Prof. Ango Abdulahi Delivers Lecture on the Economy and Future of Nigeria

Prof. Ango Abdulahi of Nigeria recently delivered a major lecture on the economic history of the oil-producing West African state.
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Friday, February 12, 2010

The state of the economy and future of Nigeria

Being a lecture delivered by Prof. Ango Abdulahi in memory of Sir Ahmadu Bello, the Sardauna of Sokoto and Premier of former Northern Region of Nigeria in Kaduna on January 15, 2010

INTRODUCTION

I WISH to first of all thank Arewa House and all those behind the organisation of this annual event for the honour and privilege conferred on me by their invitation to me to give the Ninth Memorial Lecture on the great leader, the Late Sir Ahmadu Bello, the Sardauna of Sokoto; the first and only Premier of the Northern Region of Nigeria.

I accepted honour with great humility and considerable trepidation. Looking at the galaxy of eminent personalities who undertook this assignment, I felt justified in questioning the wisdom which led Arewa House to my selection this year against their own risk of lowering the high standards already set, and in the process expose me as the odd one out in what can be described as "Hall of Fame". Be that as it may, I accepted both the honour and the challenge to speak on the assigned topic - "The state of the economy and the future of Nigeria."

Indeed this topic is apt and topical and worthy of sustained discourse in any nation even in normal times let alone in times of serious crises like is the case today not only in Nigeria but throughout the entire world. However, people in the audience familiar with my antecedents, may legitimately question my academic credentials as inappropriate and irrelevant to deal with this complex subject which seemed, over the years, to have defied even the mighty among past and present social/political scientists.

When some years back President Ibrahim Babangida became frustrated by the apparent persistent policy failures in the Nigerian economy during his administration, he raised the embarrassing alarm why this should be so in spite of the deluge of economic theories and postulations from both domestic and foreign experts advising his government! Eventually even the experts had to concede that the. Nigerian economy owed its formidable resilience to its informal, rather than, its organised corporate. Sector. This is why, ladies and gentlemen, I will seek your indulgence to treat this topic in a pedestrian style devoid of your expectations of the familiar intellectual jargon of economists laced with 'ifs and buts'.

The Economy - Historical Overview

The Journey to 1960

As a 71 year-old Nigerian citizen, I have been fortunate and privileged to have been involved and to know a little about Nigeria's history both before and after independence in 1960. Like most parts of Africa, Nigeria was also colonised by an imperial foreign power.

The present day Nigeria (plus ~ or minus some territories) came into existence with the formal amalgamation of conquered territories of the north and south by the colonial Governor - Lord Lugard in 1914. By this historic action the numerous diverse peoples who constitute the present day state, willy-nilly, began the difficult and ardious journey to a modern nationhood. The suspicion and mistrust between these diverse peoples were indeed palpable.

However, over the years, through the spirit of give and take exhibited by the leaders and people at large, a national spirit began to manifest to the point when the leaders agreed to work together, if only to kick out the British in 1960. In the 46 years of direct colonial administration, as would be expected, the British designed and organised how the economic resources of the colony should be harnessed and managed.

It is noteworthy that when the British were in-charge, they made sure that they employed the full power of government to direct the administration as well as the economic management of the colony - meaning that the public and so-called private sectors (mainly foreigners) were not easily distinguishable since both were designed to achieve obvious imperial interests. In other words, during the colonial era, capitalism (the British variety) was at home when the British themselves were in direct charge of governance. It is fair to assert that the economy of Nigeria, under direct British control between 1914 and 1960, was organised to mainly serve the interest of the imperial power while the residuals in the form of some infrastructures like" railway (narrow gauge), port facilities, and some road transport used for the convenience of exploiting the economy, were some of the benefits left behind by the British.

The British realised that at some point, they would have to relinquish direct political control to the natives. It was therefore imperative for them to plan a long term strategy to ensure continued control and exploitation of the former colony long after the attainment of political independence. The British were able to achieve its neocolonial hold on Nigeria largely through the following:

Education System: Through the education system they created, they seemed to have succeeded in entrenching a mental condition, which continues to-date, to deprive Nigerians, of their self-esteem and self confidence.

Political System: They left behind a political arrangement which to-date perpetuates national instability and resultant poor governance.

Economy: Through the failure of our educational and political systems, the British and their western allies have been able to remain in control of the commanding heights of Nigerian economy.

(b) Between 1960 and 1966

The British bequeathed a Federal Constitution to Nigeria with three largely autonomous regions as the federating units, and a parliamentary system based on the British model (with some modification to suit peculiar needs), to operate our federal system. Against this background of new political freedom, there were great expectations that Nigeria, with its vast endowment in human and natural resources would, within the shortest time possible, transform into the "GIANT OF AFRICA" in terms of its political and socio-economic structure, and become a land flowing with "milk and honey" for its citizens to live in peace and prosperity and to take its rightful place in the community of nations.

