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Petrodollars, Politics and Parasites

06 May 2012

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Simon Kolawole Live!: Emailsimonkolawole@thisdayonline.com


Listen: those who have done some research on the curse of oil are not surprised by the deadly run of events in Nigeria. They are not surprised at the poor quality of governance, the pseudo-democracy, the massive corruption, the lack of public accountability and the violent contestation for political power. These are some of the symptoms in many countries where rents from natural resources constitute the bulk of public revenue. It is even made worse by the nature of the Nigerian structure where the executive can be described as the almighty arm of government. My worry, however, is that the symptoms have persisted for too long here. Some countries have overcome many of these symptoms. For us, there doesn’t seem to be an end in sight.

Acclaimed founder of the Organisation of Petroleum Exporting Countries (OPEC) and Venezuelan politician/lawyer, Juan Pablo Perez Alfonzo, famously said in the midst of the maddening oil boom of the 1970s: “It is the devil’s excrement. We’re drowning in devil’s excrement… Ten years from now, twenty years from now, you will see: oil will bring us ruin...”  He saw something that many other leaders of oil-rich countries might not have seen then: the danger of getting sunk by a flood of petrodollars. He was speaking at a time things appeared rosy and the future looked even more promising. “Look at us,” he warned in 1976, “we are having a crisis… We are dying of indigestion.”

Alfonzo, who died in 1979, saw what many oil-dependent countries, such as Nigeria, could not understand. All we could see then was that our revenue had gone up astronomically—which meant we could triple salaries, backdate it and pay arrears in the name of Udoji awards; we could begin to devote less energy to agriculture and industry and focus on sharing federally-collected revenue every month; we could afford to disconnect the state from the society by deemphasising the role of taxation in governance and focussing instead on the windfall of petrodollars. Alfonzo foresaw trouble. He foresaw mess. He saw a shift in emphasis from economic productivity to parasitic proclivity. He saw a deformation of the structure and the values of the society. It’s a shame Alfonzo is not alive today to see the results of his lamentations—especially in Nigeria.

Take a look at political contestation, for instance. In the early hours of Friday, an aide to Governor Adams Oshiomhole of Edo State, Comrade Olaitan Oyerinde, was murdered in cold blood in the presence of his wife, children and brother in Benin City. Days earlier, the Commissioner for Information, Mr. Louis Odion, was lucky to have slept at a friend’s place as the assassins came calling at his house same night. Last week, in what looked like a stage-managed accident, a truck ran into the convoy of Oshiomhole, killing three journalists. Oshiomhole was lucky to have been in another car. All these, coming a few weeks to the governorship election, can only point to one fact: there is a heavy dose of political undertone.

What has that got to do with oil money? I will explain. Our oil wealth has created a society full of parasites. In advanced countries, industry and professional services offer people the biggest sources of income. Another source, identified by the founder of World Economic Forum, Professor Klaus Schwab, in his book “The End of Capitalism”, is “talentism”. Talent is the new capital, he argues. Bill Gates does not have an oil block; Microsoft is a product of his talent. Facebook is not an oil company. Yahoo! is not an oil company. Industry has created billionaires. In Nigeria, the shortest cut to billions is oil money. And this money is concentrated in the hands of the government. So if you want to make it, become president or governor or minister or commissioner or one of their friends and cronies. Your “prosperity” is instantly guaranteed. Inevitably, the contestation for political offices is fierce and fraught with violence and murder. Petrodollar has created parasites everywhere, within and without. The parasites feed on the oil wealth. If you deny them access, expect death and destruction.

In Nigeria, it’s winner takes all. If my party wins elections, those who are unfortunate to be in the opposing party are done for. Except, of course, they are ready to defect to my party. That is how they can be guaranteed juicy contracts and political appointments. Even if you operate in the private sector, you have to play the ruling party politics. If you had a contract with the previous government or minister, chances are it would be cancelled. We run a system where virtually everybody kowtows to the ruling government for economic survival. To hold political power, therefore, is to become a demigod. The struggle to win this political power is inevitably laden with danger and death. People will maim and kill just to take charge of the petrodollars.

Why my frequent reference to oil money? Why should oil money be responsible for this kind of politics? To be sure, what I mean is natural resource wealth; oil happens to be our natural resource in Nigeria. Many countries have also experienced political violence and civil wars over other natural resources such as diamond. Countries which depend on these resources for budgetary revenues are very vulnerable to violent politics. The Nigerian situation is made worse by the fact that these resources not only account for about 90 per cent of budgetary revenue, they are also concentrated in the hands of the government. Before we suddenly hit oil wealth, there were other avenues for people to make money. But as soon as we hit money, the laws were changed so concentrate the petrodollars in the hands of the government. We are still paying the price.

