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!

"Before It Is Too Late"

The above title is borrowed from the famous letter written by ex-President Obasanjo to President Jonathan, which forms the subject of this article. On the substance of the issues raised by Obasanjo, I make the following preliminary points-Jonathan needs to do more to convince Nigerians and the international community that his government is not tolerant or even facilitative of corruption. The Alamieyesegha pardon and the determination to retain Stella Oduah in the face of damning allegations of fraud and criminal abuse of office are particularly odious examples of the regime’s reputation in this regard! Secondly the government needs a broader governing coalition to sustain national peace and stability. Anyone suggesting to the president that he can dispense with other ethnic groups and geo-political zones and govern and win re-election with support mainly from two out of six geo-political zones is deceiving him. Thirdly I strongly support the regime’s planned national conference and I urge Jonathan not to be distracted from the task of convening it. There are two classes of Nigerians-those who like Nigeria the way it is and think once they replace Jonathan, all is fine; and those who recognize that Nigeria as it currently operates is not sustainable and needs fundamental restructuring. We know what side Obasanjo, Babangida and other oligarchs belong to! It is not a credit to Obasanjo that he occupied the presidency for eight years and left Nigeria structurally unchanged, with the consequences we see today! Finally it is true that there is an African window of opportunity which Nigeria should seize and I note that some factors militating against that are created by Jonathan’s opponents (Boko Haram, post-2011 electoral violence, Fulani herdsmen in central Nigeria, social conditions in Northern Nigeria, non-passage of PIB etc) while Jonathan bears responsibility for others (oil sector mismanagement and corruption). Beyond these comments, I do not concede to Obasanjo the moral credibility to make most, if not all of the “allegations” he has presented against Jonathan! One I do not think Obasanjo’s interest contrary to his posturing is the national interest. My careful reading tells me this is in reality intra-elite power struggles in which disgruntled members of a clique who have arrogated to themselves control over Nigeria, finding themselves marginalized seek to reclaim their power and privileges. I am not impressed that Obasanjo apparently feels that Babangida, Abdulsalam and himself have sufficient moral authority with the Nigerian people to manipulate us in whatever direction they seek. Secondly, considering the specific offences Obasanjo alleges Jonathan has committed, it is difficult to find even one which Obasanjo himself was not guilty of, in a more grievous manner while in office! When Obasanjo sees a semblance between Jonathan and Abacha, he exaggerates-the emerging similarity may actually be Jonathan and Obasanjo! Obasanjo arranged with opposition senators to defeat his party’s choice for senate presidency, Chuba Okadigbo and Evan Enwerem was elected based on AD/APP votes. That process I am very reliably informed also involved a few “Ghana-must-go” bags! PDP members in Borno State complained persistently that Obasanjo had a secret understanding with Senator Ali Modu Sherrif which led to him undermining PDP in that state. Of course we all know the fate of Senator Ifeanyi Araurume, PDP’s candidate in Imo State who was dis-owned based on orders from Obasanjo’s presidency in favour of Ikedi Ohakim of PPA. With respect to Buruji Kashamu, it suffices to ask what the difference is between him and Chris Uba who became a member of PDP Board of Trustees in Obasanjo’s time and who notoriously executed a siege on the government of Anambra State without any consequences. When Obasanjo talks about dividing the country along North-South or Muslim-Christian lines, the principal culprits are his allies who made provocative statements about making Nigeria “ungovernable” and who have already threatened bloodshed were Jonathan to contest in 2015. Yes Asari Dokubo and Edwin Clark make unhelpful statements, but so do Junaid Muhammed, Lawal Kaita, Muhammadu Buhari, Yahaya Kwande, Nasir El-Rufai and others. We may also note that the families of Bola Ige, Harry Marshall and A.K Dikibo may wonder whether Obasanjo has moral standing to complain about killings which he fears may happen when those that actually happened under his