FIGHTING CORRUPTION AND GROWING A SUSTAINABLE NIGERIAN ECONOMY
– By Obadiah Mailafia (DPhil Oxon)
Being Text of the 2016 FRCN October Lecture
(Abuja, Thursday 27 October 2016)
Introduction
It is for me an honour to stand before you this morning as FRCN Guest Lecturer for 2016; the tenth in the series. For the past decade, this October Lecture has continued to blaze a trail as the flagship in public service broadcasting in this country. Let me express my profound appreciation to Alhaji Lai Mohammed, Honourable Minister of Information and Culture, FRCN Director-General Dr. Mansur Liman and the team who have worked so hard to make this happen. You are, indeed, living true to your mission, “Uplifting the People and Uniting the Nation”.
I must say that some of the most patriotic Nigerians I have ever met have been the men and women working in public broadcasting, radio as well as television. I have found them to be intelligent, dedicated, committed and passionate about their work — passionate about Nigeria. Please, let’s give them a generous round of applause!
I feel proud as well as humbled by the calibre of the personalities who have preceded me on this podium; men far wiser, more learned and more experienced than my humble self. I therefore thank you for the honour you have done me.
I have been asked to speak on the topic, “Fighting Corruption and Growing a Sustainable Nigerian Economy”. A timely topic no doubt, but also a rather daunting one. “Fighting corruption”, you will agree with me, is a fit enough topic for a book. “Growing a sustainable Nigerian economy”, on its part, is worthy of an entire dissertation. As it will be virtually impossible for me to do real justice to this theme in the time allotted to me, with your permission, I shall sketch a broad picture of the issues at stake while offering my own thoughts on the way forward.
The Anatomy of Corruption
The word corruption derives from the Latin word corruptus or corrumpere, which means to spoil or break into pieces. Surprisingly, there is no universally accepted definition of corruption. As generally understood, it refers to behaviour involving the use of a public or privileged position for private gain.
Transparency International, the global NGO at the forefront of the war against corruption, defines it as the “misuse of entrusted power for private gain… (in a manner that) that hurts everyone who depends on the integrity of people in a position of authority”.
I think everybody agrees that corruption is evil. But there are some economists that have argued that corruption, in small doses, need not be harmful. In fact, they believe it could be seen as the oil that greases the creaking machinery of bureaucratic behemoths. From the experience of countries such as ours, such a claim would be dangerous. Corruption must be seen as being everywhere and at all times an ill wind that does no one any good at all.
Over the years, the international community has evolved a body of principles and norms dealing with corruption. They tend to all agree on the key elements involved in a corrupt transaction. These are: bribery, extortion, facilitation payment, collusion, fraud, obstruction of justice, embezzlement, misappropriation or other diversions of property by a public official, trading influence, abuse of office, kleptocracy (stealing and privatising public funds), abuse of power (intimidation and torture), electoral malpractice, illegal campaign financing, clientelism and patronage, rent-seeking, illicit enrichment and money laundering.
Corruption is a phenomenon involving a demand as well as supply side. The demand side involves those who are in position to actively solicit for corrupt gain while the supply side relates to those who are prepared to bribe or fund those who are in a position to bend the rules in their favour. In our day and age, corruption permeates the whole of society. It is a global malady infecting high and low, rich and poor and all facets of economy, culture and society.
Much of the discourse on corruption has tended to focus on the public sector. The reality is that corruption is pervades the private sector as well. There is often a strong operational nexus between public-sector corruption and private-sector corruption. They are inextricably interlinked. In our increasingly integrated global economy, corruption transcends national borders. In an age where capital travels at the speed of light, illegal funds can easily be laundered using electronic networks for international fund transfers. Terrorists, gangsters and narcotic drug lords have devised increasingly sophisticated means of laundering illegal funds through various transmission vehicles, electronic as well as human.
In the existing literature, a distinction is often made between petty corruption and grand corruption. Petty, or everyday corruption, is corrupt behaviour involving small amounts, such as the policeman by the road block who extorts fifty naira from motorists or the civil service clerk who demands small payments for finding the ‘missing’ files of contractors. Others involve customs men extorting money from smugglers in border towns in order to facilitate the safe passage of contraband goods.
Grand corruption, on the other hand, involves substantial funds running into millions and even billions. Multi-billion dollar projects such as Ajaokuta Steel and the various power projects were largely undermined by grand corruption involving theft of billions of dollars. Theft of crude oil, kickbacks from foreign investors and other fraudulent behaviour cost the treasury billions of dollars.
But there is a caveat. Moral theologians will tell us that there is no spiritual distinction between small sins and big ones. The same could be said of about corruption. Petty and grand corruption both have the same corrosive effects on the collective psyche and moral fibre of society.
