Nigerian diaspora, oppressive statism and economic growth (1)

It is an understatement to say that Nigeria’s road to progress, whether viewed through economic or socio-political development statistics, has been disappointing. Nigeria’s GDP per capita is barely above its level at emergence from colonialism over fifty years ago, and the poverty rate has actually doubled over the same period, now afflicting seven out of ten Nigerians. This deplorable record is not because Nigeria lacks ready income – its governments have taken in over $400 billion during the past twenty years in revenues from oil.

Every Nigerian is aware of the situation in the country and for Nigerians in the Diaspora, this is the discussion topic of every telephone call, social gatherings, and business meetings or when they run into each other. There are several reasons and contributing factors to the current state of Nigeria but if we are to state only one reason or contributing factor, it will be the role of governance. British colonialism had predisposed Nigerians to regard government service as the occupation of choice for educated youth. So, at independence, successive Nigerian governments have practised what is called “oppressive statism” – a decision by the political elite, whether civilian or military, that the government was most capable of controlling the economy of Nigeria. In this environment, the wealth of the country is “captured” by favoured groups, classes, and individuals. In this environment, “rent-seeking” and “corruption” flourished and grew more and more resistant to attack. It also exposed Nigeria to perhaps the world’s most long-lasting case of “Dutch disease”, because the inflow of oil money to the government only entrenched its bureaucracy further and drastically expanded opportunities for enrichment from corruption. ‘Oppressive Statism’ and ‘Corruption’ feed each other. Statism creates opportunities for bribery, so rent-seekers in government naturally want to preserve Statism.

Oppressive Statism pervades all levels of Nigerian government – federal, state and local governments. This is by far Nigeria’s greatest and most difficult economic problem.

Nigeria’s second great obstacle to development is an unsupportive business enabling environment. A business enabling environment can be considered supportive when it has three attributes: (i) an efficient system of protecting property rights, including loan collateral; (ii) a financial sector that provides sufficient and reasonably-priced funding for valid business working capital and equipment investment requirements; and (iii) reasonably priced and continuous access to the basic utility inputs to production – electricity, water, communications, and transportation infrastructure.

Nigeria is very seriously deficient in all three of these fundamental categories:

The ‘Commercial Law’ and enforcement environment is poor.  Bankruptcy, secured transactions, land titling, and related law is not sufficiently supportive of the bank credit system or even of trade credit.  Government administration and registration services to business are inefficient, and judicial and administrative enforcement are ineffective.

Business Finance is limited and expensive. Most of the limited supply of domestic savings in banks ends up devoted to trade inventory finance, much of it for consumer imports. There is virtually no long-term equipment lending from banks. Government-supported development finance institutions have an extremely poor track record, with the majority of their assets non-performing, having limited resources, and prone to corruption, or favouritism in loan granting. The Nigerian Stock Exchange (now Nigerian Exchange Limited) has some institutional strength but is very shallow and not widely accessible to businesses.

Poor utility services. Combined with the high cost of business finance, the expense forced on businesses because of the inability of the government, despite billions of dollars invested, to supply basic utility services, makes it impossible for these utilities to be price-competitive despite low labour costs. Every business of any size in Nigeria, every building, must invest in a diesel-powered electricity generator, because of daily power interruptions from electricity distribution companies. Beyond this universal essential, businesses often drill their own water wells and build their own access roads. Also, freight forwarding or transportation of goods is very problematic as there are no good roads.  Other alternative modes of transportation, such as railroad and waterways, are not in existence.

The role of Nigerians in the Diaspora

The international community and especially the United States, through its several agencies, has looked into the core problem of ‘oppressive statism’ and other economic problems in Nigeria. There are lots of donor funds to support studies or initiatives that proffer solutions.

Nigerians in the Diaspora need to be active participants either through consultancy jobs or involvement in NGOs, public constituency building for reform, investment projects, etc.

Nigeria cannot change without the complete dismantling of the tools of ‘oppressive statism’. Nigerians in the Diaspora cannot continue sitting on the fence and praying for a messiah to solve the country’s problems. The time is right and ripe for them to become active participants and assist the international community in pushing through reform programmes in the economy.

Nigeria as presently constituted operates a federal system of government which pre-supposes that the federal government is allocated some powers that are separate from those allocated to the states. The main power allocated to the federal, being the sole ownership of all the mineral wealth of Nigeria. The allocation of all the mineral wealth of Nigeria to the federal government has made Nigerian politics a do-or-die affair. All ethnic groups in Nigeria have the sole desire to control the federal government. Nigerians in Diaspora will need to operate above this mentality so as to avoid the stagnation in economic reforms caused by current political parties. The political parties have focused all their energies on the struggle for control of the mineral wealth and neglected the needed focus on reform policies and laws from a reasonably independent legislature.

