If we do not dismantle this political structure, Nigeria will die – Utomi
Professor of Political Economy, Patrick Okedinachi Utomi, in this interview with GBENGA SALAU, said the country’s political class has constantly plundered the country’s fortunes, hence the pathetic state of her economy. While calling for the dismantling of the obnoxious political structure, which has made the country anaemic, Utomi insists that it was time the country started producing to boost her economy, failure of which she would eventually die.
How will rate the economy in 2019?
I will add no value by rating the economy because it is not a matter of measure. But the question is, did it sustain the Nigerian people in the sense of an economic system? We entered 2019 with a few dubious honours. We became poverty capital of the world overtaking India in absolute poverty even when India’s population is about seven times that of Nigeria. The real meaning is even more significant.
We also entered 2019 being classified by Bill and Melinda Gate Foundation along with Zaire for producing more than 40 per cent of the poorest people on the planet within a few years. On most indicators, including human development index, we are in a very pathetic position for a country that produces a lot of crude oil, which is money.
The main problem here is the organisation of the Nigerian society, which is done in such a way that it does not incline the country towards economic growth. What is required is a very fundamental surgery. Those who run the country have the mindset that revenue determines economic progress, and that is why talks about budget is about the amount of money brought in and spent determining progress.
Hence, they say the bigger your budget, the bigger the revenue, and the better you are doing. This is absolute nonsense because many times, you are getting poorer. What makes you escape poverty is production; you produce your way out of poverty. Therefore, what makes for a productive environment is a web of values that create an enabling environment for investment; it is a set of incentives.
Economics is all about incentives that take your best talent to where you would like to produce the most so that the engine of growth is kept reeling. Our economy, however, is a rent economy and what matters is not getting your best talents to where they can most produce, what matters is connection.
Revenues are collected from oil and somehow they are shared among friends, mainly politicians and their friends, who are in business. I saw a quote that stunned me, but so correct from Brako, a Ghananian. And he said, ‘any country where the politicians are richer than the businessmen is a country on the verge of collapse.’ That is a classic case of Nigeria.
Economics is about incentives for the best talent to go into where there are most opportunities to creatively “destroy” today’s value and produce higher values. But the incentive system does not work that way in Nigeria. As far as I am concerned, the only thing that is incentivised in this country is rent extraction. That is why as a trader, you know someone somewhere, he gives you contract and you end up making money from the contract. We are just oscillating between rent collection, but we are not creating wealth and the political class is not ready to deal with it.
As a country, we have one of the most expensive political systems in the world, and the amount of money that we spend on protocol alone can kill any normal economy. So, our political system is broken and not working for the Nigerian economy to get better, but only designed to share more; who gets more of what. Thus, we created an economic system that follows a political philosophy of government of politicians, for politicians, by politicians and their business friends. It is not a government of the people; not for the Nigerian people. Therefore, the economy is not going to grow. We can create all the committees in this world, but the Nigeria’s economy is designed to burst. So, we must do something fundamental now.
The 2020 budget has been signed into law already, but you insist that we must do something fundamental now. Is this budget incapable of powering development?
How much is in the budget? Less than seven per cent of Gross Domestic Product (GDP), and where will that take us to? Even at that, there are so many politicians that are waiting to share from that amount, which cannot even power real growth. You can now see why I call it government of politicians, by politicians, and for politicians.
What then do you think we should be doing in 2020 to effect a positive shift economically?
What we need to do is to signal to the world that Nigeria is getting serious. If Nigeria is serious, the world would bring in capital to invest in Nigeria and drive growth. There is a French economist called Thomas Piketty, he is probably the biggest writer on the subject of capital in the world. The point of his research is very profound, saying there is more capital in the world today than there has been in human history because of globalisation. This is depending on how you see it, and what lens you wear.
Fortunately or unfortunately, most of this money is in the hands of a few people. For instance, 10 young boys in California have more capital than the entire African continent; that is the nature of the disproportion of capital. The point is, the capital is there and that capital will go where it finds the most comfort. One of those young boys, who owns the capital Mike Zuckerberg flew into Lagos and was jogging on the Ikoyi link bridge, the other day. And I remembered calling my friends in Lagos government that they do not need advertisement any more. Just take a photograph of Zuckerberg jogging in Lagos or walking in Yaba between Danfos, then you have sold this country and city, which is the naked truth. But politicians’ behaviour in the country is the biggest factor that has been putting off investors. In addition to that, we run a crazy structure where most of the little money available goes into making politicians happy. So the simple truth is, not many people will bring their investments here.