Let us consider some statistics. According to the World Bank, corruption, fraud and bribery cost more than US$1.26 trillion annually for developing countries alone. This amount is enough to take those that the economist Paul Collier terms ‘the bottom billion’ out of poverty in the mere span of six years. According to the High Level Panel on Illicit Financial Flows set up by the African Union and chaired by former South African President Thabo Mbeki, over the last 50 years, Africa has lost in excess of US$1 trillion from illicit outward financial flows. My former colleagues at the African Development Bank have estimated that an average of US$100 billion of capital flight leaves our continent every year; a figure far in excess of what Africa actually receives by way of foreign investment, remittances from our Diaspora and Official Development Assistance (ODA). According to some sources, Africans hold total assets of between US$700 – US$800 billion stashed away in foreign bank vaults. It is suspected that about US$200 billion of those funds belong to Nigerians.
The whole thing falls into perspective when we realise that the capital shortfalls for filling the investment gap in the African infrastructure sector is estimated at between US$30 – US$50 billion annually. The simple truth is that if corruption were brought under control, Africa would have all the capital needed to finance her own development. Our leaders would not need to go about with begging bowls in the gilded palaces of London, Berlin, Washington, Paris and Beijing.
The picture is even more unsettling for Nigeria. It is estimated that since the 1970s, we earned a staggering US$1 trillion from oil exports. However, due to corruption, over US$400 billion has been frittered away. The 1994 Okigbo panel on the Reorganisation and Reform of the Central Bank of Nigeria (CBN) revealed that a whopping US$12 billion could not be properly accounted for by the erstwhile military administration of General Ibrahim Babangida. I can tell you that US$12 billion was a lot of money then. It is a lot of money now.
And according to the London-based Royal Institute of International Affairs — Chatham House – Nigerians, in collusion with foreign shadowy characters, have engaged in the plundering of our oil resources at a monthly average of US1 billion during the years 2007-2014. It is no surprise why Nigerians today are poorer than they were in 1970; when the country was emerging from a tragic civil war.
Corruption and poverty are Siamese twins. Corruption is a curse and blight to any nation. Corruption has given Nigerians a bad name all the world. It has given the enemies of our people the right to malign us as the most renegade people on earth. It has robbed us of all honour and all dignity in the councils of the family of nations. Outside this country every Nigerian is held suspect. It does not matter if that Nigerian is a neurosurgeon or a doctor of divinity. The late Gabriel Bishop Ganaka was once stripped naked at Heathrow Airport. The airport officials said they were looking for drugs. He explained to them that he was a Bishop and Chairman of the Catholic Bishops’ Conference in Nigeria. They were not convinced. He called the Vatican to intervene. They were adamant. Not too long after that humiliating ordeal, the Beloved Bishop developed a heart condition that eventually took his life in November 1999. Many other Nigerian travellers can testify to having undergone such random acts of public humiliation simply because they happened to be carrying our green passport.
I am persuaded that marshalling the courage to tackle this evil of corruption will not only restore our dented international image; it will give our country the socio-economic turnaround and moral regeneration that we so badly need.
Let’s not make a mistake about it. Corruption in Nigeria and the rest of the emerging world has strong international linkages. As a matter of fact, nobody could successfully engage in grand corruption without international collaborators. In general, the international firms that give bribes and the public officials at the receiving end are all part of an intricate network of global corruption. If I may quote Peter Eigen, Founder and Chairman of Transparency International: “Political elites and their cronies continue to take kickbacks at every opportunity. Hand in glove with corrupt businesspeople, they are trapping whole nations in poverty, hampering sustainable development”.
Corruption has become deeply entrenched in the Nigerian society. Indeed, Vice-President Yemi Osinbajo recently lamented that the whole institutions of government are enmeshed in corruption. It is not just political appointees at all the three tiers of government; it also involves legislators, civil servants and the judiciary. Sadly, it is not just the formal institutions of government and their personnel; the whole of society is suffering from the sickness.
One would have thought that our universities would be the bastion of civility and high culture. Alas, they have become a den of iniquity and whoredom. Lecturers think nothing about forcing female students to compromise themselves if they are to pass their exams. University administrators receive bribes before giving admissions. In some of our institutions degree certificates can be bought and sold. Cultism is rife on some of our campuses, not to talk of drugs, prostitution, murder and kidnapping. It is a betrayal and a travesty of venerable ideals of civilisation that we embodied in the concept of the university as understood by great men such as Alexander von Humboldt and John Henry Cardinal Newman.
Our royal fathers have not been spared from the cancer. Nor have our churches and mosques. All sorts of false prophets and prayer contractors abound; wolves in sheep’s clothing who are capable of unimaginable wickedness under the cover of religion. The medical profession has its share of scoundrels. Misdiagnoses abound. A man could come with a simple ailment and they would falsely diagnose a heart condition requiring an expensive triple bypass surgery. Expectant mothers are dying in clinics because of the proliferation of quackery in the medical field. Journalism has become a profession anchored on blackmail and extortion. There is hardly truth to be found them. Media proprietors do not pay their staff their wages as at and when due; encouraging them to use their NUJ ID cards to solicit ‘brown envelopes’ from public officials and dubious businessmen. Civil engineers and architects are in the business of designing buildings that will collapse in no time. Many of our lawyers are best described as liars. The judges are the worst. It is said that when God wants to punish a sinful nation He sends them corrupt judges. That has been the fate of our country of late.
Understanding the Genealogy of Corruption
Where does corruption come from? How did we Nigerians acquire this incredible notoriety as one of the most corrupt countries in the world?
