|This lecture is about provoking informed debate about how to proactively prepare for Nigeria to be a major player in the 21st Century, and avert any doomsday scenario. I will argue that sustainable survival will depend on how urgently Nigeria reorganizes itself for a world with minimal dependence on oil and other natural resources.
My thesis here is that without realigning the incentive- sanctions regime, the talk about diversification of the economy will remain what it has been since the 1970s— just a wish!
I can almost visualize the mood of Nigeria in June 1960: ecstasy, aspirations, pride and hope that with political independence, the giant of Africa and the black race was in the making. The University of Nigeria and the Faculty also started as a revolution to herald and shepherd the new nation to the Promised Land. I hope that this Home Coming event or perhaps other events this year will provide the University and the Faculty theopportunity to review the journey so far. I am an alumnus of this Faculty as well as a retired Professor of the Faculty/University. I can therefore testify that the Faculty/University, through its teaching, research and community service, has contributed immensely to the furtherance of the Nigerian project. I urge the Faculty to formally document such contributions.
Perhaps to set the stage for a future comprehensive review by the Faculty, I wish, in this short speech, to provoke debate by raising issues around the politics of Nigeria’s underdevelopment. [Several of the issues raised in this lecture are contained in my earlier public presentations, especially the 2005 Democracy Day Lecture, a special presentation to the Presidency on the State of the Economy and the Road Ahead on June 13, 2007, and a Public lecture at Owerri to mark the Governor’s One Year in Office in 2008]. Before 1960, the political problem of the day was ‘colonialism’. Kwame Nkrumah surmised the dominant belief of the day when he argued that political independence was all that was required for economic emancipation. Am not sure how many people still believe this today.
I will argue here that the post-colonial oil boom, and the rentier, distributional politics that developed around it, have emasculated the potentials for Nigeria’s economic greatness. With unprecedented oil boom and debt relief, the economy merely grows at 6 -7% per annum. At this rate, it will not be until about 2052 before Nigeria can attain the current per capita income of South Africa. Given the 140 million population in the 2005 national census and the high annual population growth rate, Nigeria’s population will be about 161 million in 2010, and about 520 million in 2052. Thus, by the time a child born today turns 42, there will be 520 million people in Nigeria. Are we preparing a country that will cater for this number of people? Alternatively, is anyone courageous enough to talk about a population policy for Nigeria?
For the Vision 20: 2020 not to end up a huge joke, the economy needs to be growing at the rate of about 15% per annum (more than twice the current rate). The economy needs to be investing at least $60- $80 billion per annum (about 40% of current GDP and more than the total annual earnings from oil). So far, there is no prospect of that ever happening. The savings-investment rates and levels are too low to support future prosperity. Currently, the country literally consumes all the oil revenue
with little or no investment. The plan for the future is essentially a Federal Government’s plan. I do not know any state government that has made any investment commitment. The Federal Government controls barely 50% of the revenue. Thus, without a competitive and coordinated, national investment, the Federal effort will remain akin to clapping with one hand. The economy is helplessly hanging on the life support of a fragile and temporary oil boom. If oil prices were to fall below $30 per barrel tomorrow, hardly any government in Nigeria will be able to pay salaries, and per capita income will be below the level before the first oil boom in 1973.
As a nation, we sometimes selectively choose to have a short memory. We have been through this cycle before: every oil boom is treated as if it is a permanent shock, while every downturn in oil prices is treated as if it is temporary and we borrowed massively to cover the shortfall. The oil boom of the 1970s until 1981 led to unprecedented ratcheting-up of consumption: the famous Udoji Award in salary bonanza and massive employment in the public sector across the country; a 60% increase in the number of states by creating seven new states to raise the number from 12 to 19; a construction boom that was largely wasted; the first ‘jumbo loan’ in 1978 when oil prices slipped; the import armada; and the politics of the second republic that was essentially about distribution of the oil rents. While the oil boom lasted, per capita income soared up to the peak of about US$2270 in 1980. When the oil prices burst in late 1981, the Shagari administration introduced the famous ‘Austerity Measures’ to cope with the crisis. Recall the years when civil servants in most states of the federation were owed upwards of 18 months of salary. Have we forgotten the long queues to buy ‘essential commodities’? The military struck in 1983, and the Buhari-Idiagbon government retrenched about a half of the federal civil service and continued with the Austerity measures. The Babangida administration implemented the Structural Adjustment programme (SAP), and the Abacha regime modified to ‘guided liberalization’. In basic economic terms, Nigeria could not cope once oil prices burst: per capita income plunged from $2270 in 1980 to about $400 in the 1990s, with poverty incidence more than doubling from about 30% in 1980 to about 70% in the 1990s. In the entire 1990s, the economy grew at an average of 2.8%, which was just the rate of growth of the population, leaving per capita income growth to zero in the entire decade. Since 1999, God has again given Nigeria a second chance and oil prices have been on the increase since then. Again, we are back to exactly the same consumption pattern of the 1970s and the second republic. In spite of the oil boom for the last 12 years, per capita income is still just $1252. Imagine what would happen when the prices burst again!
President Obama of the United States made the urgent search for alternative energy sources a key campaign issue. With this determination of the United States and other western economies to find alternative energy sources, strategic national thinking should sound the alarm bells and declare a state of emergency to redesign the economic-social-political structure for a world beyond oil and gas dependence. Tragically, the consumption-oriented politics around oil has assumed a life of its own, and there is a certain lethargy and elite complacency that pervades the system on the assumption that it will endure.
In this lecture, we intend to argue that to make progress, the question of how to use oil and other natural resources must be put on the table, and the obfuscating legal-institutional arrangements around it/them, together with the distributional politics of the day, must be dismantled and or
reconfigured. Without this, it is difficult to see a prosperous future for Nigeria. This cannot happen with the current elite aloofness to politics. When I campaigned to be governor of Anambra, I set an agenda to ensure that after 6 – 7 years, Anambra will not depend upon oil money or the Federation Account allocation. If there would still be any such a gift from oil after seven years, Anambra would devote 100% of it to deepen its investment in infrastructure and education— as part of the strategy for Anambra to become the African Dubai- Taiwan. In spite of the agenda, I was still convinced that the incentive structure and politics around the natural resource revenue are wrong, and the unitary-federalism we run has created a consumption framework. To move the country forward, we don’t just need to get Anambra and a few states moving. We need to radically overhaul the entire incentives- sanctions regime in order to realign our politics from its current consumption-orientation to a production-driven regime. This is what will propel a new Nigeria, and move us closer to the Vision 20: 2020. Currently, neither the investment nor the growth rates needed for the Vision 20: 2020 will happen. The absorptive capacity will remain low under the current regime, and any attempt to force an investment boom will lead to a predictable waste!
This lecture is about provoking informed debate about how to proactively prepare for Nigeria to be a major player in the 21st Century, and avert any doomsday scenario. I will argue that sustainable survival will depend on how urgently Nigeria reorganizes itself for a world with minimal dependence on oil and other natural resources. My thesis here is that without realigning the incentive- sanctions regime, the talk about diversification of the economy will remain what it has been since the 1970s— just a wish!
