On why I remain bullish on Nigeria
On why I remain bullish on Nigeria
Political development over the last 25 years, opportunities for subnational experimentation/variation, and nascent restructuring of political economy are reasons for cautious optimism
I: What is the trouble with Nigeria?
In The Trouble with Nigeria, Chinua Achebe blamed poor leadership for Nigeria’s woes:
The trouble with Nigeria is simply and squarely a failure of leadership. There is nothing basically wrong with the Nigerian character. There is nothing wrong with the Nigerian land or climate or water or air or anything else. The Nigerian problem is the unwillingness or inability of the its leaders to rise to the responsibility, to the challenge of personal example which are the hallmarks of true leadership.
On the morning after Murtala Muhammed seized power in July 1975 public servants in Lagos were found “on seat” at seven-thirty in the morning. Even the “go-slow” traffic that had defeated every solution and defied every regime vanished overnight from the streets! Why? The new ruler’s reputation for ruthlessness was sufficient to transform in the course of only one night the style and habit of Nigeria’s unruly capital.
That the character of one man could establish that quantum change in a people’s social behavior was nothing less than miraculous.
The idea that leadership can change Nigeria persists to this day. For example, the recent presidential election witnessed fervent hope of redemption through the candidacy of Peter Obi, a former governor of Anambra State. The strong online presence of Obi-dient voters convinced many journalists, analysts, and the very online of Obi’s impending victory — a belief that ineluctably begat disappointment and an erosion of trust in Nigeria’s Independent National Electoral Commission (INEC) after the establishment candidate, Bola Ahmed Tinubu, was declared winner in an election marred by irregularities.
Both Achebe’s statement and the belief in Obi’s transformative potential betray the contradictory thoughts most observers have about Nigeria. Of course Achebe (then) and Obi’s supporters fully understand the structural conditions that have historically hobbled Nigerian political and economic development; and that it would take more than just one leader to achieve real change — society itself and associated political and economic systems have to change (see Achebe’s A Man of the People). However, most people also often hold to the idea that individual leaders like Murtala Mohammed or Peter Obi matter and can remake Nigerian society in their own image.
There is truth in both accounts. Suboptimal structural conditions can grind to dust even the most skillful of leaders. At the same time, every now and then history coughs up the right leaders at the right time that are able to completely alter future trajectories of entire nations.
In general, societies do well over time when they are able to institutionalize (coercive) systems of rule, economic management, and intra-elite political competition. Ensuing structures then discipline elites and the rest of society alike, in part by aligning incentives, creating overlapping thick systems of accountability (cultural, religious, political, legal), and solving the multiple publics problem in the case of heterogenous societies like Nigeria.
Due to the strength of structural conditions’ influence on outcomes, it follows that the trouble with Nigeria goes well beyond poor leadership. The weakness of the skeletal Nigerian state, corrosive identity politics, legacies of elite political instability, and an abiding inability to unwind petroleum-fueled policy failures have arguably been bigger problems. Therefore, instead of waiting for much-needed ideal leaders, Nigerians would be well-served to keep chipping away at these problems regardless of the leaders in power — as they have been (see examples here and here). The random draw may generate good leaders once in a while, but systems that are robust to bad leadership endure.
II: The bad and the ugly state of affairs
Endemic Insecurity
It can seem a tad heroic to be bullish on Nigeria. Consider the Nigerian state’s chronic inability to perform the basic duty of states: protection of life and property. Banditry in the northwest (reportedly with backing from organized political interests), the Boko Haram insurgency in the northeast, herder-farmer conflicts in the Middle Belt, organized crime and piracy in the Niger Delta that threatens the state’s main source of revenues, and other criminal activities in both urban and rural areas all point to a state that is struggling to get its act together in the management of social/ethnic divisions.
The endemic insecurity and the state’s inability to enforce its laws are serious impediments to political and economic development in Nigeria. Faced with the facts, it is unsurprising that some smart analysts doubt whether the state can reform itself in the direction of greater effectiveness. As Chris Ogunmodede observes in the World Politics Review:
That the insecurity which has long gripped Abuja has over time grown indiscriminate in terms of its targets is connected to similar patterns replicated across Nigeria. And the thread that connects them is an obsolete security architecture that was birthed in the colonial era and hardened by decades of military rule, one that was created for the purpose of repression and regime security, not to secure the lives and property of Nigerians. Its inability to maintain a monopoly on violence or safeguard the territorial integrity of Nigeria, to say nothing of the lives of its citizens, is a feature, not a bug.
