The Yar’adua Presidency will be half way through its term by the end of this month. Indeed as Barack Obama celebrated his first 100 days the previous week, our own government has also being in office for roughly 100 weeks this week. How has the regime fared? As I pondered over this question preparatory to writing the inevitable Yar’adua mid-term review, the President did me, and other Nigerians a service-his extensive interview with the Guardian provided a comprehensive “examination script” on the basis of which Nigerians can assess the last two years and provide a report card. I propose to do exactly that over the next two weeks.
First of all the idea of the interview was itself a welcome change given what had come to resemble the regime’s preference for shielding its activities from the media and conducting government without “playing to the gallery”. I commend the President’s initiative and hope that the interview should signpost a shift in communication strategy, with the President, Ministers and other senior government officials willing and indeed eager to engage Nigerians on their policies, plans and challenges. That in itself is a critical ingredient of democracy-openness and accountability. Policy communication also has an economic role, especially in a period of turmoil and uncertainty, of calming investors and increasing confidence. The second thing that came across from the interview is the President’s increasing mastery of details which seems to me to indicate a significant improvement in the quality of governance in the President’s second year.
A similar interview marking the first twelve months was comparably less engaging and left the interviewee resorting to the refrain of “rule of law” which soon appeared like an alibi in the absence of substantive progress. A final preliminary observation, also positive, is that the accusation that the Yar’adua regime is lacking in strategy and policy may no longer be a correct assessment. The President throughout the interview appeared finally to have articulated a comprehensive strategy and policy direction which we can now analyse and agree or disagree with. That is a significant step forward and reflects partially the fact that the President has assembled an improved cabinet and has access to better quality information, analysis and policy advice. The issue now (in most areas) is whether the President’s strategy is appropriate and even then whether he is proceeding resolutely with implementation.
I can say right away that I disagree with the government’s strategy in respect of power, which is probably (next to corruption) Nigeria’s most important economic challenge. The strategy appears to be an endorsement of the Rilwanu Lukman committee’s basic recommendation of a state-led strategy for power. The strategy flies in the face of the reality that government does not have the resources, managerial capacity and incentive structure to solve the country’s power problems. It ignores the lessons of telecommunications, aviation, broadcasting and banking amongst others, in all of which private capital rapidly increased capacity and service delivery and created jobs and other economic spin-offs. Curiously the preferred approach in power contradicts the regime’s posture in relation to transport infrastructure-roads and rail-where a concessioning strategy is emerging and the petroleum sector reforms driven by the same Rilwanu Lukman which seeks to remove the obligation on government to fund upstream joint venture cash calls.
The power error is a major drawback to the otherwise sensible proposals emerging from petroleum-both downstream and upstream, transportation and other economic sectors. It also diverts resources from the critical investments in education, health, rural development, public transportation, security and law and order and social welfare which only the government can undertake, whereas private capital will readily go into the power sector if the right policies are pursued. Those resources for instance may have eased our ability to meet the millennium development goals. It is becoming likely that the administration will meet its 6,000 MW target by December or soon thereafter. That is good, but will not lead us to becoming one of the top twenty economies in the world. The strategy will not produce a transformation in power which is what we need, but will at best only deliver incremental growth. As Michael Porter famously said, “operational effectiveness is not strategy!”
One area where even from the interview it does appear that Yar’adua is yet to make up his mind on what he wants to do is with respect to corruption. I mentioned above that in my view corruption is in reality our biggest economic problem in that it leaves us only a fraction of value-for-money for every Naira of public investment. It also affects capital inflows and investments and distorts economic planning. Apart from its economic effects, corruption is also our biggest political problem (it attracts the wrong people into politics and is the raison d’être for election rigging) and social issue (it encourages conspicuous consumption and erodes moral values thus leading youths into 419, armed robbery, kidnapping, prostitution and other vices). It is clear that the regime is yet to reach a depth of purpose in relation to corruption.
Monday, June 8, 2009
Rebranding PHCN and other comedies
They say when a matter goes beyond crying, you start laughing. I suspect that matters in our country are approaching the point where our people will have to find the heart to laugh about our issues. Good business for Ali Baba, Gbenga Adeyinka and Co!
Amodu’s (E)Scapegoats!
Have you heard the latest from Shuaibu Amodu, the “coach” we excavated from somewhere and put in charge of our “Super” Eagles as we seek qualification for the 2010 World Cup in South Africa? Amodu has essentially issued a negative “earnings forecast” implying that we may not be able to qualify due to the quality of boys available to him. Reminds you of the student who when his grade is A claims to have earned it, but when it is D says that is what the teacher gave him or the workman who blames his output on the quality of the tools. Didn’t Amodu boast at the end of the last round of qualifiers that he would win all the next round of qualifying matches? When did he re-evaluate the quality of boys? What is the NFA waiting for? Isn’t it time to look for a coach who can do the job? Okay, maybe NFA means “No Future Ambition”?
FG’s “Plans” to Help Nigerians
There have been reports in the media of “plans” by the Federal Government of Nigeria to come up with a “stimulus” package to help Nigerians in response to the global economic meltdown. I like this government. Unlike the governments of US, Britain, Japan, China, Russia and other global economies (including the stupid G20 people who didn’t invite us to their useless meeting), Nigeria’s government plans well before introducing any measures. Noted economists all over the world indeed have confirmed that the global crisis persists because those governments did not plan well before introducing various measures. Nigeria’s plans when they are eventually implemented will show the whole world how to respond to a global meltdown. I am sure the plans will be implemented before the meltdown is over!
Rebranding Corruption
Professor Dora Akunyili will soon put to shame all the enemies of her revolutionary rebranding Nigeria campaign. That is one of the benefits of putting a scientist in charge of the information ministry-she has already carried out a simulation using both empirical data and logical analysis and has discovered a simple solution to Nigeria’s problems. Simply rebrand the country. Good People, Great Nation….and eureka all our problems disappear! While she’s at it, I will like to suggest she also rebrands corruption which is one of the problems the world has with Nigeria. Let’s stop wasting our time fighting corruption. Just rebrand the thing! We can call it “elite stimulus package”, “government employees’ voluntary pension programme” or “privileged citizens’ capital accumulation scheme” and defend it vigorously as Nigeria’s own contribution to social security, poverty alleviation and pension structures. Go Dora Go. Your place as a Nigerian living legend is assured once you implement this bold and innovative strategy.
