Craving for my own taste of Dubai

To say that Nigerian governors are obsessed with Dubai is an understatement; they are chronically infatuated by it. As we enter election season, with its entertaining and melodramatic defections saga, you’ll hear the governors and governorship aspirants promise they would turn their mostly impoverished states into a Dubai. Even governors who have not paid workers’ salaries and pensions for several months would be telling their hapless electorates they’ll not have to travel to Dubai anymore, for their own Dubai will be right at their doorsteps after the elections. The governors’obsession with Dubai might make sense on its face value.

Afterall, who wouldn’t want to relish in the posh malls of Dubai, with their indoor ski slopes? Who wouldn’t want to bask in the pristine and romantic beaches of Dubai, while feeling the succulent freeze from the Persian Gulf? Who wouldn’t want to have dinner on one of the several cruise ships on the shores of Dubai Skylines? Who wouldn’t want to go gold-shopping at the famous Dubai gold souk? Each time I travelled through the Murtala Muhammed International Airport (MMA), I often observed very long queues of passengers at the Emirates check-in counters. Emirates flies twice daily from Lagos, with over 12,000 passengers per week. No other foreign airline ferries this number of Nigerian passengers. This is a clear manifestation of Nigerians’ insatiable appetite for Dubai, and the desire for a share of UAE’s national cake. Never mind that our own national cake, which is supposed to be bigger than that of the UAE, has been brazenly looted and shared by those who’ll be canvassing for their votes this coming election cycle.

Having not been privileged to visit this mysterious paradise, I often wondered why the obsession with Dubai? In July 2017, I finally had an opportunity to have a taste of Dubai. I was flying back from Bangalore, India, to the USA and decided to stop over in Dubai for a few days. Considering that July is one of the two hottest months in Dubai (up to 40 degrees Celsius or 108 degrees Fahrenheit), only the most ardent and indefatigable tourist would dare visit the country that month for leisure. But I was, by all means, determined to have my own taste of Dubai. I began to understand the governors’ obsession with Dubai immediately I stepped into the Emirates flight from Bangalore. One cannot but be shocked and awed by the professionalism, elegance, class, hospitality and cheerfulness of the airline’s hostesses. The tale of Emirates and Nigerian Airways aptly captures the sordid story about Nigerian’s inexorable slide into economic abyss. Emirates was founded in 1985, about 30 years after the founding of Nigeria Airways. Despite years of huge government subsidies, Nigerian Airways collapsed many years ago, while Emirates has become one of the leading airlines in the world. So competitive have Emirates and its sister airline, Etihad, become that Western airlines are now jittery about being driven out of the global air-travel market by Gulf airlines.

But that is just the tip of the iceberg. Nigerian governors must also have marveled at the elegance, cleanliness and ambience of the Dubai International airport; a state-of-the art airport that makes the JFK airport in New York look more like anairstrip The interiors of the airport are immaculately clean, spacious, bright, aesthetic and glitzy, compared with the dingy, dark, crowded, chaotic and stuffy atmosphere that is the lot of Nigeria’s international airports, particularly the MMA. This is quite apart from the friendly and courteous dispositions of the airport staff, compared with the unprofessional attitudes of many airport workers in Nigeria.

The governors must also have fallen in love with Dubai the moment they stepped out of the airport to find the absence of touts, hangers-on, black market forex dealers, etc. Should I also say that they must have been embarrassed to see how impeccably clean and exquisitely landscaped Dubai is compared with their state capital that is filled with heaps of garbage, pot-holed and dilapidated roads. One more thing: the governors must also have been mesmerized by how organised, orderly and disciplined the Emiratis are; how state-owned buses and trains arrive and departon time; how honest and reliable government workers are, and how effective social services (garbage collection, street cleaning, constant electricity and water supply, etc.) are delivered. If the governors do visit the sprawling gold souk (or gold market) in central Dubai, those of them with any iota of moral fortitude will be ashamed to see thousands of Nigerian youths roaming the streets in search of illusive economic opportunities, having been exploited and neglected by their corrupt governments back home. In their desperate attempts to have a taste of Dubai, albeit in a very challenging economic environment for illegal immigrants, many Nigerian youths have resorted to unsavory activities in Dubai.

Beyond my naivety of wanting to have a taste of Dubai and understand why Nigerian governors are obsessed with it, I was also interested in a much more fundamentaleconomic question: how did it come about that a hitherto small, poor, fishing and pearl-trading country was able to transform itself into a global economic powerhouse? The spectacular transformation of the UAE has questioned the arguments by proponents ofthe so-called “resource curse” or the “Dutch Disease” paradigm of development, who argue that resource endowment, paradoxically, fosters rent-seeking, underdevelopment and poverty. The UAE, Qatar, Oman (and of course our own Botswana) have joined the likes of Norway in discrediting the notion that resource endowment is inimical to growth and development. As explained below, it may well be that the resource curse theorists are conflating “institutional and governance curse” with the curse of resources. In their obtuse obsession with Dubai, the governors forget that Nigeria was more developed and prosperous than the UAE in the 1960s and 1970s. While the UAE’s main economic activities were only fishing and pearl trading, Nigeria was home to major corporations like the United Africa Company (UAC), Lever Brothers, CFAO, West Africa Portland Cement, Coca-Cola Bottling Company, Nigeria Airways, Alcan Aluminum, International Paints, Bata, Leonard Brothers, Leventis, Nigerian Tobacco Company, brewing companies, publishing firms and several textile mills. In other words, Nigeria had a stronger economic foundation than the UAE in the 1960s and 1970s. Oil was discovered in the UAE in the late 1950s, just about the same time as Nigeria. How, then, might one explain the wide divergence in the development path of UAE and Nigeria? I’m aware there are many studies on this question, but my quest for the taste of Dubai revealed additional insights.

