Nigeria’s Economic Growth: The Role of Nigerians in the Diaspora
GUEST COLUMNIST BY KANU C. OBIOHA
It is an understatement to say that Nigeria’s road to progress, whether viewed through economic or socio-political development statistics, has been disappointing. Nigeria’s GDP per capita is barely above its level at emergence from colonialism over fifty years ago, and the poverty rate has actually doubled over the same period, now afflicting seven out of ten Nigerians. This deplorable record is not because Nigeria lacks ready income – its governments have taken in over $400 billion during the past twenty years in revenues from oil.
Every Nigerian is aware of the situation in the country and for Nigerians in the Diaspora, this is the discussion topic of every telephone call, social gatherings, and business meetings or when they run into each other. There are several reasons and contributing factors to the current state of Nigeria but if we are to state only one reason or contributing factor, it will be the role of governance. British colonialism had predisposed Nigerians to regard government service as the occupation of choice for educated youth. So, at independence, successive Nigerian governments have practised what is called “oppressive statism” – a decision by the political elite, whether civilian or military, that the government was most capable of controlling the economy of Nigeria. In this environment, the wealth of the country is “captured” by favoured groups, classes, and individuals. In this environment, “rent-seeking” and “corruption” flourished and grew more and more resistant to attack. It also exposed Nigeria to perhaps the world’s most long-lasting case of “Dutch disease”, because the inflow of oil money to the government only entrenched its bureaucracy further and drastically expanded opportunities for enrichment from corruption. ‘Oppressive Statism’ and ‘Corruption’ feed each other. Statism creates opportunities for bribery, so rent-seekers in government naturally want to preserve Statism.
Oppressive Statism pervades all levels of Nigerian government, – Federal, State and Local governments. This is by far Nigeria’s greatest and most difficult economic problem.
Nigeria’s second great obstacle to development is an unsupportive business enabling environment. A business enabling environment can be considered supportive when it has three attributes: (i) an efficient system of protecting property rights, including loan collateral, (ii) a financial sector that provides sufficient and reasonably-priced funding for valid business working capital and equipment investment requirements and (iii) reasonably priced and continuous access to the basic utility inputs to production – electricity, water, communications, and transportation infrastructure.
Nigeria is very seriously deficient in all three of these fundamental categories:
•The ‘Commercial Law’ and enforcement environment is poor. Bankruptcy, secured transactions, land titling, and related law is not sufficiently supportive of the bank credit system or even of trade credit. Government administration and registration services to business are inefficient, and judicial and administrative enforcement are ineffective.
•Business Finance is limited and expensive. Most of the limited supply of domestic savings in banks ends up devoted to trade inventory finance, much of it for consumer imports. There is virtually no long-term equipment lending from banks. Government-supported development finance institutions have an extremely poor track record, with the majority of their assets non-performing, having limited resources, and prone to corruption, or favouritism in loan granting. The Nigerian Stock Exchange has some institutional strength but is very shallow and not widely accessible to businesses.
•Poor Utility Services. Combined with the high cost of business finance, the expense forced on businesses because of the inability of the government, despite billions of dollars invested, to supply basic utility services, makes it impossible for these utilities to be price competitive despite low labour costs. Every business of any size in Nigeria, every building, must invest in a diesel-powered electricity generator, because of daily power interruptions from electricity distribution companies. Beyond this universal essential, businesses often drill their own water wells and build their own access roads. Also, freight forwarding or transportation of goods is very problematic as there are no good roads. Other alternative modes of transportation, such as railroad, waterways, are not in existence.
The Role of Nigerians in the Diaspora
The international community and especially the United States, through its several agencies, has looked into the core problem of ‘oppressive statism’ and other economic problems in Nigeria. There are a lot of donor funds to support studies or initiatives that proffer solutions.
Nigerians in the Diaspora need to be active participants either through consultancy jobs, involvement in NGOs, public constituency building for reform, investment projects, etc.
Nigeria cannot change without the complete dismantling of the tools of ‘oppressive statism’. Nigerians in the Diaspora cannot continue sitting on the fence and pray for a messiah to solve the country’s problems. The time is right and ripe for them to become active participants and assist the international community in pushing through reform programmes in the economy.
Nigeria as presently constituted, operates a federal system of government which pre-supposes that the federal government is allocated some powers that are separate from those allocated to the states. The main power allocated to the federal, being the sole ownership of all the mineral wealth of Nigeria. The allocation of all the mineral wealth of Nigeria to the federal government has made Nigerian politics a do or die affair. All ethnic groups in Nigeria have the sole desire to control the federal government. Nigerians in Diaspora will need to operate above this mentality so as to avoid the stagnation in economic reforms caused by current political parties. The political parties have focused all their energies on the struggle for control of the mineral wealth and neglected the needed focus on reform policies and laws from a reasonably independent legislature.