Perhaps, by the time I finish my speech, you may understand why I have chosen to get involved in the murky waters of politics. Before I go any further, let me clarify that this is not an academic paper: it is a speech designed to provoke you to undertake the deeper academic enquiry.
I have chosen to organize the rest of the speech as follows: In the next Section, I provide a context to this speech by summarizing the current national development challenges and the drag of politics; Section III points to a possible agenda for reforms of the politics; while we conclude in Section IV.
II: The Triumph of Politics and Nigeria’s Underdevelopment
David Stockman (Director, Office of Management and Budget under President Reagan) wrote an exciting book entitled The Triumph of Politics — a damning articulation of how the Reagan economic revolution in the US failed on account of the politics of the day. One key lesson I taught my students of Policy Economics was that oftentimes, political expediency overrides economic rationality. The reality of statecraft is that there is no generally agreed Social Welfare Function (SWF) being maximized by benign, self-disinterested politicians who out of the benevolence of their heart and charity simply want to ‘help’ the society. Man, by nature, is a self-interested being. Self-interest pervades, and sometimes in conflict with ‘national’ interest. Even the most altruistic politician is still involved on daily basis with choices, which entail subjective preferences.
Unconstrained by enforceable laws and institutional arrangements for the exercise of power, a Hobesean state of nature might ensue.
As the processes for the acquisition and use of state power, politics necessarily involves continuous contestations, conflict, and compromise. With inherent conflicts of group or personal interests, bargaining and compromise are necessary features. Economists would prefer that public policy approaches the Pareto Optimality condition (whereby it is impossible to make one more person better off without making at least one person worse-off). Everyday political choices are usually different. Contending interests compete for space and dominance. The outcome is not a ‘maximizing’ but a ‘satisficing’ one. To the extent that politics is not an optimization game but a satisficing one (one which accommodates the dominant interests but not necessarily ALL interests at once), it necessarily accommodates elements of WASTE. Such ‘waste’ can take various forms— time and resources needed to ‘agree’; the ‘waste’ inherent in sometimes ‘inferior’ choices so as to maintain the political equilibrium; rents and patronage which the system dispenses not necessarily for efficiency sake but for political correctness, etc.
My view is that whether politics is destructive or developmental depends on the extent to which the bargained or ‘satisficing’ choices deviate from those that ordinarily would have optimized the society’s overall interests (however defined). Defining the ‘national interest’, like beauty, is often in the eye of the beholder. It is usual to hear people talk about government doing the ‘right thing’. The truth is that there is hardly a government that believes it is not doing the ‘right thing’. What constitutes the ‘right thing’ depends on the bargaining process and the interests that dominate. Yes, economists would readily agree that the objectives of economic policy include: rapid income growth, full employment, low inflation, and equitable income distribution. Politics begins when you want to decide on how and by whom these can be achieved. Choices are involved. Winners and losers emerge out of alternative choices. Managing the choice process in the context of conflicting interests is the domain of politics.
But politics is a dynamic game, and varies over time and space. The interests, players, and the bargaining process differ over time. Winners today lose tomorrow. Dominant interests today are replaced by others tomorrow. Dominant interests that retard the society must be challenged. That is the story of all revolutions in history. That is how and why mafia groups have been dislodged. That is how slavery, colonialism, etc were stopped. In other words, no socio-political arrangement is destiny.
Politics thus shapes, and is in turn shaped by, the structure and performance of the economy, the legal-institutional arrangements, and the development of the civil society. The extent and duration of ‘waste’ allowed by any political system depends on the economic structure and the organization of the civil society. Each system lasts in so far as the people allow it to last.
Political scientists, politicians, and analysts have different interpretations of the Nigerian political story. In this lecture, I focus on how oil rents in the post colonial Nigeria has shaped the politics of distribution and consumption and how the legal-institutional arrangements around the oil rents have assumed a life of their own, and almost creating a vicious circle of a journey without destination.
Politics in the pre and post independence Nigeria before the oil boom was essentially developmental. The regions were the building blocks of the nascent federalism. Each region was largely fiscally self-reliant based upon key agricultural products in the respective regions: palm produce in the East; cocoa in the west; and groundnut in the North. Imperfect as the federal structure was, each region paid its bills. Each region determined its own salary structure, and decided on the institutions that best served it. In the Eastern region, the University of Nigeria (with campuses in Enugu and Calabar) was built; farm settlements and palm plantations were built; public water schemes and roads were constructed; schools and the cities of Onitsha, Port Harcourt, Aba, Calabar, Enugu, etc were built. In the West, the University of Ife was built; citizens were empowered through access to education; cities were built and basic infrastructure provided. In the North, the Ahmadu Bello University, Zaria was built; schools and basic infrastructure also constructed. The point here is that the governments and politicians understood that they had to invest in the productive capacities of their regions and people as a foundation for future growth and prosperity. Industries were built. Because governments relied mostly on income taxes, accountability was relatively high.
Productive politics dominated. The umbilical cord between government and business is that government depends on thriving private businesses to provide employment and tax revenues to government. In return, the government does whatever it can to attract businesses and help them prosper.
The emergence of oil as the dominant revenue source in Nigeria, together with the institutional arrangement for sharing the rents, has changed all these. A major institutional arrangement that emerged to share and distribute the rents from oil has been the deliberate ‘creation’ of States and local government councils by the Federal Government. Ideally, federations involve the amalgamation of autonomous or semi autonomous units, with each surrendering aspects of its powers to the centre. In Nigeria, it was the opposite. The earlier federating units were the regions. Successive military governments in Nigeria divided, subdivided, and continued to subdivide the regions such that from four regions in 1965, Nigeria now has 36 States as the ‘federating units’, and 774 local government councils— all created by the Federal government. It is estimated that the demand for new states must be over 100. Soon, every village will demand to be a State.
Aside from Lagos state (understandably as Nigeria’s economic capital and which has remained largely intact from the early colonial days when it was the ‘protectorate of Lagos’), no other state is fiscally viable to the extent that it can meet its recurrent expenditures from internally generated revenue. State and local government creation was dangled and used as an instrument for elite appeasement: it was the legitimising carrot, while manipulating the population figures to maintain the assumed political balances.
The major argument for state creation is to ‘bring development closer to the people’. Examples are given of how the new state capitals have ‘developed’. Unfortunately, this argument is often repeated without much scrutiny: no counterfactuals are examined. But the economic waste inherent in the multiplicity of states can be seen through a simple illustration. Assume for the sake of discussion that each of the six geopolitical zones is a state. There would be six state ministries of education in the country, with six commissioners of education, six permanent secretaries of education, etc. Today, in
each zone, you have five, six or seven states. In sum, you now have 36 such ministries of education, 36 commissioners, and 36 permanent secretaries— doing the job that could have been done by six. We now have 36 state parliaments, 774 local government councils. The other recurrent costs are also multiplied, as there are certain fixed costs irrespective of the size of the government. Currently, most state governments spend more than 70 percent of the budget on recurrent expenditure (consumption). The implication is that in each zone, if you were to aggregate the total recurrent expenditure for running governments relative to what it should have cost, you get a sense of the resources that should have been freed up for investment in infrastructure, education and security. Our back of the envelope computation is that aggregating the states and eliminating the duplications will free up between 65- 80 percent of current expenditures for investment spending. If such investment is efficiently made, development that is close to the people would have been multiples of what it is currently.
