Professor Paul Collier

Professor Paul Collier is a global powerhouse on development economics and scholar at the University of Oxford, United Kingdom, where he is the Director of the Centre for the Study of African Economies. Between 1998 and 2003, he was a World Bank consultant on developing countries, where he proffered economic policies for countries with poor economic indexes. He has written extensively on Africa, with particular interest on Nigeria in most of his classic works such as the ‘Bottom Billion, Wars, Guns & Votes: Democracy in Dangerous Places and the Plundered Planet’. In this exclusive interview with Paul Obi in Oxford, Collier speaks on economic and governance issues in Nigeria, specifically, the danger of mismanaging oil revenues. He also provided some insight into the conference on African economies taking place this week at the centre. Excerpts:

You have researched so much on Nigeria, what informed your emphasis on Nigeria?

Well, I have written on other African countries as well; first of all, I have worked on different parts of Africa. I direct a research centre which strives to cover the whole of sub-Saharan Africa. But Nigeria is of course the biggest and most important, and in ways the most tragic, as the gulf between opportunities and realisation is so wide. Nigeria has got a lot going for it; got a very talented people, with huge amount of energy. When Nigerians work outside Nigeria they so often seem to succeed. Nigeria itself is really a good coastal location, near the markets of Europe and North America much closer than China. And because Nigeria is big, it's got all the benefits of scale. Most African countries, I think, there are just too small.

But Nigeria isn’t; I think it’s big seriously and has huge opportunities. Add all that with oil money and Nigeria really has got all the makings of being a really prosperous, dynamic society. And then, you look at the achievements, it is one of the poorest countries in the world. That means millions of Nigerians have had to live under stressful conditions. So that’s the thing that motivates me to work on Nigeria. I have been working on Nigeria, I guess since the 1980s, so I have a long history of being interested in working on the country.

Given that some of this research focused on issues of governance in Nigeria, how will you describe patronage politics?

There are sort of two interrelated dimensions for Nigerian politics; first, historically, the military involvement, thankfully that has receded now. Secondly, there has been the politics around oil, hugely valuable, centralised revenue and money that wasn’t raised by taxing people – the central government had a lot of money that has not promoted a lot of scrutiny. If you reach out to people’s pockets to take their money out in the form of taxation, people don’t like it and they will ask you what are you doing with their money? But with oil, people never see the money; it doesn’t go into their pockets and out. The government is in a position to just spend without much scrutiny. Because of that, power in Nigeria is very valuable, and so there is a very big contest for power, which in the past took the form of military power. Now, it takes the form of patronage politics.

The winners attached to politics are the ones with the most money. On that, you’ve got this layer of ethnic identities being stronger than national identities, that’s very common elsewhere in Africa. Very few African leaders went through the trouble of building a sense of national identity. Without a sense of national identity, it’s very difficult to have good governance. In Africa, where you have a stronger sense of national identity (in Botswana for instance), where there are not many ethnic divisions (in Tanzania for instance), where it started out with President Julius Nyerere, who was a great African leader; he realised that the first thing he had to do was build a common sense of identity.

He played down ethnic identities; he said that’s not who you are, you are a Tanzanian. Then, he took a lot of practical steps to make that a reality. In Nigeria, you never had that; you just lacked leaders who built that common sense that we are all Nigerians. You have had politicians who, as in Kenya, played the ethnic identity game. So Nigeria has the double problem of very valuable resources at the centre which are not raised by taxes, and a weak sense of common identity compared to sub-national identities.

In most of your writings, you correlate the conduct of elections and the type of governance system a nation is prone to have, how will you relate that to election campaign funding?

For democracy to work is much more than just holding elections. To work, a democracy has to have strong checks and balances. Strong checks and balances involve quite a lot of things, but the most elementary area of checks and balances is the conduct of elections. What we see in Nigeria, to a varying degree, is that politicians could use bribery, they use ballot fraud, and they use violence. Of course when politicians can win by those means; then elections do not genuinely hold politicians accountable to the citizens. If they win by bribery, who do they account to? They are accountable to their patrons, the people who put out their money. To some extent, that is what you see in Nigeria and quite a bit of Africa – you see patronage politics in which winning elections is enormously expensive. The victory is then financed by a few backers. They in effect – the politicians – become accountable to them rather than to citizens, so to some extent, you see that in Nigeria.

In your arguments, you stressed that unless the citizenry in the Bottom Billion are informed, politicians are not going to pay serious attention to good governance. What critical role do you think the Nigerian media and journalism in general as a watchdog can play in terms of the shoddiness of election campaign funding and its attendant consequence on governance, transparency and accountability?