No matter which political party controls the federal government or who is appointed the President, without dismantling the tools of ‘oppressive statism’, Nigeria will not develop any further than its present state. It is not the individual who is appointed or elected to any office in Nigeria that can make a change. Nigerians have witnessed different characters of persons appointed to positions of power – professors, doctors, Nigerians in Diaspora, activists, even the clergy, and nothing has changed. As long as the structure of oppressive statism is in place, as long as the tools of an oppressive statism are not dismantled, there will be no economic development in Nigeria. Whatever that will be discussed on the federal level, readily applies to the States and local governments of Nigeria. Nigerians in Diaspora can assist the international community dismantle the tools of oppressive statism by forming NGOs, working as consultants, volunteers, political action groups focusing on the following reform programmes:
(i) Single Treasury Account
The military and past civilian regimes not only operated multiple accounts but also had secret accounts that were known by only the president and the minister in charge of the revenue source or the Central Bank Governor. The present Federal Government of Nigeria has taken the “bull by the horn” in the implementation of the single treasury account since its inception. Nigerian professionals in the Diaspora with experience of Public Financial Management and Accountability can show support for this programme and insist on its continuity, administered according to proper business procedures. Nigerians in Diaspora can submit proposals to U.S. agencies such as USAID or the World Bank to provide assistance, support to the Federal Ministry of Finance, Federal Budget Office and the Debt Management Office.
(ii) Public Procurement Commission
Through promoting transparent and business-like tendering and procurement business processes, this is an essential institution in the war on corruption and in achieving efficiency in government spending. Assistance would focus on establishing detailed best-practices procurement operations, communicating procedures to spending agencies and responding to their questions and auditing actual procurements.
Nigerian professionals in the Diaspora with experience in commercial law development, drafting of public procurement commission law and procedures manual can submit proposals to USAID or the World Bank to provide assistance, support to key business processes of the government, rather than relying on outstanding professional strategic capacity. The installation of computer-based business information and transactional systems, which must be used in order to award contracts, order supplies, obtain funds, register permits, licences, collateral, and so on, is highly effective in reducing the opportunity for corruption even as it improves the quality and efficiency of government services. The World Bank, European Community, USAID and IMF are already involved using U.S. and European consultants to provide initial assistance to the Federal Government Debt Management Office (DMO), Federal Ministry of Finance (FMF), Bureau of Public Enterprises (BPE) and the Federal Budget Office (FBO)
(iii) Public Enterprises Financial Management
Major public enterprises, in particular NNPC, need to be provided assistance in developing internationally acceptable financial reports and proper managerial accounting principles. Such assistance would enable the restructuring and privatisation of these companies, and bring desperately needed transparency to their cash flows. The importance of turning these organisations around can never be over-emphasized because these companies (including the already privatised power sector) above all are the base of many of Nigeria’s economic problems.
Nigerians in Diaspora need to engage the National Assembly to pass all the enabling laws to assist in the privatisation of public companies as part of a package of economic reform. Any political action group can submit proposals for funding assistance to the World Bank, USIS, USAID or the EEC. The donor community has funds to support the growth of democracy in Nigeria. Professional Nigerians in the Diaspora can also submit proposals to provide consultancy in Public Financial Management and Accountability. Candidates must be experienced in strengthening institutions for budget formulation, execution, revenue management, and experience of guiding, monitoring and assessing national budgets.
(iv) Trade Policy Reform
Radical revision of Nigeria’s trade policy is too critical to Nigeria’s development to be ignored. USAID once undertook a study and identified major obstacles impeding the growth of trade in Nigeria. The study produced a blueprint for institutional improvement. Nigerians in Diaspora can assist by providing consultants to work with the Ministry of Trade and Industry to support the setting-up of the institutional structure and the adoption of liberal trade policy. This programme would also include advancing the ECOWAS’s goal of an integrated economic region in West Africa.
(v) Public Constituency – Building for Reform
Any challenge to oppressive statism is powerfully resisted by vested interests. Do not be deceived by thinking that civil servants who benefit from the status quo are the only vested interest group. Any Nigerian who has acquired wealth by doing business with the Nigerian government which is, almost all the rich Nigerians, represent the vested interest group. They are represented at the National Assembly, the banking sector, the petroleum sector, the construction sector, the shipping sector, and so on. The only force really strong enough to counter such resistance is popular demand. The average Nigerian has been psychologically defeated and believes that only divine intervention can push through economic reform.