However, beyond the expected euphoria of the new freedom, our pioneer leaders were very mindful of the enormous challenges ahead of the young nation. Despite a federal system where the Regions were powerful and autonomous, the leaders quickly realised the advantage, in fact the necessity, for a coordinated development planning for the country where the centre and the federating regions must come together to discuss and agree on the overall direction for the country's development. This was the basis of putting together the 1962 - 1968 National Development Plan. To drive the plan the philosophy of "Mixed Economy" was adopted to compel governments to play a major, if not a leading role, in the development of the country. Indeed under this doctrine, the private sector was encouraged to partner, wherever possible, for greater impact in the development process. Under the 1962 - 1968 plan vital areas emphasised to impact on the economy and social developments include.

Agriculture: This was recognised as the backbone of the economy for its crucial roles in providing employment, food security, foreign exchange earnings; and as source of raw materials for industrial development.

Industry: Given Nigeria's huge market and raw materials, an industrial policy which emphasized use of local raw materials for manufacturing of goods for domestic needs and reducing imports, was recognised.

Mining: Here the country's solid minerals, coal, tin, limestone and iron ore deposits and others were properly identified for development. The potential of the country's oil, and gas reserves. were also recognised in the plan.

Education and Health: The 1962-1968 plan and future plans would not succeed without skilled manpower and a healthy population. The plan gave birth to a number of our first generation tertiary education and health institutions.

The philosophy of "Mixed Economy" within the 1962-1968 Development Plan laid the foundation of the relative successes of our leaders in the First Republic. We must however mention the significant sacrifices, integrity and dedication exhibited by the political leadership as well as by the back-up civil service of their time. The quality of leadership and dedicated service can be illustrated using the budgeted provisions of £329 million for the six-year Development Plan for Northern Region under the great Sardauna of Sokoto. This averaged at about £55 million per annum for capital and recurrent expenditures, for the entire Northern Region. This was what would be available and managed to provide infrastructures and social services throughout the Northern Region. This size of revenue, then available to the Northern Region is today equivalent to the revenue being received by only three of about 370 Local Governments in the present-day 19 Northern States!

(c) Between 1966 and 1979

The military took over the reins of government in 1966, thus forcefully terminating the first democratic civil rule. The consequences, which followed this military mis-adventure included:

Civil war which lasted from 1967 - 1970

Creation of 12 States out of the former four Regions existing as at 1966. Greater appropriation of political and financial power at the centre away from the 12 new federating states.

During this period, the economy suffered the obvious setback that a considerable part of the limited financial resources of the country was diverted to the prosecution of the civil war as well as to the reconstruction effort which followed the conclusion of the war. Fortunately, however, large inflows of revenue from high oil prices (caused by another conflict in the Middle East) provided the post- civil war period with new opportunities and challenges for an accelerated economic development, using the 1968 - 1974 Development Plan. Instead, the large inflow of revenue at Federal and State levels was not used wisely and prudently. Wasteful investments in white elephant projects with little value addition to the economy became the order of the day. That also initiated the military leadership and the supporting civil service into the first stage of what was to become an endemic corruption phenomenon in later years. This also led to the virtual abandonment of long term plans for the sustainable development of the agricultural sector, and a move away from the earlier tradition of developing and promoting essential industries based on our strategic economic and security interests.

By mid-1970s there were indications that the Gowon's regime was becoming unpopular because of indications that they might not honour an earlier promise to return the country to civil democracy early enough after the civil war. This led to the replacement of Gowon's government by the Murtala/Obasanjo group in 1975. Apart from pledging to hand over in 1979, the new rulers initiated certain political reforms which included "Local Government Reforms" and the change from Parliamentary to Presidential System of government.

These reforms were aimed at bringing about better and efficient governance from the grassroots upwards, and would, hopefully, accelerate faster social and economic development. In the brief period he was in charge, General Murtala took some exemplary drastic measures to reduce corruption within the public services, and by shunning of ostentatious living styles rampant in the daily lives of Nigerians, especially the so-called affluent elite. Murtala also showed courage in insisting that Nigeria must be its own master both at home and in its foreign policies. Most people would agree that the elimination of General Murtala stemmed from this posture.

(d) The Shagari Era (1979-1983)

Nigeria began to practice the new Presidential System of government based on the provisions of the 1979 Constitution. Those who favoured the system argued that it was going to be more efficient in the delivery of good governance which would usher in a more prosperous economy to benefit all Nigerians. This should be even more so if the provisions of chapter II of the 1979 Constitution were diligently observed and applied. Furthermore, it was argued, the Presidential System, through the provisions of checks and balances in the Constitution, would ensure more transparency and accountability by public officers and in government generally.