An aspect of the state and local government creation that has distorted the politics is the requirement for consolidating revenues from oil and other sources and sharing to each tier of government, and each armed with the statutory powers to spend unconditionally. The emphasis is on ‘distribution’. Section 162 of the 1999 Constitution on public revenue, which restates the provisions in previous enactments, is metaphorically titled “Distributable pool account”. It states: “The Federation shall maintain a special account to be called ‘the Federation Account’ into which shall be paid all revenues collected by the Government of the Federation… Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the local government councils in each State on such terms and in such manner as may be prescribed by the National Assembly”.
In prescribing the formula for sharing the revenue, the National Assembly is required by Section 162 (2) to “take into account, the allocation principles especially those of population, equality of States, internal revenue generation, land mass, terrain as well as population density”. We can see why Nigeria will never have an accurate population census. To the extent that revenue sharing is tied to population, individual states will struggle to outcompete each other in the manipulation of population figures. Equality of states means that there is a base, which every State gets just for being a State. No wonder the demand for state creation is an endless quest.
Currently more than 70 percent of such Federation Account revenue comes from oil. Oil rents from an enclave sector can be likened to grants from donors abroad. The difference here is that oil rents are treated as rights and hence unconditional. Every State and local government is entitled to a share, and there is no requirement of accountability as to what you do with it. For most states and local governments, the revenue from the Federation Account is over 90 percent of the total revenue of the state. Most states and local governments merely consume the allocations in recurrent expenditures.
Nigeria has become what, for want of a better description, I call unitary-federalism. Literally everything flows from the centre. Local governments are ‘created’ from the centre; 90% of revenues come from the centre; public service throughout the country including higher educational institutions operate under unified salary schemes. A new university graduate recruited into the civil service, whether in Jigawa (the poorest state) or in Lagos, or in Abuja or in Anambra is paid about the same salary. University lecturers whether in the State or Federal Universities expect to earn the same
salaries for ‘equivalent grades’, whatever that means
A culture of entitlement around the oil rents emerged, and much of the politics is woven around the struggle for the ‘sharing’ of such rents. Labour unions endlessly demand for wage increases and resist any attempt to liberalize the pricing of petroleum products. ‘It is our God-given gifts, so why should we be asked to pay international prices’ is the familiar argument. University students insist they must have ‘free’ education even if in the end no one is getting any education. Governors and Local council chairmen withdraw huge sums (in some places amounting to 10% of the budget) as ‘security votes’. These sums, largely the Governors’ pocket money to be spent as they wish, including bribing the parliamentarians, distribution to politicians and stakeholders, have become an open sore in the political arena. Self-interested members of parliament happily approve such sums, and the Governor is not expected to account for them. Evidence abounds of some state governors simply transferring such sums into their personal coffers. , irrespective of the location and quality of the university.
Rent seeking has become full time occupation for a large segment of the most productive population. With a rentier state, people have seen that the quickest means to instant wealth is not through owning large farm estates or taking risks in manufacturing or other rigorous, risky investments. It pays more to invest in networking and rent-seeking. A large army of highly talented, skilled but unemployed ‘big men’ has emerged. Such ‘big men’ depend on outright handouts from governments/public officials to pay their bills. It is interesting that such big men/politicians are so powerful that they can really make governance unstable unless and until they are ‘settled’ appropriately2
The larger society is in denial. Examine the so-called salaries of the elected and appointed public officials. A Minister in Nigeria earns approximately $1,000 (about N150,000) per month. Does anyone in the country truly believe that any of these officers survive on these incomes? The Federal Government sold houses under the monetization policy to public servants. There is hardly any public servant whose annual salary could pay for the mortgage on the houses they bought: so how did they pay for them? The situation is worsening. As I argued this issue with colleagues in government, someone pointed out to me that political appointment was simply a means to ‘allocate offices and tables’ and what you do with the office and table depends on you: survive if you can or perish if you must! There are fundamental questions we must face as a people if we need to move forward. .
The public/citizens seem to have acquiesced: accepted it as the ‘culture’. Government does not depend on personal income tax, and only very few people pay taxes. Thus, the demand for
1 Different Universities have different criteria for promotion to various grades. Some lecturers who could not be promoted to Senior lecturer grade in some universities have been known to go to another university and were promoted to the rank of Professor. Yet, all professors are expected to earn the same salary, paid by the same Government. While the Universities have the powers to employ and promote anyone to any grade, the salary bill is sent to Abuja. So much for the university ‘autonomy’! Needless to say that most of the Universities have become ‘villagized’ in the sense of becoming avenues for employment creation for the ‘natives’ instead of global centres of excellence. Since fund distribution from the Government does not depend on any clear performance criteria such as the publications of the Faculty in international journals, employment becomes a ‘favour’, and there is hardly a search for brilliant academics to promote excellence in teaching and research.
2 There is a case of one of the godfathers in one of the States who insisted that the State Governor must be impeached because, according to him, the Governor refused to give him an adequate share of the ‘Security Vote’. The Governor actually got impeached.
accountability by the citizens is very weak. Indeed, the majority of the citizens have no idea how government gets money. They simply know that government ‘has money’ and government development programmes are almost seen as though the government is doing the people a favour. By the nature of public discourse on the performance of public officials, you can almost tell that the people seem surprised that a particular official is ‘performing’. Don’t try to get into the debate that a public official (State Governor or so) has received, say, N400 billion from the federation account but that the few roads and schools do not justify one-tenth of the amount. People would easily tell you that they are happy that at least ‘this one has done something: what if he pocketed the entire amount as some others have done?’.
The elite expect public resources to be shared to them, while the rest of the citizens literally expect their public officials to help themselves with public resources. A Governor who insists that public resources must be used exclusively for public goods is seen as being ‘wicked’, ‘tight-fisted’, and wanting to ‘eat alone’. Imagine a State Governor or major public office holder in Nigeria who finishes his tenure and goes back to his flat and drives his old Peugeot car. He would hardly find admirers in the public: he would be seen as foolish, or simply pretending. People would troop in droves to him to give them money, and no one cares from where he gets the money. The civil society is in the same mood: organizations invite public officials as chairman of launching ceremonies, and they clap even when he/she donates more than the annual salary. The public officer is adjudged a ‘kind’ man if he freely throws money about— the pressure is to accumulate and distribute!
An elder statesman drove home this point to me with what seemed an expensive joke. He said to me that public service in Nigeria carries with it a certain burden. Once you are in, the society believes you must have been corrupted. According to him, after leaving office and were a Messenger of God to come down and swear to the entire population of Nigeria that the former public officer never took advantage of his/her position to enrich him/her-self in any way, the people would be disappointed at the Messenger. Nigerians would be disappointed, according to him, because they would assume that the Messenger must have taken bribe from the former public officer and came to bear false testimony on his/her behalf. It sounded an expensive joke to me, but on a deeper reflection, I was shocked how the joke approximates reality. In other words, the morale of the joke is that in an environment of pervasive corruption, where it has become part of the ‘culture’, there is hardly an incentive to be ‘clean’. I do not believe that Nigerians are a different breed of human beings or that they are inherently corrupt. It is the oil rentier environment amplified by the permissive legal-institutional infrastructure around it that creates the corruption tents.