First of all, quite obviously, democracy can be no better than what the citizens themselves understand. At its best, democracy makes government accountable to the citizens. But then, that depends upon what citizens themselves understand. If citizens misunderstand the issues, then even if government is accountable to the citizens, it won’t be driven in the right direction, it will be driven in the wrong direction. This was Germany under Hitler. Germany won an election, but Germans misunderstood the situation. Hitler told them, it is the Jews that are the problem, and people believed that and voted them in. That is misdiagnosis of the problem that Germany faced, so it is a vital matter that the citizens are well informed.

But first, it is indeed good to understand the governance process itself. For citizens, why that process of bribery, ballot fraud, violence and protest against it. We have started to see that, actually not just in Nigeria, but across Africa – citizens becoming more aware of ballot fraud and doing something about it. That’s the starting point. The critical mass of well informed citizens also has to understand the fundamentals of economic issues. In Nigeria, the fundamental economic issue is what is done with that oil? What’s done with that money? They are running down national assets. Every day, barrels of oil are taken out of the ground, they are not put back into the ground, there’s no process of replacement; they are running down the oil, they are running down national assets. So you better be using some of those revenues to build up other assets. Otherwise, you are plundering down the next generations.

There will be a time when Nigeria will run out of oil, and then what? If you run out of oil, but you build up a viable economy, then it’s fine to run out of oil. Germany hasn’t got any oil but it’s very prosperous now. You don’t need oil to be prosperous; you need to invest in your country to build the future prosperity. It’s important that citizens wake up to that fact, appreciate that they are running down national assets. More should be put into building infrastructure, building roads, factories and power, on which modern economy depends. What what we have established so far is a critical mass of informed citizens, which is vital.

It is not an option, it is vital. By a critical mass, I mean enough people to actually influence what government does, big enough so that government can’t ignore them. How do you build that critical mass? You build that critical mass through the media, the people read, listen and watch, not just information, but understand it. Ordinary people understand the economic and political process; they understand them through narratives. It is not just hearing 28 numbers you need to know, it’s the narratives that link events and numbers up, so that people can get their minds around it. What will be a healthy narrative in Nigeria given that you’re running down your oil resources? The main narrative, to my mind, is something around the narrative of good stewardship of the national assets, and it means that as you run it down, you convert it to national assets. You can tell it as an economic story; you can even tell it as a religious story.

There is a parable of the talents in the Gospel of Luke. The rich guy leaves the town with his stewards and money, and goes away and comes back, and they asked him, what have you done with it? The ones who got it right are the ones who invested in those talents, so they’re worth more. So that’s the sort of narrative that needs to become second nature among Nigerian citizens. What are you doing with our resources? You’re running down oil in order to invest in the future, to build the future. Building that future means building the key economic infrastructure that will make the modern economy.

We need citizens at work, we need power, we need ports, we need roads. Can we get all those things from our oil revenues? Oh, our government should show us what it’s doing with it, how is that money being used. I became pretty unpopular in Nigeria for saying there was no good use of oil money – for spending it all on subsidising petrol. But you are drinking your future, because you’re just burning that up. You need to be using that revenue to invest in assets for the future. Then, in the narrative, who is going to communicate that narrative? That’s the responsibility of the journalist. What we need is good stewardship from the revenues, from these national assets.
The other narrative is the narrative about politics. Do we want patronage politics or do we want accountability of government to the citizens. Patronage politics, as I said earlier, is accountability of government to patrons. So there are few narratives really important for the citizens to understand, but a good narrative is holding the government to account for good stewardship for this unsustainable revenue generated by running down the oil.

Specifically, how do you think the Nigeria media can address these inadequacies?
That’s a question you can answer, not me. But Nigeria is lucky; you got a very active media. You’ve got newspapers like THISDAY, Business Day; you’ve got important newspapers that people read. You’ve got pretty good television programmes like on Channels Television, AIT. Then you go elsewhere in Africa, and very often, the countries are too small to support a vibrant media, there is no market. So Nigeria is fortunate in terms of economies of scale to support a vibrant media, that is a big asset. Now, that asset needs to be harnessed. In any public space, there is a battle for ideas.

The truth is just another special interest, but it better be the interest that wins. Now, you’re competing against lies, against self-interest, manipulation and so on. So the important thing is that the truth sits up courageously and effectively; courage that you have to find within yourselves. Effectiveness is a skill; effectiveness is crafting a narrative that works, that people can understand. Most academic economists are terrible addicts, journalists are much better than academics. Journalists know that you’ve got to communicate. On the whole, they know how. In academics, it is like your job. It is a mixture of crafting a good narrative with your skills. The discipline in it is an informed knowledge up with the truth and the underlying economics of what really matters. A good journalist has these two skills – you know how to craft a good narrative that people can get their minds around and you also understand the economics and politics of what’s going on, if that narrative is true.