Let me dispel one popular misconception. When, at their moment of despair, our people speak of “the Nigerian factor”, they are invariably referring to the inherent tendency for corrupt behaviour that is said to be in our DNA. This presumes that this tendency to corruption is in-built in our genotype. I believe this to be both untrue and unfair. Corruption is not inbuilt in the Nigerian character. The eminent American economist, Wolfgang Friedrich Stolper, was one of the architects of Nigeria’s first National Development Plan. He was a constant visitor to our country during the years 1959-1962. From his autobiographical accounts, Stolper described the Nigerian civil service that he met as the best in the developing Commonwealth, well ahead of India, Malaysia, Singapore and Ghana. He interacted with eminent Nigerians such as Pius Okigbo, Simeon Adebo, Jerome Udoji, Ali Akilu and Ojetunji Aboyade. Stolper, an emigrant from Vienna, Austria, was never known for hyperbole. He described the Head of the Western civil service of the time, Simeon Adebo, as “one of the greatest human beings I have ever met”. The Nigerian public service had great men and women who had both virtue and excellence – men without guile – men who were totally incorruptible. I speak of men such as Ali Akilu, Abdul Azeez Attah, Jerome Udoji and Solomon Akenzua who later became Omo n’Oba n’Edo Uku Akpolokpolo Erediauwa I.
No, corruption is not a Nigerian. The jurists of that generation could have served in the supreme court of any advanced industrial nation. I remember men like Adetokunbo Ademola, Fatai Williams, Kayode Eso, Chukwudifu Oputa, Mohammed Bello, George Sowemimo, to name but a few.
Corruption is as old as humanity itself. It has been with us since human beings first began to live together within the political community. The British political philosopher, Isaiah Berlin, spoke about “the crooked timber of humanity”. Human beings in their Adamic nature are susceptible to corruption; an existential part of the human condition as we have always known it. Men can sometimes behave in accordance with the better angels of our nature; but they are also capable of cupidity. What restrains them is the prevalence of norms, institutions, laws and mores that encourage good behaviour and discourage the bad. To illustrate my point, sometimes ago in the 1980s there was some seven hours of blackout in New York. The whole city was taken over by criminals. Supermarkets, banks and other business premises were invaded. Losses were in excess of US$60 million. More than 3,000 people were arrested. If Americans experienced the kind of electricity blackouts we have experienced in this country, nobody will be able to walk the streets safely, let alone operate a business.
There is no universal factor accounting for corruption. It is a complex phenomenon rooted in a country’s political and bureaucratic traditions, its history, political economy and national trajectory. It is generally agreed that corruption thrives best where public institutions and societal norms have disintegrated and legal-regulatory controls are weak.
Not too long ago, the British economist, Ian Senior, published an influential study, titled, Corruption: The World’s Big C – Cases, Causes, Consequences and Cures (Institute of Economic Affairs 200). He applied regression analysis, using Transparency International’s Corruption Perceptions Index 2004 as the dependent variable. He tested 14 independent variables for statistical significance as possible causes of corruption. His research showed that the most significant determinants of corruption are: the prevalence of informal markets; lack of respect for property rights; amount of regulation, in which the more the regulations the more the corruption levels; press freedom, in which the less the existence of press freedom, the more corruption would tend to thrive; absence of the culture of personal honesty; and religiosity, a counterintuitive situation whereby the more the prevalence of church attendance the more the level of corruption. He also noted an inverse correlation between the levels of per capita income and the prevalence of corruption. This is to say, that the higher the level of incomes, the less people are inclined to be corrupt.
Several factors explain the phenomenon of corruption.
First, globalisation and internationalisation have made corruption to thrive more than before. In a time of rapid internationalisation of culture, communications finance and technology, money has become the god of the age. An American journalist once accorded a member of the Taliban in Afghanistan as to why they were all obsessed with owning glistening Toyota Landcruisers when they claim to hate everything Western. His reply was simple: “Allah prefers Landcruisers for Jihad”. Niger Delta warlords who claim to be fighting for “justice” for their people are all obsessed with owning the most expensive toys that money can buy. Some of them have private jets.
In democracies as well as in tyrannies, what the Canadian political philosopher Crawford Macpherson describes as the ethic of ‘possessive individualism’ has become the defining ethos of our era. Money has become everything. It defines the so-called “American Dream”. The love of money is not only the root of evil; it is the root of all corruption.
Second and linked to the preceding is the collapse of our age-old traditional values. When I was a child I lived with my grandparents. At their feet I drank deep from the wisdom of the venerable ancestors. Theirs was a well-ordered society with puritanical values. It was not, by any means a perfect society, but most people knew how to behave and how to respect tradition and values of the community. I still look upon those growing up years as the happiest of all my life.
Contrast that disappearing world with what we have today; a world where our youths do not even know who they are, not to talk of where they are coming from. Societal values have broken down. Add to this the crisis in the family as an institution – a world of broken homes, single mothers and absent and sometimes unknown, fathers. Many of our young people have no one to turn to and no one to learn from. Consequently, they derive their moral compass from Google and Facebook, from Nollywood and from the dregs of Western culture.
