Olusegun Aganga, Goldman Sachs outfit, and the Nigerian economy By Sampson Iroabuchi Onwuka

By Iroabuchi onwuka

Aganga Olusegun is the new Finance minister and Chairman of the Board of World Bank? I can’t explain it. He has the best wishes of the country but there is need to be ‘cautiously optimistic’ with this new man on the block.



The appointment of Olusegun Aganga as Finance minister and Chairman of the Board of World Bank and IMF was hailed by Nigerians as a step forward in the attempt to redress Nigerian Financial image. Olusegun Aganga with all due respect to his fans seem to be relatively unknown. The man is a largely unknown quantity so to speak, a fact that is complicated by his recent honorary as Chairman of the Board of World Bank and IMF. It is not to be said that the new title is expected to enlarge his International weight, for it seems that he was a very light quantity. The much of what we know of the man is that he helped to negotiate a 4 billion dollar rescue package for certain Nigerian Banks sometime last year, details of which were not very clear. It is now speculative that Goldman Sachs was probably the Jack in the box and given the new details of Goldman Sachs and it chicanery on CDO, we should have course for concern. If however such isolated incident is enough to penetrate the ranks of the Nigerian financial institution, Aganga is perhaps more than welcome to work for the country in terms like this and we wish him the best.



The intention of those who awarded Olusegun Aganga the Robe at the World bank is very clear that Nigeria as a country is to be given a larger role in Africa and perhaps the world. Nigerian economy is currently straddled in its cusp between the dark embrace of 2008 ‘epic of financial’ whose victims included Soludo and the hope of its financial survival under the aegis of Sanusi. In many ways and for what it’s worth, the country needs to welcome the man and his Alma mater, and for the sake of this trust, Nigeria need to be cautiously optimistic given the additional importance attached to the man and about the robe that was vested on him. From the nature of the unprecedented promotion, it will seem to suggest that Aganga Olusegun’s appointment is ‘Custodian’ in the ‘Hedge Fund’ traditional sense of word, for we know that the post is nothing else than an ‘empty suit’ of recognition, a recognition which explains the ranks of Investment Banks who engineered his decoration at World Bank. This appointment alone should have sent out the right signal to Nigerians and to Nigerian media, that something is wrong with the set up, that some is wrong with a Finance Minister caught between two opposing interest, his loyalty to Goldman Sachs and his interest in serving his country. Whereas, Americans would tilt to challenge the other titles, our talk active Nigeria seem to acquiesce. But this is not the first time.



It is expected that the Nigerian finance Minister, Aganga, is perhaps meant to serve as the primary relief pitch for CBN chairman Mallam Sanusi Lamido. The CBN chairman’s reactionary tendency towards his fellow bankers proved detrimental to the International rating of Nigerian Banks. It may not have seem clear to the ‘unsuspecting’ Nigerians that but Sanusi’s personalized view of Nigerian banking society and funds of funds management was far too radical for a Central Bank Chairman. The role of the Central Bank Chairman in price moderation is Interventional, perhaps adjudicative but at no point is it Executive. Price is a quantity of ‘economic statistics snapshot’ and as such Price is normal market condition is expected to determine its own range in any market. It is however this price in terms on Nigerian market and in terms of Naira that now serve as our primary concern in accepting Aganga under the canopy of Sanusi. Sanusi’s quick fix actions inadvertently injured the international reputation of Nigerian financial products, a case in command that many people will still argue. But Sanusi’s policies without the international ‘anchor’ of IMF were only destined to hurt, a fact which Sanusi himself may have noted given his final tilt towards Universal Banking. He was trying to amend the Nigerian International reputation through Universal Banking. This idea of Universal Banking open us to the reasons behind Aganga nomination for he will be redeeming grace of such ineluctable error. Aganga serves as a formal rejoinder of Nigerian Banking society to the rest of world.



What is however not formal is the financial war which has broken up between Nigeria and the rest of the world. In short view, Aganga’s appointment as the Chairman of the Board of World Bank - days after his conformation - is only a form of death sentence of Nigerian domestic market and probably a trap. This Aganga’s decoration therefore conceals everything and nothing, for we are now left to entertain the question of Nigerian preparedness for such financial endorsement and trade fair. My candid view and answer is that Nigeria is not ready for this big time engagement, for the country’s domestic economy is seriously weak and uncompetitive. Nigeria is sucked into an al warfare from which the certainty is further collapse due to very weak Internal market dynamics. But this war is not like any war known to us, and the end of the war is close to what we find in today’s Greece. The war between Nigeria and the rest of Super Currency world its clearly monetary, clearly statistical, clearly digital warfare of market statistic. Nigeria will eventually be needing such thing as implied debt and rate, forced through the international rate pendulum of ‘super currency’, a rate that swings in one direction and by its energy, an International rate that wreck the domestic rate. This is where the issue lies since Nigerian economy and its Naira has become absorbed into the equation of International financial body. By entering into the same ring as these BIG others, the economic value of Nigeria no longer apply. Then, will apply the inherit problem of debt due to decline in debt management, a condition ultimately expected to be redeemed by a coalition of good fellows; Investment Banks.



