Wednesday, August 27, 2008

Biden cancels out McCain

Barack Obama announced his choice of vice-presidential nominee on Saturday morning. Contrary to many US analysts who have argued that the choice of vee-pee was not important, I have always felt that at least in the case of Obama, it would be a very critical decision. It gives Obama an opportunity to address voters’ concerns about his race, age, inexperience, and weakness on foreign policy and defence. It could be an opportunity to reach out to white, blue-collar, male and elderly voters an important voting bloc which had voted for Hillary in the democratic primary and had a possibility of going McCain in the general election. And it was also an opportunity to deal with the difficult decision of what to do with Hillary Clinton supporters who constituted almost fifty percent of democratic voters in the primaries.

Hilary Clinton remained my sentimental favourite for the job. Followers of this column will remember only too well my two articles on the so-called “Obama-Clinton” or “Clinton-Obama” dream ticket in which I leaned towards a joint-ticket of the two front-runners irrespective of who was at the head of the ticket. My initial preference for the top job was of course Hillary but I have since accepted (and enthusiastically too!) Obama’s candidacy and have become something of an advocate myself. And while my heart wanted Hillary as vice-president, my head knew it was unlikely to happen. Barack Obama was quite unlikely to want Hillary and Bill Clinton breathing down his neck and knowing that Hillary would still be looking towards another presidential run whenever the opportunity presents itself.

The fear that many Clinton-haters in the Republican Party would be energised by a Hillary nomination and thus further polarise the elections would have been another consideration against Hillary. Finally a friend of mine reminded me that the Kennedys who had turned over the family’s support to Barack Obama and one of whom was now in charge of the vee-pee pick were unlikely to re-empower their Clintonite rivals for influence within the Democratic Party by picking Hillary for the job. On the other hand, the continued disaffection of the large bloc of Clinton primary voters who may be crucial to an Obama victory in November was a strong argument for considering Hillary in spite of any misgivings. On a morbid note, I thought picking Hillary as vice-president may discourage any potential hit-men from planning to shoot a President Obama for fear of a worse outcome-a President Hillary Clinton!

I must mention by the way, that I have been disturbed by the trivialisation of the Obama candidacy by the “Corporate Nigeria” group whose previous notable political activity was their undisguised support for Obasanjo’s third-term. I suspect government may have to find new jobs for some of these people if we are to have more decorous and professional management of our stock exchange going forward. One of the things I find amusing about Nigerian society is the dissonance between the heros we claim and our behaviour. If you ask most Nigerian politicians who their political role models are, they are liable to mention Nelson Mandela, Lee Kuan Yew, Mahatma Ghandi and the like. Why I always wonder, don’t they make any effort to try to emulate these people?

In the end, Obama selected Senator Joe Biden of Delaware as his running-mate and prospective vice-president. Senator Biden, aged 65 is a veteran and heavy-weight in US Congressional politics and in the foreign policy establishment. He currently serves as Chairman of the powerful Senate Foreign Relations Committee and has chaired a Senate Judiciary sub-committee on crimes and drugs. He has been in the US Senate for 35 years and has himself run for President-first in 1988 and most recently in the race which yielded Obama as nominee. Even though Biden represents Delaware, a small state, his Pennsylvania roots and Irish, Roman Catholic background may be significant in other states.

Unlike McCain, Biden who has working-class roots may appeal to blue-collar whites, the sort who flocked to Hilary’s support and who may have tilted until now towards McCain. The most important contribution of Senator Biden to the Obama ticket however is in the re-assurance he offers to the foreign policy, defence and security establishment, and voters on whose minds those issues weigh most heavily, that the US Presidency under Obama will have the benefit of a voice as tested and knowledgeable as that of Biden when and if America’s relations with the world become the issue. When McCain seeks to remind Americans of Barack Obama’s lack of foreign policy experience, they can’t but notice that Joe Biden has that in abundance. In fact Biden has been in the Senate longer than McCain and as Chair of the Foreign Relations Committee can claim to know one or two things that McCain doesn’t know.

When McCain talks up issues like Iraq, Afghanistan, Russia, Pakistan, North Korea, Iran and other potential trouble spots, the voters cannot fail to remember that Biden is very familiar with those issues. White, elderly and male voters will see Joe Biden and will hopefully be less worried about entrusting America to a still little-known African-American Senator with a tinge of Kenyan and Muslim roots. In short, Biden offers everything that McCain offers-pedigree, safety, experience and assurance, and more. In effect Biden should cancel out McCain in November, and that leaves us with Obama!

A New Cold War?