watch remain unresolved. Even concerning security, Boko Haram and Niger-Delta militancy were both created during Obasanjo’s regime with two governors close to him (Odili and Modu Sherrif) implicated in their origins! Regarding corruption, Obasanjo cannot cast the first stone either. And it is somewhat of a shock to me that Obasanjo who got a second term, in spite of a similar alleged agreement to the contrary, and then sought an unconstitutional third term, can consider himself entitled to ask Jonathan to take “a more credible and more honourable path”. Having dispensed with Obasanjo’s sanctimonious hypocrisy, it remains for all Nigerians to ask President Jonathan for a full, detailed and comprehensive response to the allegations and particularly the following-is it true that his government has 1,000 people on “political watch list”? Is his government surreptitiously training snipers and armed personnel? What are the facts regarding the allegation of missing $7billion from NNPC by CBN? Has Jonathan offered “assistance” for any murderer generally or Major Hamza El-Mustapha in particular to evade justice? If so, why? Why are the Olokola and Brass LNG projects stalled? Is Jonathan frustrating the Port Harcourt water project funding by the ADB? What is Jonathan’s relationship with Buruji Kashamu? While we await Jonathan’s response, it remains to warn Nigerians not to allow any oligarchic clique to steal our democracy. Similar statements by Obasanjo in the past had terminal implications for former regimes, including the 1979-1983 second republic and Obasanjo in this statement explicitly threatens “Egypt must teach some lesson”. But Nigerians are rational and in spite of our pains, we know that Nigeria’s current troubles are largely the legacy of past misrule!!! Our democracy is far from perfect, but we should NOT go back to Egypt!

Nelson Mandela: 1918-2013

I can’t recall when I first heard the name “Mandela”. My parents were both teachers whose specialization was English Language and Literature. There were always books and newspapers around and I read all I laid my hands on. My earliest specific recollections of reading newspapers were around 1970 and some names stuck from those editions of Daily Times, Spear, Drum and Nigerian Tribune-Golda Meir; Yasser Arafat; Yakubu Gowon; Benjamin Adekunle; Richard Nixon; Julius Nyerere; Kenneth Kaunda etc, and at some point, Nelson Mandela. I must have been at Igbobi College in the mid-1970s however before I began to fully grasp the scale of the atrocity going on in Southern Africa and I soon realized that political freedom and equality was not a universal condition. Yes I had read about African countries securing independence from British and French colonialism, but awareness of the evil concept of apartheid was initially beyond comprehension of my young mind. First I got hints from literature books particularly Alan Paton’s “Cry the Beloved Country”, but it was the foreign policy dynamism of the regime of Generals Murtala Muhammed and Olusegun Obasanjo especially in relation to the independence of Angola, Mozambique, Namibia and Zimbabwe (Rhodesia) and the end of apartheid in South Africa that raised my consciousness about how wrong and abominable what was going on was. And then we learnt about massacres in Soweto (the Sharpeville Massacre in particular), about the death of Steve Biko; the extent of the segregationist policies of the Afrikaner regime in South Africa; the matchbox houses; the jailing of Nelson Mandela; and the persecution of his wife Winnie Mandela and I must say that for a while, the political representation of evil, wickedness and the devil in my growing spirit were the South African white apartheid regime, their National Party and its then leader, P. W Botha. The music and performances of Miriam Makeba and “Ipi Tombi” also helped communicate the conditions under which blacks lived under apartheid. I began to wonder at a point whether white people (not just those in South Africa) had a conscience, especially as important US and UK leaders-Margaret Thatcher and Ronald Reagan in particular, protected and condoned the evil system and against the background of slavery and colonialism. The sheer affront and wickedness of coming into another man’s land, taking over his land and wealth and then banishing him to the arid parts of the land while treating him as sub-human fundamentally questioned my faith in white civilization and humanity. In the event, the racist regime chose to redeem itself and with the help, encouragement and coaxing of Nelson