Another ugly scenario is losing your investments when there is a new sheriff in town, who ends up cancelling everything that his predecessor did. A new governor comes on board and ends up cancelling everything that the governor before him did. A new Central Bank governor comes in with a set of new rules, and all those who invested yesterday stand to lose everything that they invested. These foreigners are not crazy; they will look at our country and say, ‘I cannot take my money to that kind of place.’
So, the first thing to save Nigeria is to get the political class better behaved. Thereafter, make Nigerian institutions stronger because the biggest risk in doing business in Nigeria is regulatory risk. A business is likely to fail in Nigeria more from the action of a regulator, than from a market problem in the environment. How many people in the world would go into such environments to invest? We need a national conference of politicians to educate them on how to run a country that grows. Right now, the political class is working against the country’s economic progress; they are not doing it out of wickedness even though they may be selfish, but they are doing it out of ignorance. So, how do we educate them? We literarily need a national conference to discuss the structure of Nigeria.
The Nigerian economy does not give people confidence; they know that we do not have elections; they know that elections in Nigeria constitute a complete farce, and that is how it has been since 1999, but getting worse one after the other. How do you go to a place where nothing is certain? In 1998, I wrote a book titled, Managing Uncertainty, Competition And Strategy In An Emerging Economy, if you read the book today, it is as if I am writing it today. In the book, I talked about the framework for competitive strategy, and I showed how predative behavoiours of politicians is killing the economy. We need to begin to create institutions that create boundaries that would make businesses find Nigeria a worthwhile place to invest in again
The Federal Government wants to lift 10 million people out of poverty. But here you are trying to make us escape poverty to production. Does this mean that we may remain in captivity for so long?
I am not going to debate with anybody what they can do, or not do. I will tell you what realities suggest down the path that we are traveling. You see, what Nigeria needs most is private capital to come in. I travel around the world and I know the feedbacks that I get. I know very few would want to come in to invest, but their position is based on what they have observed, which might not be fair. Look, just in one day, in the last quarter of 2018, the UBS of Switzerland, a bank and another closed shop. These are investment bankers that bring in investors, but they closed and left and what are you saying with your budget?
The model that Nigeria has been following, very sadly, is the model of Venezuela. It has the largest reserve of crude oil in the world, but every time oil price goes South, they cannot even buy milk on the streets of Venezuela, that is the model that Nigeria is pursuing, just slightly better than Venezuela. We must change all of that. The model that I prescribed is the model based on latent comparative advantage. What are we endowed with as a country? Is it Sesame seed and agricultural produce? If so, lets create institutional arrangement that facilitates the development of the value chains on those endowments until we becoming global leaders on those value chains.
For instance, Sesame seed is produced in the North Central, why don’t we develop a programme for plantation and processing of Sesame seed? We should programme the educational system from primary school to have a curriculum on managing Sesame seeds, processing. All of those things that add up to engaging Macdonald, an outfit that uses Sesame seed and oil. Towing this line, Nigeria would be producing all these and distributing them around the world, and trading within Africa. We would be creating millions of jobs. Nigeria must produce, if she does not, she would die.
To what extent has leadership failure and sham elections hindered our growth as a nation?
Simply put, the problem of Nigeria is total failure of leadership. On January 12, 2020, it would be 50 years since the Nigerian Civil War ended. I was here in Lagos during the civil war, and we were dancing James Brown music, not knowing who was a Yoruba or Calabar person among us, yet we were fighting a civil war at that time. Today, you get on social media and boys, who were born 30 years after that are abusing one another based on ethnic lines. Leadership failure is responsible for that.
There is so much buzz about the country’s debts stemming from loans. What are we not getting right in our loan structure?
It still boils down to what I said earlier – we are not producing. If we borrow to produce, then the expansion of the economy can contain debt servicing, but we are borrowing to spend and consume. When you consume, it is gone, so where are you going to get the money to pay back. Nigeria’s current borrowing pattern is a dangerous track unless it boosts production. The fundamental issue with Nigeria’s economy is that it does not produce, it believes in revenue rather than production.
2023 is already here and geopolitical and ethnic cards are being played by different groups, what should be the talking points as we look towards 2023?
It still comes down to the same question; the guys are looking for whose turn is it to steal, your people have stolen, so let my people steal. It is not about building a nation, or creating wealth. The question should be, who can get Nigeria out of this mess. Nigeria is dying, who can stop this wrath, not where does he come from.
You made an attempt the last time but … ?
Where do I start, I have written a book about it and I am writing a second book on it. First of all, we do not have political parties in Nigeria. We have these funny enterprises that people have created as their personal businesses and they call it APC, PDP and all that. Those parties are designed to stop people who can move Nigeria forward from coming up. I can prove it. They are simply private enterprises of state captors, who are interested in sharing the booty. The political system now has to collapse completely, if Nigeria is going to go anywhere because there is nothing democratic in the process. What does it even stand for? I was one of them, I was in one of those parties; I helped found the party, and the road map of the party was written in my house right here. But what does the party represent? All the English that we wrote down meant nothing, and the people just wanted to capture power and do as they pleased.