There are ongoing moves to reposition the oil sector through a legislation known as the Petroleum Industry Bill (PIB), but accusing fingers have also been pointed at oil majors and Western interests as frustrating Nigerian government efforts to reform the oil sector. Do you share the opinion that the West is often meddling in the economic affairs of developing countries to their detriment, especially in this scenario with Nigeria?

First of all, the PIB, my goodness, it’s been years in the legislature, around four years, with layers of complexities added to it, I think too many layers and too many interest. I think what you need is something simple. What you need is transparency; you need checks and balances in the process in which contracts are entered into – a true transparent process by which contracts are awarded. You want to reduce discretion – I am very keen on structured competition – try where possible to limit discretion. I don’t see enough of that in the PIB; I don’t see enough of structured competition and transparency in the bill. The issue of how aggressive the tax and royalties regime is against oil companies, I am not in a position to comment on that. The feature of the bill that I liked is that the royalty rate is geared quite heavily towards the world oil price; if the percentage of royalties goes up; I think that is a good idea. There are some good features in the PIB. However, as you favour taking as much skin from the cat as you can, it’s subject to keeping the cat alive.

But if you take all the skin off the cat, you will have a dead cat – in other words, dead oil companies will say it’s not worth staying in Nigeria, and that doesn’t help you and that’s the judgment you have to make. Of course, there are people going to be on the other side, who will say, however much skin is off the cat, we want more skin. But you have to do the numbers in favour of how Nigeria will end up. Angola is generally seen as having a good deal, so benchmark so that you’re not quite as aggressive as Angola but not much less aggressive.

In recent times, China’s presence in Africa, particularly Nigeria, is increasingly becoming prominent. Former US Secretary of State, Hillary Clinton and other European allies have cautioned Africa against such a relationship. What is your view?

They are not in a position to caution you against anything. Of course, self-interest is making them say don’t go with China, go with us. So it’s basically a case of saying never mind what they say; indeed never mind what China says, but you have to think for yourself. Of course, it is good news that China is on the scene, because China means competition. No matter what China says on solidarity, China is basically for China, China is going to look out for China’s interest, so you better look out for yours. So Chinese competition with Europe and America, that is good for you. What is not good for you is if China operates in the way Europe and America used to operate; after all, it has been a 10-year battle to clean up the way European and American companies do business. That battle is not over, but it has moved a long way. There was a searchlight of transparency in these companies 10 years ago on anti-bribery, extractive industry transparency initiatives. They are publishing the revenue they paid the governments, they are now very scared of bribing officials, because it is a very serious criminal offence in their own countries. Canada has just raised the penalty to 14-year jail term for bribing officials. The danger is that at the moment, China doesn’t have that at all. If China wins competition for resources by fair means, of course you get a good deal and that’s great. But if it wins competition for resources by bribing its way in and out, that’s bad news. It will be taking you back to a history of entrenched corruption.

At a function at the London School of Economics, you criticised the notion of ‘African Solutions for African Problems’, some observers will point to the fact that even where there have been opportunities for the West to intervene, a country like UK has not been able to harness its relationship with its former colonial allies for mutual economic gains and the need to bring about development and growth among some African economies. What is your take on this?

I was criticising the formula for ‘African Solutions for African Problems’ primarily because Africa is part of the world. It is entirely appropriate to look into some current global solutions for African problems, just as you might look at some global solutions for Europe. Europe has got plenty of problems now, you might have noticed. Erecting a big sign, ‘Keep Out of Africa’ is understandable in view of history, but actually, I don’t think it’s a good approach because there is a global process of learning. Look at the Arab Spring, the Arab Spring didn’t happen by young Arabs putting up a big notice ‘Keep Out of the Middle East’.

The Arab Spring happened because young Arabs looked, used the internet, saw democracy elsewhere, saw they weren’t getting it and started demanding for it. That was a set of global ideas being brought to bear in the Middle East, very much needed it was, where rich autocracies had been misruling their people. Specifically on Britain, actually I will say, Britain recently of course, is not bad. Britain has been through a long learning process. It got more generous, more serious and less patronising. The present government despite all the austerity is actually committed to increasing aid to 0.7 per cent of GDP, which is an amazing thing to do at a time of austerity. With the Conservative-led government and with every item of expenditure being cut, aid has been increased, so that is quite a powerful gesture. At the moment, Britain is going to be the next chair of the G-8, coming up in June.