And Ekiti “Elections”
Dora can also rebrand election rigging and violence. She has a live test case in Ekiti which can be used to propound a new hypothesis. She can start by repeating the claim that elections in Nigeria are a unique enterprise-different from the ones in Ghana or South Africa. I must confess I don’t know how exactly she will prove her case, but I’m certain her cabinet colleague Ojo Maduekwe can assist her.
Problem Has Changed Name (PHCN)
A rebranding of a different sort is ongoing in the power sector. I was one of those who was relieved that an “energy economist” with previous experience working on a private sector strategy for the power sector at the BPE had been appointed power minister. Well the gentleman’s views on how to transform Nigeria’s power situation has apparently undergone a make-over. In an interview with Toyin Akinoso in Africa Oil and Gas Report, the minister, Lanre Babalola has apparently chosen PHCN autonomy as a substitute for privatisation. When asked about the 414 expressions of interest for investors interested in the seven generation and eleven distribution companies, the response went something like, “Even without the desire to sell, you have to run things differently…” His new strategy is like having a minister for communications in 2001 who rather than allow MTN, Glo, Zain and co invest in telecommunications chose to focus on improving efficiency in NITEL! He advises Nigerians not to be “fixated” on privatisation and he declines to answer a question on when the private sector will be allowed into the power sector. The minister has obviously received firm instructions from the Power Holding Cabal of Nigeria!
Our Father Who Art in Heaven
The last time some correspondents asked ex-President Obasanjo about a solution to our power problems, he indicated that we should pray to God about it! The old man was on to something there. But it’s not just about power that our salvation lies with God. It is now clear that we should pray about everything-Nigeria’s qualification for South Africa 2010, economic meltdown, corruption, electoral reform, Niger-Delta, infrastructure, crime and insecurity, unemployment, education, health…everything. General Gowon, over to you…Let Nigeria Pray!
Amodu’s (E)Scapegoats!
Have you heard the latest from Shuaibu Amodu, the “coach” we excavated from somewhere and put in charge of our “Super” Eagles as we seek qualification for the 2010 World Cup in South Africa? Amodu has essentially issued a negative “earnings forecast” implying that we may not be able to qualify due to the quality of boys available to him. Reminds you of the student who when his grade is A claims to have earned it, but when it is D says that is what the teacher gave him or the workman who blames his output on the quality of the tools. Didn’t Amodu boast at the end of the last round of qualifiers that he would win all the next round of qualifying matches? When did he re-evaluate the quality of boys? What is the NFA waiting for? Isn’t it time to look for a coach who can do the job? Okay, maybe NFA means “No Future Ambition”?
FG’s “Plans” to Help Nigerians
There have been reports in the media of “plans” by the Federal Government of Nigeria to come up with a “stimulus” package to help Nigerians in response to the global economic meltdown. I like this government. Unlike the governments of US, Britain, Japan, China, Russia and other global economies (including the stupid G20 people who didn’t invite us to their useless meeting), Nigeria’s government plans well before introducing any measures. Noted economists all over the world indeed have confirmed that the global crisis persists because those governments did not plan well before introducing various measures. Nigeria’s plans when they are eventually implemented will show the whole world how to respond to a global meltdown. I am sure the plans will be implemented before the meltdown is over!
Rebranding Corruption
Professor Dora Akunyili will soon put to shame all the enemies of her revolutionary rebranding Nigeria campaign. That is one of the benefits of putting a scientist in charge of the information ministry-she has already carried out a simulation using both empirical data and logical analysis and has discovered a simple solution to Nigeria’s problems. Simply rebrand the country. Good People, Great Nation….and eureka all our problems disappear! While she’s at it, I will like to suggest she also rebrands corruption which is one of the problems the world has with Nigeria. Let’s stop wasting our time fighting corruption. Just rebrand the thing! We can call it “elite stimulus package”, “government employees’ voluntary pension programme” or “privileged citizens’ capital accumulation scheme” and defend it vigorously as Nigeria’s own contribution to social security, poverty alleviation and pension structures. Go Dora Go. Your place as a Nigerian living legend is assured once you implement this bold and innovative strategy.
And Ekiti “Elections”
Dora can also rebrand election rigging and violence. She has a live test case in Ekiti which can be used to propound a new hypothesis. She can start by repeating the claim that elections in Nigeria are a unique enterprise-different from the ones in Ghana or South Africa. I must confess I don’t know how exactly she will prove her case, but I’m certain her cabinet colleague Ojo Maduekwe can assist her.
Problem Has Changed Name (PHCN)
A rebranding of a different sort is ongoing in the power sector. I was one of those who was relieved that an “energy economist” with previous experience working on a private sector strategy for the power sector at the BPE had been appointed power minister. Well the gentleman’s views on how to transform Nigeria’s power situation has apparently undergone a make-over. In an interview with Toyin Akinoso in Africa Oil and Gas Report, the minister, Lanre Babalola has apparently chosen PHCN autonomy as a substitute for privatisation. When asked about the 414 expressions of interest for investors interested in the seven generation and eleven distribution companies, the response went something like, “Even without the desire to sell, you have to run things differently…” His new strategy is like having a minister for communications in 2001 who rather than allow MTN, Glo, Zain and co invest in telecommunications chose to focus on improving efficiency in NITEL! He advises Nigerians not to be “fixated” on privatisation and he declines to answer a question on when the private sector will be allowed into the power sector. The minister has obviously received firm instructions from the Power Holding Cabal of Nigeria!
Our Father Who Art in Heaven
The last time some correspondents asked ex-President Obasanjo about a solution to our power problems, he indicated that we should pray to God about it! The old man was on to something there. But it’s not just about power that our salvation lies with God. It is now clear that we should pray about everything-Nigeria’s qualification for South Africa 2010, economic meltdown, corruption, electoral reform, Niger-Delta, infrastructure, crime and insecurity, unemployment, education, health…everything. General Gowon, over to you…Let Nigeria Pray!
On Broadway?
“Enter ye in at the strait gate: for wide is the gate, and broad is the way, that leadeth to destruction, and many there be which go in thereat: because strait is the gate, and narrow is the way, that leadeth unto life, and few there be that find it.”
