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DISCOURSE

By Pat Utomi

(In this write-up, the author advocates that Nigeria MUST dismantle the legacy of state capture to move forward.)

Haiti is the poorest country in the Western Hemisphere. Poverty pummels the Island country just as ferocious Hurricanes visit it from time to time with fury and the anger of a violated person. But few people know that the highest per capita income in the world in 1789 was not Britain, Germany or the United states. It was Haiti’s Plantation economy.
As the Oil age looks clearly to be coming to a close, and clever countries have used savings from Oil to build future potential, it seems fair to wonder if Nigeria will be the next Haiti. The Tea Leaves, unless something dramatic happens, points to Nigeria travelling that sad highway. This reflection, frankly, and sadly, is a story of a personal recurring cry for a beloved country as the path to perdition has been persistently opted for. Can we save our country from being like Haiti, the economy that did not change, and literally died?

Surely I wish for differently than for Nigeria to be the next Haiti. But it would be foolish to ignore reality staring you in the face. I can imagine that many in Haiti at the time James Watt redesigned the steam engine, setting off the Industrial revolution, must have been carrying on as the vast majority of the Nigerian elite are today. To live in denial is as old as history, but as students of why societies fail, like Jared Diamond (Collapse), and of the grand March of history, like in Nial Ferguson, show, with evidence, the consequences can come home to roost.

Forget for a second, the hypebole of Nigeria as a failed or failing state, and just compare how Nigeria stacks up against its peers on almost all measures of progress. On the MDGs we rank below many cotton bowl economies of the African Sahel, the basket cases of the misery index. The recent PWC report on investment flows show Nigeria at the base in Africa. On infrastructure where Nigeria once won a Gold medal for highway development in the 1970s the score today is pathetic. All of this is with oil selling at decent prices. But the wise know this will not be for long. Oil price crash of three years ago provided a great opportunity for correction. But our political class waited for Paris Club refunds, improved oil prices and the excuse of spending your way out of recession to continue the traditions of borrowing up a burden of amortization to an innocent unborn generation. Where is the production orientation and work ethic to earn enough, without Oil, which has run its course, to amortize the piling debt?

Our near coming history is disaster that gave notice but seems ready to surprise us. Yet those who governed Nigeria into this cul de sac have swagger. Instead of hiding in anticipation of what an uprising of the youth whose future they may have made less hopeful could do to them, they talk as if they are triumphalists and even dare to abuse those who warn that we will be where we have now come to.

Why is this so? Is it the depth of ignorance of the damage they have done; or the nature of the seared conscience that they could not give a hoot; or could it be that the instant gratification disposition has so captured culture that people of power and authority are so blinded to future consequences of conduct that such grave error underpin choice.

Let’s present evidence for anxiety. For years I reminded all that Oil was a wasting asset and revenues from it should be treated as windfall. I frequently turned to concepts like Peak Oil (Huberts Peak), the proven reserves of Nigeria which I used to suggest will run down to non-economic levels by 2040, to make the point that we should save Oil income and leverage the savings to create an economy that produces for export and local consumption, based on Factor endowments in which it dominates their global value chains, The diversified economy would better sustain progress. Today, I do not need to turn to such concepts anymore. We have reached the end of the Oil Age. In twelve years Oil’s value would be so depreciated that if we have not changed our current ways we do not have a chance of escaping the Coming Anarchy which Robert Kaplan foresaw.

When years ago I went to work in Import substitution manufacturing and suggested shutting it down in favour of producing some components of motor vehicles from an area in which we had what is today known as latent comparative advantage, and dominating global value chains of the components, like the chain from rubber, to the most specialized derivative components. I was mocked and called unpatriotic. But I insisted that would create more jobs and income than we were getting from crude Oil exports. It took a Professor of Economics from Oxford who interviewed me, 25 years earlier when I was promoting those ideas, to note the far sightedness in my thinking then. This after he studied China and found those ideas played out there. But I hate being the prophet who was proved right by history when the result makes my country a laughing stock. The truth is if I ever wanted to be wrong it would have to be regarding Nigeria as the next Haiti.

