• Wednesday, November 29, 2023
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Greece and Nigeria: passing off insolvency as illiquidity

This is Nigeria, where nothing works!

On Monday, February 2, 2015, I watched Nina dos Santos on CNN Business View speaking with Sarah Shawn of Standard Chartered Bank London office on the Greek economy. She commented on the notion that Greece has for quite some time had a solvency problem being routinely passed off as a liquidity problem. Having followed the Greek economy with trepidation since before the unwarranted gamble with the Centennial Olympic Games, I agree wholeheartedly.

Since I am neither a Greek nor an economist, one would wonder why I am concerned with this scenario. I do so because I have seen images of Nigeria in the Greek debacle which worries me a lot.

First, Greece had no business hosting the 2004 Olympic Games. Because Greek labour productivity notoriously languished in the low ranges (together with Spain and Italy), it was no surprise then when the multi-billion euro cost overruns started piling up. To make matters worse, the same extreme left wing labour unions (that last week voted in the Syriza Party) then moved in for the kill, extracting all manners of unsustainable concessions from the Greek government as a condition for keeping up the pace of construction for the games. In addition, every so often, the unions called out their members on strike to remind the government who was really in charge!

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It has been over a decade since that party cum jamboree was over. The revellers have long gone home while the ordinary Greeks were left carrying the baby. After two or is it three feeble attempts at debt and economic restructuring, the basic problem is still with Greece, with Europe and the global economy at tenterhooks. Meanwhile, politicians, the monied class and the middle class who could deployed their utmost best at tax evasion. Money was routinely stashed outside Greece. This further emptied the state coffers. The list of the top cheats is in the public domain. One can easily draw parallels from Nigeria’s sad situation.

Over three decades ago, I learnt from one San Francisco business journal about the importance of having the big labour unions invest in (i.e., their pension funds) and sit on the boards of major companies. The view from outside the board is always extremely rosy, often reinforced by the limited disclosures on financial and corporate governance issues prevalent in that era. Unfortunately, this idea did not then and still does not now come naturally to management. Of course, not in Nigeria with our uppity Oga-At-The-Top mentality. Nobody seems to have heard of the Nigerian proverb, “If you smack me to kill a tse-tse fly, then show me your bloodied palm.”   

In the Nigerian context, the labour unions (unfortunately like the politicians) believe that the financial circumstances of their employers are infinitely elastic and capable of accommodating every whim. In the case of Greece, it is on record that Greek protesters with a warped sense of entitlement heckled the German chancellor on one occasion and on another mobbed the finance minister.

With the freshly-minted left-leaning government now running Greece, one wonders what is going to happen next. Can Syriza find common ground with the EU, the ECB and the IMF?

The new Greek leaders are currently engaged in whirlwind visits to European capitals in an effort to sell their alternative economic plans to sceptical members of the EU. Many commentators believe that time is running out for Greece. Is the same not true of Nigeria?

Oduche Azih