This column is in its fourth year. Those who have followed this page over the period may have begun to discern our mission-to influence society, principally Nigeria towards a transformation of its values and way of life-economic, political and social. Even though the “centre of gravity” of the column is economy and business, such transformation must be total-which means not just the body and mind, but also the spirit. That is why we write on economy, politics, society, sports, entertainment and religion. That is why around Easter and Christmas, we often have one or two articles focused on faith and religion. This year, that article may have tarried, but was sure to come!
I was never in any doubt what I was going to write about. For several weeks, the words of our Lord Jesus Christ in Mathew 7: 13-14 above (KJV) had continually rang in my mind, and I soon realised that perhaps I was required to share it with readers this season. Jesus in those verses paints two different scenarios-one, a broad way and wide gate leading to destruction; and the second, a narrow road and small gate that leads to life. The NIV translates those words as, “Enter through the narrow gate. For wide is the gate and broad is the road that leads to destruction, and many enter through it. But small is the gate and narrow the road that leads to life, and only a few find it.”
There are several implications of these words. First when you see a large crowd of people and an undiscriminating assembly in which everyone is comfortable, it may be popular, fashionable, may appear credible, but as far as Jesus is concerned it is likely to lead to destruction. Clearly God’s standards are different from ours. Men seek safety in numbers; but with God “many are called, but few are chosen”. Like I once heard someone say, one test you can apply to discern God’s will concerning a matter is to check where the world is going and then turn in the opposite direction!
Another implication is that it is not difficult to locate the broad way. It is conspicuous and pervasive; you know several people on that way and the road is well advertised! Anyone you ask will tell you how to get there; and there are many signposts and entry points!!! You can enter the Third Mainland Bridge from Osborne Road in Ikoyi, Obalende, Simpson, CMS, Tafawa Balewa Square, Costain, Adekunle in Yaba, Oworonshoki, Anthony, Ogudu, Ojota and Toll Gate. You can’t miss it! Who in Lagos does not know Broad Street! But you have to FIND the narrow way! Naturally few are interested in such a narrow, inconspicuous way. It is not “the place to be” and is difficult to locate.
The narrow way may be located inside a private estate or could be a dusty, unmarked road in the wrong side of town. That is probably why it is despised and only a few find it. Jesus does not leave the conclusion of the two different journeys to us to imagine or deduce. He is categorical that the broad road and wide gate leads to destruction while the narrow road and small gate leads to life. And he makes it clear that there is a large multitude, the overwhelming majority proceeding happily on that road to hell, and only a few will find the narrow road that leads to life. A word should be enough for the wise!
One can argue that much of the Church today more closely resembles the wide way. The standards are not different from that of the world. The pursuits, interests and priorities as well as the “strategies” and “tactics” are the same and the objective is numbers, precisely as on the wide way rather than the undiluted gospel of Christ which as we know often antagonises. Indeed if you see a large meeting, going by the words of Jesus above, it is more likely a wide bridge that at best leads to no where or at worst an expressway to hell! Anywhere Christ, his disciples, Paul, Stephen or any of the examples of our faith preached, they made society especially the corrupt and wicked severely uncomfortable and that is why the Pharisees and the Council felt they had to kill them.
I believe it is not a coincidence that immediately after the words above, Jesus utters the following words, “Beware of false prophets, which come to you in sheep’s clothing, but inwardly they are ravening wolves. You shall know them by their fruits…” Is Jesus implying that in all probability there will be many false prophets on the wide road leading the people to their destruction? Are you sure you are not been led along the broad way? Let us carefully search for the narrow way, and by his grace, we will find it.
This column is in its fourth year. Those who have followed this page over the period may have begun to discern our mission-to influence society, principally Nigeria towards a transformation of its values and way of life-economic, political and social. Even though the “centre of gravity” of the column is economy and business, such transformation must be total-which means not just the body and mind, but also the spirit. That is why we write on economy, politics, society, sports, entertainment and religion. That is why around Easter and Christmas, we often have one or two articles focused on faith and religion. This year, that article may have tarried, but was sure to come!
I was never in any doubt what I was going to write about. For several weeks, the words of our Lord Jesus Christ in Mathew 7: 13-14 above (KJV) had continually rang in my mind, and I soon realised that perhaps I was required to share it with readers this season. Jesus in those verses paints two different scenarios-one, a broad way and wide gate leading to destruction; and the second, a narrow road and small gate that leads to life. The NIV translates those words as, “Enter through the narrow gate. For wide is the gate and broad is the road that leads to destruction, and many enter through it. But small is the gate and narrow the road that leads to life, and only a few find it.”
There are several implications of these words. First when you see a large crowd of people and an undiscriminating assembly in which everyone is comfortable, it may be popular, fashionable, may appear credible, but as far as Jesus is concerned it is likely to lead to destruction. Clearly God’s standards are different from ours. Men seek safety in numbers; but with God “many are called, but few are chosen”. Like I once heard someone say, one test you can apply to discern God’s will concerning a matter is to check where the world is going and then turn in the opposite direction!
Another implication is that it is not difficult to locate the broad way. It is conspicuous and pervasive; you know several people on that way and the road is well advertised! Anyone you ask will tell you how to get there; and there are many signposts and entry points!!! You can enter the Third Mainland Bridge from Osborne Road in Ikoyi, Obalende, Simpson, CMS, Tafawa Balewa Square, Costain, Adekunle in Yaba, Oworonshoki, Anthony, Ogudu, Ojota and Toll Gate. You can’t miss it! Who in Lagos does not know Broad Street! But you have to FIND the narrow way! Naturally few are interested in such a narrow, inconspicuous way. It is not “the place to be” and is difficult to locate.
The narrow way may be located inside a private estate or could be a dusty, unmarked road in the wrong side of town. That is probably why it is despised and only a few find it. Jesus does not leave the conclusion of the two different journeys to us to imagine or deduce. He is categorical that the broad road and wide gate leads to destruction while the narrow road and small gate leads to life. And he makes it clear that there is a large multitude, the overwhelming majority proceeding happily on that road to hell, and only a few will find the narrow road that leads to life. A word should be enough for the wise!
One can argue that much of the Church today more closely resembles the wide way. The standards are not different from that of the world. The pursuits, interests and priorities as well as the “strategies” and “tactics” are the same and the objective is numbers, precisely as on the wide way rather than the undiluted gospel of Christ which as we know often antagonises. Indeed if you see a large meeting, going by the words of Jesus above, it is more likely a wide bridge that at best leads to no where or at worst an expressway to hell! Anywhere Christ, his disciples, Paul, Stephen or any of the examples of our faith preached, they made society especially the corrupt and wicked severely uncomfortable and that is why the Pharisees and the Council felt they had to kill them.