Though David Cameron, the prime minister, like you, read The Plundered Planet and the Bottom Billion, when it was Britain’s turn for the G-8, he actually asked me to help shape the agenda, that’s what I have been doing. What I advised him was, first of all, do not preach to Africa about what to do and he took that. I told him, if the G-8 preaches to Africa about governance; African governments are going to say Berlusconi, the prime minister of Italy, is corrupt. So the G-8 is not in any position to preach to Africa about anything. I discussed with the PM about putting our own houses in order, the G-8 house in order in such a way that helps governance in Africa. So what should we do? We should tighten up tax avoidance, so that companies operating in Africa actually have to pay tax in Africa. They can’t move those profits out of the country untaxed, and we should tighten up on money laundering. The lawyers who facilitate the money laundering, who create the shield companies owned by people whom you can’t trace, and who open bank accounts you can’t trace, the lawyers who do that, they are not in Lagos, they are in London.

I urged him, let’s tighten up that regulation, I have to say, he got it straight away. He said this is about proper companies, not these shady shield companies. We want proper companies, who are going to pay proper tax; we want companies that are going to obey proper rules and transparency. Whether he can persuade other G-8 members, I don’t know, it’s not June yet. But I am proud to be in a country that found the generosity in a time of austerity to increase its aid, and secondly trying to do things to put its own house in order, which will help African governments. So for the moment, I think Britain hasn’t got a bad record.

In what critical areas do you think Nigeria is doing better, politically and economically?

I will say, politically, the last elections in 2011 were much better than 2007. The last elections weren’t perfect, but there were a big improvement over 2007. In fact, I will say that they were the best elections you had, so that’s clearly an improvement, and it’s hard to believe that any person other than President Goodluck Jonathan won. And that gives him a degree of legitimacy, which other presidents haven’t had – that’s quite important on the political front. On the economic front, the Finance Minister, Ngozi Okonjo-Iweala, very reputable person and the Governor of the Central Bank of Nigeria, Sanusi, very good governor, so you have actually got some really capable people at the heart of economic policies. But the question to ask is how much political space do they have? Do they have the political space to do what you believe is necessary? I can’t answer that, you’re in a much better position to tell me, than me to tell you. Given those two things, if you have an election that brought to power a legitimate president and you’ve got really talented people at the apex of economic policies – the Ministry of Finance and the central bank – given that, I will say that is great achievement.

You talked about President Jonathan’s legitimate mandate and a capable economic team. Do you think these prospects have been deployed properly in delivering the dividends of democracy and enthroning good governance?

No, like I said, given the fact that you got a legitimate president and good economic technocrats, I think the outcome so far has been rather disappointing. The potential of that is huge – a legitimate president, empowering good technocrats, to take tough decisions to build the future, and I am not seeing enough of that. Yet who am I either, it’s not my problem, it is yours. As an outside commentator, I would say, it feels rather disappointing on what has been achieved these years, both on the government front and economic front.

What will you say to some Nigerians who hold the view that the clamour for technocrats, especially from the World Bank and other foreign institutions in managing the Nigerian economy has not transcended to material benefits that the citizens need?

Nigerian citizens have every reason to be pretty fed up, because of an economy that should be prosperous but is poor. Prosperity doesn’t come in a day, and as I have indicated earlier, the key policy backbone is actually your investment. What needs to happen a lot more is active investment. For a decade, Nigeria haven’t been devoting enough of the oil money to good investments like electricity generation, the roads, the ports, that’s how you should have power and the rest of it. So that will take time to transcend into living standards. The last thing you want is to do what happened in the early 1980s. It was so good at that time, basically, the government threw a party; a lot of the money was captured through patronage politics – corruption – there was a lot going into consumption. Nigeria became the world’s leading importer of Champagne. You don’t want to go back to that. The consumption party is out of tune; they don’t do that anymore. Look at what it led to in Nigeria when the oil price crashed, everything crashed. What you really need to look at in judging whether the economy is okay, is looking at what’s happening to investment, not what’s happening to consumption? Understandably, people are not very patient and they are very suspicious. I’ll be suspicious if I was a Nigerian and that is the battlefront. So there has to be a lot of transparency on how the oil money is used to invest for the future.

There is a global conference taking place here in Oxford University this week on African economic policies, how can Nigeria and other African countries benefit from the CSAE?

Absolutely! This is the biggest conference on African economies on earth, it is an academic conference – about a thousand papers have been submitted to this conference, and a lot of them will be used. Quite a lot of Nigerians are coming; probably more than a 100 Africans are also going to be at the conference. The good news is that part of the conference will be on the web, it’s a web-based conference and I hope a lot of people out there will be watching the conference because it’s free. Because there are so many papers, a lot of them will be pertaining to Nigeria’s economic struggles. But to finish on our general theme, without a critical mass of informed citizens, Nigeria cannot succeed. The root to the critical mass of informed citizens is informed journalists.