Nigerians in Diaspora are the only set of Nigerians that can make the sacrifice to challenge oppressive statism. Every Nigerian in Diaspora must look beyond the Head of State, Buhari, beyond the political parties and support the economic reform programmes. The donor community, the international community, and the multilateral financial institutions are working seriously to push through many economic reform programmes in Nigeria. Nigerians in Diaspora can keep talking about the problems in Nigeria and play the blame game, which will not achieve any positive result, or stand up and join hands to support economic reform. These activities can be done through all the village associations that meet every Sunday, deciding to develop high quality TV-focused media campaigns. The television channels in Nigeria give wide coverage and can reach 90 percent of the villages in Nigeria.
This investment will yield a higher return than all the community sponsored projects that Nigerians in Diaspora have embarked on in the past twenty years.
This movement will be the “Jerry Rawling” phenomena of Nigeria, the “Orange revolution” of Nigeria, the “Solidarity revolution” of Nigeria.
(vi) Private Sector Development
The key to a more active private sector expansion and involvement in the Nigerian economy is the privatisation programme. Several donor agencies are assisting the Bureau for Public Enterprises through funding and training of the principal officers at the bureau. Since the federal government was forced to allow private companies to participate in the telecommunication sector, the number of telephones in Nigeria quadrupled in little more than a year. This was by far the most dramatic improvement in public utility services in Nigeria – due entirely to private sector investment. To understand the beast called oppressive statism, one would have thought that the government would readily create the same “magic” in other sectors. The ownership of these national assets by the privileged few allows them to amass enormous wealth at the expense of the masses. When NITEL was the only company in Nigeria, funds were voted to purchase new equipment and maintain existing ones. Contracts were awarded to companies owned by the privileged few at ridiculous prices. Not only were the goods and services ridiculously priced, most times they were not delivered and the companies were paid. Revenue for telephone services was not collected and when they were collected, they were not properly accounted for. With the private companies, what we hear today is the high profit being declared every year in the same country that NITEL operated in and squandered over twenty billion dollars in one decade!!
Nigerians in Diaspora must form pressure groups to intervene at the National Assembly to ensure that pending legislatures for the privatisation of all government companies are pushed through before the end of this current assembly. Consultants are also required to submit proposals to USAID and the World Bank on privatisation, commercial law development and government economists training. There are scouting for seasoned professionals with experience in understanding political change and governance structures and of designing and implementing reform programmes to strengthen government accountability, institute citizens’ rights and overcome corruption.
(vii) Agricultural Exports Competitiveness
The Kwara State Government invited displaced white Zimbabwean farmers some years ago to invest in her state with offers of free land and a one-stop fast registration process. A press interview with some of the farmers that accepted the offer and have started operations gave an insight as to the promise by the farmers to boost the agricultural outputs in that state. If white Zimbabweans can invest in Nigeria’s agricultural sector, what are Nigerians in Diaspora waiting for?
Nigeria was once a large agricultural product exporter and even today 70 percent of the country’s labour force is employed in agriculture. But today, agriculture accounts for less than 25 percent of the country’s GDP. Prior to the emergence of the petroleum industry, Nigeria’s leading exports were cocoa beans, groundnuts, palm kernels and oil, rubber, cotton and timber. As crude oil began to represent an increasing share of exports, agricultural exports declined and as such, only cocoa, rubber and palm were the primary crops exported. The agricultural sector is considered a key economic driver that must be reactivated. Current constraints inhibiting expansion of agricultural exports include high financing costs, poor infrastructure corruption and uncertain operating climate stemming from changing government regulations and policies.
Nigerians in Diaspora already know these facts and therefore have a comparative advantage in promoting agri-business in Nigeria. Agricultural products exports that could be further developed with increased investment include cocoa, cashews (particularly downstream products such as cashew kernel, cashew nut shell liquid), sesame, shrimp and prawns, hides and skin. Potential markets for increased agricultural exports include the United States and India, as well as regional markets. Nigeria currently exports an average of 12,000 metric tonnes of cashew nuts annually, primarily to India, Brazil and Vietnam, all major processing countries. Processing facilities are in short supply despite the ready availability of the crop. Nigerians in Diaspora are needed to bring in machinery, processing and packaging technology, training and technical assistance to help build a major market-oriented agricultural sector growth project.
Nigerians in Diaspora can also assist the local farmers re-create an effective joint marketing and extension service institutions – owned and managed by them, not by the government. These institutions can be developed with strong linkages to western markets, backed by their selling power through marketing cooperation. There are such government owned institutions in Ibadan, Umuahia, Owerri, Kano, Jos, etc. – moribund and waiting for you to turn them around. Serious professionals, companies or NGOs can submit proposals to USAID, USITC, EEC, JETRO and the World Bank for funding, including grants.