The four years of Shagari's presidency, produced no significant indicators of positive change, except that the people in-charge were not soldiers in uniform! Corruption was rampant, abuse of office and mismanagement of scarce resources were visible. Flamboyant life style of public office holders was an added insult to the already injured feelings of the vast majority of Nigerians left to wallow in poverty. By the 1983 general elections, the ruling elite had lost popular support, and had to resort to massive rigging to remain in power. Violent reactions to election rigging in some parts of the country prepared the ground for yet another military adventure in governance.

The Buhari Era

Given the circumstances of his coming, General 'Buhari had to make a difference from his immediate predecessors. He had to deal with pervasive malaise of indiscipline in the society generally. He firmly and decisively went for corrupt public officers to account for their misdeeds, which resulted in the worsening economic downturn of the country in the previous four years. His most challenging and daring decision was how Nigeria MUST MANAGE, DOMESTICATE, AND OWN ITS ECONOMY. This of course, would not go down well with entrenched foreign interests as well as the interests of their parasitic local agents. The inevitable came and General Buhari was pushed out.

(1) The Babangida Era

On assumption of power Babangida's immediate challenges included.

* The deteriorating economy.

* Political detainees.

* A transition to civil rule programme which will satisfy a generally restive polity.

Even though Nigerians overwhelmingly wanted to free their economy from an ever increasing foreign interference, manipulation, and control by rejecting the IMF conditionalities for a loan, Babangida agreed to reject the loan but still went ahead and introduced most of the elements in the IMF proposals. Most reviews of the economic policies of the Babangida era agreed that the consequences of the Structural Adjustment Programme (SAP) on the Nigerian socioeconomic development had very profound permanent persistent negative effects. Central to the SAP reforms included:

(I ) Devaluation of the Naira because IMF/World Bank insisted that our national currency was "over-valued"

(ii) Deregulation of the private and public finance institutions in the name of "free market" doctrine.

(iii) Effort to "remove" government from active and direct participation in managing the economy.

(iv) Divesting of public financial interest already existing in various corporate enterprises through a programme of "privatisation".

By the time Babangida 'stepped aside', the economic situation was not getting better and life was becoming unbearable for ordinary Nigerians. The bad economic situation was complicated by the failure of Babangida to conclude an election which should have ushered in a popularly elected civilian government in 1993.

(g) Shonekan/Abachal/Abubakar Era

When Babangida vacated, 'power' was handed over to Chief Shonekan - a businessman. This was bound to fail because Shonekan was not backed by any constitutional power nor by any popular support in this rather awkward arrangement. General Abacha shoved away the Shonekan hoax in a matter of three months and the military was back in power. Then suddenly, in politically cloudy circumstances, General Abacha died; and was succeeded by General Abdulsalam Abubakar, who hurriedly organized a 10 months transition for the arrival of a democratically elected government for Nigeria in 1999. During the Abacha period there was an attempt to take the country out of the adverse effects of SAP which has already brought about 65 per cent of Nigerians below the poverty line. The Petroleum Trust Fund (PTF) was the instrument introduced by General Abacha to relieve poverty pressures in many social services like transportation, health, and education. In addition, the Abacha Vision 2010 document did not receive any attention by General Abdulsalami, and was eventually abandoned completely by General Obasanjo when he took over power in 1999.

(h) Obasanjo Era to-date

Once again, Nigerians had so much to look forward to from the Obasanjo-Ied new civil government, especially because of the broad popular base of the majority party at the take-off of the administration. In addition, the country was already enjoying an unprecedented inflow of revenue, mainly from its oil export. Instead of converting these advantages to address issues basic to rapid sustainable socio-economic development of the country, the new leadership decided to take the country back to the doctrines of IMF/World Bank which were rightly rejected by most Nigerians a decade earlier; and on which Nigerians were vindicated by the massive failure of SAP. In order to please our foreign masters, the following policies were introduced/or strengthened:

(a) Vision 2010 document which sought to take the Nigerian economy back to the path of development planning was ignored, in fact shoved aside, by General Obasanjo (may be because it emanated from Gen. Abacha!). It is note worthy that Vision 2010 was very much a product of Nigerians themselves with Chapter II of the 1979 Constitution very much in their mind.

(b) The "Free Market" doctrine (delusion) was intensified through more deregulation which led to further devaluation of the national currency from N90 to 1 US$ in. 1999, to the present ever downward exchange rate. Remember that in 1986 the Naira was stronger than the dollar (W1.00 - US$1.2).

(c) Apart from deregulating the financial institutions, Obasanjo's government introduced, ironically, the policy of "MEGA BANKS", al1 in the name of creating the elusive environment of attracting "big foreign investments" into the country. Needless to say, this led to less banking facilities for the majority poor and small business in favour of the so-called "big time" business. It is now clear that the purpose for the MEGA BANKS was to create safe havens for public officers who have stolen billions from the nation which they could neither easily launder outside nor was it easy for them to stash such huge sums of money in our ordinary banks.