I believe it is not a coincidence that immediately after the words above, Jesus utters the following words, “Beware of false prophets, which come to you in sheep’s clothing, but inwardly they are ravening wolves. You shall know them by their fruits…” Is Jesus implying that in all probability there will be many false prophets on the wide road leading the people to their destruction? Are you sure you are not been led along the broad way? Let us carefully search for the narrow way, and by his grace, we will find it.
What do we lack? Part 2
“Dear Opeyemi,...As usual I enjoyed reading you yesterday on the back page of Businessday-and I am in full agreement with you, except that I think you ran out of space before you could “complete” your argument. True, leadership is in short supply, but what should the followership do about it? My main distress is that the people in their 30s, 40s, seem to assume that we have to live with leadership delinquency. My view is that Nigeria, like nature should abhor this vacuum and find a way to mobilize the intelligence, energy, commitment and effort of the people at the peak of their life cycle to take responsibility for devising a creative thrust towards shaping the future. Maybe you want to think about this and if you agree, try to bring your “What do we lack?” to a challenging conclusion….Christopher Kolade.
I have published Dr Kolade’s e-mail because I know he would have no objection and secondly I agree entirely with him. Incidentally Dr Kolade was not the only reader who sent responses highlighting the followership dimension. Another “Chris” (Adedipe) made a similar point. Their point is valid-okay so we have a leadership problem, but didn’t the followership in other societies faced with similar circumstances rise up through new and emergent leaders to salvage their nation?
Didn’t Ghana for instance throw up a Jerry Rawlings who swept away Ghana’s wayward and corrupt leaders and set Ghana on the path to reform, growth and democracy? Didn’t Nelson Mandela and his colleagues on the ANC Youth Wing rise up to challenge South Africa’s apartheid leadership even upon pain of imprisonment? Didn’t Deng Xiaoping rise to the leadership of the Chinese Communist Party and then unleash a reform process that has transformed China into a global economic power in just thirty years? Didn’t Lee Kwuan Yew as a 30 year old accept the responsibility of taking Singapore from third world to first in just three decades? Don’t countries regularly demonstrate that the people are not powerless in the face of leadership-Ukraine, Czech, Thailand, Madagascar, in recent memory?
Didn’t American voters and society demonstrate just recently their willingness to challenge and replace the inept leadership provided by Bush, Dick Cheney and the Republican Party? Indeed the Republicans reminded us that leaders anywhere can drift into error if they are not restrained by the people. What are we Nigerians doing to restrain, challenge or replace bad leadership? If our national government is too remote for us to put pressure on and demand better performance from, what about the state and local governments, and national legislators who live amongst us? What about the commissioners and house of assembly members who stay in our communities? Why are Nigerians so willing to bend over backwards perhaps until we break?
We have to re-invent society itself! We need a new activist civic mentality that is willing to challenge abuse of power and demand accountability from elected officials. Even where they have rigged themselves into office, we must insist that they have merely forcefully submitted to our authority. Nigerians must realise that we are the bosses, not those who are supposed to serve us. That is why they are called “public servants”, “civil servants”, “representatives” or “ministers” and not Kings, Queens or Lords! We need a sense of community in which everyone recognises our mutual inter-dependence. Society cannot function when everyone acts in pursuit of his or her own self-interest and self-preservation without regard to the common good. Unfortunately like Fela sang (“I no wan die, papa dey for house, mama dey for house, I wan build house, my pikin still young….”), our people fear death and danger, not realising that the value of life consists of what you do with it, and we end up deferring all the problems of society to the next generation, except that by then, the problem has degenerated many times over!
As I close however I must return to President Yar’adua’s basic enquiry, “what do we lack?” My answers have focused on fundamental causes-leadership, elite consensus, national identity and purpose, a progressive value system and social ethos, resourcefulness and productivity in public life, an activist civic citizenry etc. But all of these do not explain why President Obasanjo used to be invited to G8 meetings and Yar’adua is not invited to an enlarged G20 summit. So we must seek specific reasons for our exclusion from this G20 meeting. I think there are three-the elections that brought Yar’adua to power lacked credibility and legitimacy highlighting the critical need for electoral reform.
Secondly the world believes the current regime has abandoned its commitment to fight corruption with the treatment of Nuhu Ribadu and inaction on the corruption front-the remedy to that is also clear. The final point is that we have basically abandoned economic reforms-why invite a government whose economic policy is unclear to a summit focused on resolving a global financial and economic crisis? Moreover, we have compounded these factors with our voluntary withdrawal from the world stage. Those are the reasons, Mr President. May God give you the will and the power to do what is required.
I have published Dr Kolade’s e-mail because I know he would have no objection and secondly I agree entirely with him. Incidentally Dr Kolade was not the only reader who sent responses highlighting the followership dimension. Another “Chris” (Adedipe) made a similar point. Their point is valid-okay so we have a leadership problem, but didn’t the followership in other societies faced with similar circumstances rise up through new and emergent leaders to salvage their nation?
Didn’t Ghana for instance throw up a Jerry Rawlings who swept away Ghana’s wayward and corrupt leaders and set Ghana on the path to reform, growth and democracy? Didn’t Nelson Mandela and his colleagues on the ANC Youth Wing rise up to challenge South Africa’s apartheid leadership even upon pain of imprisonment? Didn’t Deng Xiaoping rise to the leadership of the Chinese Communist Party and then unleash a reform process that has transformed China into a global economic power in just thirty years? Didn’t Lee Kwuan Yew as a 30 year old accept the responsibility of taking Singapore from third world to first in just three decades? Don’t countries regularly demonstrate that the people are not powerless in the face of leadership-Ukraine, Czech, Thailand, Madagascar, in recent memory?
Didn’t American voters and society demonstrate just recently their willingness to challenge and replace the inept leadership provided by Bush, Dick Cheney and the Republican Party? Indeed the Republicans reminded us that leaders anywhere can drift into error if they are not restrained by the people. What are we Nigerians doing to restrain, challenge or replace bad leadership? If our national government is too remote for us to put pressure on and demand better performance from, what about the state and local governments, and national legislators who live amongst us? What about the commissioners and house of assembly members who stay in our communities? Why are Nigerians so willing to bend over backwards perhaps until we break?