Resource-dependent countries are less democratic. People who refer to Norway and Botswana as exceptions have probably not taken time to study their circumstances. Norway had developed before hitting oil wealth; it already had well-developed structures for public accountability. With all its oil, the bulk of Norway’s revenue is from tax. Botswana’s diamond wealth, on the other hand, constitutes only a small percentage of public spending and is targeted at only the critical sectors. In other words, it is not like Nigeria where every kobo we make from oil goes into a central purse where it is, by law, distributed monthly in Abuja. So, here, we have politicians presiding over the wealth of the country which they spend as they wish without let or hindrance.

It is even worse at the federal level, which takes more than half of the oil revenue and controls all the oil blocks. From Abuja, somebody determines almost everything. The president has the power to create billionaires, without productivity, overnight. That is why the battle to be president of this country is always a do-or-die affair, and is alarmingly becoming a shoot-and-bomb affair. That is why, more than anything, restructuring the economy is as important as the oxygen we breathe. The questions we should be addressing now are: how can these politicians be less powerful in economic matters? How can political offices become less attractive? How can this economy produce genuine billionaires on the basis of their talents and industry rather than political patronage? How can political positions become more about service than “eating”?

I am longing for the day INEC will complain that there are not enough presidential or governorship candidates because there is virtually nothing to steal or favours to dispense in public office again! Public office is too powerful and attractive; we should understand the spate of political killings and the tension and mindless violence going on over the 2015 presidential election within this context. Sure, political violence is not limited to Nigeria or oil-dependent countries. In Nigeria, however, the link between “juicy” political offices and violent politics is very obvious—as we can see in Edo now. We need to think and think and think again about the political and economic structure of the country. Things cannot continue this way.

You Have to Envy the ‘God Banker’
A lot has happened in the financial sector over the past eight years with its boom-and-bust cycle but, let’s be honest, we have managed to weather the storm. In this same country, years back, National Bank and Savannah Bank, among many others, went into serious crises and depositors lost their monies. Many customers developed high BP and had stroke; some committed suicide. This time around, no bank has failed, as mergers and acquisitions have saved the troubled ones, along with the injection of bail-outs by the Central Bank of Nigeria (CBN) and the purchase of “toxic assets” by the Asset Management Company of Nigeria (AMCON). True, many investors lost their assets as the capital market crashed, but it could have been worse: depositors could have lost their savings also. In a way, therefore, we have to be thankful.

One of the biggest winners is clearly the CEO/GMD of Access Bank Plc, Mr. Aigboje Aig-Imoukhuede (one of the most misspelt names ever). You have to envy him. One, his bank waded through the turbulence successfully. Although Access shares also took a hit like every other stock, the bank was never in trouble of not meeting its obligations to its customers. Two, the bank has successfully acquired Intercontinental Bank, although it must be quickly added that it was not as easy as I have put it here. But the end result is that Access Bank is now in the top five most capitalised banks on the Nigerian Stock Exchange. Its asset base has grown to N2.018 trillion and customer base to 5.7 million.

Three, as if these are not enough, Aig (as we call him) is going to be at the helm till 2015, contrary to initial calculations that his tenure would be over this year. The CBN had set a new rule two years ago forcing bank CEOs to leave after 10 years. Aig and his deputy, Herbert Wigwe, were appointed in 2002, so we thought. As it has turned out, they were only appointed in acting capacities by Access Bank. Their appointments were confirmed in June 2005 by the CBN and that is when the effective dates are counted, according to Section 48 (1) of the BOFIA 1991, which requires CBN approvals for the appointments of directors and CEOs to be substantive. No wonder, Aig is called the “God Banker”. He has been having a wonderful share of fortune.

In any case, even if Aig were to leave today, his “Siamese twin”, Wigwe, is there to carry on the vision. They both worked 10 years each for GTB, rising to executive management level before leaving to raise Access Bank from the dead in 2002. Their synergy from day one shows a clear succession plan and a commitment to it. The bank staff would eagerly tell you about the existence of robust corporate governance in the institution as well as forward thinking.

In a telephone chat recently, I asked Aig why he is called the “God banker”, an expression I started hearing about six year ago. His reply: “I honestly can’t explain the run of events in my life. They are without any doubt blessings from God. And I have never failed to acknowledge this favour in my life. So they started calling me the ‘God Banker’. Look at all the awards I’ve won, the positions I’ve attained, the successes we’ve recorded at Access Bank… it can only be God!” Aig, who is the first African co-chair of the Global Business Coalition on Health (GBC-Health), is a member of the National Economic Management Team and chairman of Access Bank UK Limited, among several other positions.

Truly, situations in life always produce winners and losers. In all the financial crisis, while some will be crying their eyes out and regretting the day they were born, others will be smiling to the bank. Such is life. You can ask the “God Banker”. Or ask God himself.

Tags: Backpage, Featured, Petrodollars, Parasites

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