Don’t blame COVID-19, Nigeria goofed as an economy, says Utomi
• ‘We were in a race to the bottom before pandemic’
• ‘Political class lacks discipline’
Professor of Political Economy and Founder of the Centre for Values in Leadership (CVL), Pat Utomi, in this interview with MARCEL MBAMALU and KABIRAT AZEEZ, Calls for political discipline and decentralization of powers.
How well have the federal and state governments handled the COVID – 19 pandemics?
I believe responsibility for such a health crisis should belong to all. Your life is your most precious asset. It is not smart to outsource responsibility for It. Civil Society also has a role, as does the government.
My first reaction, as a citizen, was to garner more knowledge quickly and try to be my brother’s keeper by disseminating it. I did a number of podcasts and videos and shut down my offices more than a week before lockdown. What little I had, I began to share with those I could identify that I could share with, and I brought CVL to try and build a loose volition of NGOs and Business Associations to intervene. Also had Patito’s Gang focus on it.
CVL then created a model of Human Solidarity Networks of Neighbors caring for Neighbors. We hope to encourage those even after the pandemic.
The performance of governments varies. Some have been commendable and some atrocious. But we should worry about the economy seeing that the nature of approaching economic crisis is frightening
What, in your opinion, is the fundamental reason Nigeria underperforms as an economy?
The pursuit of legal plunder by actors, political and commercial has been the ruin of the promise of Nigeria and the damage has come not just in the leakages and the competition for corrupt gain the culture of plunder incentives, but its fundamental fracturing of the order of incentives that make society productive. For far besides the pejorative view of economics as a dismal science, it is essentially about how to encourage the processing and converting things to a higher value.
The one thing Economics is about is erecting a regime of incentives that procure desired behaviour to advance the wellbeing of man in society.
So, in Nigeria today, those who benefit the most out of the rent economy we have erected in the oil era are not the smartest people who apply their genius to find new ways of creating values as you can see with Jeff Bezos, Mark Zuckerberg, Richard Branson, Akio Morita and Maseru Ibuka. The warped incentives structure in Nigeria is that if you are good at stealing ballot boxes, procuring women when politicians have parties or executing bogus contracts for NDDC your prospects are perceived to lead to private jets and swagger.
For a season, very short season, such a perverse order created by the extant incentives scheme may bring apparent good cheer. In the medium to long term collapse lurks for society and the mockery of history for those who seem to ride today’s Crest.
There are those who feel Armageddon is waiting for the Nigerian economy because of Covid-19. Is there any hope for good at the end of the tunnel?
It is far too easy to blame Covid-19 for the state of the economy. We were in a race to the bottom before the pandemic. The bright side is that collapse may give us the opportunity to begin again in a manner nourished by learning from past mistakes.
You did not need to possess the gift of prophecy or genius to predict the Nigerian economy was bound for where it is now. We got due notice but continued down the path like a group of drunk sailors largely because the political class lacks the personal discipline, organizational skill and moral stock and perhaps the know-how and know-why to step away from a debilitating narcissism to contemplate reality. The desire for legal and sometimes illegal plunder seems to precede reason and good judgment in public choice.
At the end of December, it was clear the Nigerian economy was heading into a Triple-shock crisis. Only the blind could have missed that. In the face of two major studies that showed Nigeria had become the poverty capital of the world, and a Forbes report suggesting Nigeria was a money-losing place, given regulatory risk and a poor environment of business, and with crude oil prices going far south of the budget benchmark price of 57 USD who would carry on with business as usual? Yet, the National Assembly voted an incredible amount of money to maintain their building, voted to buy themselves new luxury cars and Governors continued to draw security votes, as the Federal executive continued to travel around the world and Nigeria in style. Some blamed it on wickedness, selfishness or greed. I disagreed. It had to come from extraordinary ignorance because it would have been easy to see how the self-interest would be damaged by these choices.
How can anybody rationally make these kinds of choices even when possessed by self-love? To be fair, you still find some people who are good or know enough in those corridors of power to be bewildered by goings-on even though they are in the system as politicians or senior civil servants.
The real good news is that our failures to respond to the triple shock crisis from international loss of confidence which is constricting investment flows; the collapse of crude oil prices and the lockdown impact on supply lines, has forced need to think of new ways. If the Phoenix rises from the ashes of yesterday’s errors and chases off the hovering patient vultures, we will have managed well out of bad and ugly.
Given the prospects for Nigeria in the 1960s, how did we get here?
A simple answer is Soldiers, Oil and Politicians. The retrogression is real. In the 1960s we produced vaccines hear in Yaba today not one pint of vaccines in Nigeria. As a Senator reminded the former Health Minister, Prof. Adewole in the National Assembly, UCH was one of the top 4 hospitals in the entire Common Wealth, including Britain, Canada and Australia. Today you do not want to know the ranking. So with the lockdown no vaccines are entering Nigeria and infants are likely to suffer from the failure to get vaccinated and we could witness a return of Small Pox, Measles and Polio.
In an industry where manufacturing surged with self-government with the politicians of that era drawing down reserves in the accounts of the regional marketing Boards domiciled in London between 1957 and 1960 to use to build Industrial Estates we have witnessed de-industrialization.
