The Scariest Thing about Nigeria
We see different things even when we are looking at the same picture. When CBN asked MTN to return the $8.1 billion dividends it “illegally” repatriated between 2007 and 2015, I was not thinking about MTN or CBN. Rather, my mind was on Econet, the ancestor of Airtel. Econet and MTN launched operations in Nigeria in 2001. Three Nigerian states — Lagos, Delta and Akwa Ibom — invested heavily in Econet, owned by a Zimbabwean. Suddenly, the states sold their shares for no intelligent reason. The only thing we knew was that the buyers of those shares happened to be fronts for politicians. Individuals, rather than the states, became the ultimate beneficiaries.
Imagine how much the three states would have been receiving in dividends today. If MTN’s foreign investors could net an annual average of $1 billion in eight years, we can guess, at fight over again. the minimum, that the Nigerian states would The argument that some states are not viable have earned around $3 billion from their Econet can be easily defeated. My principal witness this investments during the period (warning: I’m just morning will be Luxembourg, a tiny European guessing based on mental calculations). Clearly, country. With a landmass of 2,586.4 square the sale of the shares was not for any economically kilometres, Luxembourg is half the size of Toro sound reason; that I can say for free. The way LGA, Bauchi state. And with a population of things go in Nigeria, there must be a fraud 602,005, Luxembourg is less populous than component to every single transaction. There Oshodi-Isolo LGA in Lagos state. But its GDP, is hardly anything straightforward in Nigeria. built around industry, agriculture and banking Even to put a dead body in the mortuary has services, is $72 billion — more than the combined a fraud component. GDP of Lagos, Rivers and Delta states, Nigeria’s
One of the biggest lies you have ever been top three states by GDP ranking. Countries are told is that some states in Nigeria are not viable. developed by brains, not landmass, population Those who make the argument build their thinking or allocation. We must let that sink into our heads on one pillar: the oil revenue-fuelled federation appropriately. allocation. Their calculation is that if there is no If viability is determined by population, (or low) federation allocation, most states would Luxembourg is not viable to be a state much less a collapse. And we know, and everyone knows, that country. Even a local government in Borno would the federation allocation is nothing without the be more viable than the European country based oil revenue. Take away the oil money from the on the population factor. If viability is determined central pot and most states would not be able to by population, Luxembourg is not more qualified pay salaries, much less fund the utilities or embark than any state in Nigeria. If viability is determined on a single project. Based on this oil-propelled by natural resources, Luxembourg would have calculation, many analysts have suggested that perished since. Banking services form the largest some states need to merge. sector of the economy; it is, in fact, rated as one
Indeed, it has been suggested that Nigeria of the most competitive financial centres in the should be re-arranged into six regions so that world. The country also manufactures steel. the federating units can be economically stronger. And, if this would interest us, its farmers are We seem to have concluded that the viability of good producers and exporters of meat, dairy states is proportionately related to the size of their products and wine. federation allocations. It makes sense to a large In Nigeria, we have reduced our thinking extent. Many states are unable to pay salaries capacity to federation allocation. We blow up the moment allocations drop, either because population figures in order to collect more money of low oil prices or low oil production or both. from the central pot because our brains have been The monthly meeting of the Federation Accounts saturated with oil money. Every discussion starts Allocation Committee (FAAC), which shares the and ends with “sharing” the national cake. If money, is one of the most important gatherings our revenue distribution formula is such that the on earth. Our happiness is tied to the price of more your population is, the more you have to oil. When it is high, we are high. When it is contribute to the federation account, states would low, we are low. start reducing their population figures in order
But verily I say unto you: there is no single to contribute less to the central purse. It is this Nigerian state that is not viable. No, I am not obsession with “sharing” that has stunted our talking about solid minerals. Let’s not even go capacity to think. Take away the oil and we are there. Anytime I argue that all Nigerian states as naked as fried chicken. are viable, I am told, “Yes, every state has solid As we mark our 58th Independence Anniversary, minerals.” For once, let’s get over our obsession my desire is that we would refocus the development with mineral resources. This obsession has done debate. Rather than grumbling and moaning enough damage to the progress of Nigeria and about our arrested development, we should be psyche of Nigerians. It is at the root of every putting on our thinking caps. Until the component poisoned discussion about Nigeria. When crude units of Nigeria are economically fortified, we oil price fell below $30 in 2016, I noticed that will continue to have a misguided, misdirected the clamour for “resource control” and “fiscal and fruitless debate about national peace and federalism” died down a bit. Take away the oil development. The prosperity of Nigeria will money from the debate and there is nothing to never be determined by FAAC. It will never be
THISDAY Newspapers Limited. determined by federal appointments and federal projects. All these are about “sharing national cake”. The focus should be on how to “bake” the national cake in the first place.
A Zimbabwean farmer who worked in Shonga, Kwara state, some years ago told a colleague of mine: “With what I can see in this community alone, Nigeria’s potential is scary.” Others see prospects, we see problems. Nevertheless, I have three proposals on how states can become viable so that the government can become smaller in our lives. One, states can set up and run companies. Two, states can invest in companies. Three, states can create the environment to attract companies that will boost economic activities and push up internally generated revenue. These three proposals are not mutually exclusive — you can have the three together. I will explain these options in brief.
One, any state could have floated a telecoms company to bid for a GSM licence in 2001. It would be making the billions. Any state or group of states could have set up a mobile phone assembly plant or oil company and be making the billions. Any state or group of states could have set up a massive cattle ranch, comparable to the ones in Denmark, and be making billions from export of beef and dairy. However, I will not favour this option. Publicly owned companies in Nigeria are a sham, built around collecting subventions and perpetrating fraud. I don’t know of any government-run company in Nigeria that functions optimally. In other countries, such as China, they are profitably run.
Two, states can actually invest in companies offering these services, the same way Lagos, Delta and Akwa Ibom invested in Econet before the heist. This is pure investment. The management of the companies will NOT be run by government appointees. We have a similar model with the NLNG company in which the Federal Government of Nigeria has a 49% stake but the oil majors own 51% and manage the entity. We are reaping billions of dollars in dividends every year. There is no law that bans Bayelsa or Benue from investing in a productive company in a similar manner. I have read the “useless” 1999 constitution again and again and I can’t find any hindrance.
Three — and the one that is, to me, the most desirable but the most unlikely — is for the states to create the right environment and encouragement for investors. With productive and booming local economies, states will start to generate enormous revenue from various tax handles at their disposal. Enormous revenue from industries, enormous revenue from jobs created, enormous revenue from the entire value chain. Nothing in the constitution forbids this. But I must admit this is the most difficult option for us — it requires using the brain. But who wants to use any brain when there is a FAAC meeting holding in Abuja next week?
Space will not allow me to elaborate on how Plateau state could be exporting wine, or how Jigawa could be producing thousands of ICT experts, or how Ondo could be home to chocolate-exporting companies. As Nigeria clocks 58, the biggest unaddressed challenge remains the notion that our lives are tied to petrodollars and federation allocation. I will argue, and keep arguing until somebody finally listens to me, that every state has the capacity to survive, thrive and flourish — without a single kobo from oil revenue. Our brains need to be restructured to start thinking and acting intelligently. The scariest thing about Nigeria is our amazing potential. Happy anniversary!