Monday, 4th December 2023

 Interpreting why nations fail or struggle

By Pat Utomi
15 July 2020   |   1:05 am
Fascination with why some countries succeed remarkably, others fail disgracefully, and many occupy grounds of the shades of grey on the spectrum, has been decades old with me.  In response, I have written several books, numerous opinion pieces and academic essays and jumped into the arena of praxis, with spectacular stories to tell, and show…

Fascination with why some countries succeed remarkably, others fail disgracefully, and many occupy grounds of the shades of grey on the spectrum, has been decades old with me.  In response, I have written several books, numerous opinion pieces and academic essays and jumped into the arena of praxis, with spectacular stories to tell, and show for it. Lately, my greater concern has been how to help people not inclined to academic treatises, or have the time for even OPED essays of this type, identify with how these matters connect to the burdens of their life’s journey. To show why they are more miserable than their parents. How do you explain to people for example, that the evidence suggests production, the output that sustains and enhances our quality of life has been in decline since the Land Use Act or decree of 1976?  The intellectual easy path would be to explain the role of institutions and economic performance but you know how many years of study it took you to make those abstractions and then linkages between concepts and phenomena and you feel frustration well up.

For years I have spoken quite a bit about the place of strong institution in economic performance and development of countries.  My 1998 book, Managing Uncertainty- Competition and Strategy in Emerging Economies was based on the extra-ordinary insights from Douglas North who won the Nobel Prize of Economics for work in that area. It is easy to assume the satisfaction I derive from that effort comes from the fact the book comes from the fact that it was winner of the Abiola Book Prize for the best academic text published in Nigeria in 1998, or some of the comments many years later from University of Ibadan professors I did not know were on the Book Prize panel back then, but it is in how much I tried to bring the ideas to what practical decision makers could related to that brought satisfaction. Still I know few people in every day walk will have the patience to digest all those pages. But the actions of those people matter, just like black lives.

The book Why Nations Fail, by James Robinson and Daron Acemoglu attained significant regard for showing why countries like Nigeria are poor, based on the same insights on institutions and economic performance. My own book which followed Managing Uncertainty, but was positioned as a sort of prequel at a broader frame level than managing uncertainty, Why Nations are Poor, published in 2006, a decade before why Nations fail, also followed those same insights. Those same ideas also led US President Barack Obama to remark in Accra, in his first speech on African soil as US president, that what Africa needs in strong institutions and not strong men. But how does the small-scale agriprenuer, starting a one hectre farm with processing facitity understand the point that Robinson and Acemoglu, or Ragharan Rajan and Luigi Zingales make in the book Saving Capitalism from the Capitalists,  or my own books relate to outcomes of his effort. How does he know why he may be unlikely to make the same success for equal effort as his American colleague or that his innovation may be more trigger the Paradox of prosperity that Clayton Christensen and partners which include one of his former Nigerian students at Harvard argue for in another book. In the 1980s a group of us believed intellect and praxis needed to combine and pressure policy to change for the good of all.

The result was the Enabling Environment Forum and later the Nigerian Economic Summit Group {NESG}. How much does todays young agripreneur who is more likely to save Nigeria from the current mess than some rent tycoon businessman, understand the state of play and how much does he understand these phenomenological linkages to make his point well and give direction to policymakers totally adrift at Sea. This for me is where duty lies for those with a heart for social engineering.

Let us take the matter of the authority regarding land and how institutional arrangement regarding land has made us poorer, inclined to upheavals and to low trust in our ways of social organization. This problem has assumed great urgency given the economic, political and deep social malaise manifesting in widespread anomie, poverty and misery. My more immediate source of concern is the tripple shock economic crisis which, for me, began last year with the assessment of Nigeria by Forbes magazine which labelled Nigeria a money Losing machine, a signal to investors that Nigeria should be a no-go area for investments. To say that investment, capital, is the lifeblood of capitalism is an oxymoron is not to be gifted with genius, the review was, therefore, literally speaking a death sentence on the Nigerian economy.  

I thought it worthwhile to explain how the Land Use decree, now Act, and how the Governors have administered the Act, have contributed to growing poverty in Nigeria. Unless that young Farmer or Real Estate Developer can relate to how that apparently distant revocation of a C of O by a Governor impacts prospects of his venture, or the commuter in Lagos jumping on a bus to get to the day’s hustle knows how the Governors behaviour is impacting his misery level, we will all be swimming in the dark. When experts talk of evidence-based policy prescription, it is easy to think of it as ‘’ too much wahala over little’’.  But it came with much power in a recent conversation with a researcher who showed graphic evidence of how agricultural outputs and production, in general, have declined on a per capita basis since the land use decree was promulgated some 34 years ago. Of course another study can show that the rise of Oil may be as much a cause of decline as the Land Use Law but the pattern traced should affect how we make choices. The survey shows, for example, that Nigeria’s rice production and consumption globally and the same rate until the Land Use Act says consumption has consistently outstripped production. Even if one were to argue that new taste and increasing prosperity turn people towards rice, then the logic is that increased demand should have been more incentive to grow rice.

In probing further SBM Intelligence from which much of this solid data has come have built up significant evidence for such phenomena. And Cheta Nwanze, its ceo passionately interprets research evidence. Almost everywhere you look high uncertainty regarding the violation of the rule of law and property rights by governors, relating to the land use Act have contributed to the conclusion that Nigeria is not safe place to invest in. In pursuit of self-interest, and legal plunder, many governors have revoked the certificate of occupancy signed by their predecessors.

Yet on the basics of such C of O’, long land lease and contracts, many businesses had borrowed money and committed other valuable resources to initiate value-creating Enterprises. Land, and political leadership designs for plunder, around it, is an age long challenge. In the Judeo – Christian tradition the story of King Ahab and Jezebel tells well how far political leaders can go to appropriate people’s property rights for their unearned gain. The story also speaks to the consequence of such abuse. In our time, that consequence is in the raising of the perception of risk in the environment which makes for high transaction costs. 

These make the environment uncompetitive, directing capital elsewhere and allowing poverty to get deeper and more debilitating. Part of the trouble with the abuse of property rights by state actors is that it complicates state access to land for development of infrastructure for common use.  I was trying to push a minister of works to fix some badly maintained roads in Delta State. He replied that people had built up on the space allowed as setback and were aggressively seeking compensation. In most parts of the world the law of eminent domain built on the fact that none appropriability goods, those common facilities whose use you cannot exclude those who cannot or will not pay from accessing. Yet in spite of the Land use act which vests land in the Governor, it is not enabling easy access to land even for infrastructure and development partly because implementation of the law has not engendered confidence.
So, when an official like a Governor, does the untoward, and it seems like it is not your business you may be grossly underestimating the consequence of his or her action, for the quality of life you live. Many times, the public officials who conducts himself badly for what he considers small gain may not know well the real effect or damage to the lives of many. Sadly, much of the information to make them wiser exist but exists in forms more readily accessible to people of only a certain level of education or of interest. This call for considerable effort to build media and political actors that can make available to the marketplace such ideas.  If Nigeria’s failing state situation is to be reversed, we not only have to increase the quality of education of public policy makers and implementing agencies but also build up civil society that are triggers for Greater accountability. Equally importantly is building up Media that can reduce experts thought for Citizens in ideas you can use for your good.
Utomi, political economist and Professor of Entrepreneurship is the founder of Centre for Values in Leadership.


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