For over fifty years, Nigeria had a telecommunications monopoly, most-recently called Nigerian Telecommunications Ltd (NITEL) by the time of the Digital Mobile License auctions in 2001. In spite of a large underserved market and extremely high prices, NITEL refused or was unable to exploit the market opportunity providing only about 470,000 lines across the whole country! It cost over N200,000 to obtain a telephone line and a Nigerian Minister for Communications was reported to have proclaimed that telephones are not for the poor! As an upwardly mobile manager in a leading bank, I recall having to go through a friend, whose uncle was federal permanent secretary simply because I wanted an analogue mobile phone!!!
According to Nigerian Communications Commission (NCC) data, there were 117 million connected lines, 90.5 million active lines and installed capacity of 160.9 million lines with tele-density of 64.7% as at April 2011. Given current installed capacity, the industry now has capacity to provide a telephone line for every Nigerian, rich or poor! Beyond sector transformation, the impact on government revenue (corporate and employee taxes), import duties, employment and GDP growth has been phenomenal. The telecommunications sector has grown to just under 5 percent of GDP in just 10 years-higher than manufacturing!!! Meanwhile the state-owned NITEL has virtually disappeared from the industry radar due to a combination of corruption, incompetence, bureaucracy and sabotage.
The domestic airline industry has also been transformed due to sector liberalisation leveraging private capital and management. I recall the bad old days of Nigerian Airways when you could not get around Nigeria in less than one week! The airline frequently oversold tickets and prospective passengers risked getting on the plane to find all seats taken, except of course you had a powerful government official or Airways official to secure your seat. Ex-president Obasanjo has frequently lamented how Nigerian Airways fleet of over thirty airplanes was depleted to just one in a space of twenty years due to corruption, mismanagement and greed. While there are still problems with private airlines, air travellers can get to and from Abuja, Port-Harcourt, Enugu or Lagos in one single day! The difference is that you have a choice between Air Nigeria, Arik, Aero Contractors, DANA, IRS and whoever else is able to muster capital and requisite regulatory approvals to set up an airline.
Government ownership was also disastrous for the financial services industry in the 1980s and 1990s. No one who has read the case study of the old International Merchant Bank (IMB) as contrasted with the Guaranty Trust Bank case both written at the Lagos Business School will countenance the return of government ownership of banks in Nigeria (unfortunately as the CBN has just executed!) Hopefully that will be a short-term intervention. Government ownership meant that promotions, employment, lending and credit decisions and board and management composition in banks were subject to political interference and abuse. Most federal and state government-owned banks did not survive that era-Continental Merchant Bank, Allied Bank, Nigerian Merchant Bank, Nigerian Arab Bank, National Bank, Progress Bank, Lobi Bank etc. Private banks are not free of mismanagement (as we have recently being reminded), but the difference is that owners of private banks are more likely to be allowed to suffer the consequences of mismanagement than government!!! Had government control of our leading banks-First Bank, UBA, Union, Afribank, Federal Savings Bank etc continued for just a few more years, it was virtually inevitable that those banks would also have gone the way of the others.
I find it curious that journalists and activists are often opposed to privatisation, not recognising that they are important beneficiaries of private sector investment. When government controlled the “commanding heights” of the Nigerian economy, most newspapers, radio and television stations were owned by federal and state governments-Daily Times, New Nigerian, Radio Nigeria, Lagos Television, OGBC, Radio Lagos, Sketch, Observer, Nigerian Tide, Herald, Triumph etc. Government media ownership was a major constraint on civil liberties, especially freedom of expression and the press, and only very few media organisations such as Chief Awolowo’s Tribune offered an alternative to official propaganda. Journalism and civil society flourished with media entrepreneurship making it impossible for schemes such as “third-term” or “self-succession” to succeed in Nigeria.
Activists and commentators freely offer alternative, often anti-government views on various privately-owned media platforms-STV, Channels, THISDAY, Guardian, Trust, Businessday etc. It was their self-employment in private professional practices that enabled activists like late Kanmi Ishola-Osobu, Tunji Braithwaithe, Alao Aka-Bashorun, Beko Ransome-Kuti, Gani Fawehinmi, Bamidele Aturu and Femi Falana to survive the intimidatory powers of the Nigerian state! Associated with growth in private media is the marketing communications industry (advertising, public relations, branding, outdoor marketing etc) which have blossomed as private media expanded.
The transformative impact of private capital and management has been felt in other sectors-hotels and hospitality, information technology, cement, oil marketing, professional services, food logistics etc. Is it a coincidence that the areas in which our people suffer-electricity, refineries, water and public utilities, transportation, public health and education-are state-owned? I don’t think so!!! The Nigerian public sector has more than enough to do in maintaining security and public order, building regulatory institutions, investing in education, health and social services, providing roads and public infrastructure, administration of justice and stamping out corruption.
Wednesday, August 24, 2011
Wednesday, August 17, 2011
Giving Privatisation a Bad Name!!!