You said we must dismantle the political parties, because they are business enterprises, how do we do that when the CEOs will not let go?
That is why Nigeria is on existential struggle. If we do not dismantle the political parties, Nigeria will die as a country. I am definite about that. They will struggle because it is their businesses, but the people have to rise in one form or the other. In a democracy, there are ways that the people can do that. I have told people that these things are small things. If everyday, one million people march in front of National Assembly to say this mess cannot go on, those guys will quit. They will quit. The bottom line is that it is not working; Nigeria is not making progress as an investment destination; everybody has given up on Nigeria and oil companies are leaving. If you want to tell the truth, that (oil) is the only thing that we are holding on to, and it is an area that we should not be playing with, in the sense that this finite resource is wasting as the world is moving away from fossil fuel. It is something we should be distancing ourselves from. Even at that, it can sustain us in the meantime.
If you look at the body language of the oil majors, the only one that is making serious commitment to Nigeria is Total Plc. Thus, we got a serious existential crisis and we cannot allow politicians whom we do not understand what they are doing to continue misleading us. We have to challenge them as a people that this nonsense cannot go on. If you cannot lead, get out of the way. More so when they do not even allow the people to determine who leads them, because of the farce called election, but which the whole world knows that they are no elections. We need to begin again; we need to start afresh. That is the naked truth. We need a new approach to governance. If some very good persons are brought in and put in this mess, they would just be moving around in circles. Government needs to move closer to the people, and the most important level of government should be the local government so that the people can take their destiny into their hands.
This is a time to look at the thoughts of somebody like Prof. Peter Eke, who has written one of the best pieces in Nigeria’s political science field from far back as 1975, where he lamented the absence of morality in the public space. In Eke’s argument, you have the primordial culture, where people go for town union meetings and they will not want to steal because of the consequences. Here, the morality of society shifts to the primordial base, but when you get to the Federal Government where the money belongs to nobody, the thinking is, steal the whole thing and bring back to our village. We have got to the stage where we need to tell ourselves that we need to shift governance to the level that connects to the people; move most of the power down there. Whatever ways you choose to do it, let power get closer to the people. Now, if those people elect directly, a representative to the parliament and those representatives pick the best among them, it is easier to get the very best among them to be their prime leader or prime minister.
You will also find out that not only will you be running a good local government administration, but the people that come from the local government areas to be representatives in Abuja are also permanently held accountable because they just go there to make laws for the generality of the people. Those people will be held more readily accountable, and the system of government will work more effectively. The logic of what the military gave us under Obasanjo was to say that part of Nigeria’s problem is that everybody does not own the man who is the president. If we get a president who goes all over the country, and everybody owes loyalty to him, he would act in the interest of everybody. How many of those who have been president in Nigeria have acted in the interest of everybody? Therefore that logic collapses on the basis of that.
Secondly, the so-called president amasses so much power, but unfortunately, the nature of military rule allows people to give so much power to the “big general” at the centre, with the “small colonels” in the regions who can’t even talk to him. We then reached a point where government is about, how can I get my share of what is left in Abuja? An American political scientist, Richard Joseph, called it bureaucratic prebendalism- that is, sharing the national cake. It is just like a pastor, or vicar who gives out prebends to his assistants. The idea of going to Abuja to beg ‘Oga please give me small,’ takes away the whole incentive structure of production from the system.
No economy has been built on sharing revenue. Every economy that is an economy of substance is built on production. What the governments of the regions did the most in Nigeria was that they generated a competition of who develops their regions most. And two American political scientists, Robert Melsone and Wolpe, in discussing modernisation in Nigeria back in the 1970s, described that process of competing ethnic nationalities working on who will bring progress most to their people as competitive communalism. Indeed, the era of competitive communalism was when Nigeria thrived.
I make bold to say that it is the military that created this bureaucratic prebendalism culture, where everybody goes to beg for a prebend in Abuja, and nobody wants to produce. Let me give you a very simple illustration. In the 1960s, there were more local governments in southern Nigeria (simply for administrative conveniences, they were not involved in revenue sharing) than in northern Nigeria.