The more things change, the more they remain the same? When the Berlin Wall came tumbling down in November 1989, German re-unification the next year and the collapse of the Soviet Union in December 1991, the West triumphant proclaimed, “The End of History…” as Francis Fukuyama famously declared in his book of the same title. Fukuyama wrote that “a remarkable consensus concerning the legitimacy of liberal democracy as a system of government had emerged throughout the world over the past few years, as it conquered rival ideologies like hereditary monarchy, fascism, and most recently communism” and argued that liberal democracy may constitute the “end point of man kind’s ideological evolution”. From then, every reference to the United States of America on CNN and other western media was prefaced with the obligatory celebration, “the World’s sole superpower” rubbing it in to the ex-Soviets and all else who cared to listen that the US and its allies in NATO had conquered the world.

The Soviets were left stunned and confused. Mikhail Gorbachev had not sought the disintegration on of the USSR. He imagined himself to be a trusted partner of the US, and merely sought to ensure greater political and economic freedom in the USSR. While the west encouraged and celebrated him, their real objective was later revealed to be destruction of the Soviet system, and global dominance. In his resignation speech after the country he presided over disappeared beneath him, Gorbachev lamented, “I have firmly stood for independence, self-rule of nations, for the sovereignty of the republics, but at the same time for preservation of the union state, the unity of the country. Events went a different way. The policy prevailed of dismembering this country and disuniting the state, with which I cannot agree.”

I recall western analysts dismissing Gorbachev’s later distress with disdain, as the unstable Yeltsin became the new western friend and hero. The USSR became the Commonwealth of Independent States, then Russia, and continued to splinter in pieces. Many eastern bloc countries, (except the ones which switched unambiguously to the West such as Poland), continued to disintegrate-Yugoslavia into Serbia, Croatia, Bosnia, Slovenia, Montenegro, and most recently Kosovo; Czechoslovakia into Czech and Slovakia, while on the other hand Western Germany which was in the western axis united with the weary eastern half. Russia continued to go down hill, as Yeltsin under western advice plunged into privatisation without market institutions leading to the emergence of oligarchs who seized control in the un-transparent sales. Until the remnants of the Russian security apparatus led by Vladimir Putin rose up to, as they saw it, rescue Russian from virtual ignominy and irrelevance.

I think the west misunderstood and mismanaged the undoubted victory of the free enterprise democratic system at the end of the cold war. The victory of the NATO Allies was most importantly a moral and philosophical victory that demonstrated the inherent superiority of the ideological underpinnings of free enterprise democracy. The USSR and its allies were not conquered; they decayed from inside. Gorbachev in the same speech earlier referred to admitted that the Soviet “society was suffocating in the vice of the command-bureaucratic system, doomed to serve ideology and bear the terrible burden of the arms race. It had reached the limits of its possibilities.” Even Deng Xiaoping in China had in 1978 come to the same realisation that communism now needed a dose of capitalism to grow as stagnation emerged.

But the west in my view continued to fight against a defeated foe, strangely as this was an adversary who under Gorbachev voluntarily admitted defeat and sought friendly relations with the west. Gorbachev proclaimed that “we opened ourselves to the world, gave up interference into other people’s affairs, the use of troops beyond the borders of the country, and trust, solidarity and respect came in response”. A conservative backlash was inevitable as Russia felt betrayed, and the west must ponder why Putin has enjoyed approval ratings averaging over 80 percent in his years in power-most Russians now regret the break-up of the Soviet Union and Russia’s diminished place in the world.

The world may now be sliding into a new cold war, with Russia seeking to preserve its sphere of influence and China becoming a global power. The events in Georgia in the last week demonstrate what I suspect is western strategy that is now lacking in moral clarity. What principles for instance justify independence in Kosovo, but not South Ossetia and Abkhazia? Why must Russia accept western missiles on Russia’s border in Georgia, while the US rejected Soviet missiles in Cuba during the Cuban Missile Crisis? Why must the territorial integrity of Georgia be preserved, when that of Serbia was not sacrosanct? Why has no one blamed Georgia which clearly started the fight in South Ossetia, giving Russia an opportunity to flex its muscles? US and Russian policy makers may be unwittingly creating a new cold war, but it may be one in which principles may not be entirely on either side.

Wednesday, August 13, 2008

Infrastructure Lessons from Telecommunications

I was at the Nigeria Infrastructure Summit organised by the Federal Ministries of Finance and National Planning in Abuja from August 6th to 8th. It was a commendable initiative by Mallam Sanusi Daggash and Dr Shamsudeen Usman, and the organisation was impeccable. Credit must go the Ministers and to their incredibly dynamic and intelligent Special Assistants, Sufianu Garba, Dr. Yemi Kale and Jaffar Muhammed who displayed organisational skills and commitment rarely seen in the public sector. More important was the implicit recognition that ran through both the conception and design of the proceedings that involvement and engagement with the private sector will be critical in addressing our severe infrastructure deficit.