When you want to hang a dog, first give it a bad name! Evidently some powerful constituencies in Nigeria viscerally dislike privatisation and the notion of private-sector led development. They prefer the prebendal, statist, semi-feudal development (actually underdevelopment!) model in which banks, refineries, telecommunications companies, electricity generation and distribution utilities, hotels, airlines, newspapers, television and radio stations etc are controlled by Abuja and bureaucrats, politicians, traditional rulers, government contractors and sundry patrons and wards of the state control all economic resources and determine who gets rich or stays poor! This coalition and their agents hate privatisation as it takes away their control over the destinies of our nation and its peoples.
But they can’t say this, can they? So instead they focus on persuading us it has failed! That privatisation is over-rated and state-owned enterprises are better after all. It doesn’t bother them that massive corruption is endemic in state-owned enterprises, but they carefully scrutinize privatisations for opportunities to call the kettle black! And they succeed in persuading some naïve or hypocritical “comrades” (who own private professional practices; carry three mobile phones; work for private banks and telecommunication companies; and appear regularly on private broadcast stations!!!) to their cause!!! The current leader of this “Anti-Privatisation Coalition” is Vice-President Namadi Sambo, who ironically as Chair of the National Council on Privatisation (NCP) presides over privatisation. In Sambo’s view, “80percent of privatised firms moribund” (Thisday May 13, 2011) and “the process of privatisation has been going on for about ten years but has not been successful due to obvious non-performance” (Peoples Daily May 12, 2011). Meeting with the Russian Ambassador, Sambo re-stated that “many of the privatised companies have not met been able to meet the aspirations of government” (Punch June 28, 2011).
Unfortunately Sambo may have persuaded President Jonathan! The Nation newspaper’s screaming headline proclaimed “Privatisation has failed, says Jonathan”!! This at the inauguration of NCP!!! Jonathan’s late boss, Umaru Yar’adua reversed the privatisation of Refineries which were concluded just before ex-President Obasanjo handed over to him. Yar’adua also refused to proceed with the expected privatisation of unbundled Power Holding Company of Nigeria (PHCN) entities; and later formally outlined a policy championed by Rilwanu Lukman which rested the private sector electricity model in favour of state control. Should we then expect that Jonathan will abandon the Power Sector Roadmap and Electric Power Sector Reform Act 2005 both of which are based on privatisation of electricity generation and distribution, while transmission is billed to be concessioned to the private sector? Is the power road map dead on arrival, since we can logically expect Namadi Sambo to frustrate expected privatisations?
Interestingly a replay of Yar’adua’s strategy of stalling Obasanjo’s power reforms, (as Engineer Foluseke Somolu recently pointed out), through public disinformation that $16billion had been wasted on power; and Ndudi Elumelu’s House of Representatives Power Committee probe appears ongoing! The Senate has commenced its legislative agenda with an adhoc committee investigating privatisation!!! Senate President David Mark while inaugurating the panel declared that privatisation has not achieved the desired objectives and actually blamed privatisation for loss of jobs, financial deprivation and loss of revenue to the federal government!!! If the Senate had already reached these conclusions, why did it bother setting up an investigation? I urge Nigerians to be calm and circumspect in responding to the “alarming revelations” emerging from the Senate probe!!!
By all means, any clear infractions must be dealt with based on law and due process. Indeed this columnist has long identified conditions which make for successful privatisations-an independent technical agency overseeing the process; proper valuations of assets being disposed of; open, competitive and transparent bidding by all participants; a process that first establishes technical qualification of bidding firms before proceeding to competitive financial bidding; and the absence of corruption and political interference, except in cases of national security and overriding national interest. The industry structure must ensure existence of a competent regulator; and privatisation must not result in private monopolies. Where specific transactions breached these principles, that is not a failure of privatisation but the corruption and political irresponsibility that afflicts our nation!
But the bigger picture is that the private sector has been vastly more successful than government in Nigeria. Can anyone compare Oando and Conoil to Unipetrol and Nolchem? Would First Bank and UBA have survived (remember Continental Merchant, Allied Bank, IMB, NMB etc) government ownership? Can you compare Federal Palace Hotel, Golden Tulip Festac, Ikoyi Southern Sun, Notore and Eleme Petrochemicals to their rotten pre-privatisation predecessors? Does anyone miss the scandal-plagued, massively corrupt, pre-privatisation African Petroleum or NAFCON? Aren’t Nigerians aware that military rulers and bureaucrats used Aluminium Smelter Company and Ajaokuta Steel to enrich themselves? Can’t we see what difference private capital and management has made in telecommunications, financial services, aviation, newspapers, radio and television broadcasting, private universities, hotels etc? Do we miss the days when Nigerian Airways, Daily Times, New Nigerian, NTA, Radio Nigeria and inefficient and politicised government-owned banks were our only alternatives?
Does anyone want a return to the days when state-owned parastatals consumed billions of Naira every year without returning a kobo to the treasury? I don’t!!!
