Reconstructing Nigeria For Prosperity By Charles Soludo

In my 2005 National Democracy Day Lecture, I strongly argued that “for sustainable democracy, fundamental changes are required in the constitution, the electoral system, the fiscal federalism, as well as a gamut of legal-institutional reforms that are developmental and capable of promoting private enterprise and competition”. 

Charles Soludo, Ex Nigerian Central Bank Governor

Seven years later, I feel more strongly about this point, and almost a sense of urgency to it. In the last two years, I have given several lectures on Nigeria’s dysfunctional political economy. I am glad that constitutional amendments are being debated. At least, let us start the talking. There is a systemic failure, and our institutions cannot take Nigeria on a sustainable path to prosperity.  In three articles, beginning with this one, I want to join the debate.

The word ‘restructure’ evokes all kinds of reactions. For some, it is a veiled campaign to dismember or weaken the Nigerian federation. I disagree. While I admit that Nigeria as a country or nation has been a colossal disappointment and a textbook example of “how not to do it”, I disagree that the solution is to dismember or weaken it.

I have three strong reasons to be a believer in one united and prosperous Nigeria. First, I am a pan-Africanist--- an Nkrumaist in terms of Pan-African unity.  As a scholar, about 60 per cent of my research and publications are on African economies. I am one of those dreaming of the second USA, the United States of Africa (with 54 states, encompassing the current 54 countries, with Nigeria as the Texas of Africa). Our destiny is tied together—the rest of the world simply sees one ‘Africa’ as if it is a ‘country’ but we think of ourselves as different. Combined, the 49 sub-Saharan African countries account for barely two per cent of global GDP (the size of Belgium with 10 million people). I see Africa’s future increasingly within the context of a more fully integrated continent. Enough of my dreams: now back to reality!

Second, I am proud to belong to the “big country”, and wish that it could become the “next China”. Nigeria is Africa’s most populous and its potentially biggest economy. In today and tomorrow’s world, size matters. Europe will inevitably move towards greater ‘federal Europe’ if the euro is to survive, and other efforts towards agglomeration are going on around the world. Nigeria accounts for far less than one per cent of global GDP (indeed if Nigeria were to submerge under a volcano tomorrow, the world would only notice it as a humanitarian disaster). I cannot imagine Nigeria breaking into smaller groupings. I do not see any of the groupings that will ‘happily’ stay together under one union without its own internal contradictions and tensions as in the larger Nigeria.

Third, I am aware that the hangover of history makes any reference to the word ‘restructure’ by an Igboman to be viewed with suspicion. I hate to think of public policy in those terms but if it helps this discourse, I make bold to say that as an Igboman, I will never support anything that will threaten the unity of Nigeria. Igbos have the greatest stake in Nigeria, and therefore stand to lose the most in the event of (God forbid) any disorderly unravelling of Nigeria. An enterprising, itinerant people with huge population in a tiny land mass, Igbos (like the Jews) are in need of a large domain or market for their commerce without molestation or discrimination. They are everywhere.  Of the estimated 17 million Nigerians in Diaspora, I can bet that at least 10 million of them are Igbos. They dominate most markets, especially for motor spare parts, in Africa. Onitsha traders now suffer because of Boko Haram as their supply chains to and from many parts of the North are grossly diminished.

There is hardly any village in Nigeria or town in Africa without an Igboman, speaking the local language and probably owning a house and feeling much at home. Without fear of contradiction, I can assert that at least 80 per cent of the Igbo elite live outside of Igboland (mostly in Lagos and Abuja), and more than 70 per cent of the investments by Igbos are outside of Igboland. I know that more than half of Anambra’s population lives outside of the state. There is hardly any former public office holder (governors, ministers, senators, Reps, etc) since 1999 who lives in Igboland. As Mallam Nasir el-Rufai was quoted as saying sometime, Igbos have turned Abuja into their ‘sixth state’, and some estimates opine that Igbos constitute 30-40 per cent of Lagos State. Even traditional marriages are now celebrated anywhere. The reasons for these are for another day.

The point of emphasis is that Igbos have the greatest need to keep Nigeria or even Africa as one united and prosperous market. An elderly Igbo friend of mine summed it nicely: “in the 1960s Igbos fought to leave Nigeria and the rest of Nigeria refused; we lost our properties and lives; now that we have re-built them everywhere, we are going to fight to make sure no one else will leave the union: we are all in this marriage for better or for worse”. Enough said!