Trends since 2010 paint a grim picture of the problem of insecurity. Communal conflicts, insurgents, and armed gangs have killed thousands of Nigerians. Kidnappings are so common that victims’ families often promptly pay the demanded ransoms rather that contact the police. Arrest and prosecution of kidnappers are rare. And to make matters worse, some politicians and security agents appear to have concluded that it is better to instrumentalize insecurity for political and economic ends rather than end the scourge. Consequently, banditry is a thriving business.
A dismal economic record
On the economic front, Nigeria competes with the much more populous India for title of the “poverty capital of the world.” More than 80m Nigerians live in extreme poverty, with the numbers projected to remain stubbornly high into the medium term. Nigeria will underperform overall poverty reduction trends in Africa (see below).
Two of the leading reasons behind Nigeria’s poor economic record are that (1) the state does too little and (2) the little it does tends to be highly distortionary.
For a variety of reasons, including the nature of intergovernmental division of labor under federalism, historical under-investment in tax administration, weak or non-existent mechanisms of policy implementation, the legacies of military rule that suppressed public demand for government services, and the problem of low fiscal capacity, the Nigerian state vastly underspends its peers (see image below).
For example, total 2020 public expenditure by Kenyan government (national + county) added up to about US $540 per capita. The equivalent figure in Nigeria (federal + state + LGAs) was about US $196. Importantly, the problem isn’t just about present-day low levels of spending. The cumulative effect of abysmally low historical levels of public spending means that the systems and mechanisms of service delivery (as well as political efficacy on the demand side) are simply non-existent in much of Nigeria.
The human consequences have been dire. According to the World Bank:
The country is among the eight economies with the lowest human capital in the world, ranked 167th out of 174 countries on the World Bank’s Human Capital Index. As a result, a child born in Nigeria today will only be 36% as productive when he grows up as he could be if he had access to effective education and health services.
... At the present level of public investment allocations, and even before considering mounting climate change adaptation costs, it would take Nigeria 300 years to provide the minimum infrastructure that the country needs.
A binding constraint (and consequence) of low levels of public spending is that Nigeria barely collects any revenue (see above). While tax administration gaps and over-reliance on oil partially explain the current state of affairs, it is also true that a frayed fiscal pact dampens tax morale. It will be hard for the state to convince Nigerians to pay more taxes without demonstrating what it can do.
Amaka Anku of the Eurasian Group neatly summarized this chicken-and-egg problem:
Following decades of unaccountable military rule, Nigerian civil society groups have—not unreasonably—resisted efforts to raise taxes, arguing that the government must demonstrate that it can provide public goods before it earns the right to tax society. Unable to make a compelling case for taxation without the revenue base to provide sufficient services, Nigerian politicians have simply avoided the issue, leading to an implicit agreement between the Nigerian state and society: the state provides little or no public services, and Nigerians pay little or no taxes.
The little that the Nigerian state does tends to be highly distortionary and inefficient. A non-trivial share of public revenues get wasted on highly distortionary and regressive subsidies — including fuel and exchange rate subsidies. The poorest 40% of Nigerians only consume 3% of subsidized petroleum, not to mention the resultant cartelization of the oil importation and distribution sectors that has been an impediment to real reforms for decades. The confused exchange rate regime is a disaster for existing businesses and a major risk for would-be investors.
III: Putting things in perspective
Despite the deep structural problems outlined above, I am bullish on Nigeria. I believe that there is a good enough foundation for continued political and economic development in Nigeria that will expand possibilities for welfare improvement. Below I consider these good enough foundations from the perspective of political development, opportunities for subnational experimentation and learning, emerging reforms of Nigerian political economy, and the promise of Nigeria’s diaspora.
Political development
It is a remarkable achievement that Nigeria exists as one country today. Having inherited a colonial patchwork of three ethically and religiously diverse regions with varying degrees of economic, social, and political development, the country looked doomed to partition. However, Nigeria survived a calamitous secessionist war (1967-70) and managed to avoid recidivism even as it endured three decades of coups and military rule (more on Biafra in a future post).
Given its history of elite political instability, it is a remarkable achievement that since 1999 intra-elite consensus has entrenched civilian rule and presidential term limits (plus the alternating north-south/religious zoning system). The compromises that produced the current system of federal, state, and local governments endure; and elites generally play within broadly accepted rules of legitimate political conduct, albeit with substantial gaming.