But they can’t say this, can they? So instead they focus on persuading us it has failed! That privatisation is over-rated and state-owned enterprises are better after all. It doesn’t bother them that massive corruption is endemic in state-owned enterprises, but they carefully scrutinize privatisations for opportunities to call the kettle black! And they succeed in persuading some naïve or hypocritical “comrades” (who own private professional practices; carry three mobile phones; work for private banks and telecommunication companies; and appear regularly on private broadcast stations!!!) to their cause!!! The current leader of this “Anti-Privatisation Coalition” is Vice-President Namadi Sambo, who ironically as Chair of the National Council on Privatisation (NCP) presides over privatisation. In Sambo’s view, “80percent of privatised firms moribund” (Thisday May 13, 2011) and “the process of privatisation has been going on for about ten years but has not been successful due to obvious non-performance” (Peoples Daily May 12, 2011). Meeting with the Russian Ambassador, Sambo re-stated that “many of the privatised companies have not met been able to meet the aspirations of government” (Punch June 28, 2011).
Unfortunately Sambo may have persuaded President Jonathan! The Nation newspaper’s screaming headline proclaimed “Privatisation has failed, says Jonathan”!! This at the inauguration of NCP!!! Jonathan’s late boss, Umaru Yar’adua reversed the privatisation of Refineries which were concluded just before ex-President Obasanjo handed over to him. Yar’adua also refused to proceed with the expected privatisation of unbundled Power Holding Company of Nigeria (PHCN) entities; and later formally outlined a policy championed by Rilwanu Lukman which rested the private sector electricity model in favour of state control. Should we then expect that Jonathan will abandon the Power Sector Roadmap and Electric Power Sector Reform Act 2005 both of which are based on privatisation of electricity generation and distribution, while transmission is billed to be concessioned to the private sector? Is the power road map dead on arrival, since we can logically expect Namadi Sambo to frustrate expected privatisations?
Interestingly a replay of Yar’adua’s strategy of stalling Obasanjo’s power reforms, (as Engineer Foluseke Somolu recently pointed out), through public disinformation that $16billion had been wasted on power; and Ndudi Elumelu’s House of Representatives Power Committee probe appears ongoing! The Senate has commenced its legislative agenda with an adhoc committee investigating privatisation!!! Senate President David Mark while inaugurating the panel declared that privatisation has not achieved the desired objectives and actually blamed privatisation for loss of jobs, financial deprivation and loss of revenue to the federal government!!! If the Senate had already reached these conclusions, why did it bother setting up an investigation? I urge Nigerians to be calm and circumspect in responding to the “alarming revelations” emerging from the Senate probe!!!
By all means, any clear infractions must be dealt with based on law and due process. Indeed this columnist has long identified conditions which make for successful privatisations-an independent technical agency overseeing the process; proper valuations of assets being disposed of; open, competitive and transparent bidding by all participants; a process that first establishes technical qualification of bidding firms before proceeding to competitive financial bidding; and the absence of corruption and political interference, except in cases of national security and overriding national interest. The industry structure must ensure existence of a competent regulator; and privatisation must not result in private monopolies. Where specific transactions breached these principles, that is not a failure of privatisation but the corruption and political irresponsibility that afflicts our nation!
But the bigger picture is that the private sector has been vastly more successful than government in Nigeria. Can anyone compare Oando and Conoil to Unipetrol and Nolchem? Would First Bank and UBA have survived (remember Continental Merchant, Allied Bank, IMB, NMB etc) government ownership? Can you compare Federal Palace Hotel, Golden Tulip Festac, Ikoyi Southern Sun, Notore and Eleme Petrochemicals to their rotten pre-privatisation predecessors? Does anyone miss the scandal-plagued, massively corrupt, pre-privatisation African Petroleum or NAFCON? Aren’t Nigerians aware that military rulers and bureaucrats used Aluminium Smelter Company and Ajaokuta Steel to enrich themselves? Can’t we see what difference private capital and management has made in telecommunications, financial services, aviation, newspapers, radio and television broadcasting, private universities, hotels etc? Do we miss the days when Nigerian Airways, Daily Times, New Nigerian, NTA, Radio Nigeria and inefficient and politicised government-owned banks were our only alternatives?
Does anyone want a return to the days when state-owned parastatals consumed billions of Naira every year without returning a kobo to the treasury? I don’t!!!
Wednesday, August 10, 2011
The Extended Tenure Distraction
President Goodluck Jonathan was reported to have stated at the Presidential Inauguration Lecture delivered by Professor Ladipo Adamolekun just before his inauguration on May 29 that in his view, four years was too short to achieve transformation. The statement was unexpected from a president just elected overwhelmingly on a mandate of “transformation” and upon whom Nigerians had invested hopes for national renewal. Jonathan has now in effect launched a campaign to persuade the National Assembly, the political elite, State Governors and legislatures on the desirability of a constitutional amendment to extend the tenure of the President and Governors from the current four to between five and seven years with no prospect of second terms.