Mandela, and after decades of incredible black suffering, pain and blood, Nelson Mandela was released from prison in 1990, the ANC unbanned, and majority rule was achieved in South Africa in 1994. It remains to be seen whether the White South African change of heart was the result of genuine repentance or merely a strategic change as the unsustainability of minority rule became glaring and the global political environment became unconducive to apartheid. Whatever the motives of the Afrikaner regime, Mandela came out of prison without anger or bitterness; preaching love, forgiveness and reconciliation; showing incredible generosity of spirit, graciousness and optimism about humanity; and working across racial barriers to build a rainbow nation of multiple races. A grateful world, shocked at his nobility of character and goodness of heart submitted to his moral leadership and his example. When after a single term in office in 1999, Mandela chose to step down (disdaining the African stereotype of nationalist leaders who having secured political freedom for their nations, concluded that occupying its presidency for life was the least of their just rewards), his reputation as a “saint” and exceptional, transformational, once-in-an-era leader was cemented. When I saw the breaking news on CNN of Mandela’s death on Thursday December 5, 2013, I knew that without doubt, the greatest African and most influential black person that ever lived had just departed. There will be two challenges to Mandela’s legacy however-continuing black poverty and deprivation and widening inequality will lead some to wonder whether apartheid simply shed the liability of political control, while strengthening economic domination; and many blacks will wonder whether his successors in the ANC have lived up to his standards and vision. Mandela recognized that true transformational leadership did not consist of the privileges of power and wealth it could secure, or the sanctions and force it could exercise, but the influence it wielded and example it offered. Mandela’s life is evidence to me, that when we seek a higher quality of leadership in Nigeria, we are neither naïve nor academic. Several years ago, I wondered in a conversation with a professor of ethics, why every Nigerian politician touts the names of the likes of Mandela, Mahatma Gandhi, Martin Luther King Jnr and Chief Obafemi Awolowo when they make absolutely no effort to emulate these great people? Don’t they say imitation is the best form of flattery? If you truly admire these people, why don’t you make some effort, even a little, to be like them? Mandela’s names defined his life-born “Rolihlahla” (literal “pulling the branch of a tree” but colloquially meaning “troublemaker”), he was also “Khulu” (great, grand, paramount), “Madiba” (his Xhosa clan chieftaincy name), and “Tata” (father). He was born on July 18, 1918 into a Thembu royal family in Mzevo, near Qunu in the hinterlands of Umtata, capital city of Transkei in the Eastern Cape Province of South Africa and joined the African National Congress (ANC) in 1943. He formed the ANC Youth League along with Oliver Tambo and Walter Sisulu in 1944 and its military wing “Umkhonto we Sizwe” (Spear of the Nation) in December 16, 1961. Mandela also made his mark in the law profession, founding South Africa’s first black law practice, “Mandela and Thambo” in 1952. He married Nomzano Zaniewe Winifred “Winnie” Mandela in 1958 having divorced his first wife, Evelyn a few years earlier. He was to later marry Graca Machel, widow of Mozambique’s Samora Machel after his divorce from Winnie. When he was jailed in the notorious Rivonia Trial in 1964 ushering in his 27 years in Robben Island and other locations as prisoner 466/64, Mandela uttered the now immortal words, “During my lifetime, I have dedicated myself to the struggle of the African people. I have fought against white domination, and I have fought against black domination. I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities. It is an ideal for which I hope to live and achieve. But if needs be, it is an ideal for which I am prepared to die”. He was awarded the Nobel Peace Prize in 1993 along with Frederick W De Klerk. Mandela’s life confirms to us that living for principles and the common good is neither foolish nor futile. On the contrary, that is the only legacy that endures. Opportunistic, self-serving and tactical politics can bring much temporary advantage, but it is only sacrificial, principle-centred leadership that transforms society and edifies people.