I was lead speaker at the Telecommunications and Information Technology Session and my take on the discussion was to focus on what lessons Nigeria can learn from the experience in Telecommunications as we seek to overcome our most significant economic challenge-infrastructure, particularly power and transportation. The success in telecommunications has been nothing short of phenomenal, even though as we shall later see, challenges remain. But the current state of the telecommunications sector in Nigeria was frankly inconceivable as recently as 2001. I remember that in 1996/1997 as I tried to obtain an analogue mobile phone (which cost somewhere in the region of N200, 000), I had to seek the help of a friend whose uncle was a federal permanent secretary in the ministry of communications! Just to get a mobile phone!!! Truly at that time, telephones were not for the poor, and it was debatable whether they were even for middle class professionals.

Some statistics will show how radically the situation has changed. As at 2001, we had only 400,000 connected telephone lines and 25,000 analogue mobile phones. I went to the Summit with the last publicly available figures-about 46 million connected lines. The NCC Executive Vice-Chairman, Engineer Ernest Ndukwe who was a co-panelist provided updated figures-over 55 million! The industry has grown by more than 6 million lines every year against an annual growth of only 10,000 in the decades up to 2001. Tele-density today is 38% as against 0.4% in 2001 and today you can get a mobile phone virtually for free. The last statistic however reveals what lies at the root of the exponential growth-as at 2001, cumulative investment in telecommunications amounted to about $50 million, but in the over seven years since then over $12billion of investment has gone into the sector, essentially from private sector institutions.

So the transformation of the telecommunications sector has been achieved without recourse to the public treasury. On the contrary, the government of Nigeria has earned billions of dollars from the sector. You recall three GSM providers paid $285million, Globacom added $200million for its second national carrier license, and Mubadala paid $400million for its GSM license. That already adds up to $1.455billion! Add the payments for unified and 3G licenses and payments for other spectrum licenses, taxes and customs duties, and other charges and the income to the government may be as much as $3billion. This excludes the impact of direct employment of over 12,000 workers and thousands of indirect employees and entrepreneurs and businesses engaged in the sector. Today there are 5 GSM operators, 4 CDMA mobile operators, 26 licensed fixed line operators, 117 ISPs, instead of 1 inefficient government-owned monopoly and several weak private telecommunications operators in 2001

But there are challenges. Fixed and Internet Service growth and penetration has been less successful, with 1.43million active fixed wireless telephone lines as at Feb 2008 and less than 5 million people with internet access. As at 2006, a technology research firm estimated that there were 2,350 cyber cafes, 71,635 dial-up accounts and 2.2 million internet users, a penetration rate of 2.2% of the population. Today internet penetration remains less than 5%. And the problems with power, insecurity, and skill and competency gaps manifest in sub-optimal quality of service. We still lack a domestic IT software and hardware industry and duplication of infrastructure by operators means higher operating costs. But ongoing investments in various submarine cable projects, increased competition with unified licensing, end of GSM exclusivity and 3G licensing portends better service and improved internet and data capabilities in the medium term.

What are the lessons from all this? First market liberalisation and deregulation drives infrastructure growth. No amount of money pumped into NITEL would have delivered this revolution. Indeed while the private telecommunications operators were growing in leaps and bounds, NITEL was dying in government hands. Private capital and management is critical. For the managers of the power sector who seem to prefer to delay privatisation in favour of more government spending, it is a shocking failure to learn from experience including recent revelations about the NIPPs. Government of course has a role-providing strong and competent regulation, creating the right investment climate (incentives, laws, transparent licensing, concessioning or privatisation regimes, security and law enforcement etc.), social investment such as education to provide skills and consumer protection. Finally government must ensure competition and an appropriate and sustainable industry framework dependent on market pricing and not subsidies or price control.

The Trouble in the Niger-Delta

Like a simple wound left without prompt and decisive attention, the situation in the Niger-Delta appears to be getting deeper and wider. In such circumstances, the longer the wound is left without careful management, the greater the risk that the wound will get infected and perhaps malignant. At times, the degenerate part may have to be surgically extracted and sometimes the patient may indeed die. What is usually required to prevent such a tragic consequence is immediate medical attention; careful cleaning of the wound; examination and diagnosis of the situation by a competent, dedicated and sincere people; and immediate remedial actions to ensure the wound is treated, and managed until it fully heals.