I have since been bewildered as I pondered how the president and his advisers considered this issue his most important policy and legislative priority? Even though I would prefer to believe the president’s assertion that he doesn’t intend benefitting from the proposed change, the question remains why this matter occupies such elevated position on the president’s agenda? And the wisdom, from the point of view of strategy, of the president personally making the case; the consequence been that Jonathan has squandered political capital so early in his term on a debate of at best doubtful value! This column, as well as many other commentators and stakeholders have spent time articulating an agenda for the Jonathan administration covering power, transportation, infrastructure, economic diversification, unemployment and poverty, education and health, housing mortgage and land reform etc-did anyone identify extended presidential and gubernatorial single tenures as an important national imperative?
Beyond misplaced priorities, the case being made for longer tenures appears shallow and simplistic!!! The logic advanced is that extending presidential and governorship tenures would reduce cost and ferocious competition associated with four-year electoral cycles and allow office holders focus on performance without re-election worries. These arguments do not stand much scrutiny! The 2007 elections, probably the worst in Nigeria’s chequered democratic history was conducted by ex-President Obasanjo who wasn’t a candidate. Yet it was a “do-or-die” matter because like all incumbents, Obasanjo was interested in his succession! So were ex-Governors Gbenga Daniel, Bukola Saraki and Ali Modu Sherriff of Ogun, Kwara and Borno states respectively in the last governorship elections even though they weren’t contestants, having served mandatory two terms. The point is, in corrupt political systems (particularly), departing incumbents and parties remain interested in succession irrespective of whether specific individuals are running!
The prospect of exclusion from political power for five to seven years may in fact have the unintended consequence of making intra and inter-party competition for political power a more deadly fight-to-finish! The knowledge that another opportunity is only four years away moderates desperation to win elections at all cost. I worry also about the consequences of electing a wrong governor or president! The electorate is condemned to five, six or seven years of drift and stagnation once it makes the error of electing a wrong leader. Given that most Nigerians regard most of those they have elected as failures in office, I wonder whether they have any reason to project that giving longer non-renewable terms will make a positive difference. The more likely consequence is that a corrupt, incompetent or irresponsible leader with has no prospect of re-election will become totally irredeemable, lacking no incentive to attempt better performance. In my view, six or seven years of mis-governance may amount to a generational calamity!!!
In a yet-developing democracy, rife with corruption, self-aggrandisement and unaccountable leadership, this proposal is likely to weaken, rather than strengthen our democracy! Leaders will get more insulated from the voters; the electorate will further lose “power” over their rulers; and elected officers will become near monarchs! The proposal assumes that the over-riding motivation for seeking political office in Nigeria is the quest for service, with the political system and elections being a distraction rather than the other way round! Most Nigerians will for good reason, contest such an assumption. The truth appears to be that many seek office for pecuniary gain, and may simply appropriate the gains of longer tenures in cash, rather than focused service. A truly committed leader would excel in four years, and the voters will reward him with a second term as they did for Fashola in Lagos.
I concede however that there may be need to debate the more comprehensive proposals contained in the draft 1995 Constitution (which never became law) which recognised six geo-political zones; created the offices of President, Vice-President, Prime-Minister, and Deputy Prime Minister; created five-year single terms for president and governors; recognised the principles of zoning and rotation of political offices among geo-political zones and senatorial districts; created a 30-year transition period for such zoning and rotation to operate; created a process to ensure succession from the same zone in the event of succession or death of an incumbent; and recommended proportional “all-party” governments to eliminate the “winner-takes-all” system which is the real cause of deadly political competition. Even though these proposals emerge from the “national cake sharing” paradigm of the Nigerian nation, they are worth re-examining to see if they offer any value.
I have since been bewildered as I pondered how the president and his advisers considered this issue his most important policy and legislative priority? Even though I would prefer to believe the president’s assertion that he doesn’t intend benefitting from the proposed change, the question remains why this matter occupies such elevated position on the president’s agenda? And the wisdom, from the point of view of strategy, of the president personally making the case; the consequence been that Jonathan has squandered political capital so early in his term on a debate of at best doubtful value! This column, as well as many other commentators and stakeholders have spent time articulating an agenda for the Jonathan administration covering power, transportation, infrastructure, economic diversification, unemployment and poverty, education and health, housing mortgage and land reform etc-did anyone identify extended presidential and gubernatorial single tenures as an important national imperative?
Beyond misplaced priorities, the case being made for longer tenures appears shallow and simplistic!!! The logic advanced is that extending presidential and governorship tenures would reduce cost and ferocious competition associated with four-year electoral cycles and allow office holders focus on performance without re-election worries. These arguments do not stand much scrutiny! The 2007 elections, probably the worst in Nigeria’s chequered democratic history was conducted by ex-President Obasanjo who wasn’t a candidate. Yet it was a “do-or-die” matter because like all incumbents, Obasanjo was interested in his succession! So were ex-Governors Gbenga Daniel, Bukola Saraki and Ali Modu Sherriff of Ogun, Kwara and Borno states respectively in the last governorship elections even though they weren’t contestants, having served mandatory two terms. The point is, in corrupt political systems (particularly), departing incumbents and parties remain interested in succession irrespective of whether specific individuals are running!