In 1975/76, the Olusegun Obasanjo-led government looking at examples from Eastern Europe and Brazil, made local government areas part of the fiscal transfer system. So, significant revenue was now going to them. Quickly, every colonel who had power started working towards getting his village to become a local government, and before long, we got 774 local councils, with about 500 from the old North, twice as many as in the south. Guess what, it means that since 1975/76, a huge amount of revenue has been flowing to northern Nigeria through local government reforms. This is a great irony because northern Nigeria has also got poorer than southern Nigeria all these years. Nothing makes my point from that illustration than the fact that revenues do not make for economic growth, what makes economic growth is production. And this is the reason that we need to get away from this mindset of getting a bigger share of the cake because it does not make anybody rich, but just makes a few elite foolish, because since they have more money they do not know what to do with it, but their people are becoming poorer.
You talked about the need for a national conference for politicians, and another to restructure the economy, but a few years ago we had one that its outcome has not been implemented?
I do not want to get into this debate because of the problem we have in Africa about sovereign national conferences. But let me state clearly that we should not have a conference just for the amusement of whomever that is in power to do whatever he likes. I mean President Goodluck Jonathan could have saved all of us this nonsense if he had the courage to implement something that had a national consensus in his time. But because he was looking at winning the next election, he failed to do what he should have done. And this is the reason that we must hold him accountable.
However, the point remains that we should not look at issues from the point of these people will win or those people will lose because this is supposed to be a win-win thing. Now, restructuring has got a bad name because some people think others will get more revenue while we get less, but even the much that they are getting is still making them poorer, and that is why I am saying that the problem of Nigeria is ignorance. What we need to do and the kind of national conversation that we should have (if conference will be like one of those things), is on what leads to wealth creation and what takes people out of poverty. Everybody who is a responsible Nigerian, but who does not feel ashamed that Nigeria is the poverty capital of the world, his head should be examined.
When I walk around the world, I walk with my head bowed because I come from a country where misery is the middle name of everybody. What we really need is a conversation not conference on why we are poor and miserable. That process may lead to the education of the Nigerian political class to understand what it takes not to be poor and miserable. And also understanding the fact that their being able to steal as much as they want has not made them rich; it has only made them foolish. The country’s education system must play a role if truly ignorance is the reason why we are poor.
Yes, it is not helping matters. We have a lot of certificated illiterates in Nigeria. To be educated is not to be certificated. I was in Rome a few weeks ago when a certain educator and a prince of the Catholic Church, Anglican pastor, and a professor at Oxford University became a cardinal. John Henry Cardinal Numan was canonized a saint. One of the great legacies of Numan is what is referred to as the idea of the university; a collection of lectures and talks he gave in Dublin around 1850, which became known as the idea of a university. And he talked essentially about what it meant to be a person worthy in character and learning. Today, there are many who have certificate, but do not have the character to be called educated persons. And part of the problem of our country is that we assume that anybody with a certificate is educated. There is a certain humanity that arises from being educated; that makes you understand the essence of common good; that makes you understand that public life is a stage of morality.
French man, Baron Montesquieu, who had the most influence on the founding fathers of America, and who first propounded the Doctrine of Separation of Power, argued that central to being in public life is virtue, the same point that Eke argued in his two publications as morality, which I argue as leadership values and ethos. Unless you recognise that the reason that you are a senator is to advance the common good of all, and that there are certain conducts that go with that role; that elevate the dignity of the human person; unless you understand that, you are not fit for that position. And we have in Nigeria, such people who think it is a contest of brute power. I had a conversation with a retired intelligence officer, a senior citizen, who said he has never seen in the country’s history, where the naked pursuit of raw power and money has been so central to public life as it is today. A truly educated people will not act like that. What is now happening is just crude pursuit of plunder.
Famous French writer, Frederic Bastiat, in his book, The Law, talked about legal plunder. Man by nature is inclined to plunder and this always leads to eventual failure. The political class is plundering and enjoying it by riding fancy cars. The worst part of it is that those who chased the former set of plunderers out are also having a field day plundering. In this situation, the society is experiencing a double fall. This is more dangerous for society, including the original plunders.
In 1975/76, the Olusegun Obasanjo-led government looking at examples from Eastern Europe and Brazil, made local government areas part of the fiscal transfer system. So, significant revenue was now going to them. Quickly, every colonel who had power started working towards getting his village to become a local government, and before long, we got 774 local councils, with about 500 from the old North, twice as many as in the south. Guess what, it means that since 1975/76, a huge amount of revenue has been flowing to northern Nigeria through local government reforms. This is a great irony because northern Nigeria has also got poorer than southern Nigeria all these years.
When I walk around the world, I walk with my head bowed because I come from a country where misery is the middle name of everybody. What we really need is a conversation not conference on why we are poor and miserable. That process may lead to the education of the Nigerian political class to understand what it takes not to be poor and miserable. And also understanding the fact that their being able to steal as much as they want has not made them rich; it has only made them foolish.
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