Our thesis here is that a society can only prosper under conditions of ‘good leadership’ as well as a ‘good system’ that supports competition and wealth creation. So far, the dysfunctional system and its perverse incentives that make it almost impossible to make sustained progress in Nigeria have received little attention in public discourse. For three consecutive years, Nigeria has retained the 14th position in the world as ‘a failed state’ (with Somalia as number one) and many people think it is a joke. I posit that any serious discussion of public policy that ignores this issue misses the point. We believe there is a systemic failure that cannot be fixed by ad hoc ‘reforms’ irrespective of the type of leadership.

We therefore use the term ‘restructure’ to refer to the gamut of transformations in the nature and structure of the Nigerian State and society away from the current entanglements with the pursuit of rents to re-establish the link between the state and the people/business, and to re-engineer a society where competition and hard work drive success. Let us divide Nigeria’s post-independence history into the pre-civil war (under the 1963 Republican Constitution and its provisions for competitive federalism under the regions and a revenue allocation formula that forced hard work and competition) on the one hand, and the post-civil war with its centralised, unitary-federalism, with the centre repeatedly ‘creating’ the unviable federating units each entitled to the free money from the centre.

On literally all accounts, the average Nigerian was better off in the first than under the second: per capita income in 1966 was about $1,000 and about $1,400 in 1973 and is currently about $1,200. In REAL terms, the average Nigerian today (despite Nigeria earning over $600 billion from oil since 1973) has less than half of the income in 1966; is poorer; has a shorter life span; with poorer educational system and infrastructure. All the industries and palm and cocoa plantations and groundnut pyramids built by the regions have collapsed.

Our current unproductive system was designed to keep Nigeria ‘united’ by creating a strong ‘centre’. In the process, we have neither a federation nor a unitary system (at best a corrupted unitary system). All incentives and institutions are designed around a command and control structure for sharing and consuming the lottery jackpot from God (oil rents). For fear of death, Nigeria has indeed decided to commit suicide! There is no incentive for productive governance. National politics of competition for the oil rents has assumed a life of its own. On a per capita income basis, Nigeria has the most expensive parliament in the world. Every village now wants to be a state to get its own ‘share’. Don’t talk about fiscal viability! Have you heard any state governor advertising the number of new businesses that were attracted to his state or number of private sector jobs created as ‘the’ key performance indicator? There is little incentive for such! Debate on leadership is about who will share and where he comes from. It is not about who has the best plans to create jobs and wealth. Because you don’t need any skills to share, just about anybody can be a ‘leader’. Our politics has become a road to nowhere.

We need good leaders but equally important, we need a competitive system that allows any potentially good leader to emerge and perform. To use the metaphor of football, you need good footballers in a good pitch to have great football. If you have 10 Lionel Messis in a team but you take them to play in a cassava farm as field, their talents and efforts may come to little. In fact, because the field is a cassava farm, the ‘best players’ that would emerge could be the street urchins. Our view is that the type of leaders thrown up under a democracy and the latitude they have for creative change depends upon the nature of the legal-institutional infrastructure and the incentive-sanction system. As an economist, I understand that to change behaviour, two keywords are critical: incentives and sanctions. Both summarise what are popularly termed ‘institutions’. An individual can make a difference but ultimately it is institutions that make all the difference.  You can assemble a thousand technocrats, each with his/her ‘reforms’ and at best their positive impact will be at the margin.

Nigeria is in a chicken and egg situation. How will the ‘good system’ emerge without ‘good leaders’ and vice versa? Leave this for our next articles!

To prepare for life without oil, we need a new road map, and the starting point is a new constitution for prosperity! We need to understand the institutional/constitutional design that makes United Arab Emirates (UAE) produce the world class city of Dubai with little oil while other oil-producing countries of the Middle East are not diversified. We need to understand the incentive system that enables the State of Nevada in the US to prosper despite not having any natural resource in a country with oil rich states. It won’t be easy to repair the havoc oil and the destructive politics around it have wreaked on the society, including destruction of the productive elite. But the time to start is now.

To move forward, Nigeria must review the content and meaning of its current political map; rights over mineral resources and land; tax jurisdictions; citizenship rights; fiscal responsibility and fiscal federalism; powers of the central vis-a-vis regional governments; elimination of the suffocating hands of the Federal Government on the regions; etc. It is an oxymoron to repeat the same thing over and over, and expect a different outcome. For a new Nigeria to emerge, new thinking and new ways of doing business must be in place.