We have to re-invent society itself! We need a new activist civic mentality that is willing to challenge abuse of power and demand accountability from elected officials. Even where they have rigged themselves into office, we must insist that they have merely forcefully submitted to our authority. Nigerians must realise that we are the bosses, not those who are supposed to serve us. That is why they are called “public servants”, “civil servants”, “representatives” or “ministers” and not Kings, Queens or Lords! We need a sense of community in which everyone recognises our mutual inter-dependence. Society cannot function when everyone acts in pursuit of his or her own self-interest and self-preservation without regard to the common good. Unfortunately like Fela sang (“I no wan die, papa dey for house, mama dey for house, I wan build house, my pikin still young….”), our people fear death and danger, not realising that the value of life consists of what you do with it, and we end up deferring all the problems of society to the next generation, except that by then, the problem has degenerated many times over!
As I close however I must return to President Yar’adua’s basic enquiry, “what do we lack?” My answers have focused on fundamental causes-leadership, elite consensus, national identity and purpose, a progressive value system and social ethos, resourcefulness and productivity in public life, an activist civic citizenry etc. But all of these do not explain why President Obasanjo used to be invited to G8 meetings and Yar’adua is not invited to an enlarged G20 summit. So we must seek specific reasons for our exclusion from this G20 meeting. I think there are three-the elections that brought Yar’adua to power lacked credibility and legitimacy highlighting the critical need for electoral reform.
Secondly the world believes the current regime has abandoned its commitment to fight corruption with the treatment of Nuhu Ribadu and inaction on the corruption front-the remedy to that is also clear. The final point is that we have basically abandoned economic reforms-why invite a government whose economic policy is unclear to a summit focused on resolving a global financial and economic crisis? Moreover, we have compounded these factors with our voluntary withdrawal from the world stage. Those are the reasons, Mr President. May God give you the will and the power to do what is required.
What do we lack?
“I must say that today is a sad day for me. And I think it should be for all Nigerians, when 20 leaders of the leading countries in the world are meeting and Nigeria is not there. This is something we need to reflect upon. We have the population, we have the potentials, we have the ability and capacity and we have the will. What do we lack? Is it the will that we lack? Honestly and sincerely, to realise these potentials…potentials are nothing unless they are realised. No matter the potential you have, unless you work on it, it will not be realised. No matter the potential you have, unless you work on it, it will not be realised. We must realise it and lead the nation to realise it. This is what we must do and PDP must do to realise its potentials.”-President Umaru Musa Yar’adua addressing the PDP National Executive Committee (NEC) on Thursday April 2, 2009 in Abuja.
President Yar’adua must be commended for raising these weighty and serious issues. It is somewhat comforting to know that this matter agitates our President’s mind as one might otherwise have thought from the actions of the regime that we didn’t care what the world or even domestic audiences thought about us. But all Nigerian patriots must take up these questions and help the President, his party and his colleagues in government at the federal, state and local government levels find the right answers to these important questions. Fortunately or unfortunately we don’t have any other country!
I was tempted to give a short, one-word, ten-letter answer to the President’s enquiry-leadership! Chikena!!!But then I decided to interrogate the questions more carefully and see whether we can reach some deeper diagnosis. I discovered that there are in fact several things we lack which I will outline here. First, an enlightened elite with a consensus on where we want to take Nigeria to, and how. We have a short-sighted, self-seeking, selfish and parochial elite. I can also add self-destructive. Our elite cannot identify their long-term sustainable interests. Everyone seeks personal short-cuts and compromises the system. When an individual is in power, he forgets he will one day leave, and acts only for personal benefit instead of creating a system from which all can gain. It is not unusual for such persons to start complaining bitterly when they leave office.
Our elite do not recognise that poverty and under-development breed crime, insecurity and social crisis from which even the wealthy suffer. Rather than build a hospital, the Nigerian elite steals the money, and then flies their relatives to South Africa, Egypt, England when they are sick. Secondly we lack a committed and selfless political class. I once listened in shock to a gubernatorial aspirant in my state disclose that when a leading ‘godfather’ recruited him into politics, he was clearly informed that this was not about service to anyone but themselves! So we have entrepreneur politicians looking for food to eat! Unfortunately by the time they have more than enough to eat, stealing has become a habit and they can no longer stop!
Thirdly we do not have a national identity and purpose. We think in terms of Northern, Hausa-Fulani, Yoruba, Igbo, Ijaw interests and the like. Our narrow ethnic, sectarian, group and communal agenda are stronger than the national identity so we often see the same issue in different lights based on misguided considerations. As a result the nation is immobilised as we seek a lowest common denominator to which everyone has no objection, rather than a highest common factor to which all agree. Fourthly we do not have a progressive value system and social ethos. Our social values have degenerated as a combined result of oil, unaccountable governments and corruption. Today our values are defined almost exclusively by money and power and society is undermined as each individual acts against the interest of sustainable society.
Fifth our public life is not characterised by resourcefulness and productivity. While individually Nigerians have these characteristics in abundance, our country has developed a prebendal culture of sharing, consumption and distribution rather than production. We gather all finance commissioners to Abuja every month to share oil proceeds rather than (as in the first republic) every region or state contributing resources based on its productivity. There are other things we lack-a professional and courageous civil service (we used to have this, but it was destroyed by the military purges and corruption); our business class is not universally committed to innovation and entrepreneurial value creation (instead with some exceptions, we have a rent-seeking, contractor, crony capitalist class); our military started by giving us officer-gentlemen like Gowon, Mobolaji Johnson and Hassan Katsina, but ended up with Abachas and El-Mustaphas; and there are many other things we used to have that we have destroyed-a principled world-class academia, vibrant student’s unions and labour movements, media, religious institutions, and the professions, many deliberately destroyed by soldiers or politicians or subverted by corruption. And then I realised that I had come full circle. It all boils down to leadership! All of these things are about leadership! Mr President, what we need is leadership!
President Yar’adua must be commended for raising these weighty and serious issues. It is somewhat comforting to know that this matter agitates our President’s mind as one might otherwise have thought from the actions of the regime that we didn’t care what the world or even domestic audiences thought about us. But all Nigerian patriots must take up these questions and help the President, his party and his colleagues in government at the federal, state and local government levels find the right answers to these important questions. Fortunately or unfortunately we don’t have any other country!
