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.