Perspectives on the Nigerian Political Economy

By Dr Bukar Usman

 

Any consideration of the wellbeing of a country must take into account of both its political and economic outlook. It is difficult to say which takes primacy over the other; but they go together. When the wind of decolonisation was blowing in the 1960s, the nationalists overwhelmingly resolved to first seek political freedom and work for economic emancipation later. This conviction guided the activism of Dr Kwame Nkrumah of Ghana and Dr Nnamdi Azikwe who, among others, led the nationalist movements in their different countries.

      Blood was shed in the independence struggle, such as in Algeria, Kenya, Zimbabwe, Namibia, South Africa and Guinea Bissau; bloodshed in independence struggle is still going on in the Saharawi Arab Republic, which the Kingdom of Morocco calls Western Sahara and tries to keep as a possession. Nigeria was lucky to get its independence without much bloodshed, or as some people call it, on a platter of gold. Nigerians resisting colonialism and those who joined the struggle for independence suffered personal inconveniences like detention, dethronement and banishment. Nigeria’s misfortune was to come after the attainment of independence when the Nigerian military turned their guns against the native governments thereby plunging the country into the Nigeria-Biafra civil war and other political upheavals. 

     After the attainment of independence in 1960, Nigeria, like several other emerging nations, set about to consolidate its political freedom and to face the economy. Both tasks proved to be difficult right from the onset. This was primarily because the countries were only politically independent; many remained heavily attached economically to their former colonial masters. Thus in spite of the proclamation of political sovereignty, no newly-independent country had absolute freedom to decide its economic direction as a nation state. This aside for over two decades, the cold war raged on.  The countries found themselves torn between the capitalist West and the communist East.

     They found some solace in the United Nations Organisation, consequently, many African countries rushed to join the United Nations like their counterparts in other parts of the world. They also formed or joined regional groups.  Within Africa, two broad groups emerged, the Casablanca and Monrovia groups. The Casablanca Group was promoted by the radicals and the Monrovia Group by the moderates. The Casablanca group advocated the immediate formation of an African Government with a standing unified Military High Command, while the latter, the Monrovia group, though not rejecting the proposal outright favoured gradual integration. Both groups later united under the continent-wide Organisation for African Unity (OAU), the forerunner to the current African Union (AU), with headquarters in Addis Ababa. The aim was to form a formidable common front to consolidate their newly-won political freedom and to secure freedom for the other dependent territories. Some African countries were founding members of the Non-Aligned Movement.  It is a grouping of developing countries that sought to chart a course of independent foreign policy. Ideological inclinations determined membership of the groups.

     In spite of the political freedom they enjoyed, these countries were not free to choose any economic or political system to suit their countries. Nigeria was no exception. That serious handicap persisted until the end of the cold war that followed the collapse of the Union of Soviet Socialist Republic (USSR), and its allies in the communist bloc countries of Eastern Europe. Even after that, Nigeria and the other emerging nations were caught up in a web of economic relationship designed and encouraged by the former colonialists. This economic web, some would say trap, favoured the metropolitan countries, which, not coincidently, are industrialised.

     The advantages enjoyed by the industrialised countries compared to the benefits derived by the African countries on account of their membership of such institutions are enshrined in the rules and contents of the conventions establishing those organisations. The organisations include the Breton Woods Institutions, the IMF and the World Bank, the International Finance Corporation, The World Trade Organisation (WTO), OECD, EU-ACP, the G8 now widened to G20 the World Economic Forum in the economic  arena and several Human Rights bodies set up to reign in the conduct of countries in the political arena.

     After the collapse of the communist bloc, the entire world dissolves into a unipolar world which leaves countries with a very little room to manoeuvre in terms of political and economic options. This is the international environment in which Nigeria finds itself today.

     Nigeria’s 50th independence anniversary celebration marked on October 1, 2010, provided the opportunity for a comprehensive stocktaking and assessment of its economic and political performance over the last five decades. The overall verdict is not quite cheering. Nigeria did not perform as much as its peers at independence, which include Malaysia, Brazil and India. Some smaller countries including Ghana, Rwanda and Botswana are also rated to be faring better in quite a number of socio-economic and political indices.