Some people have dated the moral collapse of our society to the time the Gowon administration handed over missionary schools to the government in the seventies. The mission schools in which some of us were trained, were second to none in the inculcation of excellence, character and learning. Nigeria has never recovered from it. The prevalence indiscipline, drugs, violence, sexual deviance, cultism and criminality among the youths has been a major factor in the making of the corrupt society that ours has become today.
Thirdly, and linked to the above, is the clash of values. The eminent sociologist Peter Ekeh wrote a famous essay on what he termed “the two publics”. He propounded the theory that Africans live in two worlds; one deriving from colonially inspired modernity and the other from African traditional kinship values. These two worlds, according Ekeh, are in perpetual tension with each other, often resulting in all sorts of societal maladies. For example, the emergence of the post-colonial state in independent Africa never totally won the allegiance of ordinary people. They continue to view the state with a high level of scepticism. For many of our people, it is not considered immoral if you defraud the state to help your people. Anyone who steals from government and uses the spoils to help his people is considered a hero and not a villain. And given our convoluted values, if you held a high position and never used it to amass wealth, your people are likely to believe that you committed robbery against them worthy of treason.
Fourthly, in divided societies such as ours, corruption thrives because there is no shared sense of community and no commonly shared moral purpose. The American social scientist Robert Putnam has done work of original importance on the role of social capital in economic development. He understands social capital as the residual trust and shared interests and values that glue diverse peoples together.
In our leadership traditions, nation building has hardly ever featured. As a consequence, there has been an erosion trust among our people. And it goes without saying that divided house cannot stand. This is why we have not been able to gather the momentum and moral capital to defeat the cankerworm of corruption.
Fifth, public choice theory provides yet another explanation for corruption. When a government official decides to engage in corrupt behaviour, we can safely presume that he does soon the basis of rational calculations. He would have calculated that the returns from corrupt behaviour outweigh both the chances of being caught and costs of punishment if they were every caught. The only credible solution that will dissuade such rent-seeking behaviour is to maximise the possibilities and costs of being caught while inflicting higher levels of punishment, including, some would say, capital punishment for grand corruption.
Sixth, there is what is known as ‘the broken glass window’ theory. It is associated with the work of the eminent American political scientist James Q. Wilson. Wilson noted a phenomenon that many social scientists had not taken note. He noticed that even in the wealthiest residential neighbourhoods, if one broken window is neglected, chances are that a second one will be broken, and then a third and ad infinitum. Lawless people are always looking for broken windows. It gives them a clue that there is no law in the area and that nobody cares. From broken windows, criminals, drug addicts and prostitutes begin to crowd the area. Before you know it, it has become a den of iniquity and lawlessness. James Wilson believes that normative breakdown occurs when authorities ignore the smallest cracks in normative behaviour. When authorities ignore little acts of corruption those acts will sooner or later mushroom into bigger ones and before you know it, chaos is unleashed upon the whole community.
The metaphor of the broken glass window illustrates the increasing incapacity of leaderships in democracies old and new to govern with effectiveness. Weak institutions, poor leadership and inadequate statecraft provide not only a breeding ground for corruption; they open the floodgates of a multiplicity of pathologies in the body politic. As a consequence, any young man bold enough can go across the border and bring armaments with which to visit havoc upon his hapless neighbours. When a society treats with levity men and women who take up arms against the state we are sending signals to the rest of society that all is permissible. And before you know it, the entire society is held under ransom by criminal bandits.
Seventh, I believe that poor wages in the public sector have played their part in making corruption attractive. If we are transparently honest with ourselves, we would reach the sobering conclusion that the current official minimum wage of N18, 000 is not really a living wage in today’s Nigeria. In many of our states, some of the Governors are still complaining that they cannot afford to pay even that abysmal the minimum wage. What we are practising amounts to wage slavery. It is definitely sustainable. As a result, public sector workers feel no sense of obligation or commitment to their duties. Many civil servants ply other trades during office hours to make ends meet. There is enough evidence in economics to show that an adequate minimum wage is actually good for the economy. This is true of the United States as it is true of Britain, Germany and New Zealand.
In the nation of Singapore, they went a step further. They have ensured that the wages of higher civil servants compare favourably with those of the private sector. The rationale is that they are recruiting from the same reservoir of limited talent and it would be foolhardy to underpay them. Those civil servants are also men and women of the highest talent. Recruitment and promotion are strictly based on merit. Incidences of corruption, when they do arise, are swiftly dwelt with. As a consequence, Singapore operates one of the most efficient bureaucracies in the world. And they have gone ahead to deliver the best for their country.
Eighth, in countries where corruption is endemic, the absence of institutional controls and failure to prosecute and sentence means that corrupt behaviour is treated with not so much as a rap on the knuckles. In China grand corruption attracts capital punishment. It is treated as a violation of national security. One of the recent celebrated cases involved one of China’s rising political stars, Bo Xilai. A member of the Politburo who was once touted as a future leader of the country, Bo Xilai was involved in a series of scandals which were to ruin his career. In 2013 he was tried for corruption, bribery and abuse of power and was slammed with a 15 year jail sentence.