I was tempted to give a short, one-word, ten-letter answer to the President’s enquiry-leadership! Chikena!!!But then I decided to interrogate the questions more carefully and see whether we can reach some deeper diagnosis. I discovered that there are in fact several things we lack which I will outline here. First, an enlightened elite with a consensus on where we want to take Nigeria to, and how. We have a short-sighted, self-seeking, selfish and parochial elite. I can also add self-destructive. Our elite cannot identify their long-term sustainable interests. Everyone seeks personal short-cuts and compromises the system. When an individual is in power, he forgets he will one day leave, and acts only for personal benefit instead of creating a system from which all can gain. It is not unusual for such persons to start complaining bitterly when they leave office.
Our elite do not recognise that poverty and under-development breed crime, insecurity and social crisis from which even the wealthy suffer. Rather than build a hospital, the Nigerian elite steals the money, and then flies their relatives to South Africa, Egypt, England when they are sick. Secondly we lack a committed and selfless political class. I once listened in shock to a gubernatorial aspirant in my state disclose that when a leading ‘godfather’ recruited him into politics, he was clearly informed that this was not about service to anyone but themselves! So we have entrepreneur politicians looking for food to eat! Unfortunately by the time they have more than enough to eat, stealing has become a habit and they can no longer stop!
Thirdly we do not have a national identity and purpose. We think in terms of Northern, Hausa-Fulani, Yoruba, Igbo, Ijaw interests and the like. Our narrow ethnic, sectarian, group and communal agenda are stronger than the national identity so we often see the same issue in different lights based on misguided considerations. As a result the nation is immobilised as we seek a lowest common denominator to which everyone has no objection, rather than a highest common factor to which all agree. Fourthly we do not have a progressive value system and social ethos. Our social values have degenerated as a combined result of oil, unaccountable governments and corruption. Today our values are defined almost exclusively by money and power and society is undermined as each individual acts against the interest of sustainable society.
Fifth our public life is not characterised by resourcefulness and productivity. While individually Nigerians have these characteristics in abundance, our country has developed a prebendal culture of sharing, consumption and distribution rather than production. We gather all finance commissioners to Abuja every month to share oil proceeds rather than (as in the first republic) every region or state contributing resources based on its productivity. There are other things we lack-a professional and courageous civil service (we used to have this, but it was destroyed by the military purges and corruption); our business class is not universally committed to innovation and entrepreneurial value creation (instead with some exceptions, we have a rent-seeking, contractor, crony capitalist class); our military started by giving us officer-gentlemen like Gowon, Mobolaji Johnson and Hassan Katsina, but ended up with Abachas and El-Mustaphas; and there are many other things we used to have that we have destroyed-a principled world-class academia, vibrant student’s unions and labour movements, media, religious institutions, and the professions, many deliberately destroyed by soldiers or politicians or subverted by corruption. And then I realised that I had come full circle. It all boils down to leadership! All of these things are about leadership! Mr President, what we need is leadership!
Policy and Economic Review Part 2
Last week we focused on budgets, stimulus, deficits, spending reform, innovative approaches to stimulating the economy, and priority sectors-power, transport and solid minerals (add agriculture), and such matters. This week there are more issues-foreign currency management, a return to controlled interest rates and broader issues of economic management strategy that appear more and more mis-directed under this administration.
First the shocker that emerged from the Central Bank mandating banks to take deposits at a maximum of 15 per cent, grant loans at a maximum of 22 per cent interest and 2 per cent per annum fees, with an explicit maximum spread of 6 per cent. With this policy pronouncement, the Central Bank completed an embarrassing descent into economic illiteracy that has been unfolding in the last few months! I was willing to support the banks “temporary” controls on the foreign currency management side. I believed that those were justifiable in the context of an emergency situation of an unprecedented global financial crisis, and economic meltdown. I agree that the lesson from Malaysia’s response to the Asian financial crisis was that in the midst of a crisis, temporary controls may be useful in stemming outward flows and calming the markets.
In spite of agreeing with this broad response on the currency management front, there are actions from the bank itself which appear to have fed the panic in the first place-the absence of policy direction in December/January while market participants worried about foreign currency sourcing in the new year; doubts about the safety and soundness of the banking sector which I believe have been fed rather than assuaged by the regulator’s complicity in the industry’s decision to defer recognition of loan losses, and lack of transparency regarding the extent of individual institutions’ and the industry’s exposure to margin loan losses; the over-celebratory posture of the regulator since the conclusion of consolidation and pushing the industry in the direction of further capital raising rather than the substantive priorities of the industry. The mere fact that there are rumours in fact questioning the integrity of the CBN’s management of foreign currency depreciation whether true or false is itself a comment on the incestuous relationship that appeared to have developed between the regulator and those it was supposed to be regulating.
While the arguments on foreign currency management may be nuanced and debatable, I find nothing whatsoever that can justify the resort to direct price controls as the Central Bank’s strategy for managing interest rates. For one, they will not work. Price controls which run against economic fundamentals (as Nigeria should very well know from our history in the 1970s and 1980s) don’t work. In financial services, they are even more useless in so far as anyone familiar with structuring of financial products knows that they can easily be structured to achieve effective interest rates far higher than the nominal rates stated on the face of the documentation. More importantly, the attempt to regulate interest rates distorts (and destroys) industry structure accentuating a flight to (perceived) safety and making smaller and weaker banks less competitive. Moreover in an environment with 14.6% inflation, a deposit at 15% makes no sense-a sensible depositor will rather put his money in tangible assets that hold value than in monetary assets at a real return of 0.4%.
The international policy analysts Eurasia Group, says our CBN has with this measure cemented “its growing reputation as one of the most erratic central banks in the world”! Ouch!!! The analysts also make the following comments, “Rather than helping to ease the liquidity crisis, the arbitrary imposition of interest rate controls will severely exacerbate it…The profitability of the country’s banking sector will take a structural hit. Nigeria’s Central Bank Governor Chukwuma Soludo (who is tirelessly fighting to be re-appointed to another 5-year term next month) has clearly abandoned all pretences of a basic belief in market-based economic mechanisms…This adjustment process will crowd out the middle-tier and smaller banks…Unless this circular is rescinded soon, Nigeria will soon develop an even more risky unregulated ‘shadow banking system’ where market rates will apply between borrowers and lenders.” I commend these words to our economic and policy managers. A word is enough for the wise!