     Politically, the country is still tinkering with its constitution and electoral laws in search of a more enduring political system. It discarded the parliamentary model and adopted the presidential system in 1979. The Presidential system is proving to be too costly to run. The national Assembly consumes a disproportionate amount of the budget while electioneering campaigns are too expensive. Annual budget is heavily loaded with recurrent and overhead items to the utter neglect of capital expenditures. This lopsidedness has been perpetuated over the years and is telling on the economic development of the country. Public concern has rightly increased since the critical analysis and comments by the Governor of the Central Bank of Nigeria, Malam Sanusi Lamido Sanusi, indicating that up to 25% of the national recurrent expenditure is on the personal emoluments of members of the two chambers of the National Assembly.  No one told the Nigerian public the amount appropriated for the political officers on the side of the Executive branch of the government.

     Nigeria since independence had tried several economic development models including central planning. However, the federalism practiced in Nigeria did not engender the required plan discipline even under the military with its regimental tendencies. After the First, Second, Third, Fourth, Fifth and Sixth economic development plans, planning was abandoned. Outside influence and interests dictated practically the content and direction of development programmes in quantitative terms and set targets. The Structural Adjustment Programme (SAP) which was prescribed for the country by the IMF/ World Bank in the 1980s set the tone for the economy and to some extent, the political direction.  This is part of the conditionalities for financial support from those foreign institutions. The debtor must obey while the creditor dictates terms. Naira was devalued. The nation was weighed down by heavy external financial indebtedness.  The outcome of the SAP was a brief growth in the economy. Foreign debt mounted, but the country won debt forgiveness during the tenure of Chief Olusegun Obasanjo as civilian President. However, in a sad turn of events, the Administration of Dr. Goodluck Ebele Jonathan since May 6, 2010 when the National Assembly proclaimed him president with full constitutional powers, the country returned to borrowing and the debt mountain is gradually ballooning.  The foreign reserve and money from excess crude sales have been depleted to uncomfortable levels.

     SAP was followed by other imported programmes some of which are connected with health and centred on disease eradication programmes, child and maternal mortality, HIV/AIDS. Others are agriculture-orientated. Current emphasis is on the Millennium Development Goals (MDGs) and similar programmes such as National Economic Empowerment and Development Strategy (NEEDS) and State Economic Empowerment and Development Strategy (SEEDS). Consequent to all this, the Nigerian bureaucracy lost out in having any serious role in economic planning for the country. The tendency is to rely on the ‘imported’ programmes packaged by the ‘development partners’ and donor countries and organisations.  The donors closely monitor the implementation of their programmes and projects including direct financial disbursement and capacity building. Home grown programmes were virtually subverted and de-emphasized. Many have been protesting to no avail against the foreign designed programmes and prescriptions which take no account of the social background of the country. So far, the foreign donors and creditors continue to have their way and Nigeria seems to be caught in the web with little or no room for ‘home grown’ initiatives. Aside from the adverse comments by knowledgeable Nigerians against the foreign economic development programmes, the widespread reluctance by the governments in this country to subscribe to the counterpart funding of projects is sufficiently indicative of the strong reservations and loss of faith in such programmes.

     The raging debate especially in the second half of the 2010 was about budget performance and the overall health of the economy. The nation seriously lagged in disbursement of the approved estimates for 2010. Performance was worse in capital releases and access by the MDAs. As a result of the delay capital projects execution was extended to March 31, 2011 while the President lifted the embargo earlier imposed on award of contracts for capital projects.

    Presentation of the Budget estimates to the National Assembly is routinely delayed; that invariably leads to late approval of the budget. Everything is behind schedule.   Coupled with the end of year holidays and festivities and preparations for the general elections (in election years), the situation could only bring more hiccups and complications in financial management and the health of the economy.

     One seemingly lone voice which continuously extols the performance of the economy is that of Mr Olusegun Aganga, the Finance Minister who was appointed into the Cabinet by President Goodluck Jonathan. To him the economy was doing quite well.  He takes pride in Nigeria being among the 10 countries in the world having the best growth economies in 2010. In a way he could be right.  On pages 66-67 of its January 8 2011 edition, ‘The Economist’ of London listed Nigeria among the 10 fastest growing economies in Africa.  It said that the Nigerian economy grew by 8.9 per cent between 2001 and 2010.  It projected that the Nigerian economy would grow at the rate of 6.8 per cent from 2011 to 2015.  The news is good news to Mr. Aganga, but the magazine did not give hard, reliable data, at least in the edition cited, to back its claims of such a robust economic growth. But it must be admitted that Mr Aganga is a highly rated international financial expert. He presided over the World Bank’s annual meeting in Washington for 2010. He therefore knows his onions. However, it is noteworthy that his ratings tend to conflict with the negative indices of international rating agencies which show that poverty is widespread, endemic and inadequately tackled by the Nigerian authorities.