This is not a low bar. History teaches us that institutionalizing a process-based peaceful transfer of power (however flawed — like this year’s Nigerian election) is an important first stage of political development. It appears that Nigeria has cleared that stage and now has good enough elite consensus for continued peaceful political development. It is easy to forget the enormous ethnic/religious/regional hurdles that the country had to scale to get to this point.
Opportunities for subnational experimentation and learning
Nigeria has Africa’s most institutionalized federal system of government with significant variation in developmental outcomes across the 36 states and Abuja (see below). The variation is both a drag on nation-building and an opportunity for subnational policy experimentation and learning. Over the last 25 years, states like Lagos and Anambra have demonstrated that it is possible to have serious developmentalist leadership at the subnational level. Admittedly, Nigerian states have a long way to go in facilitating private enterprise, raising their own revenue, and developing capacity to serve their populations.
The source of optimism is that over time more examples like Anambra and Lagos (i.e. bold policy experimentation and a serious approach to government) are bound to arise in different parts of the country, despite federal-level inefficiencies that currently characterize Nigeria. In other words, Abuja doesn’t have perfect control over outcomes.
The other benefit of the federal system of government is that it facilitates multi-speed political development and facilitates the sidestepping of national disputes that would otherwise create systemic crises. Whether one looks at the question of Sharia Law or inter-ethnic distributive politics over petroleum revenues, federalism has helped diffuse potential incompatibilities. This, of course, has its drawbacks in the sense that the federal government is not always able to uniformly enforce “Bill of Rights” statutes or effectively monitor subnational deployment of resources. However, it is a feature that guarantees system-level stability.
Beginnings of structural reforms
In her excellent book on the politics of economic diversification in Nigeria, Zainab Usman, Director of the African Program at Carnegie, shows how external shocks arising from oil prices can push Nigerian policymakers towards structural reforms that benefit non-oil sectors. This is because for a long time Nigeria’s habit of exporting crude and importing refined products fostered a highly inefficient political economy characterized by oil theft, opaque revenue management, and costly regressive subsidies. Consequently, a sector that barely contributes 7% to GPD has had distortionary macroeconomic effects since it accounts for over 90% of export earnings and 50% of government revenue.
This is about to change. The Dangote Group’s 650,000 barrels per day (bpd) refinery is poised to restructure Nigeria’s political economy in important ways. It will save the country billions of dollars in forex that it uses to import petroleum products, create thousands of direct and indirect jobs, loosen some of the petroleum-based constraints to fiscal reforms (subsidies), and catalyze whole new manufacturing sectors. In the shadow of Dangote’s demonstration effect, several other smaller refineries are currently under construction.
Finally, the problematic small footprint of the Nigerian state has a silver lining. Reform in the direction of growing the state is typically easier than the reverse. Countries with “over-grown” states often struggle to downsize due to the politics of loss aversion (who wants to cut-off voters from services?) In other words, should the country be able to leverage its good enough institutions and politics for change, there is hope for a more rational co-evolution between the “lean” Nigerian state and the expanding economy than in comparably poor countries with over-grown states and associated interest group politics.
IV: Conclusion
Perhaps the most important thing that happened in this year’s presidential election in Nigeria is that the post-1999 intra-elite consensus held. A Southwestern politician will replace a Northern incumbent president (albeit while fudging the religious dimension of zoning). The losers of the election appear committed to institutional processes of challenging Bola Tinubu’s victory.
President-designate Tinubu will ascend to power as a mixed bag. Serious questions have been raised about how he amassed his wealth. At the same time, his tenure as Lagos governor put the state onto a gradualist path to prosperity — something that perhaps he shall try to replicate on a national scale. As Howard French writes in Foreign Policy:
Under Tinubu, the enormous numbers of people [in Lagos] who shirked paying their taxes were made to understand that henceforth they would have to do so. In return, though, the state would begin to do something quite novel: It would begin to improve public services in ways that would achieve public buy-in, because they would be fundamental, constant, and visible.
That is the hope. However, in the spirit of my structural argument above, it is worth remembering that Tinubu will be but just one piece of a giant puzzle. The changes underway in Nigeria — from reorientation of the political economy of the oil sector to political empowerment of the #EndSARS generation — will keep keep shaping the option set available to Nigerian ruling elites whether they like it or not.