Security and Federalism

I was at the 7th Town Hall Meeting of the Lagos State Security Trust Fund (LSSTF) last Thursday November 28, 2013 at the Civic Centre, Victoria-Island in Lagos. For those who may not know, LSSTF was created by Governor Babatunde Raji Fashola (SAN) through a Law passed by the State Assembly, in 2007 when he was first elected. Indeed it was the first law passed under the Fashola Administration. It was envisaged as a public-private partnership arrangement to intervene in the chronic funding gap for the police and other security agencies in the state. As I have heard Fashola say on several occasions (and as those of us who live in Lagos can easily corroborate!), when he came into office in May 2007, Lagos was besieged by armed robbers and other sundry criminals. Bank robberies, home invasions and traffic attacks were a regular daily occurrence and near anarchy was virtually loosed upon the land. I can testify to all these from personal experience! In August 2007, five or more armed robbers broke into my home on the island in the dead of night and carted away laptops, projectors, phones, jewellery, cash and any portable stuff they could lay their hands on. It was, I believe, only the restraining hand of the Almighty that ensured no one came to any harm, and nothing of subsisting value was lost. Some years earlier, I had gone to visit a junior bank colleague who had just had a child in the Ikeja area, along with my wife, and armed men broke into the flat while we were there! This was around 8.00pm on a Sunday evening!!! In 2000, armed robbers blocked me down Opebi Road, Ikeja around 9.30pm, drove me (with a gun to my head all through) to Ijoko Road, Otta, before dropping me off in the middle of nowhere around 11.30pm. Of course they went off with the brand new Honda Accord I was driving as well as most of my personal belongings!!! Fashola notes that he spent his first weeks in office visiting hospitals, mortuaries and homes of residents to console victims of the then rampant robberies in the state and quickly decided the deteriorating security situation required an emergency response. LSSTF was the outcome of the work of a committee headed by former Inspector-General of Police, Musiliu Smith, which recommended the state find a means of redressing the almost criminal neglect of police funding by the federal government. At the Town Hall Meeting, one of the mechanisms institutionalized by LSSTF to ensure transparency and accountability (others include publication of an annual report; auditing of its accounts by global accounting firm, Price Waterhouse Coopers; an independent board, comprised of a majority of private sector representatives; non-receipt of any direct appropriation or subvention from the state government; etc), Fashola and the Fund’s Executive Secretary, Fola Arthur-Worrey illustrated the shocking scale of police funding deficit-in 2013, Abuja provided only 3 vehicles to the Lagos State Police Command, which includes command headquarters, OPS Attack, Special Anti-Robbery Squad (SARS), Special Investigation Board (SIB), State Criminal Investigation Department (SCID), 106 police divisions with Divisional Police Officers (DPOs), and numerous police stations and posts, as well as Marine Police, 5 Mobile Police Divisions and a Counter-Terrorism Unit (CTU). All these exclude the “federal” commands based in Lagos-Airport, Ports, and Railway Commands, Federal SARS and FCID! The FGN reportedly budgeted N475million for vehicles for the entire Nigeria Police Force!!! The total police budget for the whole country was N311billion of which N293billion was for personnel costs, leaving only N8billion for overheads and N10billion for capital expenditure! Yet this same Federal Government, which abandons the police, other security agencies and many other federal agencies in the states resolutely opposes state police and devolution of power! It is very much like an irresponsible husband and father, who lavishes his money on a wasteful lifestyle while refusing to provide for his wives and children, and yet insists the wives must not work!!! It is absurdities and dysfunctions such as this that convince me of the necessity, indeed the imperative of a national conference to discuss such and similar fundamental issues! In the face of this gross federal neglect, Lagos State Government, its Local Governments and Local Council Development Areas, and citizens and organisations have through the LSSTF provided in excess of N12billion in resources and provided the police and other security agencies in the state more than 800 vehicles since 2007. LSSTF has also become a mechanism to ensure recurrent costs such as fuelling, servicing and maintenance of vehicles, equipment and other operational resources are provided in an accountable and verifiable manner. The relative peace and security which Lagos State enjoys is thus not a co-incidence, but the result of the vision of Fashola in setting up LSSTF and it illustrates the effectiveness of “local responses to rising national security challenges” (the theme of this year’s town hall meeting) and the value of federalism in a society with diverse peoples and challenges. Federalism we must re-state is the system best-suited to nations with multi-ethnic, multi-religious and other multi-component diversities allowing sub-national entities respond to differing challenges in manners best calibrated to their local conditions. It is this effectiveness of local strategies and responses that Nigeria denies itself through its current pseudo-federal or defacto unitary constitution. The virtual breakdown of law and order across Nigeria is just one additional symptom of the failure of the current approach!