In Nigeria, by contrast, no member of the elite has ever spent 10 years behind bar for corruption or abuse of power. Nobody has ever truly suffered disgrace for defrauding the state. And no one has ever been banned from holding public office because of bribery, fraud, corruption or other high crimes of state. The lawyers and the judges will quickly rally around to get the criminals off the hook, so long as they get their cut. President was right when he said that the judiciary has become an obstacle in the war against corruption. The simple truth is that failure to punish has been the highest incentive for the perpetuation of impunity in our country today.
Ninth, the political economy of the rentier state has an inherent propensity to generate a market for corruption. Our oil dependent political economy has been based on collecting rent from multinational oil companies which is then shared out on a monthly basis between the three tiers of government according to an agreed formula. Much of the wealth from oil gave us the illusion of wealth which was not based on productivity or disciplined application. In addition, the Dutch disease syndrome was rampant. Oil exporting economies tend to have an in-built tendency to keep exchange rates artificially high. This discourages exports while stifling agriculture and manufacturing. The whole economy is geared towards importation and consumption rather than innovation and production. Government often imposes ineffectual controls and distortions which only serve to provide additional avenues for rent-seeking behaviour on the part of public officials. Ruling elites feel no obligation to be accountable to anyone. Whatever remains of the semblance of a Lockean social contract disappears. Systemic corruption becomes the norm since there is a widespread feeling that no one owes anything to anyone.
The economist Daron Acemoglu and political scientist James Robinson have co-authored a fascinating book, Why Nations Fail: The Origins of Power, Prosperity and Poverty. They seek to explain why some nations are wealthy while others wallow in poverty reminiscent of the Middle Ages. They believe that the secret lies in the quality of leadership, institutions and the rule of law. They make a distinction between ‘extractive societies’ and ‘inclusive societies’.
Extractive societies are anchored on raw materials exploitation. The elites tend to be highly authoritarian in the exercise of power. While extractive societies may get lucky in experience a surge in wealth, much of it is fortuitous and unsustainable over time. Corruption and tyranny would tend to sap the energy of the people. Inclusive societies, on the other hand, are anchored on the creation of democratic institutions based on trust, accountability and the rule of law. Such societies discourage corruption incentivising hard work, discipline and a long-term view. Such an environment fosters growth and innovation, unlike the former.
Lastly, there is the reality of what economists term ‘path dependence’. Once a society is set on a given course, the collective mindset, culture, institutions and the orientation of dominant elites would tend to follow that trajectory, gathering a momentum of its own. This would seem to conform to Sir Isaac Newton’s first law of motion in physics which states: “In an initial reference frame, an object either remains at rest or continues to move at a constant velocity, unless acted upon by a net force.”
Nobel laureate Douglass North has noted that path dependence is one of the most enduring features of economic history, in which the historical matrix of an economy and its institutional architecture constrain future choices while limiting the possibility for altering the existing trajectory. The same could be said of corruption. Once corruption becomes endemic in a society, it will soon become well-nigh impossible to stop its continuation.
Impact and Consequences
Former World Bank President Paul Wolfensohn famously likened it to a cancer that literally consumes the soul of nations: “Corruption is the largest impediment to investment. And it is not just a theoretical concept…It becomes clear when people die from being given bad drugs, because good drugs have been sold under the table. It becomes clear when farmers are robbed of their livelihoods.”
It is well-known that corruption retards human development. When public officials steal funds targeted at social programmes such as education and health, they rob ordinary people of the opportunity to improve their life-chances. Where there is corruption there you will also find poverty, income inequality, illiteracy and poor health. And where corruption is at a minimum, there you will find improved livelihoods, knowledge, better health and improved well-being.
According to the World Economic Forum, there is an inverse correlation between corruption and national competitiveness. By national competitiveness we are referring to the set of institutions, policies and factors that determine a country’s level of productivity. It seems clear that national competitiveness and corruption do not make easy bedfellows. One has to give way for the other.
There is empirical evidence that corruption undermines the efficiency of the free market economy. In an ideal world, markets working with undistorted price signals enable individuals to choose the products and services that best satisfy their needs. This is the working of Adam Smith’s ‘invisible hand’. Corruption is a disease that cripples the free workings of the invisible hand. Those who believe that corruption is to be accepted in developing countries if it oils an otherwise creaking system will have to think again.
Corruption undermines democracy, distorts markets, increases risk in commercial dealings, scares investors and erodes societal trust while undermining the upward redistribution of wealth from poor to rich. Like cancer, it moves from organ to organ, eventually affecting every institution of government. Corruption distorts the equitable allocation of wealth in society in a situation where public policies are made not in view of the public good but for the advancement of the narrow selfish interests of ruling elites. Corruption affects everything from services delivery to law and order, environmental degradation and the sanctity of age-old societal norms.
Grand corruption can also threaten long-term economic stability. It slows growth, weakens institutional capacity, distorts budget allocation and erodes the legitimacy of government. A government without legitimacy will soon lack the moral right to be obeyed. Once the social contract that binds government to the governed is undermined, the society is likely to become unstable economically as well as politically.