It has become clear to me that while there are narrow technical reasons for all our current domestic economic challenges-the capital market collapse, financial sector worries, Naira depreciation, rising inflation and rising interest rates, at its foundations what we are dealing with is most importantly a crisis of confidence. That crisis of confidence has aspects that are not within our control-the exogenous impact of the global financial crisis for instance on capital flows and the price of oil. But there are several aspects that are endogenous and we must now begin to deal aggressively with them. There is a lack of confidence in policy direction, governance and leadership. The populace and the markets perceive no sense of urgency in addressing the nation’s economic and policy challenges, and in some cases (such as the unwillingness to implement the Electric Power Sector Reform Act) a case probably of perverse motives. And there is eroded confidence in the transparency and regulation of our capital markets, financial sector and now currency management as well. If we don’t urgently re-instate confidence at all these levels, our crisis may extend beyond the global financial crisis.
First the shocker that emerged from the Central Bank mandating banks to take deposits at a maximum of 15 per cent, grant loans at a maximum of 22 per cent interest and 2 per cent per annum fees, with an explicit maximum spread of 6 per cent. With this policy pronouncement, the Central Bank completed an embarrassing descent into economic illiteracy that has been unfolding in the last few months! I was willing to support the banks “temporary” controls on the foreign currency management side. I believed that those were justifiable in the context of an emergency situation of an unprecedented global financial crisis, and economic meltdown. I agree that the lesson from Malaysia’s response to the Asian financial crisis was that in the midst of a crisis, temporary controls may be useful in stemming outward flows and calming the markets.
In spite of agreeing with this broad response on the currency management front, there are actions from the bank itself which appear to have fed the panic in the first place-the absence of policy direction in December/January while market participants worried about foreign currency sourcing in the new year; doubts about the safety and soundness of the banking sector which I believe have been fed rather than assuaged by the regulator’s complicity in the industry’s decision to defer recognition of loan losses, and lack of transparency regarding the extent of individual institutions’ and the industry’s exposure to margin loan losses; the over-celebratory posture of the regulator since the conclusion of consolidation and pushing the industry in the direction of further capital raising rather than the substantive priorities of the industry. The mere fact that there are rumours in fact questioning the integrity of the CBN’s management of foreign currency depreciation whether true or false is itself a comment on the incestuous relationship that appeared to have developed between the regulator and those it was supposed to be regulating.
While the arguments on foreign currency management may be nuanced and debatable, I find nothing whatsoever that can justify the resort to direct price controls as the Central Bank’s strategy for managing interest rates. For one, they will not work. Price controls which run against economic fundamentals (as Nigeria should very well know from our history in the 1970s and 1980s) don’t work. In financial services, they are even more useless in so far as anyone familiar with structuring of financial products knows that they can easily be structured to achieve effective interest rates far higher than the nominal rates stated on the face of the documentation. More importantly, the attempt to regulate interest rates distorts (and destroys) industry structure accentuating a flight to (perceived) safety and making smaller and weaker banks less competitive. Moreover in an environment with 14.6% inflation, a deposit at 15% makes no sense-a sensible depositor will rather put his money in tangible assets that hold value than in monetary assets at a real return of 0.4%.
The international policy analysts Eurasia Group, says our CBN has with this measure cemented “its growing reputation as one of the most erratic central banks in the world”! Ouch!!! The analysts also make the following comments, “Rather than helping to ease the liquidity crisis, the arbitrary imposition of interest rate controls will severely exacerbate it…The profitability of the country’s banking sector will take a structural hit. Nigeria’s Central Bank Governor Chukwuma Soludo (who is tirelessly fighting to be re-appointed to another 5-year term next month) has clearly abandoned all pretences of a basic belief in market-based economic mechanisms…This adjustment process will crowd out the middle-tier and smaller banks…Unless this circular is rescinded soon, Nigeria will soon develop an even more risky unregulated ‘shadow banking system’ where market rates will apply between borrowers and lenders.” I commend these words to our economic and policy managers. A word is enough for the wise!
It has become clear to me that while there are narrow technical reasons for all our current domestic economic challenges-the capital market collapse, financial sector worries, Naira depreciation, rising inflation and rising interest rates, at its foundations what we are dealing with is most importantly a crisis of confidence. That crisis of confidence has aspects that are not within our control-the exogenous impact of the global financial crisis for instance on capital flows and the price of oil. But there are several aspects that are endogenous and we must now begin to deal aggressively with them. There is a lack of confidence in policy direction, governance and leadership. The populace and the markets perceive no sense of urgency in addressing the nation’s economic and policy challenges, and in some cases (such as the unwillingness to implement the Electric Power Sector Reform Act) a case probably of perverse motives. And there is eroded confidence in the transparency and regulation of our capital markets, financial sector and now currency management as well. If we don’t urgently re-instate confidence at all these levels, our crisis may extend beyond the global financial crisis.
Policy and Economic Review
Countries all over the world, developed, developing and under-developed are faced with a downward economic spiral. Those who are not yet officially in recession (meaning a contraction in economic activity) are faced with a slowdown in the rate of growth in their gross domestic product (GDP). Whether recession or slowdown, both result in higher unemployment, corporate and individual bankruptcies and loss of consumer and producer confidence. Policy makers everywhere recognise that deliberate policy and action is required to stem or reverse such a downward spiral otherwise economic activity declines further as more unemployment means lower demand, and then less production, and more bankruptcies etc in a vicious cycle.
That is why President Barack Obama has passed a $787billion stimulus bill (The American Reconstruction and Recovery Act) to invest in public infrastructure and generate jobs and economic activity which would otherwise not be generated by the private sector. China which is not in recession, but whose growth rate has declined from 13% to 6% has enacted their own $586billion infrastructure package based on the same thinking. Governments across Europe are doing the same thing. The question is how will Nigeria act to ensure that the envisaged slowdown in growth from around 7.5 per cent in 2008 to a projection of around 4 per cent in 2009 does not become worse in 2010 if global adverse conditions do not abate?