    By December 2010 it became clear that problems of succession connected with President Umaru Musa Yar’Adua’s ailment and subsequent demise had taken a heavy toll not only on the political arena but also on the economy. Governance was severely disrupted for the better part of the first half of the 2010 financial year and this has reflected in the late submission of 2011 budget. After much anxiety expressed by the National Assembly the 2011 budget address by President Goodluck Jonathan was eventually delivered to the National Assembly on December 15, 2010. The address which came barely two weeks to the end of the financial year was unprecedented in the budget cycle of this country in terms of the delay. The effort made to synchronise the 2011 budget with the First National Implementation Plan (NIP) had inevitably taken some time and so too the cabinet changes which followed the assumption of presidential powers by  former Vice President Goodluck Jonathan. The new Ministers required time to familiarise themselves with the policy direction more particularly so by those who were not in Government. Permanent officials who should normally take political directives could only deal with the routine under the circumstances. This aside it has been recognised by development partners that there is serious deficiency in executive and managerial capacity in the Nigerian public service generally.

    President Jonathan’s budget pronouncements had put paid to the speculations and debate about the 2010 budget performance and some of the concerns expressed by stakeholders about the socio-economy generally. The President confirmed many things and succeed in putting matters in proper perspectives. Until this time, it was virtually Mr Olusegun Aganga, the Minister of Finance who almost single-handedly defended the performance of the economy against the negative ratings by international rating agencies. Fitch’s credit rating, MO Ibrahim Foundation for African Governance index, International Budget Partnership of Washington DC’s Open Budget Index, Transparency International corruption Perception Index, World Bank Group “Ease of Doing Business” and United Nations Development Programme report on Human Development were all negative. The only ray of hope came from the ratings of Standard and Poor, and the International Monetary Fund (IMF).The latter rated Nigeria’s growth rate of 7.4% in 2010 as being the third fastest growing economy in the world next to China and India (Thisday, October 29, 2010, P.18). The 2011 budget projection of growth rate 0f 7.86% compares favourably with India’s 8.4% and China’s 9.6%. However, as rightly remarked by Chief R.O.A Akinjide, “The real measure of social and economic progress goes much deeper than growth rate; international ranking, oil production level or volume of foreign reserves. What matters is not that Nigeria becomes the 20th largest world economy in some years in the future; what matters are that poverty recedes, that roads are properly maintained and that clean water, electricity, health care and education is as widespread as possible,” (The Guardian, January 16, 2011, P. 16).

    At the home front, the greatest unease has been with capital releases and utilisation for the 2010 fiscal year. Many figures were flying in the face ranging from 20-50% implementation. Admittedly, there were varying degrees of nominal releases, physical access to the funds in the CBN and project execution by the MDAs. As confirmed by the President in his budget address, the average capital utilisation by the MDAs was 50% and that N749.75bn capital budget has been cash- backed and would rise to N900bn by the 4th quarter, an achievement which, he said, was unprecedented in recent budget history of this country. Perhaps better performance would have been recorded but for the extreme shortage of funds which the Minister of Finance explained to the House of Representatives plenary session was due to several factors. Among these were: shortfall in internally generated revenue, wage increase, funding INEC, funding power generation, non receipt of  revenue from privatisation of NITEL; and compliance with due process  in procurement which slowed down pace of execution of projects.

    The 2011 budget tagged budget of ‘fiscal consolidation’ is designed to break from the past, attract investment, and facilitate private sector growth, boost employment especially among the youth, ensure wealth creation and other socio-economic developmental goals under Vision 20:2020 framework. These worthy goals were spelt  out against serious concerns about unemployment, rise in recurrent expenditure, quality and efficiency of spending, the need  for and urgency to establish Sovereign Wealth Fund (SWF),huge infrastructural deficit and revenue leakage.