As Pius Okigbo who pointed to the fiscal roots of that rise in Industrial Estates in his writing on Nigerian Public Accounts and also points to how Import Substitution Industrialization (ISI became the basis of our manufacturing strategy in his Public Philosophy of Development series lived to see De-industrialization set in after Structural Adjustment failed to adjust strategy away from what was leaving us permanent infant industries for, he was already witnessing to the erosion of the dreams of the founding fathers.
All around us, the evidence is not so much of the stagflation confronting us as inflation accelerates and out shrinks, but a decline in many areas – education, values, and skills and so on. The imperative of now is demolishing what brought us this far down and beginning again. When oil came, the soldiers forgot a few things, including how families behave when they get a windfall, which is to save.
For years, I have argued for a fiscal regime in which three Accounts should receive oil receipts. The lowest percentage I argued should go to the distributable pool fund, FAAC account that is the backbone of government budgets, a stabilisation fund invested in near money instruments that can be drawn on when there is revenue shortfall for budget and the third and the biggest in the high price of crude seasons; a future fund, what we now call a Sovereign Wealth Fund.
I have canvased these ideas for 30 years. But bad politics and poor leadership with a spicing of greed and laziness prevented us from rational public conversation and choice.
I feared certain outcomes. Those fears have now come home. The paths I warned about – the road to Venezuela, the road to Somalia and the road to the coming anarchy seem to have been travelled and the Google Navigator seems to be saying destination just ahead.
So how do we begin again?
In Grad School, my Department Chairperson, or HOD as we say in Nigeria was a woman Eleanor Lin Ostrom. Lin worked on Rational Choice Theory. I was mildly fascinated by her work and have been much influenced by the concept of the Tragedy of the Commons from Garret Hardin’s famous 1968 article since about 1980 when I met Lin. Lin would go on to win the Nobel Prize in Economics for her work, I believe she was the first and still is the only woman to win the Nobel Memorial Prize for Economic Science. But I never thought my academic work would be in her area. So, I never even thought of asking her to serve my Doctoral Committee. But I found that after 30 years of watching leadership in Nigeria make choices that led the Economists Arvind Subramanian and Xavier Sala-i-Martin in the 2003 IMF working paper suggest that Nigerians would be better off without a government, given how government use of Oil proceeds was making us all worse off, has steadily moved my academic interest towards Lin’s area. The need to properly explain how the government manages to act not so rationally had become overwhelming.
It was clear to me that how Public choice is made matters so much so that a good part of my academic work today follows Lin Ostrom’s track.
To begin again, more effectively, requires that we recognise that a few things we do, and positions we take, ostensibly in pursuit of our self-interest, actually negate those interests. The Prebendal culture of sharing the national cake instead of building a passion for producing has truly been our ruin. A strategy for how we produce our way out of misery and make the great escape from poverty, for all of our people must be central to our new mindset.
It should begin with identifying the Factor Endowments on which we want to erect global value chains we can dominate, based on our latent comparative advantage.
For me, that means broadening competitiveness of Agricultural production generally and specific emphasis on select produce like Cassava, Sesame Seeds, Plantain, Corn, Rice, Gum Arabic and Sorghum for processing in Agric/industrial towns for food security and exports for industrial uses. So, the cassava value chain will take us from garri to various snacks and the topmost quality Industrial starch and ethanol.
To prove my point, I stopped talking about it and actually began to develop one such Agric/Industrial Town throwing in every naira I could earn as the system seldom supports innovators. We can bring into our project within the next few months the thousands of young graduates as produce agents, in our aggregation processes through a wholesale produce market and leverage technology to create a new kind of Agricultural extension service agent. We are starting with the Plantain and cassava value chains and should be exporting processed outputs by next year.
Nigeria got here because we made irrational choices to move forward, we need to make a more thoughtful rational effort and do what Deng Xiao Ping said to China in 1977 that pulled it away from 500 years of stagnancy and propelled it to global dominance -trust knowledge more. In Nigeria, we try to denigrate knowledge and say “na grammar we go chop”. We have made fun of Grammar for 50 years and we now know where it got us.
Can we restructure the economy without restructuring the polity.
I don’t think so. Already there is talk of resurrecting the Oronsaye Report on trimming the size of government. Better late than never. But the merger of a few Parastatals cannot be enough. Motorcades, travel and contracts that do not evidently add to elevating public good or welfare in an optimal way need to be considered. So should the nature of our Fiscal Federalism. Instead of the centre handing out prebend to the subnational, the LGAs and States should create enabling environments and facilitate conditions for businesses to start and earn enough to be taxed for the spending needs of the State. They should not kill struggling businesses by a tax bullying but my making for tax healthy profits. The Principle of Subsidiarity, the decentralization of authority is so critical for progress. For me, change must be accompanied by a de-professionalization of politics. Politics should be part-time and the epitome of Citizenship. We need to reduce the cost of the legislature by making them Citizenship legislatures of people who have regular full-time jobs but make out time to come to make laws.
How long do you think this Covid-19 pandemic will hold us down?
I do not know enough to say. I doubt that even experts know enough. From the Spanish pandemic, it involved a second wave and was around from 1918-1919. But we must plan for a long-distance race. My hope is that, after the night, comes daylight. The Influenza of 1918/1919 in the US was followed by the roaring 1920s. I hope we will survive this, restructure, change the culture, and thrive after.
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