No matter which political party controls the federal government or who is appointed the president, without dismantling the tools of ‘oppressive statism’, Nigeria will not develop any further than its present state. It is not the individual who is appointed or elected to any office in Nigeria that can make a change. Nigerians have witnessed different characters of persons appointed to positions of power – professors, doctors, Nigerians in Diaspora, activists, even the clergy, and nothing has changed. As long as the structure of oppressive statism is in place, as long as the tools of oppressive statism are not dismantled, there will be no economic development in Nigeria. Whatever that will be discussed on the federal level readily applies to the states and local governments of Nigeria. Nigerians in Diaspora can assist the international community to dismantle the tools of oppressive statism by forming NGOs, working as consultants, volunteers, political action groups focusing on the following reform programmes:

(i)  Single treasury account

The military and past civilian regimes not only operated multiple accounts but also had secret accounts that were known by only the president and the minister in charge of the revenue source or the Central Bank governor. The present federal government of Nigeria has taken the “bull by the horn” in the implementation of the single treasury account since its inception. Nigerian professionals in the Diaspora with experience of public financial management and accountability can show support for this programme and insist on its continuity, administered according to proper business procedures. Nigerians in Diaspora can submit proposals to U.S. agencies such as USAID or the World Bank to provide assistance, support to the Federal Ministry of Finance, Federal Budget Office and the Debt Management Office.

(ii) Public Procurement Commission

Through promoting transparent and business-like tendering and procurement business processes, this is an essential institution in the war on corruption and in achieving efficiency in government spending. Assistance would focus on establishing detailed best-practices procurement operations, communicating procedures to spending agencies and responding to their questions and auditing actual procurements.

Nigerian professionals in the Diaspora with experience in commercial law development, drafting of public procurement commission law and procedures manual can submit proposals to USAID or the World Bank to provide assistance, support to key business processes of the government, rather than relying on outstanding professional strategic capacity. The installation of computer-based business information and transactional systems, which must be used in order to award contracts, order supplies, obtain funds, register permits, licences, collateral, and so on, is highly effective in reducing the opportunity for corruption even as it improves the quality and efficiency of government services.  The World Bank, European Community, USAID and IMF are already involved using U.S. and European consultants to provide initial assistance to the Debt Management Office (DMO), Federal Ministry of Finance (FMF), Bureau of Public Enterprises (BPE) and the Federal Budget Office (FBO).

(iii) Public enterprises financial management

Major public enterprises need to be provided assistance in developing internationally acceptable financial reports and proper managerial accounting principles. Such assistance would enable the restructuring and privatisation of these companies, and bring desperately needed transparency to their cash flows. The importance of turning these organisations around can never be over-emphasized because these companies (including the already privatised power sector), above all, are the base of many of Nigeria’s economic problems.

Nigerians in Diaspora need to engage the National Assembly to pass all the enabling laws to assist in the privatisation of public companies as part of a package of economic reform. Any political action group can submit proposals for funding assistance to the World Bank, USIS, USAID or the EEC. The donor community has funds to support the growth of democracy in Nigeria. Professional Nigerians in the Diaspora can also submit proposals to provide consultancy in Public Financial Management and Accountability. Candidates must be experienced in strengthening institutions for budget formulation, execution, revenue management, and experience of guiding, monitoring and assessing national budgets.

(iv) Trade policy reform

Radical revision of Nigeria’s trade policy is too critical to Nigeria’s development to be ignored. USAID once undertook a study and identified major obstacles impeding the growth of trade in Nigeria. The study produced a blueprint for institutional improvement. Nigerians in Diaspora can assist by providing consultants to work with the Ministry of Trade and Industry to support the setting-up of the institutional structure and the adoption of liberal trade policy. This programme would also include advancing the ECOWAS’s goal of an integrated economic region in West Africa.

(v) Public constituency – building for reform

Any challenge to oppressive statism is powerfully resisted by vested interests. Do not be deceived by thinking that civil servants who benefit from the status quo are the only vested interest group. Any Nigerian who has acquired wealth by doing business with the Nigerian government, which is almost all the rich Nigerians, represents the vested interest group. They are represented at the National Assembly, the banking sector, the petroleum sector, the construction sector, the shipping sector, and so on. The only force really strong enough to counter such resistance is popular demand. The average Nigerian has been psychologically defeated and believes that only divine intervention can push through economic reform.

• business a.m. commits to publishing a diversity of views, opinions and comments. It, therefore, welcomes your reaction to this and any of our articles via email: comment@businessamlive.com