The foregoing analysis points to the colossal WASTE in the politics that has developed around the oil rents. Besides the corruption elements, which are colossal, we summarize the waste in terms of displacement effects on the economy as follows: one, by substituting for government revenue, the umbilical cord between government and businesses is broken and government has no incentive to promote production and growth. The politicians, unlike the ones under the regions, do not have to build industries or palm plantations for government to generate revenue. Like manner from heaven, it simply flowed. A governor of a state can afford to squeeze the industries owned by his political opponents. He does not need the tax revenue from the company. As for jobs, he could literally create any number he wanted in so far as the rents flowed. In a sense, there is no incentive to be productive,
or to actively promote production (bake the cake). Second, the easier rents provided by oil and the distributive state structures means that a large proportion of the productive population is lured out of productive activities into briefcase-carrying ‘suppliers and politicians’—rent-seeking! Three, the massive consumption involved in servicing the wasteful bureaucracies erected as distribution pipes of the oil rents means that there are little resources available for investment. Four, the real exchange rate appreciation that usually follows huge inflows of oil receipts (the so-called Dutch Disease syndrome) hurts non-oil exports and hence domestic output. It is not an accident that non-oil exports have not exceeded 5% of total exports since the 1970s.
As we ponder the above ‘wastes’, we are led to wonder whether in fact, correcting for the civil war era, the rate of growth and transformation of the regions immediately following independence was not such that Nigeria would have been much better off without the oil rents! With about $400 billion oil income since the 1970s down the drains, per capita income today is not different from what it was in 1973. In a sense, oil for Nigeria has been a curse! And the prognosis for the future does not look good except something dramatic happens.
The consequence of the destructive politics is that Nigeria is mired in vicious circles of poverty and underdevelopment: a paradox of poverty in the midst of plenty! The only other two countries in the world that at some point approximated Nigeria’s waste and plunder of the oil rents were Venezuela and Angola. Both countries are now doing better than Nigeria. Nigeria is trapped in the oil resource curse. Despite recent advances, the production structure is still largely primitive, with the volatile primary commodities (oil and agriculture) dominating production; the cost of doing business for the private sector is one of the highest in the world; power and infrastructure are decadent; return on public investment is one of the lowest in the world; half the population lives in absolute poverty; top 8 percent of the population owns about 90 percent of the wealth, making Nigeria one of the most unequal societies in the world. Despite growth in the last 7 years, per capita income is still less than half of its level in 1980 (30 years ago).
More than 50% of our population are below age 18 and yet education as the bridge to the future has completely collapsed with billions of dollars spent on Nigerian children’s education abroad. Education system is creating dynasties of poverty whereby the children of the poor are most likely to end up poor. Our system is creating three classes of Nigerians— a minority that is well educated (mostly abroad and may never return), a majority that is either mis-educated or poorly educated and those without education at all. This is a time bomb!
Urbanization rate averages about 5.3%, and urban youth unemployment poses a time bomb. Insecurity of life and property has reached alarming state with kidnapping so rampant that the elite and its productive capabilities (capital and skills) in the South East are on the run in exile to Abuja and Lagos. Evidently, there is serious doubt that the Federal Government alone can fund security with the current fiscal structure.
Africa’s (Nigeria’s) non-land, private wealth abroad is estimated at about 40%, and we also believe that the at least 40% of the most talented and skilled manpower reside outside the region. Nigeria alone is said to have about 17 million Diasporas of which over 20,000 medical doctors live in the USA alone.
At the national level, we have designed an expensive bicameral legislature with about 469 members and costing about $1 billion in direct and ‘indirect’ costs annually to run (higher than the national budget of about half African countries). At the states and local governments, there is the phenomenon of executive co-optation and the Executive largely reduces assimilation of the parliaments and oversight functions to outright buy-outs. Distribution and consumption is the name of the game!
Our constitution is grossly defective in respect of economic management. It gives the nominal power to manage national economy to the federal government but says nothing about the fiscal responsibilities. How can you manage the macro economy without fiscal powers? The Constitutional provision to share the revenues standing in the Federation Account means that savings of oil rents is not possible (except if all the tiers of government agree, or if individual states decide to save from their share). The Constitution also makes state governors ‘chief security officers’ of their states and yet they cannot take responsibility for security in their states. The police force belongs only to the Federal Government, which does not have the fiscal resources to police the entire country.
Public finance is the boldest testimony of the rentier, distributional politics. An example with the Federal budget illustrates the point. In 2003, with benchmark oil prices at $25, and external debt at over $34 billion, and external reserves at barely $7 billion, the recurrent expenditure of the Federal Government was just about the size of the total revenues. I was alarmed as the Chief Economic Adviser to the President. The FGN embarked on the monetization policy and public sector reforms to rationalize spending; also the Due Process office was activated to eliminate waste and increase the efficiency of public procurement. Nigeria had since secured external debt relief and external debt down to less than $4 billion. As oil prices increased, we rapidly built up reserves and by 2007, Excess crude account had almost $20 billion. Now in 2010, the Excess Crude account is almost empty; oil prices have, on the average been above $60 in the last three years, and oil output has increased due to the cessation of hostilities in the Niger Delta. With benchmark oil price at $67 in the 2010 budget, the size of the recurrent expenditure, plus debt servicing is almost equal to the estimated revenues, leaving zero for capital expenditure. The size of the budget deficit in 2010 is about the size of the capital budget— exactly where we were in 2003! The bad news is that while oil prices are rising, and we are not saving, we are also accumulating public debt (internal and external) at highly unsustainable rate. Domestic debt is growing at an alarming rate (by both Federal and State Governments). God forbid, but if oil prices crash dramatically tomorrow, massive defaults cannot be ruled out.
The summary of the foregoing is that the economy is hanging on a life support of a temporary oil price boom. The savings- investment levels are too low to carry the economy forward. If oil prices were to crash below $30 per barrel tomorrow, most governments in Nigeria, including the Federal Government would not be able to pay salaries, and Nigeria would on a per capita basis, be poorer than it was before the oil boom in 1973.
III: The Agenda for Developmental Politics
Nigeria is now an evolving democracy. At least, we hold periodic election-like events3
Once a country has a democratic regime, its level of economic development has a very strong effect on the probability that democracy will survive… Democracy can be expected to last an average of about 8.5 years in a country with per capita income under $1000 per annum; 16 years in one with income between $1000 and $2000; 33 years between $2000 and $4000 and 100 years between $4000 and $6000…. Above $6000 democracies are impregnable and can be expected to live forever. No democratic system has fallen in a country where per capita income exceeds $6055. . In the light of the analysis in the preceding sections, will the democracy last? Prezeworski, etal (1996) has a startling insight on one area to worry about:
We need to emphasise the caveat that the result applies on the ‘average’. It is not destiny. Nonetheless, it has a powerful message.