The deeper the wound and the longer it is allowed to fester, the more radical and painful the curative approach usually required, and the wound may heal only after a very sustained period of treatment and management. Where the patient is a child or some other person under the care and authority of a parent or other person, the parent may have to accept responsibility for ensuring the right conditions to ensure the wound is properly treated and heals-the right doctor and hospital, compliance by the patient with the doctor’s instructions, the right drugs, and an environment which facilitates the treatment and healing process. The child’s siblings and friends may also have to help. But whether the patient is a child or an adult, he or she will also bear some responsibility for wanting to be healed and must behave in a manner compatible with the desire for healing.

I suspect the above metaphor represents the paradigm with which we will have to address the Niger-Delta problem. Nigeria is the patient, the Niger-Delta is the wound, and the federal government is the parent. The wound has been left to degenerate since before independence. I have just finished reading the Willinks Commission Report of 1957, and what I find shocking is that there is nothing about the situation in the region that was not known as early as the 1950s-the fears of the Rivers, Delta and other minorities about their marginalisation in the emerging Nigerian federation, difficulty of the terrain in terms of development, the regions arguments questioning the inheriting of sovereignty over the region from the British colonialists by the Nigerian State (i.e. “resource control”), and questions about the structure of Nigerian federalism. Yet Nigeria essentially did nothing about the situation.

In addition however, after independence and large scale commercial exploitation of oil, we added new dimensions-environmental degradation, military rule, a worsening federal system, civilian political regimes that lacked popular legitimacy and between 1999 and 2003, a greedy regional elite and a particularly irresponsible set of political leaders in the region and much of the rest of the country. All of this in a context in which virtually all of the country’s revenues were extracted from the region; most of it was spent in other regions; and poverty and desperation in the region was growing in leaps and bounds. At the same time, corruption was growing phenomenally and ensuring that only a marginal fraction of the funds supposedly committed to the regions development was available for that purpose.

When Isaac Adaka Boro signalled the depth of discontent in the region, he was suppressed and ended up dying in the Nigerian civil war fighting on the Nigerian side. When Ken Saro Wiwa rose up on behalf of the Ogoni people to raise national and international attention to the perceived injustice in the region, we did not attempt a reasoned dialogue to understand the concerns of the people, and address them. When the agitation for resource control started, we did not examine the issues and at least try to negotiate a consensus acceptable to all. We did not intensify the development of the region in any significant manner. Unfortunately some of the political leaders in the region damaged the argument for resource control-the best way to justify a call for more resources, is to demonstrate what was done with available ones, and not to embezzle them. But then, a counter-argument is that corruption was a national phenomenon. The way governors in the north, east and west (and I dare say the federal government too!) perpetuated misery and poverty through mis-governance and theft of state resources was no different from that seen in the Niger-Delta. Except that the Niger-Delta governors had more resources to steal given the thirteen percent derivation funds available to them and the exceptional prices of oil.

Fortunately I think a better crop of governors appear to be emerging in some scattered locations all over the country including the Niger-Delta. I have observed for instance the Chibuike Amaechi regime in Rivers State committing huge resources to urban and rural road construction, primary health centres and general hospitals and education (including a massive infrastructural upgrade in the Rivers State University of Science and Technology) and I have mentioned these only because I have been able to personally verify some of these projects. Unfortunately criminality and brigandage has entered into the picture before such remedial actions were started. And in any event the degradation had gone on for over forty years so “treatment” will have to be continuous and sustained before the impact will be felt. And many of the actions required will also have to come from the Federal Government and other stakeholders.

Most importantly beneath the criminality and gangsterism, legitimate grievances remain unaddressed. The substantive questions about the structure of our federation, revenue allocation, responsibilities of states and federal government, state and community policing, taxation and the division of tax responsibilities amongst different tiers of government, the environment and the activities of oil and gas exploration companies, the effects of corruption on national development and constitutional and electoral reform have not yet been discussed with sincerity, let alone addressed. We believe that these fundamental issues will have to be resolved to the satisfaction of the constituent states and regions in the Nigerian federation before we can really make progress as a nation.

In addition and specifically concerning the Niger-Delta, a three-track strategy is required-a sincere and constructive discussion and engagement between all stakeholders (federal, state and local governments, community and civic associations, oil companies, NDDC, youth groups, media, donor agencies, etc) to achieve consensus on the region’s development. Secondly, massive and immediate infrastructural investment in the region-roads and bridges, railways, hospitals, urban renewal and new cities development, primary and secondary education, micro-finance institutions, as well as skills acquisition and youth and vocational centres. These actions will not only create jobs and signal a new commitment to the region’s economic development, they will deny legitimacy to the militants and criminals. It is only in this context that the third track-military and intelligence capacity building and strict and decisive law enforcement and security action can be effective.