Nigeria's Tragic Political Failure But Greater Economic Potential

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Nigeria's Tragic Political Failure But Greater Economic Potential: Nigerian People Must Liberate Their Land
http://www.forbes.com/sites/dougban...ial-nigerian-people-must-liberate-their-land/

I stepped into the elevator to head down for dinner. It jerked to a stop and went silent, leaving me in darkness. The finest hotel in Nigeria’s Houston, the hub of the country’s large and profitable oil industry, could not escape periodic power outages. A few very long seconds later brightness returned as the hotel’s emergency generator kicked in and the elevator continued its journey.
My experience in the capital of Abuja was no different. I interviewed Orji Uzor Kalu, a former governor and wealthy businessman, at his home in an exclusive neighborhood next to the president’s residence. Public power went out while I was there. More than once.

The electricity came back on immediately since Kalu also has a generator. As do other well-off Nigerians, top officials, major hotels, and large businesses. But most people are not so lucky. Africa’s most populous nation with massive oil reserves cannot keep the lights on for its citizens.

Nigeria, with a population of 177 million, is a potential powerhouse. People speak English and universities are full of students hoping for jobs. Its streets pulse with energy. People are busy and entrepreneurial.

Yet modern office buildings shadow shanty-towns. Luxury hotels abut overgrown lots. The countryside is a sea of poverty: deteriorating roads with rusted wrecks at the side, rutted side streets of dirt and mud, subsistence farms providing marginal livelihoods, shacks and lean-tos for homes and businesses.

Nearly a hundred million people live in poverty, earning less than a dollar a day. The 60 percent poverty rate of 2010 was up from 52 percent six years before. Illiteracy and chronic nutrition are pervasive, and highest in the Islamic north. A quarter of the population and one-third of adults under 25 are out of work.

In mid-March the government announced 5,000 openings in the immigration department. Some 65,000 people turned up to apply at Abuja’s sports stadium, creating a traffic jam which snared passing vehicles, including mine. Inside seven job hopefuls died in a human stampede. Tens of thousands more applied around the country, where another eight people died in similar human crushes.

Even optimistic Nigerians who see progress admit much more must be done. Kalu, who is considering a second presidential run, emphasized that the “potential of the country is very high” but acknowledged the enormous challenges.

When asked about his priorities he pointed to electricity: “Without energy we are not going to develop.” The entire country has about as much electricity as the Washington, D.C. metro area. Barely 80 million people have access even to intermittent power. The government has begun to privatize the industry, which Kalu supports, but in his view both the private and public sectors need to improve. He would look to America and Europe for guidance: “We should tackle it head on with the help of those who have done it before.”

Even more serious is the problem of security. When I arrived in Nigeria with several journalists for a tour arranged by Kalu’s SLOK Holding Co., we were met by a guide, driver, and two national policemen armed with AK-47s. When we convoyed with Kalu the guard multiplied. He acknowledged that “without a police escort you cannot move.” A few areas, such as the capital of Abuja, were safe, “but you cannot move elsewhere.”

My hotels were surrounded by high walls and gates manned by armed security personnel, who checked cars for bombs. The entrances employed metal detectors. Security guards wandered the grounds and even sat by the elevators on each floor overnight. In Port Harcourt, where foreign expatriates have been targeted by local militants, my hotel designated emergency “muster points” for gathering in an emergency. Guests were reminded that their “escorts” could not bring firearms into the hotel.

In fact, the Niger Delta, host to manifold energy and maritime operations, is particularly risky. Christopher Odili of Brawal Oil Services said residents resent northern domination and “see money coming out of the water and the land and not getting much of it.” As a result, employees are kidnapped, ships are hijacked, and facilities are attacked.

In response, businesses routinely employ armed guards. The government created a Joint Task Force to coordinate security strategies and provided payments to militants accepting an amnesty. Companies commonly engage in “social responsibility,” that is, underwrite local programs. One businessman said that “we do projects since we want them to be happy to see us.” He privately acknowledged that his firm spread cash locally to buy protection. He said you’ve got “to go to every community” or else face attack.

The potential for violence hinders economic growth. Security is costly and diverts resources from other investments. An editor at The New Telegraph newspaper complained that it was dangerous to send trucks out at night to deliver the next day’s edition.