     President Jonathan assures that the Nigerian economy remains ‘resilient’ but requires hard choice, difficult decision, determination and discipline to achieve the developmental goals and complete the journey of national transformation. It is perhaps in response to this  exhortation that the Senate President, David Mark announced that based on the prevailing economic reality, ‘overheads’ including salaries would be cut  across the board by the three arms of governments and the three tiers of the federating unit  to save more funds to be channelled into capital development. President Jonathan had earlier hinted in his budget address the readiness of the executive branch to do so (Peoples Daily, December 16, 2010, P.8). With this congruence of legislative and executive views on the need for reduction of non productive expenditure, all eyes will be focused in the coming months on how this resolve will be implemented especially against the backdrop of public concern about the legislators’ remunerations. A more rational, objective, effective and enduring policy is to empower the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) to fix the remuneration of all public officers or a new wage panel for political office holders should be instituted.

    President Jonathan in his 2011 Budget address stated that his Government is in the process of engaging ‘global management firms to enhance capital project management and delivery.’ Surely, Government move to realise this policy will be eagerly awaited with great interest. Suffice it to say that although in an inter-dependent   world, free movement of labour and skills should be expected, the emphasis these days is on building indigenous managerial capacity and encouraging technology transfer. Already there is strong resentment and reservation about the ‘imported’ developmental models and development partner-funded projects. The foreign project designers have seized the initiative from the Nigerian public service in developing its own project conception, planning and executive capabilities.

    Currently, and for the next decade all effort is directed at the implementation of the Vision 20:2020. The objectives and methodology for its realisation are embodied in the National Planning Commission publication NIGERIA Vision 20:2020 ECONOMIC TRANSFORMATION Blueprint (December 1999). It is pertinent to consider this document along with Vision 2010 the details of which are contained in the Vision 2010 Secretariat publication Report of the Vision 2010 Committee MAIN REPORT (September 1997). Print wise the Vision 20:2020 which is a 134page document is more colourfully and attractively packaged than the nearly 260page Vision 2010.Vision 2010 was a 13-year programme to be implemented from 1998-2010 while the current one is 11-year long to end in the year 2020 to be implemented in 3 phases 2010-2013,2014 -2017 and 2018-2020(P.99). Going by the President’s budget address, these phases have been shifted by one year which makes the first phase to be 2011-2013. In effect, there is a loss of one year.   

    In terms of substance, I must acknowledge the amount of effort put to produce both documents. They both reveal that they are products of wide ranging consultations undertaken using ‘bottom-up’ approach to aggregate the aspirations of Nigerians. Both documents set out ways by which Nigeria could develop into an industrialised economic power by the set date and to do so in a manner which brings maximum satisfaction to Nigerians in all facets of life- socio-economic and politically. According to the Vision 20:2020 Blueprint, it is ‘an expression of Nigeria’s intent to improve the living standards of her citizens and place the country among the Top 20 economies in the world with a minimum of $900billion and a per capita income of no less than $4000 per annum'(P.8).

    In contrast, Vision 2010 (page 42) states that ‘the core purpose and overriding philosophy guiding Nigeria’s Vision 2010 should be to:

     Develop and sustain a strong, God -fearing, politically stable, economically prosperous, culturally rich, socially harmonious, just and truly federal Nigeria.

      Build a society that:

–        defends and upholds the principles and practices of democracy;

–        respects fundamental human rights and the rule of law;

–        cherishes and promotes unity in diversity;

–        emphasises national identity and recognises merit, rather than ethnicity, favouritism and patronage;

–        rewards merit and excellence; and

–        Promotes co-operation and social cohesion, thereby engendering a sense of belonging amongst the people.

Make Nigeria a major industrialised nation and economic power that plays a leadership role in Africa and the world.’

    As can be seen, the aims and objectives of the two visions are virtually the same except that Vision 20:2020 is defined in a more concise term.

    Nigeria’s experience with development planning according to the Vision 20:2020 blueprint (P.95) reveals that series of 4-5 year development plans were applied in the 1st, 2nd, 3rd and 4th National Development Plans between 1968 and 1982. Since then the pattern was changed in favour of 3year rolling plans with varying degrees of success due to ‘flaws in budgeting process that results in programmes and projects not being aligned to the nation’s strategic plans or priorities to be appropriated, as well as the recurring issue of poor adherence to provisions. The qualities of estimation of revenues and expenditure in budgets across all levels of government have also been less than optimal.’ In spite of the Fiscal Responsibility Act of 2007 which was enacted primarily to address these shortcomings, the problems still persist largely due to lack of fiscal discipline and sustenance. The former Minister of Finance, Dr.  Mansur Muktar in a paper titled: Promoting Fiscal Responsibility in Nigeria: Progress and Challenges, told the fifth International Conference on Federalism held in Addis Ababa on December 15,2010 that only about a third of the States in Nigeria had adopted the Fiscal Responsibility Act which, among others, provides mechanism to monitor and track compliance with targets, goals and priorities; and promotes fiscal discipline in a credible ,predictable and transparent manner (Peoples Daily, December 16,2010,P.9).