Multiple Levels of Uncertainty

The policy highpoint of 2013 was substantial privatization of the unbundled PHCN entities by the federal government with only three outstanding transactions-Sapele and Afam Gencos and the Kaduna Disco. Outside the power sector, the other area of progress remains continuing reforms in agriculture. GDP growth in the third quarter at 6.8% suggests that full year output will grow within our target band of 6.5-7% for 2013. Some sectors appear to be doing quite well-retail; hotels and restaurants, and indeed the wider entertainment sector; electronic payments and e-commerce, driven by improvements in the financial sector with regard to the payments system, and continuing telecommunications sector growth over 30%. The CBN has succeeded in managing inflation, bringing it down in the last three months (8.2%, 8.0%, and 7.8%) consecutively. There has been some progress too in financial and capital markets-apparently stable deposit money banks; rising capital markets with 2013 YTD growth around 35%; efforts at financial deepening and increased trading sophistication through the creation of two new over-the-counter exchanges for unlisted PLCs (NASD) and bonds, derivatives and other money market instruments (FMDQ); and growing international interest in our bond markets with J.P Morgan, Barclays and the IMF/World Bank all taking interest in Nigerian bonds. The government has conducted sensible foreign relations and recorded significant achievements in global football-winning the African Nations Cup and FIFA Under-17 World Cup, and qualifying for the 2014 World Cup in Brazil. Less positively, the government continues to grossly mismanage the oil sector-the Petroleum Industry Bill remains stuck in parliament; oil theft and piracy are rampant in the Niger-Delta costing the federation billions of dollars (and challenging federal and state budgets!); and under-investment and divestment by the international oil majors continues unabated. To compound our domestic oil sector incompetence, the outlook for global oil market fundamentals does not appear robust especially into the medium and long term. In this context, the CBN pursues its emotional defense of the Naira at current levels while the markets appear to have assumed depreciation is inevitable sooner or later, and the later it is, the more likely it would be devaluation! Not surprisingly, the spread between the CBN’s official dollars and autonomous market rates is widening. Meanwhile at the cost of scarce foreign reserves, we continue to subsidize imported consumption, capital repatriation, foreign education, holidays and some limited manufacturing! University students remain at home, five months after ASUU declared a strike, which appears motivated by a desire to inflict political costs! In all this, the social context remains bleak-significant levels of corruption; massive poverty and unemployment; the collapse of public services; high levels of crime and insecurity; and a continuing “civil war” against “Boko Haram” in the North-East region which remains under emergency rule. In addition, ethnic cleavages and religious polarization are increasing and the 2015 elections appear certain to widen those divides. In 2014, we would enter into the full political season as most of the electioneering campaigns will happen early; and we may have a “national conference” to discuss fundamentals of our union. The consequence is that in 2014, we will pay more attention to politics, rather than policy and economy, and political risk may be elevated. We should however complete outstanding PHCN privatisations, carry out the NIPP version and may also sell off the four government-owned refineries. A new CBN governor should be appointed and some monetary policy directions may change, although the incumbent may yet shape the financial markets for most of next year. 2014-2015 may also test our vulnerability to oil markets around multiple indices-oil prices; revenue and budgets; exchange rates; and inflation. It is possible that attention may also shift to stimulating investments in the solid minerals sector, but FDI may fall in 2013-2015 as investors adjust to perceptions of higher political risk. If CBN goes ahead to increase CRR on public sector deposits, we may see some financial sector “blues” in terms of constrained liquidity within segments of the industry, but probably not of cataclysmic proportions. And if PIB remains unpassed in 2013/H1 2014, it may be sensible to consider an unbundled PIB which allows us pass less controversial elements in smaller pieces of legislation. In my view, the top three risks for 2014 will be political; oil sector vulnerabilities; and exchange rates with upside possibilities from privatization of additional power assets and refineries. Overall I see 2014 as a year with multiple levels of uncertainty-around politics and complex national scenarios, with a determined opposition ranged against a president who wants a second term and is strengthening his hold on the tools to accomplish that desire, within the context of an election that may accentuate regional and religious fault lines; continuing insecurity and sectarian violence; sustained global economic risks including low growth, unemployment, uncertain oil markets, and discussions of US tapering of quantitative easing from Q2 2014 (though it now seems clear Janet Yellin will not be aggressive in that regard); multiple domestic economic concerns around exchange rates, interest rates, inflation (in the context of increased political spending, though official budgets may be lower) and the impact of higher CRR and MPR on financial sector liquidity. GDP growth is likely to stay broadly around current levels or slightly lower.