Kalu said “internal security is critical,” since otherwise “I don’t know how we can develop. We need internal security so citizens and non-citizens can move more freely.” He advocated security measures so “that violence is deterred at all costs.”

Moreover, in places like the Delta, where people “feel that their homes, their environments have been the victims of unjust degradation,” said Kalu, grievances must be addressed. For instance, “measures must be taken to ensure that business operations are more accountably mutually-beneficial.” In his view “A greater understanding of the needs and wants of average citizens” was necessary to reduce violence.

Even worse has been communal violence and burgeoning Islamic terrorism, which together have cost more than 18,000 lives since 1999. “We have not made any progress in this area,” worried Kalu, who viewed current violence as a natural continuation of the past. “In 1966 they just were killing Igbos and other southerners. Now there is no limit. They are killing everybody.”

The country is almost evenly divided between Christian (south) and Muslim (north), leading to complicated political accommodations. A dozen Islamic-majority states have imposed sharia, sparking protests by Christians. There and elsewhere mob violence occasionally has broken out against minority religious communities, often triggering tit-for-tat retaliation.

Even more worrisome is the rise of the terrorist group Boko Haram—the full name translates into “People Committed to the Propagation of the Prophet’s Teachings and Jihad”—which has spear-headed a growing insurgency costing more than 3,000 lives since 2009. The group originally made its name slaughtering Christians and moderate Muslims, but today kills more indiscriminately. Observed Human Rights Watch, Boko Haram “has committed horrific crimes against Nigeria’s citizens.” The U.S. State Department blamed the organization for Nigeria’s “most serious human rights abuses.”

Boko Haram’s operations in the three northeastern states of Adamawa, Borno, and Yobe have affected more than three million people, driving many from their homes. The organization is responsible for at least 600 deaths so far this year. More than 150 Christians were killed in an attack on three villages in central Nigeria two weeks ago.

The government has responded with greater brutality than accuracy at times. HRW pointed to security forces engaging “in excessive use of force, physical abuse, secret detentions, extortion, burning of houses, stealing money during raids, and extrajudicial killings of suspects.” Unfortunately, these activities bolster Boko Haram’s anti-government narrative, encourage terrorist recruitment, and discourage community support against the militants.

 

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Kalu said the organization “is undoubtedly the biggest security threat challenging Nigeria.” In his view its objectives go well beyond imposing Islamic beliefs: the group is “trying to challenge the very territorial integrity of Nigeria and build an Islamic state within its borders.” He advocated seeking assistance from the West, establishing a “high-capacity operational base in Borno State,” where the group is most active, and improving “intelligence gathering and covert operations.”

At the same time, he warned against “often extreme retaliatory action” by security forces, acknowledging “instances of unjust arrest, prolonged detention and even torture undertaken by our security forces.” Kalu argued that the government must fight “a battle for the hearts and minds of the friends and families of the fallen.” That requires remedying such problems as poverty and other perceived injustices.

One of which is rampant corruption. Nigeria has “taken corruption to another level,” complained one foreign businessman. Kalu said that “The entire society from A to Z is corrupt.” An expatriate worker observed: “Nigeria is not a country. It is an opportunity.” Transparency International rated Nigeria among the world’s most corrupt nations, ranking 144 out of 177.

State enterprises, especially the Nigerian National Petroleum Corporation, assessed as the world’s least transparent energy company, are founts of abuse. In February President Goodluck Jonathan removed the central bank president after the latter charged that billions of dollars in oil revenues were missing from the national treasury. Even the NNPC acknowledged being unable to account for some $11 billion.



Headquarters of the Central Bank of Nigeria in Abuja, Nigeria (Photo credit: Wikipedia)

Pay-offs are a way of life, including to the police. The human rights group Freedom House noted that “Corrupt officers are often supported by a chain of command that encourages and institutionalizes graft.” Such corruption facilitates violence. Boko Haram publicly celebrated its ability to buy off security forces when launching attacks.

The system also undermines economic productivity. Declared one foreign businessman: “I’ve bribed a lot of people. If someone cannot be bribed, your competition has paid them more. It is endemic, cultural corruption. You can’t get anything done without greasing a hand.” There are various official anti-corruption initiatives, but the State Department’s latest human rights report noted that “The government brought few persons to justice for abuses and corruption.” One frustrated executive told me he saw “no difference” as a result of such efforts.