    On his part the Director-General, Budget Office, Dr Bright Okogu told the 2nd Economic Policy and Fiscal Strategy Seminar on ‘Strengthening the Budgetary Process for Improved Service Delivery: Towards Best Practices,‘ that budget has unfortunately become more political than fiscal whereby MDAs go through other channels to have their budget estimates increased from what the budget Office actually estimated and ended up with huge budgetary allocations not optimally utilised. This statement was corroborated  by Hon John Enoh, Chairman House Committee on Finance that sometimes the National Assembly arbitrarily increase figures in budgetary proposals without recourse to the overall implications on the polity (Thisday,12/12/2010,Pp.1&8).

    At this juncture it is quite apparent that the objectives set out in the blueprints of our development plans are fairly understood by the authorities and other stakeholders. What is perhaps more relevant is to review comparatively the methodology for implementation as set out in Vision 2010 and Vision 20:2020. Both have a vision council made up mainly of the principal members of government. Vision 2010 had an ‘Action Plan’ which assigns more specifically to a private sector or a government agent the responsibility for actionable items and suggested time frame (Pp.167-199).This aids focus.

    On the other hand, Vision 20-2020 is prepared as a ‘politically-neutral’ document (Pp.13 and 117) and so is expected to be one which successive governments in the country would respect and implement with equal zeal and in a sustained manner. To further make assurance doubly sure legislation with sanctions will be enacted to ‘compel all tiers of government to have a multi-year development plan programmes and projects right through the cycle.’ This is to be complemented with an ‘institutionalised monitoring and evaluation’ mechanism. Among the punitive actions to be taken is to prohibit erring entities ‘from access to the Federation Account and other consolidated revenues.’ The third success factor taken into account is ‘collective goodwill of our people’ (P.117).The other essential back up is ‘economic diplomacy’ declared as the new ‘central theme of Nigeria’s foreign policy’ (P.62). Here it should be borne in mind that several countries including the most industrialised have realised the need to play down political prejudices for economic advantage. Policy directions and drive of even the most industrialised countries of the West all look up to Asia as the hub of economic power in the next decade.

    To be candid, the success of a plan needs a ‘political guardian.’ It requires ownership, commitment and consistency in implementation. As someone who was privileged to have made input as an official into Vision 2010,it was unfortunate to see that document in which so much effort was put  in its preparations casually cast aside as a non event. Vision 20:2020 must not suffer the same prejudices. To begin with for politicians to demonstrate faith in the plan document, it should form the corner stone of the political party manifestoes while the legislators commit themselves to cut down legislative delays. For example NV20:2020 envisages review of existing laws including the constitution, passage of pending bills, and enactment of several others. More specifically are the following outlined in the Vision blue print (P.114):

    Constitutional Amendments:

1.         Appropriation framework: Amendments to Sections 80, 81,82and 83

2.         Amendments to the Exclusive legislative and Concurrent lists (Second Schedule: Legislative Powers) relating to reforms of

                            a. Police

                            b. Prisons

                            c. Railway

                            d. Revenue Allocation

    Laws to be reviewed:

        The Fiscal Responsibility Act, (FRA) 2007;

        The public Procurement Act, (PPA) 2007;

        The Land Use Act;

        Companies and Allied Matters Act (CAMA);

        Banking and other Financial Matters Act (BOFIA).

        Passage of pending legislation aligned to policy thrust of the vision:

e.g. Freedom of Information Bill.

     New legislation to enable implementation of the Vision:

         NV20:2020 Act (National Development Plan law);

         Development Planning Act (DPA);

         Project Implementation Continuity Act (PICA);

         Arbitration & Conciliation Act and Rules;

         Arbitration Centre Act and Arbitration Commission.

    Given the history of the pace of legislation under the civilian administration in this country and the inevitable disruption of legislative and executive activities in the 2011 election year, progress of legislation in the outlined areas will be of considerable interest as it is of obvious significance to the effective take off of the Vision and related activities.

 

18/01/2011