Next Frontiers of Reform

Economic reforms advanced in the power and agricultural sectors in 2013, with privatization of the unbundled PHCN entities and imminent sell-offs of the NIPP power generating assets. As I have written severally, these are potentially significant turning points in our socio-economic development. Of course the road to electricity supply Eldorado is still some way off-we are likely to see incremental improvements in the short term, but substantial improvement may come when the 10,000MW from NIPP kicks in (in private sector hands!) and when the challenges of transmission, gas supply, new investment, pricing etc. are redressed. It would be sensible, politicians, bureaucrats and labour allowing (!), if we could also privatize the refineries very quickly! Our agricultural reforms are also yet still a work-in-progress and must be sustained, in my view, for at least a decade before the full potential and impact will be manifest. It would help if the current agriculture minister is kept in office for as long as possible. I suspect that the issue of downstream petroleum sector deregulation and the “oil subsidy” debate will have to be deferred to after the 2015 elections! However there remains a major deficiency in our post-SAP, NEEDS and “Transformation” reforms, which have generally been geared towards the creation of deregulated, market-oriented structures operated by the private sector and regulated by relatively autonomous and professional government regulatory institutions (e.g. CBN, NCC, NERC, NAICOM)-the absence of competition law and policy! As I wrote many years ago, pursuing an agenda of deregulation, liberalization and other pro-market reforms without protecting the market against monopolies, oligopolies, cartels, anti-trust behavior, crony capitalism and other abuses of the free market system is the equivalent not of a market, but of the jungle, where might is right, the strong prey on the weak, and only the strongest survive. I would argue that in the context in which we have pursued reforms without competition law and policy, it is not a coincidence that we have created constructive and actual monopolies and oligopolies across several sectors, while conversely creating about one hundred million people living in poverty! Nigeria would now have to URGENTLY enact a strong and robust competition law and policy regime otherwise we will discredit capitalism and reforms in favour of the alternatives. A word should be enough for the wise! The major focus of policy now must be the social sector-poverty, unemployment, education, health, urban mass transportation, housing and mortgages and rural development. Government appears conceptually aware of this necessity to place attention on these areas, but it would seem to me that the emphasis is insufficient. Given the levels of poverty and unemployment, it is something of a miracle that we still have some modicum of stability in Nigeria and we need a marshal plan to redress poverty across the country and to create jobs-that is our real state of emergency and it is evident even from official statistics in every region of Nigeria, rather than just the North, or North-East-50% poverty rates, which are about the minimum in every part of Nigeria is completely unacceptable! With regard to education and health, I would suggest that we are yet to answer the basic policy questions in these sectors which center on sustainable financing models that will guarantee both quality and access. I am pleased with the recent launch of the Nigerian Mortgage Refinancing Company (NMRC) and other efforts to re-invigorate the housing and mortgage sector. The solid minerals sector is an area in which Nigeria has chosen to sub-optimize its potential. Oby Ezekwesili put in place very sensible reforms in the sector leading up to 2007, culminating in a Mines and Minerals Act which set out an appropriate legal, regulatory and institutional framework for growth of the sector. Unfortunately (as I warned the major dramatis personae at the time), Ezekwesili was prematurely moved to education with the consequence that we were left with two incomplete reforms in education and solid minerals, both of which were abandoned by the succeeding anti-reform Umaru Yar’adua government. Now that Jonathan has successfully revived power sector reforms (another sector where Yar’adua and Rilwanu Lukman stalled reforms), I suggest he may turn attention towards solid minerals. Nigeria is a natural transportation hub for road, water, air and rail transport in West Africa and Africa. We have refused to leverage our advantages in this area due to poor road infrastructure, a decrepit (now slowly improving) rail sector, mismanaged aviation services and weak investment and management of our ports. We need a policy that concessions airports and seaports to the private sector and encourages private investors to build new ones; we need to pass the long-delayed National Transport Bill to facilitate the required investments in transportation; we need more investment in modern rail infrastructure and services by international entities; and we need to build as many deep sea ports as are economically viable as the private investors may decide. I support current investments in road construction and renovation and urge urgent reconstruction of the critical Lagos-Ibadan Expressway. Finally (and this is probably trite, but must be re-stated for emphasis), we must confront the issue of corruption, which denies the country the resources for infrastructure, social services and development, and denies the government the trust and respect of its people.