Cassava is a major food crop and offers a variety of industrial uses. Nationwide production is estimated at 34 million tonnes annually, which is 53 percent of Africa’s production and 37 percent of the world total.
The World Bank provides counterpart funding for the establishment and running of Agricultural Development Programmes (ADP) in all the states of Nigeria. It has assisted in the establishment and running of integrated rice projects in many states and sponsored FADAMA (dry season farming) development projects.
USAID is sponsoring the breeding and dissemination of cassava mosaic (virus) disease resistant varieties of cassava through IITA. USAID is also funding the cassava enterprise development project (cassava cluster project). USAID has funded the delivery of training projects for multiplication of disease resistant hybrid plantain/banana varieties. The agency is playing a leading role in the development of the needed critical mass of expertise, knowledge and facilities for bio-technology growth in agriculture and has sponsored innovative programmes such as the Rural Sector Enhancement Programme (RUSEP). UNDP provides funding for agriculture development in Nigeria. It has funded a project, Women in Agriculture (WIA) and has organised training in partnership with Shell for the restive youth in the Niger Delta area.
FAO provides funds and technical experts to work on irrigation development, post-honest technologies and processing activities in Nigeria. FAO provided a $1.3 million trust fund for the Ministry of Water Resources to undertake an assessment of dams and river basin resources for possible rehabilitation.
DFID (UK) has funds for projects in agricultural export promotion and agricultural commodity and service marketing programmes.
UNICEF has funding for the establishment of community based Natural Resource Management projects and tuber expansion programmes.
UNICEF has funding for water projects in many states.
Democracy has a major deficiency. Corruption can flourish without improved transparency and accountability. But accountability requires leadership and leadership is not a monopoly of the Head of State. Leadership could be exercised by the National Assembly, the Judiciary, the Press or Citizen Groups. Nigerians in Diaspora cannot excuse themselves from this responsibility and must show leadership by participating in the economic reform initiatives by getting actively involved, they are indirectly working towards creating a system in which public waste, irresponsibility and neglect of duty at all government levels are exposed and dealt with in ways that reduce the prospects to repeat these practices.
The way to start is to be informed of all the economic reform efforts by the international community and donor agencies in Nigeria by visiting their various websites. There are tonnes of data, information, and guidelines on how you can get involved as a volunteer, consultant, NGO or a professional.
A United States based Nigerian village association can transform into a non-governmental organisation duly registered and set up with appropriate management structure. If all the Nigerian village associations in the Diaspora can adapt the economic reform programmes at their respective local government levels in Nigeria, the changes will trickle up to the state level. When the reforms are enhanced and consolidated at the state level, Nigerians will start seeing the benefits of democracy and the country will be on the path to economic growth and development. Over half of consolidated government spending in Nigeria is at the State and Local Government levels.
Nigerians in Diaspora will be most effective in pushing through economic reform programmes at the State and Local Government level and need to focus all initiatives at these levels. Nigerians in Diaspora should be considered and accepted as a catalyst for growth in Nigeria and it remains to see how this group will take up this challenge.
•Kanu C. Obioha is currently the Executive Vice President, Bluefield Associates, Inc. and President, Clear Essence Cosmetics (USA), Inc., both of Ontario, California. He has a very successful career in several strategic corporate institutions worldwide. These include stints with the former Anambra State University, Enugu, Nigeria as a senior faculty member in the Earth Sciences department; Chairmanship of the old Imo State Utilities Board, Owerri, Nigeria, CEO of Summa Engineering Company, a civil engineering company in Lagos, Nigeria; Committee member of the Nigerian Technical Committee on Privatisation and Commercialization (TCPC) now Bureau of Public Enterprises (BPE), Group Board Member of Nigerian National Petroleum Corporation (NNPC), Special Adviser to Navy Commodore James Aneke, one-time Military Governor of Imo State. He has participated actively as a member of several private-sector U.S. trade delegations to sub-Saharan African countries and has developed parallel expertise in export development and promotion in a good number of U. S. industries that have invested in Africa.
As a result, Bluefield Associates, Inc. won the U.S. Export-Import Bank award as the small business exporter of the year. Kanu C. Obioha has also been appointed by the U.S. Secretary of Commerce as a member of the Inland Empire Chapter of the District Export Council. He has recently been appointed to the Advisory Board of the United States Export-Import Bank. Obioha is an alumnus of Government College, Ibadan, Nigeria. He obtained a first degree in Physics from Bowdoin College, Maine and a Masters degree in Engineering from Columbia University in the City of New York, an Ivy League institution. He is married to Lillian Amaka Obioha, née Chukwuani, and together, they have three children – Ogbonna, Nnenna and Fuchi.