Corruption has also been found to be a ‘push factor’ for immigration, especially among the youths. It has been estimated that thousands of African youths, many of them Nigerians, die every year on the perilous journey across the Sahara in a desperate bid to reach the illusory Eldorado of Europe. Corruption has undermined their hopes of a better life at home. So they deem it worth the risk of death to cross the Mediterranean into Europe in search of a better future. Among the immigrants fleeing our land are young professionals such as engineers and doctors, in whom our state has invested so much. The brain drain robs our country of much needed human capital that could contribute so much to our national development. But it is clear that our young people will only be attracted to remain at home when our country offers them opportunities and hope of a better life.
A part from the economic and social consequences that we have mentioned, corruption corrodes the very soul of society while undermining its moral virtues; sapping the energy of the people and discouraging integrity and honest effort. When young people see that only thieves and robbers are making it, they will be discouraged from honest work and will seek to make it by hook or by crook. We would then have become a land of scoundrels where, according to the Greek historian Thucydides, the “powerful take what they can while the weak grant what they must”.
Growing a Sustainable Economy
To get the economy back on its feet and to re-boot long-term growth, I believe that the first priority is to achieve economic stabilisation. We have been officially in recession since the second quarter of this year. The collapse of oil prices has grossly affected our public finances, eroding over 50% of our public revenues. Our foreign reserves have fallen from a peak of US$60 billion to a low of US$24 billion. The naira is on a downward spiral. Meanwhile output has fallen precipitously while inflation is shooting through the roof, at the current 18 percent. Layoffs have been taking quietly while several airlines have pulled out of our country. The investors are no longer coming the few that we had are having a rethink or moving to Ghana and other neighbouring countries.
The current predicament did not arise from the collapse of global oil prices alone. The spendthrift follies of the previous administration contributed to the crisis. Let’s not mince words: thievery, rapine and grand larceny defined the character of the ancien regime. During the last political-electoral cycle, backroom deals were settled in dollars, some of it taken directly from the vaults of the apex monetary institution. It is the kind of unbelievable behaviour reminiscent of tropical gangsters as depicted in the improbable accounts of the Polish journalist-journeyman Ryszard Kapuscinski.
With the recent collapse of global oil prices, government revenues have dried up by over 50 percent. Government at all levels have had difficulty paying public sector workers, not to talk of financing major physical infrastructures. What began as a dollar shortage has mushroomed into a major recession – some would say stagflation.
The fat years are gone, and with them the phantasmagoria of our being a land flowing with milk and honey. The blissful fantasy in which we wallowed for more than forty years was spurred by a petrodollar political economy that fed our appetite for laziness, avarice and graft. Consequently our rulers exercised power with total impunity. And most of the wealth was stolen anyway, with little left to be invested in national development. It was no surprise that our politics became a titanic zero-sum game to capture power by all means so as to have untrammelled access to petrodollars.
Economic stabilisation requires bold neo-Keynesian to pump a fresh infusion of capital into the economy in order to restore confidence and re-boot growth. Improved sentiments will not happen until we pursue economic policy within the framework of a coherent and credible development strategy. There also has to be greater coordination between fiscal and monetary authorities. Sadly, we notice that Nigeria does not have an economic administration. The British Chancellor of the Exchequer, for example, has at his beck and call some 300 highly well-trained economists in the Treasury. Their job is to worry day and night about the economy, monitor key trends, analyse critical developments and proffer policy. We need to build such an administration, in addition to strengthening the National Economic Management Team that has become virtually comatose.
Let’s get it very clear: the current recession was neither created by Muhammadu Buhari nor by the ruling APC. It is the ultimate denouement of a long night of poor leadership and wrong policy choices. But the buck stops with one person. We cannot continue to blame previous administrations. We can only hope that, like the great Franklin Roosevelt in the America of the 1930s and like Barack Obama during the height of the Great Recession, our President will muster the vision and courage to reclaim the lost centre. He needs a brains trust of people who love Nigeria passionately and are ready to do what it takes to take us to the path that destiny has ordained for us.
Muhammadu Buhari is a statesman of destiny. It would seem that each time destiny brought him to head the High Magistracy, there would be one economic crisis or the other. It was the case in 1983 and it is the same today. God has a way of choosing people for specific tasks in history. I happen to believe that fate will not impose on us burdens that we cannot bear; nor will it place anyone in a storm that he cannot weather. But at the rate we are going, we run the risk of squandering the vast reservoir of moral capital that ushered in the administration. Nigerians are getting impatient and they are complaining that this change is not translating into what they were hoping for. We must do what we have to do to rescue our economy and to get the great Nigerian people back to work.
In terms of long-term policy, I believe that government holds the key to our long-term sustainable development. We need bold action to reinvent the state and restructure the economy away from dependence on oil. It is clear that the model we have been operating for the better part of 4 decades is no longer sustainable. There is general agreement that low oil prices will become the new normal for quite sometimes to come. The world is tiring of the hydrocarbon industrial civilisation that has fuelled the world economy since the turn of the last century. The advanced industrial nations are frantically seeking alternative energy sources. Global harming is an additional incentive for them to move away from hydrocarbons. The handwriting is clearly on the wall: We in Nigeria must diversify or perish.