Our per capita income was US$ 1252 in 2009. If the prediction of this study is right, the question is how to ensure that our democracy endures beyond 16 years. At the current per capita income, if the economy continues to grow at the average of the last three years, it will not be until 2025 before Nigeria attains per capita income level of $2000, and 2048 before it reaches the $4000 mark. The big ‘IF’ here is the fortune of oil prices. If the prices burst soon, the economy certainly will burst. The point here is that it depends on what happens to the economy from now on.
David Stockman showed that politics often triumphs. But we also know that sound economics is excellent politics, since there can be no sustainable politics without a sound economy! In more mature democracies, hardly any leader has been re-elected into office at a time of economic difficulties, and conversely, leaders who preside over a booming economy hardly lose elections. There is thus a bi-directional causation between politics and the economy. Nigeria currently is mired in a vicious circle of bad politics, bad economy, and the circle continues. The challenge is therefore a search for the break-in point, so as to engineer a new dynamics of virtuous circle.
Our hypothesis is that for the Nigerian economy to be transformed rapidly for the sustenance of democracy, its politics must change. Changing its politics will require an understanding by the political class that the current environment is not sustainable and that there is imminent risk of systemic failure.
Make no mistake about it, despite the litany of challenges outlined in Section II, Nigeria has abundant growth reserves which if mobilized and deployed effectively, can unleash it as Africa’s China: the largest economy in Africa and perhaps one of the top 10 in the world in the shortest possible time. Only 40% of the arable land is under cultivation; a large proportion of the educated youths are either unemployed or underemployed or misemployed; much of the natural resources— oil, gas, bitumen, limestone, iron ore, columbite, gold, coal, gypsum, etc remain untapped; gross capacity underutilization in most sectors; a youthful population (more than 50% under 18) and potential future workforce; about 17 million largely skilled Diasporas with remittances in billions of dollars per annum with potentials for skill/technology transfer. With these potentials, and oil prices remaining above $60 per barrel on average for the past three years, there is no reason why Nigeria should not be growing at double digit. Its politics holds it down!
3 A US foreign diplomat is quoted as saying that Nigeria holds ‘election-like events’. To the extent that our electoral process is still a sham, such a description is apt in many ways. Each successive election is worse than the previous ones.
For the Vision 20: 2020 not to end up as an empty sloganeering, the economy has to be growing annually at the rate of 15 per cent or more. To achieve this, Nigeria must unleash a productive investment boom and competition/revolution in most sectors. Contrast this requirement with the current politics, which is consumption-oriented, rent-seeking and distributional (cake-sharing) with only scant sloganeering around the politics of production (cake-baking) required to move Nigeria forward. Politics generally is not dominated by Nigeria’s first eleven. Most of the productive elite (as opposed to the parasitic elite) either loathe politics or are shoved aside by the system, and the entry fee for their admission increases by the day. As things are, it is those same people who benefit immensely from the current order who would be expected to change it. This is the paradox! To move forward, the debate must go beyond the confines of political parlours to the market place occupied by the citizenry.
As I argued elsewhere, “for sustainable democracy, fundamental changes are required in the Constitution, the electoral system, the fiscal federalism, as well as a gamut of legal-institutional reforms that are developmental and capable of promoting private enterprise and competition” (Soludo, 2005: 11). The emphasis is to orchestrate a new politics that is aimed at cake-baking rather than cake sharing, one which aims to mobilize the creative energies of Nigerians and their endowed resources to unleash one of the economic miracles of the 21st Century.
To deliberately orchestrate a new politics that will unleash the required new economy, urgent changes are required in a few major areas.
(a) Dealing with the oil curse and its destructive politics
(Consolidation of states into six fiscally viable regions and reconstruction of fiscal federalism to ensure true, developmental federal structure)
The starting point in reclaiming and re-inventing project Nigeria is to squarely admit that oil and the manner we have designed to utilize it have constituted a stumbling block to Nigeria’s progress. In Section II, we identified the four channels through which oil and its cake-sharing politics has held Nigeria down. We must therefore begin by breaking down the institutional arrangements around oil and reconstructing Nigeria’s political map.
The key principle is to ensure a true federal structure, with each of the federating units being fiscally viable as to be able to fund its recurrent expenditures, and provide some basic infrastructure on its own without recourse to the centre. The current six zonal structure invented by Dr. Alex Ekwueme is perhaps a good starting point, with perhaps Lagos, Port Harcourt and Abuja as special territories. The point is that we need to consolidate the current unviable entities called states that helplessly depend on Abuja even to pay the salaries of clerks into fiscally and economically viable regions4
4 No doubt the process of consolidation of states will involve short-run transition costs, especially as wasteful, duplicated bureaucracies are scrapped. The boom in economic activities that will follow is such that the medium to long term benefits will dominate. Our federalism will at least be productive and sustainable. . We could end up with six regions, with Lagos, PH and Abuja as special territories (Nigeria’s
economic and political capitals)
Another major institutional dismantling is to scrap the local governments arbitrarily created by successive military governments. At least, local government councils should not receive funds directly from the centre. It should be up to each region to create as many local institutions (local governments or so) appropriate to its own development. It should be up to region A or so to create 1000 states/provinces or local governments provided it can fund them. . The proposed sovereign national conference, although largely misunderstood, would have been a good platform for negotiations. Whatever the platform— be it a constitutional conference, or constitutional amendment by the national Assembly, or whatever— it must be understood that Nigeria cannot develop on a sustainable basis without restoring the umbilical cord between government and business (private sector) thus bringing back competition among the regions to create wealth. When government revenue depends on whether or not private businesses thrive, it will become the primary business of government to ensure that businesses survive and boom. Currently, there is no such an incentive and Nigeria cannot go forward without it. The talk about private sector-led economy will continue to be much of a ‘talk’ until there is an incentive for governments to be interested in growing businesses. Citizens’ participation and demand for accountability increases when government depends on them for revenue. Furthermore, the aggregation will eliminate the unbelievable waste and duplications in bureaucracies and free up resources needed for investment.
As should be expected in any true federal structure, the regions should be able to maintain regional police force to complement the federal police. We must debate local policing, and therefore encourage competition among units on this front. Some regions might have more efficient policing mechanisms than others. Currently, state governors are the ‘chief security officers’ of their respective states but without ‘control’ over the police force. No governor today can run an election promising to fight armed crimes in the state. Without security of life and property, no sustained private investment boom can be expected in any state. But state police that helplessly depends on how much of the federation account comes the next month is a joke. Regions must largely fund their local police. In some regions, local government or provincial police force (depending on the laws of the region) may be allowed, and depending on how much insecurity is an issue for them. The usual argument against state police is that some state governors would abuse and use them as thugs against their political opponents. This argument is simply playing the ostrich. We cannot be afraid of death and end up committing suicide. Every institutional arrangement is subject to abuse. There are many instances where the federal police has been brazenly abused and used by the federal government against state governments or politicians perceived as opponents. What is required are appropriate safeguards and checks and balances vis-a-vis the federal police and also hope that the courts will be alive to their responsibilities.