There are simple litmus tests about how efficiently managed an economy is, and the UAE passes nearly all of them. The first is the openness of the economy, which can be assessed by indicators such as how quickly travelers clear immigration and customs on arrival at the airport; as well as how easy it is for labor, capital and goods to move in and out of a country. It took less than five minutes for me to clear immigration and customs in Dubai, with virtually no questions asked. Another important indicator of openness is whether black-market currency operatives cluster around you upon exiting the airport? There are no official and parallel exchange rates in the UAE; neither is there an observable black market. I found that the exchange rate (3.8 Dirham to $1) was the same everywhere, and that foreign currencies were readily available for exchange. No paperwork is required for foreign exchange transactions, beyond the issuance of a receipt.

Travelers to the UAE are allowed to bring or leave with undeclared cash worth up to 100,000 Dirham (or $25,000) to the country, whereas Nigeria has a lower threshold of $10,000. UAE’s openness has enabled it to attract relatively cheap labor in the construction and services sectors, mostly from India, Pakistan, Nepal, Bangladesh, Thailand and the Philippines. This cheap labor has been very instrumented in the construction and infrastructural boom that the country has enjoyed during the past decade. The country’s openness has also enabled it to overcome skill shortages, as most of the top positions in critical sectors of the economy are occupied by expatriates. It’s noteworthy that Emiratis make up just about 20 per cent of the country’s population, a manifestation of how receptive the country is to foreign labor.

Good governance and effective institutions are some of the reasons for UAE’s economic miracle. Good governance has enabled UAE’s development agencies like The Abu Dhabi Investment Authority (ADIA), Investment Corporation of Dubai, Emirates Investment Authority, Mubadala, etc. to invest UAE’s $160 billion sovereign wealth funds (as of May 2016) prudently, an amount that triples Nigeria’s foreign reserves. It’s noteworthy that Nigeria’s sovereign wealth fund was a meager $1.4 billion in 2016. Good governance has also enabled the country to amass robust foreign reserves of about $90 billion, more than twice that of Nigeria. Because of its effective and prudent management of oil revenue, it has been able to sustain a fixed foreign exchange regime. This fixed regime has kept inflation very low; enabled firms in the country to import critical production inputs at a lower cost, and has thus strengthened the international competitiveness of firms located in the country. .

Good governance, coupled with a very stable macroeconomic environment as manifested in low inflation and interest rates, have instilled confidence in foreign investors. Even if Nigerian governors are genuinely interested in creating their own Dubai, their efforts would be thwarted by Nigeria’s chronic governance and institutional challenges. Many of the things it would take to transform States in Nigeria into a Dubai are beyond the control of governors. The first involves institutional constraints. The emergence of Dubai as a hub for international business would not have been possible under the types of institutional challenges that Nigeria faces. In the UAE, the political leaders and policy makers are transparent and honest. It is no wonder that the UAE was ranked number 25 out of 183 countries in the 2017 Transparency International’s Corruption Perception Index (CPI), compared with Nigeria’s rank of 153. Foreign investors find Dubai to be very stable and predictable, with few impediments to doing business. The UAE was ranked number 21 out of 190 countries in the 2018 World Bank’s Ease of Doing Business Index, compared with Nigeria’s rank of 145. To put this in context, the UAE ranked higher than competitive economies like Japan, France, Switzerland and the Netherlands.

Until Nigeria invests massively in infrastructure, and create a stablemacroeconomic environment, Nigerian governors should forget about creating a Nigerian Dubai. Dubai has become a benchmark by which other countries (including developed countries) measure the adequacy of their infrastructure. Dubai has built the infrastructure of the future, whereas Nigeria is unable to maintain the infrastructure of the past.Nigerian governors should forget about a Nigerian Dubai because they cannot replicate the natural advantages Dubai enjoys. Dubai has been attractive to investors, travelers, and tourists because its location allows for very easy connecting flights to Asia, the Middle East and Europe.

In conclusion, Nigerian governors should stop promising a Dubai in Nigeria. They should rather focus on the more basic and fundamental requirements of good governance: provision of essential social services (security, water, electricity, health, education, jobs, safety nets and economic opportunities). Please do not vote for any governor or governorship aspirant that promises a Dubai in Nigeria, for such a governor would end up siphoning the resources of your State to Dubai. Just like me, unfortunately, you’ll have to enjoy your taste of Dubai by going there and not in Nigeria anytime soon!
Onyeiwu is a professor and chair, Economics Department, Allegheny College, Meadville, Pennsylvania, USA.