Until the Great Recession which swept like a hurricane across the advanced industrial economies beginning from the autumn of 2008, the reigning orthodoxy was that ‘big government’ is the enemy of the people, not their friend. Ronald Reagan in America and Margaret Thatcher in Britain anchored their monetarist programmes on the belief that ‘big government’ inhibits creativity and entrepreneurship. They proceeded to ‘roll back’ the state through massive programmes of deregulation and liberalisation. We in the developing world were virtually coerced into undertaking structural reforms, with disastrous consequences in terms of de-industrialisation and deepening poverty.
Today, we know better. While it is clear that a regime of controls and distortions cannot ensure long-term prosperity, we also know that the gods of the marketplace are nothing more than naked masquerades. It is evident that untrammelled liberalisation of capital markets has created untameable financial bubbles which portend huge risks for the stability of banking and financial systems, and indeed, of the economy as a whole.
As two experts in the field of state-building, Ashraf Ghani and Clare Lockart, in their book, Fixing Failed States (Oxford University Press 2009) explain: “Our international system is premised upon states that are capable of fulfilling a range of international and domestic responsibilities. As the locus of political authority in a country, the state’s decisions are simply assumed to have the capacity to implement those decisions, project its authority throughout the territory, possess a domestic resource base to meet its spending obligations, and have a legitimate monopoly on the physical means by which it can guarantee its citizens’ security”.
The key functions of the state as understood in our twenty-first century requires, the following key elements: the presence of the rule of law; monopoly of the use of violence; effective administrative control; sound management of public finances; massive investment in human capital, including education, health, knowledge, training and skills; enhancement of citizenship rights through expanded opportunities for participation and ensuring reciprocal rights and obligations to all citizens; development of a competitive and forward-looking market economy.
We need a civil service that is based on merit and professionalism. This is because, no matter how exalted the vision of the statesman, if he does not have the right civil servants to implement that vision, it would come to nought. China has never pretended to be a democracy. But it is a meritocracy. Since medieval times the Chinese have instituted merit as the foundation of their national system. And the system has delivered. We need a reformed public service that is not only cost effective but also re-engineers progress and prosperity. To my utter disappoint, the New Public Management (NPM) philosophy that swept through much of the world in the last two decades bypassed our continent. The NPM has been anchored on reforming civil service systems by making them performance-oriented and focused on delivery of quality, with measurable benchmarks, transparency and accountability. Better late than never!
Linked to this is the need for administrative decentralisation. An over-centralised state has been the bane of our national development. Over-centralisation has tended to go hand-in-hand with corruption and tyranny. Countries such as Uganda, Tanzania, Kenya, and Namibia have made significant progress in terms of administrative decentralisation, with results that have been quite encouraging. But countries such ours are far behind by a long shot. We need to restore hope to our people by strengthening local government and local self-determination. People must be empowered to take responsibility for their own future. The state must cease from being an overbearing Leviathan that sucks the blood of the people instead of being their servant.
Thirdly, we need to create an entrepreneurial state – a smart state that supports innovation and generates critical public goods that support creativity and higher level productivity. Mariana Mazzucato, an economist at the University of Sussex, England, has done original work on the role of government in high technology innovation. Her book, The Entrepreneurial State (Anthem Books 2014) has made some waves among economists and policy scientists with regard to the old debate about industrial policy. Mazzucato shows that, ironically, at a time when America was pushing the ideology of deregulation and privatisation in developing countries through the World Bank and the IMF, their government was doing the very opposite by intervening in strategic high technology industries. She provides evidence of crucial government support for ICT in Silicon Valley which made those industries world leaders. What is advocated is not government setting up companies; rather, it is about the state investing in building a sound business environment and incentive systems that drive creativity and innovation. If it is good for America it has to be good for Nigeria.
Fourthly, we need to diversify the economy. We Nigerians are often a quarrelsome lot. But if there is one thing we are all agreed on, it is on the urgent need to diversify the economy. To begin with, it is important to know what we are talking about. People tell us that the Nigerian economy is already relatively well diversified. The issue, however, is the quality of that diversification. Petroleum still accounts for 95% of our foreign earnings and about 70% of government revenues. That is not good enough. To be meaningful, diversification has to reflect not only a well diversified local production base but also variegated high quality value-added products for local and world markets. This will not happen without agro-based mass industrialisation. We must manufacture or die! Trade and product diversification is also vital, as is diversification of international trading partners.
Concluding Observations
I am persuaded that tackling the monster of corruption and accelerating growth and transformation is the key to our sustainable future. It is a well established fact of economic science that the prosperity of nations does not derive from any nebulous concept of geographical or genetic determinism. Rather, it is shaped by wise and enlightened leadership, investment human capital and infrastructures, smart policy choices, effective governance and sound macroeconomic management. It takes courage, vision and creativity. It is obvious that an endemically corrupt society can never generate long-term sustainable prosperity.