The prospect of exclusion from political power for five to seven years may in fact have the unintended consequence of making intra and inter-party competition for political power a more deadly fight-to-finish! The knowledge that another opportunity is only four years away moderates desperation to win elections at all cost. I worry also about the consequences of electing a wrong governor or president! The electorate is condemned to five, six or seven years of drift and stagnation once it makes the error of electing a wrong leader. Given that most Nigerians regard most of those they have elected as failures in office, I wonder whether they have any reason to project that giving longer non-renewable terms will make a positive difference. The more likely consequence is that a corrupt, incompetent or irresponsible leader with has no prospect of re-election will become totally irredeemable, lacking no incentive to attempt better performance. In my view, six or seven years of mis-governance may amount to a generational calamity!!!
In a yet-developing democracy, rife with corruption, self-aggrandisement and unaccountable leadership, this proposal is likely to weaken, rather than strengthen our democracy! Leaders will get more insulated from the voters; the electorate will further lose “power” over their rulers; and elected officers will become near monarchs! The proposal assumes that the over-riding motivation for seeking political office in Nigeria is the quest for service, with the political system and elections being a distraction rather than the other way round! Most Nigerians will for good reason, contest such an assumption. The truth appears to be that many seek office for pecuniary gain, and may simply appropriate the gains of longer tenures in cash, rather than focused service. A truly committed leader would excel in four years, and the voters will reward him with a second term as they did for Fashola in Lagos.
I concede however that there may be need to debate the more comprehensive proposals contained in the draft 1995 Constitution (which never became law) which recognised six geo-political zones; created the offices of President, Vice-President, Prime-Minister, and Deputy Prime Minister; created five-year single terms for president and governors; recognised the principles of zoning and rotation of political offices among geo-political zones and senatorial districts; created a 30-year transition period for such zoning and rotation to operate; created a process to ensure succession from the same zone in the event of succession or death of an incumbent; and recommended proportional “all-party” governments to eliminate the “winner-takes-all” system which is the real cause of deadly political competition. Even though these proposals emerge from the “national cake sharing” paradigm of the Nigerian nation, they are worth re-examining to see if they offer any value.
The Extended Tenure Distraction
President Goodluck Jonathan was reported to have stated at the Presidential Inauguration Lecture delivered by Professor Ladipo Adamolekun just before his inauguration on May 29 that in his view, four years was too short to achieve transformation. The statement was unexpected from a president just elected overwhelmingly on a mandate of “transformation” and upon whom Nigerians had invested hopes for national renewal. Jonathan has now in effect launched a campaign to persuade the National Assembly, the political elite, State Governors and legislatures on the desirability of a constitutional amendment to extend the tenure of the President and Governors from the current four to between five and seven years with no prospect of second terms.
I have since been bewildered as I pondered how the president and his advisers considered this issue his most important policy and legislative priority? Even though I would prefer to believe the president’s assertion that he doesn’t intend benefitting from the proposed change, the question remains why this matter occupies such elevated position on the president’s agenda? And the wisdom, from the point of view of strategy, of the president personally making the case; the consequence been that Jonathan has squandered political capital so early in his term on a debate of at best doubtful value! This column, as well as many other commentators and stakeholders have spent time articulating an agenda for the Jonathan administration covering power, transportation, infrastructure, economic diversification, unemployment and poverty, education and health, housing mortgage and land reform etc-did anyone identify extended presidential and gubernatorial single tenures as an important national imperative?
Beyond misplaced priorities, the case being made for longer tenures appears shallow and simplistic!!! The logic advanced is that extending presidential and governorship tenures would reduce cost and ferocious competition associated with four-year electoral cycles and allow office holders focus on performance without re-election worries. These arguments do not stand much scrutiny! The 2007 elections, probably the worst in Nigeria’s chequered democratic history was conducted by ex-President Obasanjo who wasn’t a candidate. Yet it was a “do-or-die” matter because like all incumbents, Obasanjo was interested in his succession! So were ex-Governors Gbenga Daniel, Bukola Saraki and Ali Modu Sherriff of Ogun, Kwara and Borno states respectively in the last governorship elections even though they weren’t contestants, having served mandatory two terms. The point is, in corrupt political systems (particularly), departing incumbents and parties remain interested in succession irrespective of whether specific individuals are running!