Ending or even limiting corruption would be a tremendous undertaking. Kalu argued that “we need to go for reorientation in values.” He added: “You only get what you sow. The sooner you start sowing good seed, the sooner you will reap a good harvest.” He believed that it is necessary to transform government, which “is broken.” As governor he said he attempted to lead by example and challenged those under him. Citizens need to be educated about what public service means. It “is difficult when people hear stories that those keeping the treasury are looting it.” Yet budgets for the anti-crime agencies have been falling. Indeed, some former officials known to have stolen are free and walking around. “Only in this society,” he lamented.

Finally, the country suffers from the usual Third World maladies of an over-politicized state and dirigiste, state-dominated economic policies. The NNPC, which accounts for 80 percent of the government’s budget, “functions well as an instrument of patronage,” noted a 2010 Stanford University study. With oil responsible for 40 percent of the country’s GDP, Nigeria desperately needs to diversify. But “anybody telling you that it will be easy to move away from oil is lying to you,” said Kalu.

To create jobs the government has imposed local hiring requirements on foreign firms. However, Firas Bechara Abboud of SLOK Nigeria Limited said it will take time to develop sufficient trained personnel to fill many technical and professional positions. “Day in and day out it remains a problem.”

Enterprises like SLOK nevertheless create new economic opportunities. Kalu was well-received when he told a university audience that “I want to spend the rest of my life creating wealth for people to work.” But doing so isn’t easy. Odili, a Nigerian educated overseas who worked in America before returning to help manage his family’s business, argued that the state should provide an “enabling environment” for private enterprise.

In this the government today fails miserably. The World Bank ranks Nigeria at 147, near the bottom of nations in its Doing Business report. This was, noted The New Telegraph, “only marginally better than Iraq and Sudan.” Adewale Okunrinboye of ARM Asset Management in Lagos argued that the government needed “to undertake economic reforms, infrastructure, job creation.”

Some look to Kalu, a billionaire who understands entrepreneurship and promotes political reform. As a teen he started trading palm oil. SLOK Holding, which he chairs, has interests in energy, shipping, finance, journalism, real estate, and more. Kalu succeeded without using his government office, unusual in Nigeria. Noted my Cato Institute colleague Marian Tupy: Nigerian politicians usually “become wealthy during their time in the governor’s mansion.”

Kalu urged adopting market-oriented policies: “The more the economy goes out of government to the private sector the better it will be for the economy.” Kalu denounced restrictive licensing and said he “would like to see small government and big enterprise.” He spoke with admiration of Ronald Reagan who, Kalu said, “is the kind of person people in Nigeria should be looking at.”

He advocated privatizing NNPC and the state-owned coal and power companies as well. He even suggested getting the government out of more traditional areas, such as education, which he views as necessary to achieve Nigeria’s moral reformation. Let the state instead subsidize education for poor Nigerians.

Kalu may run for president in 2015, which would test his message of market liberalization nationally. His chances are complicated by being an Igbo; his tribe last held the presidency a half century ago. Still, Nigeria’s fragile democratic system is strengthening. When he ran unsuccessfully in 2007 the poll was marred by rampant intimidation and vote rigging. In contrast, the 2011 presidential election was considered to be generally free, despite some “violence, fraud, and irregularities,” according to the State Department. Moreover, one of Kalu’s priorities has been electoral integrity—he helped found the non-partisan NGO G37, focused on ensuring honest polls.

The bigger question is whether he could implement his message of freer markets if elected. Noted Tupy, Nigeria “has never had a president committed to small government, privatization and liberalization.” But Kalu forcefully argued that committed leadership could make the difference. “If a strong person wants this to be done, it would be done.”

Whoever becomes president, any reform agenda will be long and its implementation difficult. And only Nigerians can make change happen. “We need friendship with other nations, but we need to do it ourselves. We don’t require any assistance,” argued Kalu. “We don’t need anyone to build us roads. Those days are over.”

Nigeria’s people know what to do. Nigeria’s people need to liberate themselves.

Nigeria needs reform, but implementing any change agenda will be hard. Only Nigerians can make change happen.