5 Fiscal viability is the key issue. If any currently existing state insists on existing as a region, it may be allowed to do so provided it should not receive any funds from the Federation Account. This is a debatable point. One point of view is that states should not have a choice as to whether to belong to the region or not, irrespective of its level of resources. This will be especially so for oil producing societies where some local governments would even prefer to become regions (Nigeria’s own Kuwait) simply because of the oil resource endowment.
Under the new structure, each region should develop at its own pace, and competitive regionalism will accelerate the pace of development. Each region will set its own salary scales and conditions of service depending on its own revenue profiles, etc. You cannot expect a worker in Lagos or Port Harcourt to earn the same salary as in Taraba or Jigawa.
Economies of scale resulting from the consolidation of states will ensure, and the savings from the wasteful duplications of bureaucracies will create an infrastructure investment boom. I look forward to seeing one or two regions becoming bigger than the current Nigerian economy in the next five years. I look forward to seeing regional interconnected rail lines. Private sector-led regional power plants and water schemes will make sense, etc.
A major issue in the reconstruction is to debate a new fiscal federalism that is developmental. Oil revenues are currently treated as unconditional grants, and the global experience is that such aid (like welfare system without individual responsibility) has left most of the potential beneficiaries helplessly dependent and the society worse-off. Oil money must be treated as conditional grants. Unless the sense of competition returns among the component units, it is difficult to see how entrepreneurial policymakers will emerge and how new grounds would be broken. We need to debate how the federal government should be funded on a sustainable basis, and the kinds of transfers to distressed areas. The starting point is to seriously review responsibilities on the exclusive, concurrent, and residual lists in the Constitution. We also need to review the provisions of the Constitution that assign the responsibility of managing the national economy to the Federal Government but without fiscal powers. The federal structure needs radical overhaul. The federal government currently carries dozens of parastatals/agencies, whose functions overlap and with questions as to their contributions to the national pie. Quite frankly, once we review the items on the concurrent and exclusive lists in the Constitution to ensure an operationally efficient and effective Federal Government, it might be difficult to justify more than ten ministries at the Federal level. Nigeria also needs to seriously debate the logic of the bicameral legislature at the federal level with approximately 469 members. It will be an interesting study to examine the efficiency and effectiveness of the bicameral chambers relative to the whopping cost. If we end up with six regions, I am yet to be persuaded that we need more than 150 members of a unicameral national assembly.
In thinking about the new political map, we assume that oil rents and the revenues in the Federation Account are quarantined and not available for distribution anymore. Certainly, we need to debate the devolution of revenue powers to the regions. The current structure is too much of a unitary than a federal system. A central issue will pertain to how we treat revenues from natural resources (oil, gas, etc). What will be the redefinition of the derivation principle? The negotiation process will lead to an acceptable agreement. As a starting point, we need to agree that derivation should not be less than one-third (33.33%) of the revenue. The federal government should be entitled to say, 45% of the rent, while the rest (21.67%) should be paid into the Federation Account. With this, the current clumsy and highly bureaucratic arrangement of having Niger Delta Ministry, NDDC, etc — all managed by Abuja, will be scrapped. We need a dynamic model for dealing with natural resources: other regions may discover other natural resources tomorrow.
What to do with, and how to manage, the revenue in the Federation Account will be a very important issue. An important principle will be to abolish the entitlement mentality. Oil, gas and other natural resources are exhaustible gifts bequeathed to present and future generations of Nigerians. What we (the present generation) are doing is to simply squander/consume the rents without leaving much behind. There are several models on how to productively utilize rents from such resources. One possibility is for them to be used only to create ‘capacity for future wealth’. For example, we may agree that rents from natural resources be deployed exclusively to augment spending in three major areas: Security, infrastructure (including power) and education! The sharing of the Federation Account to the regions and Territories should be on conditional terms for monitorable programmes (such as the three areas suggested above). Fiscal Responsibility should be enshrined in the Constitution. We need fiscal decentralization with coordination mechanisms enshrined in the Constitution. For example, a region must be spending no more than 60 percent of its own revenue on recurrent expenditure to qualify to receive grants from the Federation Account. The logic is that such grant should be ‘additional’, and not substitute for the internal revenue effort. Grants from the centre must only supplement, not substitute for, the regional investment in the specified sectors. In other words, the grants are to be competed and accounted for; and the revenue-grants authority to be made up of men and women of integrity and capacity.
One major issue currently on the policy front burner is what to do with ‘Excess Crude Account’ or the transition to the ‘Sovereign Wealth Fund’ (SWF). This model imitates what happens in some oil producing countries. However, we suggest that such makes a great deal of sense under the current system of plunder and waste. At least, something is SAVED, however transient! Once we re-construct the system into a responsible federalism, there are alternative savings-investment models that are possible. Nigeria is a capital deficient country, and with appropriate institutional reforms, the absorptive capacity can also be very high.
(b) Return of Ideology and Issues-based politics
Ideologies need to return to the discourse, especially once the oil curse is exorcised from the body politics. Our democratic politics has degenerated rather than advanced. In the second republic, the five political parties (NPN, UPN, NPP, PRP, and GNPP) had recognisable and differentiable ideologies and manifestoes. Today, the difference between parties is the individuals that populate them. For better or for worse, the PDP is the dominant political party6
6 I am not sure how many members of the PDP can make a few sentences as to what the party stands for, and how it is different from others. Nigeria’s opposition is within the PDP itself. I often joke that an interesting comedy will be to line up about 10 elected officers on the platform of PDP and without notice ask each of them (in isolated cabins) what the ideology and manifesto of PDP are. After the separate interviews, and you piece the different clips together, the contradictions and incoherence will shock the listeners. . The opposition seems much worse, with the only difference being that they are not PDP. Most of them started off as PDP members, and offer nothing radically different either in ideology or programmes. In the second republic, we saw all the UPN states implement the party’s four cardinal programmes including free education at all levels, free medical care, etc. We saw the NPN dedicated to their programmes on agriculture (Shagari’s Green Revolution) and housing (which are advertised even in the party’s
With the fraudulent electoral system and politics as simply a quest to grab and distribute the oil rents, ideology had no place. Most candidates hardly even think through what they would want to offer the people except the general phrases of promises of a ‘good life’—power, security, education, health, roads, water supply, housing, etc. Some hire consultants who prepare glossy ‘programmes’ that promise Eldorado, without any slightest idea of what it would cost and how and from where the money would come. Some people simply get elected, and look out for proposals on what to do. Not anymore! Today, the only thing holding people together in a political party is simply a convenient platform to grab power.