The prospect of exclusion from political power for five to seven years may in fact have the unintended consequence of making intra and inter-party competition for political power a more deadly fight-to-finish! The knowledge that another opportunity is only four years away moderates desperation to win elections at all cost. I worry also about the consequences of electing a wrong governor or president! The electorate is condemned to five, six or seven years of drift and stagnation once it makes the error of electing a wrong leader. Given that most Nigerians regard most of those they have elected as failures in office, I wonder whether they have any reason to project that giving longer non-renewable terms will make a positive difference. The more likely consequence is that a corrupt, incompetent or irresponsible leader with has no prospect of re-election will become totally irredeemable, lacking no incentive to attempt better performance. In my view, six or seven years of mis-governance may amount to a generational calamity!!!
In a yet-developing democracy, rife with corruption, self-aggrandisement and unaccountable leadership, this proposal is likely to weaken, rather than strengthen our democracy! Leaders will get more insulated from the voters; the electorate will further lose “power” over their rulers; and elected officers will become near monarchs! The proposal assumes that the over-riding motivation for seeking political office in Nigeria is the quest for service, with the political system and elections being a distraction rather than the other way round! Most Nigerians will for good reason, contest such an assumption. The truth appears to be that many seek office for pecuniary gain, and may simply appropriate the gains of longer tenures in cash, rather than focused service. A truly committed leader would excel in four years, and the voters will reward him with a second term as they did for Fashola in Lagos.
I concede however that there may be need to debate the more comprehensive proposals contained in the draft 1995 Constitution (which never became law) which recognised six geo-political zones; created the offices of President, Vice-President, Prime-Minister, and Deputy Prime Minister; created five-year single terms for president and governors; recognised the principles of zoning and rotation of political offices among geo-political zones and senatorial districts; created a 30-year transition period for such zoning and rotation to operate; created a process to ensure succession from the same zone in the event of succession or death of an incumbent; and recommended proportional “all-party” governments to eliminate the “winner-takes-all” system which is the real cause of deadly political competition. Even though these proposals emerge from the “national cake sharing” paradigm of the Nigerian nation, they are worth re-examining to see if they offer any value.
I have since been bewildered as I pondered how the president and his advisers considered this issue his most important policy and legislative priority? Even though I would prefer to believe the president’s assertion that he doesn’t intend benefitting from the proposed change, the question remains why this matter occupies such elevated position on the president’s agenda? And the wisdom, from the point of view of strategy, of the president personally making the case; the consequence been that Jonathan has squandered political capital so early in his term on a debate of at best doubtful value! This column, as well as many other commentators and stakeholders have spent time articulating an agenda for the Jonathan administration covering power, transportation, infrastructure, economic diversification, unemployment and poverty, education and health, housing mortgage and land reform etc-did anyone identify extended presidential and gubernatorial single tenures as an important national imperative?
Beyond misplaced priorities, the case being made for longer tenures appears shallow and simplistic!!! The logic advanced is that extending presidential and governorship tenures would reduce cost and ferocious competition associated with four-year electoral cycles and allow office holders focus on performance without re-election worries. These arguments do not stand much scrutiny! The 2007 elections, probably the worst in Nigeria’s chequered democratic history was conducted by ex-President Obasanjo who wasn’t a candidate. Yet it was a “do-or-die” matter because like all incumbents, Obasanjo was interested in his succession! So were ex-Governors Gbenga Daniel, Bukola Saraki and Ali Modu Sherriff of Ogun, Kwara and Borno states respectively in the last governorship elections even though they weren’t contestants, having served mandatory two terms. The point is, in corrupt political systems (particularly), departing incumbents and parties remain interested in succession irrespective of whether specific individuals are running!
The prospect of exclusion from political power for five to seven years may in fact have the unintended consequence of making intra and inter-party competition for political power a more deadly fight-to-finish! The knowledge that another opportunity is only four years away moderates desperation to win elections at all cost. I worry also about the consequences of electing a wrong governor or president! The electorate is condemned to five, six or seven years of drift and stagnation once it makes the error of electing a wrong leader. Given that most Nigerians regard most of those they have elected as failures in office, I wonder whether they have any reason to project that giving longer non-renewable terms will make a positive difference. The more likely consequence is that a corrupt, incompetent or irresponsible leader with has no prospect of re-election will become totally irredeemable, lacking no incentive to attempt better performance. In my view, six or seven years of mis-governance may amount to a generational calamity!!!
In a yet-developing democracy, rife with corruption, self-aggrandisement and unaccountable leadership, this proposal is likely to weaken, rather than strengthen our democracy! Leaders will get more insulated from the voters; the electorate will further lose “power” over their rulers; and elected officers will become near monarchs! The proposal assumes that the over-riding motivation for seeking political office in Nigeria is the quest for service, with the political system and elections being a distraction rather than the other way round! Most Nigerians will for good reason, contest such an assumption. The truth appears to be that many seek office for pecuniary gain, and may simply appropriate the gains of longer tenures in cash, rather than focused service. A truly committed leader would excel in four years, and the voters will reward him with a second term as they did for Fashola in Lagos.
