative externalities in agriculture related to the environment and the quality of food, the public sector needs also to invest.

There are various other ways of defining private and public goods and roles. The balance between public and private goods and roles has changed during the past decades. The changing balance is also a result of private sector initiatives related to improved intellectual property regimes. A country's level of development is another factor which affects the public/private sector balance.

In many cases solutions must deal simultaneously with several sources of market failure. The public sector should not lie monopolistic; instead a multi-organizational service system should evolve.