Friday, 12th May, 2006AD

"ONE SHINING EXAMPLE" 

Everyone is focused on the US with its ballooning balance of trade and government deficits, resulting in its massive overhang of debts. Earlier today on a conference call with a small group of investors out of London, I gave my view that this is a global problem; "it is not just the US that is running massive deficits, it's the ENTIRE GLOBE !, the world is more indebted today that in its entire history, and worse still, the trend is heading in the wrong direction - globally we are spiraling further and further into debt." 

One only needs to do a small degree of research to discover that virtually all nations in the world today are increasing their indebtedness, externally and/or internally, on an annual basis. Those few nations that do balance their books externally, (export more than they import), have out-of-control governments that don't understand fiscal constraint resulting in mammoth 
government debts world-wide, and populaces that are hell-bent on consumption now, presumably to be paid for by the labor of their children, and children's children. 

It was refreshing recently to see one shining example of a nation, that some would least expect, bucking the global trend of spiraling further into debt. 

In late March, Nigeria paid off its multi-billion dollar 'Paris Club' debt, becoming the first African nation to settle with its official lenders (1). 

But first, who is the Paris Club? This exclusive 'Club' is a group of 19 countries ("lenders") including G7 (2) and other first world countries whose governments have large claims on various other governments or countries. Its members include the USA, UK, Australia, Canada and Germany. But aren't these "lenders" the same nations that exhibit no fiscal restraint and are themselves running massive internal and external debts? 

Nigeria is unique, choosing a path opposite to the crowd, not only amongst its African counterparts, but globally. To its credit, rather than sliding further, it is slowly and steadily pulling itself out of the mire. In recent years it has implemented a steady program of economic reforms and a commitment to pay down its debts (3). The nation plans further privatizations, tax reforms, and greater transparency to further boost its economy and attract foreign investment. 

What does this mean for Nigeria and Nigerians? Already it been removed from an international credit blacklist. This is a nation that can hold its head high on the international stage. 

Revenues that were once lost on servicing useless debt can now be used to improve infrastructure, productivity and develop and control its incredibly rich natural resources (4). 

With good management, the old story would apply; 'wealth creates wealth'. It is a nation with a highly intelligent and large available workforce. With a commitment to hard work and fiscal control, Nigeria could quickly become a Shining Example of wealth, prosperity and integrity in a debt ridden and corrupt world. 

Sincerely - Philip Judge pjudge@anglofareast.com

(1) Reuters Newswire 20/4/06
(2) G7 country: one of a 'group of seven' leading industrial nations
(3) Nigeria's debts date back to the early 1980s, and had ballooned to 
more than $35bn during the 1990s.
(4) Nigeria sits on vast deposits of essential, tangible assets including 
base and precious metals, oil and gas.