There is no clear strategy on the table in this regard. Instead the President’s advisers are worried that the 2009 budget as passed by the National Assembly is unsustainable. I disagree! As passed, the 2009 budget contains a deficit of 3.02 percent with the President warning that if oil production declines to an average of 1.6million barrels per day, the deficit will increase to 5.24 per cent. What the president’s advisers did not tell him or Nigerians is the comparable level of deficit in countries across the world all of whom like us adopt a target of 3 per cent maximum deficit as a percentage of GDP. In the US, the percentage is 12 per cent! In other countries the same trend is in play-Britain-7.2% and France-5.5% are some examples according to the Economist. The US budget deficit is exclusive of the stimulus package earlier referred to!
The point is, it doesn’t make sense in a recessionary environment to simply tout extant technical rules about deficits when everyone ought to recognise the dramatic and unique circumstances in which the country finds itself. The other point of course is, what is the percentage of government spending as a percentage of GDP? In all these developed countries, the percentage is rising-US projected to be 39.9% in 2010; while the Eurozone is similarly projected at 47.1% in the same year; In France, Britain and Germany, the figures are 52%, 45% and 44% respectively. In Nigeria, the figure by my calculations and projections is around 12.86% which negates the alarm over government spending. The scare is even less credible considering that while the US for instance is borrowing from outside to finance the deficit, Nigeria has $40 billion in reserves. Like Dr Mrs Ngozi Okonjo-Iweala reminded us, it is not illegal to spend one’s savings!
So the real problem is not spending but quality of spending (what are we spending money on?) and value for money (how much of it gets stolen versus how much gets into the purpose of the appropriation?)! Which means altering the ratio of spending between capital and recurrent expenditure in favour of capital spending; altering recurrent spending from maintaining bureaucracies to funding social investment in education, science and technology, agriculture, and law and order; improving the effectiveness and transparency of the procurement process; and stopping corruption! The regime needs to focus on these priorities.
But meanwhile until we reform procurements and reduce corruption, public sector spending will remain a sub-optimal source of economic stimulus in Nigeria given the reality that much of the money will be embezzled. Indeed public sector spending then becomes economically destabilising as stolen funds are aggressively exported, thus depreciating the Naira; aggressively diverted into real estate thus fuelling property prices; and aggressively deployed into ostentatious consumption thus contributing to erosion of moral values. In the circumstances, we can afford to be innovative and seek private sector stimulus in some targeted sectors which in spite of global recession will yield capital inflows. In my view such three priority sectors for Nigeria should be power, transportation and solid minerals.
I believe Nigeria can mobilise private capital domestically and internationally into all of these sectors in spite of the current economic conditions. These will replace some of the decline in government spending; generate taxes, employment and other economic spin-offs much like telecommunications deregulation did between 2001 and now, and in the particular case of power, contribute to economic efficiency. More importantly in all of these the legal framework for attracting private capital already exists in the form of the Electric Power Sector Reform Act of 2005, the Mines and Minerals Act of 2007 and the ICRC. What remains is for the ministers and regulators in charge of these and the administration in general to get going!
That is why President Barack Obama has passed a $787billion stimulus bill (The American Reconstruction and Recovery Act) to invest in public infrastructure and generate jobs and economic activity which would otherwise not be generated by the private sector. China which is not in recession, but whose growth rate has declined from 13% to 6% has enacted their own $586billion infrastructure package based on the same thinking. Governments across Europe are doing the same thing. The question is how will Nigeria act to ensure that the envisaged slowdown in growth from around 7.5 per cent in 2008 to a projection of around 4 per cent in 2009 does not become worse in 2010 if global adverse conditions do not abate?
There is no clear strategy on the table in this regard. Instead the President’s advisers are worried that the 2009 budget as passed by the National Assembly is unsustainable. I disagree! As passed, the 2009 budget contains a deficit of 3.02 percent with the President warning that if oil production declines to an average of 1.6million barrels per day, the deficit will increase to 5.24 per cent. What the president’s advisers did not tell him or Nigerians is the comparable level of deficit in countries across the world all of whom like us adopt a target of 3 per cent maximum deficit as a percentage of GDP. In the US, the percentage is 12 per cent! In other countries the same trend is in play-Britain-7.2% and France-5.5% are some examples according to the Economist. The US budget deficit is exclusive of the stimulus package earlier referred to!
The point is, it doesn’t make sense in a recessionary environment to simply tout extant technical rules about deficits when everyone ought to recognise the dramatic and unique circumstances in which the country finds itself. The other point of course is, what is the percentage of government spending as a percentage of GDP? In all these developed countries, the percentage is rising-US projected to be 39.9% in 2010; while the Eurozone is similarly projected at 47.1% in the same year; In France, Britain and Germany, the figures are 52%, 45% and 44% respectively. In Nigeria, the figure by my calculations and projections is around 12.86% which negates the alarm over government spending. The scare is even less credible considering that while the US for instance is borrowing from outside to finance the deficit, Nigeria has $40 billion in reserves. Like Dr Mrs Ngozi Okonjo-Iweala reminded us, it is not illegal to spend one’s savings!
So the real problem is not spending but quality of spending (what are we spending money on?) and value for money (how much of it gets stolen versus how much gets into the purpose of the appropriation?)! Which means altering the ratio of spending between capital and recurrent expenditure in favour of capital spending; altering recurrent spending from maintaining bureaucracies to funding social investment in education, science and technology, agriculture, and law and order; improving the effectiveness and transparency of the procurement process; and stopping corruption! The regime needs to focus on these priorities.
But meanwhile until we reform procurements and reduce corruption, public sector spending will remain a sub-optimal source of economic stimulus in Nigeria given the reality that much of the money will be embezzled. Indeed public sector spending then becomes economically destabilising as stolen funds are aggressively exported, thus depreciating the Naira; aggressively diverted into real estate thus fuelling property prices; and aggressively deployed into ostentatious consumption thus contributing to erosion of moral values. In the circumstances, we can afford to be innovative and seek private sector stimulus in some targeted sectors which in spite of global recession will yield capital inflows. In my view such three priority sectors for Nigeria should be power, transportation and solid minerals.
I believe Nigeria can mobilise private capital domestically and internationally into all of these sectors in spite of the current economic conditions. These will replace some of the decline in government spending; generate taxes, employment and other economic spin-offs much like telecommunications deregulation did between 2001 and now, and in the particular case of power, contribute to economic efficiency. More importantly in all of these the legal framework for attracting private capital already exists in the form of the Electric Power Sector Reform Act of 2005, the Mines and Minerals Act of 2007 and the ICRC. What remains is for the ministers and regulators in charge of these and the administration in general to get going!
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