Development law policy as magic wand to transform Nigerian economy

Nigeria is in a parlous state. Gross Domestic Product (GDP) is a miserly 1.9percent, population exploding past 200 million; debt overhang may strangulate the country. So, to turn this around, it is commendable that the Federal Government has empanelled an Economic Advisory Council of proven experts. My recommendation is that the Federal Government should adopt the Keynesian expansionary fiscal policy to achieve and sustain double-digit growth of at least10percentover10yearstopullatleast200 million Nigerians out of poverty. But the magic wand that can achieve this feat is the concept of development law, a public policy tool that intersects law and economic development.

Development law scholars agree that there is a strong linkage between law, regulatory institutions, governance, economic development and national welfare. It is argued that the Nigerian legal and judicial framework is hopelessly outdated and needs an urgent review to meet current challenges. Yet, governments generally fail to notice the links between legal policy, economic development, governance, institutions, etc. The late Prof. Mansur was the leading scholar on this linkage. A sound nation depends on vital legal institutional, regulatory and governance frameworks. The links unfortunately between legal institutions, political economy and development have often, and in our case, been completely overlooked or missed, hence under-development.

De Soto gives a striking example of law as a key primer of development using just one index; property law. Property consists of two values, physical and conceptual. The physical value may be fixed in say, a house. The abstract or conceptual value is fixed in property law systems. In developed nations, property law allows owners of housing, to represent their value in the conceptual realm. This possibility allows easy access to credit that in turn generates capital for development. In Nigeria with a very weak legal regime, conceptual representation of property to create value is absent. Yet the housing assets inventory of Nigerian housing exceeds six trillion dollars. But this is dead capital. If the housing value is indexed to the banking system by massive legal reform of the property law system, we can create an instant credit market with major impact on development. In this way, we wake up dead capital for development.

Itisimportanttherefore,thatpolicymakers must,considerthatalthoughmacropoliciesare unquestionably important, there is a growing consensus that the quality of business regulations and the legal institutions that enforce it are a major determinant of development. If development law is applied as a public policy tool in the following areas, for example, Financial Services Sector, National Trade Policy, Maritime,aviationandspace,legalandjustice Sector,landadministration,corruption,social Security Administration etc. It will transform the economy, create millions of jobs and pull 200 million Nigerians out of poverty.

The Financial Services Sector (FSS) is the oxygen and lifeblood of a strong economy. The FSS ought to consist of the following key institutions, the Banks, the National Credit Guarantee Agency, a Development Bank and the CBN. The banks lend to the real sector of the economy and consumers and ensure the economy is stimulated. In Nigeria, it is doubtful if the banks have performed optimally, delivering on cash to the real sector and consumers. They seem to be engaged in short term lending including treasury bills. The result is that the economy is anaemic. A banking policy that delivers resources to the economy is needed. In the US, the Glass – Steagall Act and Frank-dodd Act focused banks on the proper role to lend to consumers at low-interest rates. The second key FSS institution is the National Credit Guarantee Agency. This is absent in Nigeria. The National Credit Guarantee Agency supports viable business proposals. When viable business proposals are guaranteed, the economy gets stimulated and expanded and that gets converted to goods and services that are sold on to consumers. The economy will benefit from the establishment of the National Credit Guarantee Agency. The third FSS institution is a Development Bank to lend to the vital sectors of the economy. The Development Bank of Nigeria is undercapitalised and so the CBN plays a distorted role. The Development Bank of Nigeria needs to be properly capitalised so it can support the economy. The CBN is the fourth FSS institution. The CBN as presently constituted is overburdened with far too many things – monetary policy, banking supervision and banking. The major role of the CBN is monetary policy stability and so the CBN may benefit from streamlining and strengthening its legal framework. A new policy and legislation can unbundle the CBN and create a new agency to regulate banks by ensuring they deliver on core mandate. In England, they have the Prudential Regulatory Authority.

Tied to the FSS is the need for a National Trade Policy to stimulate local industry, grow export and reduce dumping of foreign goods. The Central Bank of Nigeria recently stated at the launch of its vision and policy thrust for the next 5 years, that it will target unscrupulous individuals and businesses that embark on massive smuggling and dumping of goods that can be produced in the country thus leading to the demise of our agriculture and manufacturing sectors. This needs to be supported. There is a need to strengthen the National Office of Trade Policy. This Office has to be ministerial level. Trade laws have import substitution as their main goal. This means to reduce imports and create local industries. The National Assembly can pass legislation to establish the Trade Remedies Agency, devoted fully to fair trade issues. This will support our local industries around Rice, maize, cassava, cotton, cocoa, tomato, oil palm, poultry, fish, etc. Trade policy on Fly Nigeria will grow Nigeria Airlines, a strong Cabotage Act will grow shipping lines, oil and gas, legal, banking, insurance, shipping etc. If trade legislation is favourable, Trillions of Naira will flow with Job creation in the millions.

Flowing from the discussion on trade policy; there is a need to review Nigeria’s Bilateral Investment Treaties (BITS). BITS are part of a countries trade policy. Nigeria is a signatory to over 30 bilateral investment treaties. The recent arbitration award secured by a company, Process and Industrial Developments Limited (P&IDL) has raised the question of how fair it is for Nigeria to have arbitration clause with a foreign seat. We understand that an Executive Order is currently under contemplation to make Nigeria the seat of arbitration and require parties to choose an arbitration institution in Nigeria. While the proposed Executive Order is laudable, it is our opinion that the Order might be confronted by challenges that might defeat the essence of enacting it. It will be recalled that Arbitration Agreements are embedded in Bilateral Investment Treaties (BITS) that Nigeria has signed and ratified with many countries. An Executive Order may conflict with the BITS. This is so because BIT’S provide that disputes arising between Nigeria and foreign investors will be determined in foreign institutions of arbitration and seeking to alter this position simply by an Executive Order might