I concede however that there may be need to debate the more comprehensive proposals contained in the draft 1995 Constitution (which never became law) which recognised six geo-political zones; created the offices of President, Vice-President, Prime-Minister, and Deputy Prime Minister; created five-year single terms for president and governors; recognised the principles of zoning and rotation of political offices among geo-political zones and senatorial districts; created a 30-year transition period for such zoning and rotation to operate; created a process to ensure succession from the same zone in the event of succession or death of an incumbent; and recommended proportional “all-party” governments to eliminate the “winner-takes-all” system which is the real cause of deadly political competition. Even though these proposals emerge from the “national cake sharing” paradigm of the Nigerian nation, they are worth re-examining to see if they offer any value.
Wednesday, August 3, 2011
Sanusi's Many Controversies (2)
I support the case, for reasons of financial inclusion, for providing non-interest banking for those who for reasons of faith, find conventional interest-based banking objectionable. However this must be done in line with BOFIA and our Constitution, rather than by creating a precedent that could lead towards Nigeria’s “Sudanisation”. The problem as I see it is that Sanusi seeks to take his regulatory framework from Malaysia, Bahrain and other officially Islamic nations, rather than countries that insulate their laws and Constitution from religion! The Central Banks in UK, USA, South Africa, Singapore, Hong Kong and those other places the CBN touts as having Islamic banking products, certainly would not accept banking guidelines which blatantly infringe on the separation of state and Church or Mosque!
The Banking and Other Financial Institutions Act (BOFIA) enacted by two Muslims, Ibrahim Babangida and Abdulkadir Ahmed as President and CBN Governor respectively, made provision since 1991 for non-interest banking as a constitutional and non-divisive means of allowing those Nigerians who abhorred interest to create and/or patronise non-interest financial institutions(NIFI). Section 61 of BOFIA defines NIFI as “a profit and loss sharing bank” which is “a bank which transacts investment or commercial banking business and maintains profit and loss sharing accounts”. Jaiz International Bank received an approval-in-principle to conduct non-interest banking several years ago, until Soludo’s N25billion minimum capital proved an obstacle. There was no objection then to Jaiz’s imminent license, until CBN’s January guidelines which introduced religion into banking regulation. Sanusi, it must be noted, has since re-introduced Arabic lettering on the Naira and now seeks to float sovereign Islamic bonds (“Sukuk”) so his critics can legitimately point to a trend!
As I pointed out last week, Sanusi’s January 2011 guidelines contained several inappropriate provisions- it defined a NIFI as one who conducts business “in accordance with Shariah principles and rules of Islamic commercial jurisprudence”; defined Shariah principles as “the divine guidance as given by the Holy Qu’ran and the Sunnah of the Holy Prophet and embodies all aspects of the Islamic faith, including beliefs and practices”; contained terms such as “Shariah-compliant products and services”, Arabic terms such as “Istitna”, “Ijarah”, Ijarah wa iqtina”, “Mudharabah”, “Salam”, “Sukuk” and many others; required all licensed NIFIs to establish “an internal Shariah compliance review mechanism and a Shariah Advisory Committee”; and required the CBN to establish a “CBN Shariah Council” to “advise the CBN on Shariah matters”!!! With those guidelines, Sanusi put to question his credentials as a technical financial sector regulator and public servant in a multi-religious entity like Nigeria.
The June amendment according to one commentator was “clever(er) by half”. Instead of a “CBN Shariah Council”, you now have a “CBN Advisory Council of Experts”; Arabic words are omitted; and instead of a mono-definition of NIFI based on “Shariah principles and rules of Islamic commercial jurisprudence”, it created two categories-those based on “Islamic commercial jurisprudence” and “any other established rules and principles”. The document prescribed modalities for the “Islamic” ones while the CBN promised to “subsequently issue guidelines governing the provision of non-interest financial services based on established principles other than Islamic finance”. These guidelines remain problematic as they purport to redefine NIFI other than as specified in BOFIA and establish “Islamic Financial Institutions” contrary to the letter and spirit of BOFIA and our Constitution. They may also be discriminatory, prescribing capital requirements for Islamic banking lower than for conventional ones for equivalent coverage. As pointed out by others, the CBN should have simply issued operating guidelines which are faith-neutral (like those for private universities or broadcast stations by NUC and NBC) and allow individual institutions set up internal mechanisms (in this case such as product papers; credit and risk management policies; ethical guidelines; corporate governance and corporate social responsibility principles; memorandum and articles of association; and other institution-specific governance mechanisms) to fulfil their mission.
Beyond the Islamic banking controversy, it is necessary to caution the current Central Bank against getting involved in political, religious or socio-economic disputations. Unlike most global central bankers, Sanusi has tended to court controversy-at his Senate confirmation hearings, he criticised the governance agenda of the government that appointed him; he took on errant bank owners at a point calling for their public execution; he once declared that Nigeria’s stock exchange operated like a casino; disagreed openly with the International Monetary Fund (IMF); launched a blistering attack on the national legislature; and urged the public not to believe bank rating agencies, which are licensed by the CBN! Some months back, he publicly threatened to liquidate the 8 “intervened” banks if they didn’t recapitalise by September 30, 2011, recently altering the threat to nationalisation. It would be inconceivable that any of these statements could be made by US Federal Reserve Chair, Ben Bernanke or Bank of England Head, Mervyn King!!!