Political parties and candidates need to clearly articulate their ideologies and programmes, and tell the electorates what they want to do (targets and results possibly in measurable forms), how they intend to achieve it, how much it will cost and how to finance it! This should be the benchmark litmus test for each candidate’s programmes. I recall that in 1979, a key issue was that Obafemi Awolowo (Presidential candidate of the UPN) was rigorously queried as to how he would fund his promises of free education at all levels and free health care. He showed how he would cut waste in government consumption, and drew the nation’s attention to how much the tea offered in various government offices cost the national treasury. The point here is that we need political leaders who have clear beliefs and principles and have clearly articulated and costed programmes as basis for their election. .
c) Electoral Reforms and the Party System
The good news is that there is a national consensus that electoral reforms are key to the endurance of our democracy. The popular view on the street is that the present Independent National Electoral Commission (INEC) has conducted some of the worst elections in Nigeria’s history. We cannot continue this way. Only an electoral reform where only votes count and all votes are counted will guarantee internal democracy within the political parties. Where people’s votes do not count in electoral victories, party tickets are considered personal favours by the leadership. Where votes count, you insist on presenting candidates who are ‘electable’. It is a two-way street! We must openly debate what voting system can guarantee free and fair elections. My view is that Nigeria should not be treated as a homogenous entity. In some places, modified ‘Option A4’— the open queuing system might work. The issue is that we need to debate it.
Another tricky issue is the number of political parties that should contest elections in Nigeria. The issue of the party system must also synchronize with the new regionalism. Would regional parties be allowed in Nigeria? If so, what should be the limits of such parties? For the presidential elections,
7 As an undergraduate and chairman of the student chapter of the NPN at UNN, and later the old Anambra State, I had a hard time engaging fellow students on the ideological foundations of the party largely seen as feudalistic and conservative in an era when it was fashionable to be a Marxist apologist on campus. I engaged the NPP members and their neo-welfarist ideology; the PRP and its democratic humanism; and UPN with its scientific socialism. At least, even students debated the internal coherence of alternative ideologies, and politicians who cross-carpeted from one party of extreme ideology to another were considered unprincipled. Even during the Third Republic we had the two party system (SDP and NRC), supposedly distinguished by their ideological leanings — ‘one a little to the left, and the other a little to the right’!
8 I have run into dozens of public office seekers at the Executive levels who had no idea about the size of the economies of the States they aspire to govern; the level of unemployment, poverty, infrastructure deficiencies and requirements, funding requirements for their programmes and sources, etc. In other words, they did not know anything about the baseline conditions of the societies they sought to change. How would they know if progress was being made or not?
should we allow more than two parties? Democracy is about choices, and one point of view is that we should allow as many political parties as possible. There is no problem with this provided we think through how such is to be paid for, and the net contribution to the development of our democratic practices of electoral competition. My view is that currently, we hardly have serious electoral competition, especially at the Presidential level. With the dominance of the PDP, once its presidential candidate emerges, there is every probability that such a candidate will win in a free and fair election. The opposition is fragmented, and the electoral arithmetic favours the PDP. To ensure real electoral contest and effective choices, it may be necessary that we go back to the two party system or provide incentive for the evolution of such. There is something to learn from the Ghanaian experience.
We don’t need to outlaw other parties. A party could exist for years and not field candidates. It could also field candidates for elections but should not receive funding from Government unless it secures up to 10 percent of members of the National Assembly. Independent candidates may be allowed but under very stringent conditions, otherwise, you may have situations of hundreds of candidates vying for a particular position. The Anambra experience has some lessons.
(d) Get Involved: Philosophers also need to become kings!
A pertinent question is who will bail the cat? Paradoxically, it is the current players in the political terrain, and perhaps even the beneficiaries of the current order who would be expected to change it. A Constitution of the Federal Republic of Nigeria already exists, and this needs to be fundamentally amended. Under the current power relations, a coalition of elected governors is the most dominant political force in the country. To amend the Constitution, you require not only the National Assembly but also the concurrence of at least two-thirds of the States’ Houses of Assemby (at least 24 out of 36 States). The governors also largely exert much influence on their elected members of the national assembly. But how would the governors willingly agree to a new political structure, which in effect largely curtails or eliminates much of their powers? Our sense is that the issues need to become national issues: a bargaining process could help to craft a win-win outcome.
One often hears that politicians everywhere are the same. Hear what Stockman (p.14) had to say about the US politicians:
“The fact is, politicians can be a menace. They never stop inventing illicit enterprises of government that bleed the national economy. Their social uplift and pork barrel is wasteful; it reduces our collective welfare and wealth. The politicians rarely look ahead or around. Two years and one Congressional District is the scope of their horizon.
There is only one thing worse, and that is ideological hubris. It is the assumption that the world can be made better by being remade overnight. It is the false belief that in a capitalist democracy we can peer deep into the veil of the future and chain the ship of state to an exacting blueprint. It can’t be done. It shouldn’t have been tried”.
Since we can’t design a blueprint for politicians of every cycle to implement (taking politics out of policy), the only way for sustainable productive politics is to continuously have ‘good’ people in the arena. Only the continuous supply of talented men and women with character will ensure the protection of good institutions and continuously refine existing or invent new ones to propel the ship of the state.
In more advanced societies, the most talented citizens are mostly in the private sector where the reward is highest. Democracy thrives mostly in middle income-dominated and educated societies. In poorer societies, the basic institutions of the state and even the private sector have to be ‘created’ and ‘built’ by the state. This requires a high level of skills, commitment, courage, character and leadership of the politicians. Unfortunately these qualities are scarce in such environments. Individuals can make a difference but institutions make the enduring difference. However, the quality of institutions depends on the quality of those who operate them. But those with ‘helicopter’ abilities and political suaveness are few. The marginal contribution of each skilled fellow to statecraft is highest in poorer environments. Thus, the abdication of each talent and or indifference of the educated elite to politics is a crime against the society and people.
Currently in Nigeria, politics and public service are, in a sense, criminalized. To describe someone as a ‘politician’ is not a compliment. It evokes several perjorative emotions. For some, the politician is a liar, a corrupt person, a thug or simply a dishonourable person9
We must liken the stage of the struggle to liberate Nigeria from the clutches of underdevelopment to the struggle against colonialism. Literally every member of the educated class became part of that political struggle for decolonisation. Students were very active. We are at a similar junction today. Unless and until there is a critical mass of the productive elite involved, and a vibrant civil society . My experience so far tells me that Nigeria is in deep trouble. Even when I joined Government in 2003 as the Chief Economic Adviser to the President, not a few people were concerned that such a ‘decent scholar like you’ should join government: don’t you think ‘they’ will rubbish you? When I indicated interest to contest an election to govern Anambra State, which everyone agreed is Nigeria’s textbook example of opportunities squandered, there was an uproar. Everywhere I went, dozens of questions were asked: why should you ‘stoop’ so low to Anambra? Why Anambra of all places? Can you cope with the thugs that have taken over the state?, etc. Many were indeed surprised that I could become the candidate of my political party in spite of the army of opposition. My reading of all the concerns was that people not only agreed that things were too bad, but that they had in fact given up any hope of redemption. Otherwise, the obvious contradiction was palpable. Such is the story of much of the productive elite and political participation. The cost of entry is too high for the average professional, and the possible damage to the reputation is too high. For most people therefore, the personal cost of participation is prohibitive. The question remains: who will bail the cat? If everyone wrings off his hands in despair, it is difficult to see what magic will uplift the country from the mess.