So how can we escape that? If Nigeria is to move quickly, as it has the potential to do, from failed state or failing state to a future that reflects the dreams of its founding fathers. It must as a matter of urgency dismantle the legacy of state capture by the class of 1966. It is largely the culture of the club of capture that has moved the country from great potential to the arena of mediocrity. Anyone in doubt about the phenomenon of capture only need read the memoirs of two former Chiefs of Army staff, Chris Alli and Ishaya Bamayi.

Sadly we continue to live in denial about the coming of the end of the Age of Oil, as the National Assembly vote on Restructuring in the Constitutional review process shows so evidently. The Bureaucratic Prebendalism of National cake sharing Richard Joseph pointed to so clearly to three decades ago remains the political elite mindset in Nigeria. Nothing, in the points made repeatedly about how poor leadership made Nigeria miss the window to leapfrog its way into a desirable future and lamentations about how windows of opportunity were about to close on us because our political class was distracted or obsessed with self as the world was rushing forward into a bold new future, has resulted in a revisit of my Rasheed Gbadamosi stories.

Chief Gbadamosi who we lost recently was a great beacon who I inflicted my many worries about Nigeria on for a quarter century. In the early 1990s I kept pointing at how Indonesia was pulling away from being Nigeria’s development twin. My friend Peter Lewis of Johns Hopkins would years later compare how Nigeria was trending South and Indonesia heading North in a book titled Growing Apart. I had said often in a small group concerned with the economy, which included Chief Rasheed Gbadamosi that Nigeria ought to recognize it was more a Gas producing country and stop fooling around with the LNG project. It took Abacha’s commitment of nearly two billion dollars in a low Oil Price regime to begin to halt our decline there. But in 1998 Gbadamosi became a member of the Federal Executive Council and leader of our OPEC delegation. With Crude Oil prices below USD10 a barrel and desperation for better quote allocation, Gbadamosi went to a tense OPEC meeting in 1998. He was shocked to see the Indonesian Oil minister literally uninterested in the fight for quota. When at break time he went to his Indonesian counterpart to resolve the puzzle, the Indonesian smiled and said it’s you Nigerians who are not serious, much of our revenues come from Gas and that has no quota. As Chief Gbadamosi told me the very night he returned from the meeting, the exclamation that he let out as the Indonesian made his point, was- Paaat!! I did not pound my chest and feel good that I had been vindicated yet again. But my pain increased when President Goodluck Jonathan allowed Brass LNG to literally fail, because he was distracted, and could therefore not do what Abacha did and gave us NLNG which would become the most profitable company in Africa.

These continuous policy errors, because of poor leadership, resulted in the 2003 IMF working paper by Columbia University Economists Xavier Sala-i-Martin, and Arvind Subramanian, in which they argued that if you collected oil receipts and sent out cheques to all Nigerians the country would be much better off than with the kind of governments Nigeria had receiving such monies. The truth is that the pressures driving our sad national decline result from perception of the authoritative allocation of values, politics, in conditions of state capture in which an opportunistic club of capture which has functioned with scant regard for the nation building needs of Nigeria beyond lip service, has left a culture of mediocrity and discontent writ large. It is this discontent that is manifesting in irredentist pressures and the new self-determination flooding our mass media.

My alternative offering on how to go, sadly, is what I offered 30 years ago, which today, thanks to Justin Yefu Lin the Chinese Economist who served for a while as Chief Economist at the World Bank, has gained ascendancy in structural Economics as the new Latent comparative Advantage. Unless we can turn quickly to this view of the macro level structure- conduct- performance paradigm in structural economics, with industrial policy focused on our factor endowments, or some superior strategy, Nigeria is in the grave danger of becoming the next Haiti. A country that change left behind because it failed to adapt.
• Pat Utomi, Political Economist and Professor of Entrepreneurship is Founder of CVL”