Person of 2013

This is the tenth year I will be naming a person of the year and my approach this time is somewhat different and eclectic. Nominees include individuals and companies, even projects! I have joint and several nominations; some are governments, national or sub-national, and others are non-governmental organisations. My nominations are informed by my perspective of what the most important developments in the outgone year were, and once you understand that perspective, you should sympathize with my choice of nominees. In my view, the most important development in 2013 was the privatization of the unbundled PHCN distribution and generation entities, even if Nigerians do not yet recognize it as such. In terms of our economic development, that was a revolutionary moment, probably at par with telecommunications deregulation/digital mobile license auctions and the Paris Club debt forgiveness transaction. Politically the most significant development was the creation of the All Progressives Congress, the opposition coalition which, in spite of its many limitations, promises to make our politics more competitive. It is a pity that its success in deepening politically competition was probably somewhat undermined by the cynical manner in which it seeks to inherit, through a wholesale political “organ transplant”, the heart and soul of the PDP! Other important positives in 2013 included the continuing agricultural reforms; Nigeria’s multiple successes in football at the African Nations Cup and the FIFA Under-17 competition; the expanding market for electronic commerce and electronic payments in Nigeria; and continuing strengthening of the Nigerian corporate sector. In politics, the Nigerian Governors Forum (NGF) impacted the polity and carried over into the “New” PDP and APC with Rivers State Governor Rotimi Amaechi being the constant factor. I live in Lekki where an iconic project, the Lekki-Ikoyi Link Bridge has shortened commuting time and transformed lifestyles with hundreds if not thousands of residents, including this columnist, improving their health and lives through walking, jogging and cycling on the world class bridge. And corruption remains one of Nigeria’s most debilitating challenges. While official anti-corruption efforts floundered, I found one innovative non-governmental effort that provides the common man a weapon to fight corruption. Given the above view of 2013, my list of nominees for person of the year 2013, would then not be surprising. I think Stephen Keshi, Manu Garba, Bolaji Abdullahi and President Jonathan jointly deserve recognition for our successes in football. Keshi’s victory at AFCON was unexpected, but dazzling and he proved it was not a fluke by also qualifying Nigeria for the 2014 CHAN contest for Africa-based national players and FIFA World Cup 2014 in Brazil. Garba’s team won the FIFA Under-17 tournament in equally brilliant fashion, with a team whose average age may be closer to (say) 22 rather than 30! It would be nice if we could actually present 17 year olds!!! Sports Minister Abdullahi and the President must share the glory for their leadership and enablement. The EFCC, ICPC and the Police failed to combat corruption in 2013, but an NGO, “The Integrity Organisation/Convention on Business Integrity (CBI)” led by Soji Apampa along with some partners (OSIWA, Premium Times, Abuja Sheraton, BAAC etc.) created a website called www. egunje.info which provides a process through which ordinary Nigerians can report requests for bribes and other encounters with official corruption which the organization follows up with the ICPC. This worthwhile initiative earned the NGO my nomination for person of 2013. Governor Rotimi Amaechi was ubiquitous on the political scene throughout 2013 for good and doubtful reasons. I personally believe the fate of NGF was a “lose-lose” outcome for him and Jonathan; I also worry that he may have been distracted from the laudable work he was doing in Rivers state and may be dissipating his state’s resources on excessive propaganda and brinkmanship. But no one can question his courage and the fact that his actions contributed towards defining 2013, one way or the other. Of course Asiwaju Bola Tinubu would clearly be the pre-eminent political actor of 2013 forging APC out of disparate interests and challenging PDP’s political hegemony. It is debatable if he hasn’t sacrificed his new grouping’s credibility as a truly “progressive” party in the process and may be taking some of his core constituencies for granted, but his impact on Nigerian political development in this dispensation has been huge. My next three nominations are from the business constituency. Larry E Ettah of UAC has transformed the legacy conglomerate and strengthened its competitive position, entering into joint ventures with Tiger Brands, Famous Brands and Imperial Logistics all of South Africa and concluding acquisitions of Portland Paints and Livestock Feeds in the same year. Aig Aig-Imoukhuede stepped down as CEO of Access Bank after an eventful tenure which saw him take the institution near the top of the Nigerian banking league. The manner of the post-Aig succession was a brilliant master class. My final business nomination is jointly to three entities that are transforming the e-payments space in Nigeria-Jumia, Konga and Mastercard. And then my top three nominees-for the first time I recognize a project, the Lekki-Ikoyi Link Bridge a world-class, architectural and engineering masterpiece sponsored by the Lagos State Government, which is adding value in multiple ways-transportation, tourism, health, lifestyles and revenue generation, a remarkable win-win for all stakeholders. Dr Akinwunmi Adesina earned well-deserved global acclaim as Forbes African of the Year in 2013 for his agricultural reforms (and competed strongly for this column’s as well!), but my “person” of the year for 2013 is jointly awarded to Atedo Peterside, Bureau of Public Enterprises (BPE) and President Jonathan for the power sector privatization and reforms, which will one day be regarded as the economic turning-point for Nigeria.