Olusegun Aganga in his opening statement after confirmation sounded off the issue of Power Supply in Nigeria as a top priority and last week the Nigerian president Goodluck Jonathan promised Niger Delta a total solution to its power supply. It is clear that we are witnessing a classic motif of Goldman Sachs in Public financing. Such motif of Goldman Sachs in Aganga statements are comments about the general assumption of debt, debt in the guise of pay package and for balancing the budget. All, and much of these traits add up to long term financial of these banks and form part of the portfolio strategy of Investment banks dealing with relatively weaker economies. In a sense, Goldman Sachs’ financial product for nations include debt structure and need to bail out failing institutions, for all these points to the essence of International Monetary Fund which is rubric of Aganga commentary.



But the IMF is not a voluntary organization, it is an assortment of Banks and one Bank. In many ways, the new International responsibilities of the ‘New Nigerian’ in office compel the ‘See’ of International financial society such as IMF on Nigerian market. This oversight is uncalled for and unlikely to pay, for how could Nigerian economy compel itself to suffer the rates of International markets. This can only mean one thing and one thing only that International standards will now apply to the Nigerian market. But this is not good at all, not that foreign ‘see’ is not necessarily a bad interference but IMF and World Bank are just a bunch of International financial organization owned by Investment Banks. These banks include the likes of Gold Sachs. The Investment Bank in question bring with it a ‘Negative externality’ that usually impact on a third world performance in Real Time money market. Such bad performance is almost a guarantee for profit for these Banks doing business in Third world economies. The profit is at best a symptom of weak domestic third markets, a condition that will become weaker as Investment Banks such as Goldman Sachs offer their debt structure. In that guise much of the current affiliation with IMF and World Bank with Nigeria is not that useful for they operate with as much agenda as the Investment banks of US before the 2008 collapse. These foreign donors apply the same rule of profiteering and commercial engineering bereft of the defunct US Investment Banks and only ‘suckers’ like our good Nigerian are likely to believe that IMF and World Banks are International helpmate for their prospective economic venture.



In the argument, we can remind ourselves that in any business of the world, there are always ‘losers’ or ‘suckers’, and there are those who profit from the rest of them. In essence, there is no probable hiding place for the Nigerian economy from this time onwards, no room to secure its economic growth away from the International Society. This does not take anything away from the baiting in itself which is set for and against International Power banks and for their super currency. There is then a probable need to be cautiously optimistic of this Aganga’s new marriage with the world as captain of two ship. There is no point to pretend that the outcome of this new marriage and ship is detrimental, since it is very clear that the only ship that is likely to sink downwards is the very Nigerian Ship. The marriage of Nigerian financial to the rest of the world is exposed to accommodate opportunity for the fledgling economy, and in IMF and World Bank, they stand the chance of such opportunity. But this may not be the case, this is so far from the case that it is safe to assert that IMF and World Bank are only intent on making their profit from your prospective countries and not the other way round. This view is so complete in its downwards spiral that we can equally assert that national loses to the Banks are by several examples entirely inevitable going at least by the example of Greece and European Financial debacle. In blunt view, it is safe to cite that there is no need to expect any useful deals with these Banks, no need to promote these banks on any plausible grounds except one of loses and indebtedness. This problem of debt and debt structure, always put a funk on the stability of most countries of world, and instability occur because these countries are more than likely unable to pay the huge spike in debt. From such spike, CDO ‘Collateralized Debt Obligation’ essentially thaw, and the rest is just history as usual.



Greece financial debacle did not happen overnight. The compromising exposure of the Greek economy to the International rates at the expense of her economy and domestic market is for a million page the detriment of the country. Long Term Greece may have arranged big time deals with power house corporation for official public works much like ‘Nigerian Power Supply’ in Niger Delta, or in their case Olympics. Greece may have acquired or attracted International Hedge Funds management to give stability to its financial engagements, and like all businesses involving International markets, it was meant to be Long Term. But all Long Term engagement are economically noted by shorts. Short Term the Greeks inability to maintain its debt structure (which is only expected to be the case due to capital appreciation of the Super currency and its investment grade) forced the country to succumb to the tenets of the debt obligation and then failures of businesses naturally occur by way of capital depreciation.



Investment Bank’s strategy such as Goldman Sachs are not too far from these bunch of lenders and are not too far from spotting deficits in your National budget. These Investment Banks always lend to business outfits, always lend to financial institution, to Hedge Funds and always tend especially to oil countries for long term purposes. Goldman Sachs like other Investment Banks always engage the real estate of stable economies of the world. Always engage the stock market of most countries of the world, especially countries where IPOS are monitored. Goldman Sachs always slush funds in many of their ‘shady deals’, all in such a way that the host country and investment grade will sour so high, so fast on the ‘long term greedy’ of a Gus Levy (which is an indirect snob on the greedy going long) that any crack on the rate of expected returns will shatter any business community. In Markets if not Banking and Financing, ‘Excess Returns’ is more or less equal to the Anomaly of Risk. Illiquidity as we find Greece today and in Nigeria 2008, is not without the influence of bad mathematics and manipulation. These market, Greece and Nigeria are high risk markets only useful for shorts. Greece today defaulted on number of real time ‘Expected Returns’ and with that came the instability of the their financial market. This financial failure could have only been the expected and now actual yield from Greece, for it seems clear to many economics that Greece neglected their Domestic Market when it accepted the International barometer for Euro membership. Greece, in accepting the custodian of European membership inadvertently choked the price movement or their local markets and in the end, they were destined to reap the grapes of debacle. In private investment from Europe and US, Greece was expected to grow like others, to practiced eyes that was only unlikely the case, as such the sudden nose of the Greek domestic market, collapsed with it the International investment and bond market, all of which were no surprises.