The CBN has fundamental challenges to deal with-indices on access to credit; unemployment; financial deepening; financial sector stability; and exchange rate management are all going negative. All these economic limitations can be remedied. It would be sad however if the manner of introduction of non-interest banking leads Nigeria further in the direction of Sudan, Yugoslavia or Indo-Pakistan!
The Banking and Other Financial Institutions Act (BOFIA) enacted by two Muslims, Ibrahim Babangida and Abdulkadir Ahmed as President and CBN Governor respectively, made provision since 1991 for non-interest banking as a constitutional and non-divisive means of allowing those Nigerians who abhorred interest to create and/or patronise non-interest financial institutions(NIFI). Section 61 of BOFIA defines NIFI as “a profit and loss sharing bank” which is “a bank which transacts investment or commercial banking business and maintains profit and loss sharing accounts”. Jaiz International Bank received an approval-in-principle to conduct non-interest banking several years ago, until Soludo’s N25billion minimum capital proved an obstacle. There was no objection then to Jaiz’s imminent license, until CBN’s January guidelines which introduced religion into banking regulation. Sanusi, it must be noted, has since re-introduced Arabic lettering on the Naira and now seeks to float sovereign Islamic bonds (“Sukuk”) so his critics can legitimately point to a trend!
As I pointed out last week, Sanusi’s January 2011 guidelines contained several inappropriate provisions- it defined a NIFI as one who conducts business “in accordance with Shariah principles and rules of Islamic commercial jurisprudence”; defined Shariah principles as “the divine guidance as given by the Holy Qu’ran and the Sunnah of the Holy Prophet and embodies all aspects of the Islamic faith, including beliefs and practices”; contained terms such as “Shariah-compliant products and services”, Arabic terms such as “Istitna”, “Ijarah”, Ijarah wa iqtina”, “Mudharabah”, “Salam”, “Sukuk” and many others; required all licensed NIFIs to establish “an internal Shariah compliance review mechanism and a Shariah Advisory Committee”; and required the CBN to establish a “CBN Shariah Council” to “advise the CBN on Shariah matters”!!! With those guidelines, Sanusi put to question his credentials as a technical financial sector regulator and public servant in a multi-religious entity like Nigeria.
The June amendment according to one commentator was “clever(er) by half”. Instead of a “CBN Shariah Council”, you now have a “CBN Advisory Council of Experts”; Arabic words are omitted; and instead of a mono-definition of NIFI based on “Shariah principles and rules of Islamic commercial jurisprudence”, it created two categories-those based on “Islamic commercial jurisprudence” and “any other established rules and principles”. The document prescribed modalities for the “Islamic” ones while the CBN promised to “subsequently issue guidelines governing the provision of non-interest financial services based on established principles other than Islamic finance”. These guidelines remain problematic as they purport to redefine NIFI other than as specified in BOFIA and establish “Islamic Financial Institutions” contrary to the letter and spirit of BOFIA and our Constitution. They may also be discriminatory, prescribing capital requirements for Islamic banking lower than for conventional ones for equivalent coverage. As pointed out by others, the CBN should have simply issued operating guidelines which are faith-neutral (like those for private universities or broadcast stations by NUC and NBC) and allow individual institutions set up internal mechanisms (in this case such as product papers; credit and risk management policies; ethical guidelines; corporate governance and corporate social responsibility principles; memorandum and articles of association; and other institution-specific governance mechanisms) to fulfil their mission.
Beyond the Islamic banking controversy, it is necessary to caution the current Central Bank against getting involved in political, religious or socio-economic disputations. Unlike most global central bankers, Sanusi has tended to court controversy-at his Senate confirmation hearings, he criticised the governance agenda of the government that appointed him; he took on errant bank owners at a point calling for their public execution; he once declared that Nigeria’s stock exchange operated like a casino; disagreed openly with the International Monetary Fund (IMF); launched a blistering attack on the national legislature; and urged the public not to believe bank rating agencies, which are licensed by the CBN! Some months back, he publicly threatened to liquidate the 8 “intervened” banks if they didn’t recapitalise by September 30, 2011, recently altering the threat to nationalisation. It would be inconceivable that any of these statements could be made by US Federal Reserve Chair, Ben Bernanke or Bank of England Head, Mervyn King!!!
The CBN has fundamental challenges to deal with-indices on access to credit; unemployment; financial deepening; financial sector stability; and exchange rate management are all going negative. All these economic limitations can be remedied. It would be sad however if the manner of introduction of non-interest banking leads Nigeria further in the direction of Sudan, Yugoslavia or Indo-Pakistan!
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