Tackling corruption requires the highest qualities of leadership: courage, boldness, vision, moral force and conviction. Indeed, there comes a time when a statesman must rule with tough love. An ancient African adage counsels the king to “talk softly but carry a big stick”. It is indeed a counsel of wisdom. It
What the Buhari administration has launched is a call to moral revolution in our country. And as you all know, a revolution is not a dinner party. As Niccolo Machiavelli warned long ago:
“And let it be noted that there is no more delicate matter to take in hand, nor more dangerous to conduct, nor more doubtful in its success, than to set up as the leader in the introduction of changes. For he who innovates will have for his enemies all those who are well off under the existing order of things, and only lukewarm supporters in those who might be better off under the new.”
Some of the methods used by the current administration in their anticorruption drive may look rather clumsy. But what matters, as far as I am concerned, is that they achieve results. Some of the actions have borne positive fruit. Trillions of naira have been recovered from corrupt officials back into the national treasury. The Treasury Single Account (TSA) promises to reduce fraudulent behaviour that has often taken place with the collusion of bankers. Public expenditure can be better monitored and controlled. What is important is that, in everything, we must respect the constitutional rights of the accused, including respect for the rule of law and for due process.
Going forward, it must be made clear that fighting corruption is necessary, but it is not in itself an economic policy. It can only compliment a coherent development strategy to re-boot growth and ensure long-term sustainable development.
I also think that the fire-fighting approach is not quite sustainable. Tackling endemic corruption requires much more than dawn raids by intelligence service officers. It requires that the anticorruption agencies map out a strategy and roadmap for their efforts. It requires research, painstaking analysis and high level intelligence information gathering skills.
In addition, I believe that the proposed anticorruption court needs to be set up as soon as possible. It may well require integrating the EFCC with ICPC into a super-organisation headed by an anticorruption Tsar. The new organisation should be given judicial powers to arrest, prosecute and sentence.
A few countries in Africa and the emerging world have made considerable progress in anticorruption. We can learn a lot from such countries as Ethiopia, Botswana, Namibia, Uganda and Rwanda. These countries have created strong national supreme audit institutions that have served as a bulwark against corrupt behaviour. In addition, they have put in place instruments for monitoring and evaluation of government programmes in a manner that ensures accountability for results and impact. Some of these countries have also enshrined the principles of judicial review in their administrative laws so as to ensure that all actions of public officials can be subject to judicial scrutiny. We need to imbibe those lessons in redesigning a more comprehensive and more strategic approach to fighting corruption.
In concluding my reflections, let me reemphasise the point that without peace and harmony, nothing good will come. But without justice, there can be no peace to speak of. The task falls on our generation to re-imagine Nigeria as a land of peace, a land of justice, a land of progress, — a land based on the precepts of democracy, rule of law, enlightenment and humane values of civilisation. We need a coalition of Nigerians who believe in our manifest destiny as leader of Africa and the black race. If Nigeria fails, Africa fails; if we fail, there can be no hope for the benighted Black people in Europe, the Americas and the islands of the seas.
It goes without saying that social order and harmony constitute the fundamental bedrock of economic progress. This goes hand-in-hand with macroeconomic stability and improvement of economic fundamentals such as low interest rates, a stable naira that is progressively a semi-convertible international trading currency, progressive industrial and trade policies, and forging bold regional and international trading partnerships that hook us into the integrated global marketplace.
I am inclined to believe with the Nobel laureate Amartya Sen, that development is about freedom and about extending the frontiers of human capabilities and empowerment. Democracy and development must therefore be seen as two sides of the same coin. Without welfare, human dignity is imperilled; but without freedom and justice, prosperity is meaningless.
The Great Recession has exposed the fallacies underlying the free-market prescriptions that were forced down our throats not too long ago. To be sure, markets will continue to be paramount. But they would have to be complimented by smart, entrepreneurial states as drivers of innovation and technological progress. We as a people must take responsibility for our own development and our own future.
And I believe that a good dose of economic nationalism will not do us any harm. We should be proud of our past, our culture and the civilisation heritage in this glorious land of our forefathers. We must re-imagine our Nigeria as the New Jerusalem — the true heart of Africa.
President Muhammadu Buhari is a statesman of destiny. It would seem that each time destiny brought him to head the High Magistracy, there would be one economic crisis or the other. It was the case in 1983. It is the same today. God has a way of choosing leaders for specific tasks in history. I also happen to believe that fate will not impose on us burdens that we cannot bear; nor will it place anyone in a storm that he cannot weather.
Nigeria has a world-historic destiny. Our vocation is to build a first class technological industrial democracy. We are meant to be a city set on a hill – a light to unto the nations. We can only fulfil our destiny if we reinvent our nation as a country of humane values; a country of civility, a nation of positive science, intellectual progress; a land of peace and justice – a country of civilised values. At the same time we must be open to the rest of the world – open to foreign investors and to brokering partnerships that will bring mutual benefit in our interdependent world. This must go hand-in-hand with a new ethos of responsible leadership anchored enlightenment, the rule of law and commitment to the Standard of Civilisation as universally understood. We also need responsible citizens and proactive civil publics that cherish democracy and the Good Life as Aristotle understood it. Only then we can truly win the war against corruption, poverty and economic backwardness. It is the task and mission of our generation; the shape that destiny assumes upon the earth.
This is the task and mission of our generation.
***