9 It is common in the wider civil society that when someone stands up in a meeting and lies or double-speaks, people will excuse him by pointing out that ‘he is a politician’. The rest of the people might remind him that the issue at hand is a serious matter, and admonishing him to ‘stop playing politics here’. This is the level of debasement. In some parts of Nigeria, it is seen as a profession for the street urchins, thugs, hooligans and for the unemployed. It is believed to be too rough for the highly educated and decent members of the society.
unleashed, Nigeria cannot be rescued. Nigeria must have a strategy to attract and retain talents within the body politics. Even more pointedly, Nigeria must have a strategy for youth involvement in our body politics. Nigerian students must re-awaken. I remember the early 1960s when Nigerian students protested the Nigeria-Anglo-Defence Pact, and it was stopped. We must rebuild such a national consciousness.
Lee Kuan Yew (Singapore’s Prime Minister for 31 years and the man who built Singapore into a modern advanced economy) wrote a 729 paged book entitled From Third World to First: The Singapore Story: 1965- 2000. Below we quote him extensively on the lessons of experience of Singapore on issues relating to the nexus between talent and good governance. According to him (p.135) “It had taken me some time to see the obvious, that talent is a country’s most precious asset”. “After several years in government, I realized that the more talented people I had as ministers, administrators, and professionals, the more effective my policies were, and the better the results”(p.136).
In Chapter 41 of the book, Lee Kuan Yew deals with ‘Passing the Baton’. Here he summarizes his major lessons and how they deliberately groomed talented people to succeed his generation. On his experience, he observed:
“My experience of developments in Asia has led me to conclude that we need good people to have good government. However good the system of government, bad leaders will bring harm to their people. On the other hand, I have seen several societies well-governed in spite of poor systems of government, because good, strong leaders were in charge. I have also seen so many of the over 80 constitutions drafted by Britain and France for their former colonies come to grief, and not because of flaws in the constitutions. It was simply that the preconditions for a democratic system of government did not exist. None of these countries had a civic society with an educated electorate…“The single decisive factor that made for Singapore’s development was the ability of its ministers and the high quality of the civil servants who supported them” (p.663-4).
Mr. Yew documents how he and his colleagues deliberately scouted for talents:
My colleagues and I had started to search for younger men as possible successors in the 1960s. We could not find them among the political activists who joined the PAP, so we scouted for able, dynamic, dependable, and hard-driving people wherever they were to be found. In the 1968 general election, we fielded several Ph.D.s, bright minds, teachers at the universities, professionals including lawyers, doctors, and even top administrators as candidates. In by-elections in 1970 and 1972, we fielded several more. We soon discovered that they needed to have other qualities besides a disciplined mind able to marshal facts and figures, write a thesis for a Ph.D., or be a professional. Leadership is more than just ability. It is a combination of courage, determination, commitment, character, and ability that makes people willing to follow a leader… p.664
To do this I had to find and get into office a group of men to provide Singapore with effective and creative leadership. Had I left it to chance, depending on activists coming forward to join us, I would never have succeeded. We set out to recruit the best into government. The problem was to persuade them to enter politics, get themselves elected, and learn how to move and win people over to their side…. Successful, capable professionals and executives are not natural political leaders, able to
argue, cajole, and demolish the arguments of opponents at mass rallies, on television, and in Parliament; p.665
Beside high helicopter quality, they needed to have political sense and the temperament to establish rapport with grassroots leaders. Those with these extra qualities I took into cabinet…. Nursing a constituency and attending official functions, plus a lower income than they could earn outside, made political office unattractive. Most of all, the person must have that extra quality, the capacity to work with people and persuade them to support his policies p.671
On his experiences as politician, he had the following to say in the Epilogue:
Had we known how complex and difficult the problems that lay ahead were, we would never have gone into politics with the high spirits, enthusiasm, and idealism of the 1950s p.685
I learned to ignore criticism and advice from experts and quasi-experts, especially academics in the social and political sciences. They have pet theories on how a society should develop to approximate their ideal…. p.688
Would I have been a different person if I had remained a lawyer and not gone into politics? My work experience would have been more limited and my horizons narrower. In politics I had to range over the whole gamut of the problems of human society…My responsibilities gave me a wide perspective of human societies and a worldview that a lawyer would not have p.688.
The above have important lessons for Nigeria. However, these lessons only become relevant in a context where you have entrepreneurial leaders— those who are losing sleep on how to create wealth and prosperity. You don’t need much talent and skills to distribute under our current system. What talent or skills does one need to allocate oil blocks, or to share allocations from the Federation Account? If one were to be concerned about how to create an international financial centre, a world class port system, etc, then there is urgent need for talent. But if these do not matter because oil rents provide easy money, then just about anybody can do the job. Such is the case today in Nigeria.
Will this new Nigeria happen? Most people are wont to dismiss the proposals as difficult, not necessarily because they are not the needed changes but ostensibly as a result of the presumed opposition by the powerful beneficiaries of the current system. My response is that no condition is permanent. History teaches that one can only delay but not stop an idea whose time has come. Who could have imagined the fall of the Berlin Wall and the unification of Eastern and Western Germany? How many believed that the citizens of Europe would have willingly surrendered their national currencies and adopted the common currency, the Euro, and the advances towards a more unified, almost a confederal Europe? When necessity foists a certain imperative, we can only ignore it to our peril. In ten years’ time, 2020, there will be about 212 million people in Nigeria, and about 520 million in 2052. Certainly, the current system will be catastrophic for them. The only option on the table is a dramatic CHANGE NOW. Oil and other natural resources must be regarded as grants from God to build a sustainable future for Nigeria. The word for that future today is INVESTMENT. Oil money is not enough for the level of investment required: we must therefore not waste even a cent of that on current consumption.
Nigeria is at a crossroad. It is currently mired in a vicious circle of underdevelopment occasioned dominantly by the oil curse and the destructive institutions and rentier politics that have emasculated any chances of a prosperous future. Errors do become cumulative and often become a way of life. The unitary-federalism, with the drainpipes in terms of arbitrarily ‘created’ 36 unviable states and 774 local governments, together with the wasteful bureaucracies around them have orchestrated a brand of politics that is distribution-consumption oriented. Production and growth are an anathema to the current environment and only happen by accidents. The tragedy is that the current ‘system’ has assumed a life of its own, and indeed, not many people realize that it is a blind ally leading to nowhere. The economy today is hanging on a life support of a temporary oil price boom. Who will bail the cat? Paradoxically, it is the same operators and even beneficiaries of the current system that will be required to change it. Will they? Only history will tell. But history teaches us that those who make peaceful change impossible make violent change inevitable.
To move forward, a new politics weaned of the natural resource curse is imperative. A new incentive framework, driven by a new institutional-legal reconstruction of the political map of Nigeria is the only way forward. We propose the consolidation of the 36 states into six regions (with Abuja, Port Harcourt and Lagos as special territories); a new fiscal federalism with derivation principle accounting for at least 33 percent; distribution of Federation Account as ‘conditional’ rather than unconditional grants; regional police force to complement the federal police; scrapping of current local governments and allowing the regions create the provinces/local governments that they can fund; orchestration of a two party system to ensure serious electoral competition; re-invention of ideologies and manifestoes in the politics, etc. For the new politics to take root, everyone must be involved! In particular, elite indifference is not an option. The change will not come through the normal course of present day politics: it must be engineered! Let the debate continue!
Thank you for listening.