Nigeria in 2014

The biggest risks Nigeria will face in 2014 are related to one, politics (the presidential elections due early 2015 and the planned national conference); two, vulnerabilities to a softening oil market; and three, related to or contingent on the first two risks, the management of foreign reserves and exchange rates. The most important will be political risk. Nigeria has somehow stumbled once again into a broad two-party system, as it did earlier in 1963-64, 1983 and 1993. In each of the earlier episodes, the country went into general elections with two broad electoral alliances “fighting” (literarily and figuratively!) for power, and each time the process ended in chaos and confusion. In 1964, the Action Group (AG) and National Council of Nigerian Citizens (NCNC) formed the United Progressives Grand Alliance (UPGA) to do battle with the Northern Peoples Congress (NPC) and its alliance partner under the Nigerian National Alliance (NNA), the Nigerian National Democratic Party (NNDP). The elections were a fiasco and by January 1966, the military had taken over power! In 1983, the so-called Progressive Parties Alliance (PPA) formed by opposition parties (UPN, NPP, PRP and GNPP) had floundered and the ruling NPN felt sufficiently confident to proclaim for itself a “landslide” victory. On the last day of that year, barely three months later, General Muhammadu Buhari was in power as military dictator! (Buhari by the way still seeks for the third time, to be a candidate in the 2015 elections, thirty two years later!!!) The military ruler who organized the next presidential elections in 1993, Ibrahim Babangida had earlier decreed a two-party system, the National Republican Convention (NRC) and Social Democratic Party (SDP), but when his multi-billionaire friend, M. K. O Abiola appeared set to win, he annulled the entire exercise under pressure from military and regional hardliners, plunging the nation into a five year crises under Nigeria’s worst military dictator, Sani Abacha! Nigeria on the face of it would appear to have put its days of coups, counter-coups and military rule behind it having stayed under civil governance since 1999, but some form of “civilianized” chaotic power struggle has replaced military plotting, and ex-General Obasanjo’s recent open letter to President Jonathan was an uncomfortable reminder of Nigeria’s previous pre-coup signaling and propaganda. The last elections in 2011 were fought essentially on regional basis, with leading Northern politicians seeking a regional consensus against Jonathan who had inherited power as the lucky beneficiary of the death of his erstwhile boss, Umaru Yar’adua, a Fulani Muslim from Katsina in Northern Nigeria. Jonathan’s victory was followed by serious violence in which young, electoral officers were targeted and many killed. “Boko Haram”, an Islamist terrorist group based in the North East has dogged Jonathan’s tenure. The opposition merger grouping, All Progressives Congress (APC) has emerged essentially as a Northern stratagem to prevent a Jonathan second term, with allies in the West and South, and several Northern governors have left the ruling party for the APC. Clearly the 2015 elections would be fought almost explicitly on ethnic, religious and regional lines. In Nigeria’s volatile mix of diversity and sectarian fault lines, that cannot be a good thing! And then there is the National Conference! Many Nigerians, this writer inclusive, believe the country’s problems are structural and cannot be cured by mere elections, but require a fundamental diagnosis and renegotiation. President Jonathan for both strategic and tactical reasons has come to the same conclusion and plans to hold a national “dialogue” in 2014, the centennial anniversary of Britain’s forced amalgamation of the North and South. There could be intricate scenario possibilities around the combination of volatile elections and fundamental national re-examination! Against this complex political background, the social context is dismal-poverty afflicts over 60% of Nigerians, in effect over 100 million people! 24% of the employable population is unemployed, and for 15-24 year olds, the percentage is close to 40%! Corruption is endemic, and oil theft and piracy are now in the mix. An Islamist insurgency ravages the North-East; and violent crimes, particularly armed robbery and kidnapping are common especially in the Southern states, outside Lagos. This is clearly not an ideal background for contentious elections in a sectarian context! If the two other risks I mentioned manifest in 2014-a dip in oil earnings, continued divestment by oil majors, currency devaluation, fall in foreign reserves, inflation, etc., then the situation could become dire. There are several positives of course-GDP growth around 6-7%, power privatization, agricultural reforms, a growing middle class which according to AfDB now represents 23% of the population, some booming sectors-telecommunications, retail, e-commerce, hotels, real estate and construction; a rising capital markets and improving prospects for long term bond financing; etc., but given the gravity of the social crises, their impact is limited at least in the short term. The problem with Nigerian politics is whenever the contest is close, the battle becomes a zero-sum game or in local parlance, a “do-or-die” war that ends in “lose-lose” outcomes for all sides! On the other hand, Nigeria’s power elite have a well-earned reputation for crisis management and stepping back from the brink. Since the war is usually not over principles or ideology, but over privileges and political bounty, no matter how intense, there is usually scope for negotiation, pay-offs and compromise. I suspect that our reputation for retreating from the edge of the precipice may be sorely tested in 2014!