Nigeria’s economy remains under hostage by a few, says Pat Utomi

By Chijioke Nelson and Gloria Ehiaghe   |   24 May 2017   |   2:22 am  

Pat Odinachi Utomi


Professor Pat Utomi is known for his eloquence in the call for inclusive development, transparency in public finance management and fiscal frugality. In his assessment of the economy since the return to democracy, with emphasis on the last two years, the political economy professor told CHIJIOKE NELSON and GLORIA EHIAGHE that the economy is tightly held hostage by a few with “state capture” mentality.

What is your perspective on the economy since return to democracy in 1999?
A very interesting thing that came just at the return to civil rule was the emergence of the Afro Barometer. A group of American scholars had created these indicators for measure of democratic legitimacy and the perception of the democratic culture. It started shortly after return to civil rule. One of the early indicators was how enthusiastic people were for a democratic order just even before the elections. Unfortunately, few years following the return of civil rule, Nigerians in this perception index became less enthused about the democratic process.

I’ve not seen the more recent reports to know where we are presently, but one critical lesson from the rise in the love of democratic order to its descent is the clear indicator that all democracies require legitimating attributes and economic well being is the foremost.

Every government require legitimacy, the same level of acceptance to be able to govern, whether military or civilian government or whatever. This is the reason why if there is a military coup, you will hear the coup announcer say that hospitals have become consulting clinics, no light, no this nor that, because he is trying to acquire legitimacy by delegitimising the old order.

So, legitimacy is a fundamental concept in democracy or in governance general. The point is that democracy is not a gift, it is something that is earned every day and central to legitimising of democratic order is economic performance. It has been abysmally low.

The core concept of government from the history of political thought is that the states exists primarily to provide security of life and property and conditions for an improved welfare, better quality of life of the citizen.Unfortunately, in our democratic order, government has not been as obsessed with how much life has improved for the citizen as it should be.

Why is this so?
We are used to discussing things on the surface, we don’t think deeply enough. For example, why is it that the National Assembly is more interested on how much it allocates for its own use than it has for the quality of life of the citizens? It’s not logical if you look at what democracy should be, but that is the way it has been. During elections campaigns, how much conversation do you hear about what can be done to improve the economy? American campaigns used to be reduced to “Is your life better than it was four years ago?” That is why it is said that elections are not so much for positions to win, but government to lose. If you cannot show that people’s lives were better off today than when you came in, you have more or less lost elections. But that has not been our case. Our country was run so badly for many years and incumbencies continuously put on their cronies.

In fact, we have not been having elections in Nigeria. What we call elections, are anything but elections. There has been a phenomenon of state capture and the Nigerian state has been more or less the captive in the hands of young army officers from 1966 till more than 50 years down the line without break, playing all kinds of games and retaining control of the country. Governance since 1966 stopped being an arena for people to come and make sacrifice because they have a vision for their country or that they will like their children to live in this kind of society.

So, the mindset of the class of 1966, which was imposed on Nigerians, is that governance is about coming to eat, not about coming to sacrifice to build for our children and grandchildren. The same class dominated Nigeria over the years with instant gratification mindset and that is the problem with Nigeria.

How did we sustain the trajectory under the civil rule?
Now, when Obasanjo was sworn-in in 1999, oil price was $11 a barrel. A few months before that, it has actually reached $9 a barrel. Nobody was running around in great panic. Of course, there were problems and projects were being re-ordered, but we were not running all over the place that Nigeria is about to come to an end or that oil price is $9. There were reserves, even when they were at low level and business was still going on and all of that. Literally, within months of our return to democracy, oil prices shot into the atmosphere and we reached $120 per barrel or more at a point. It then that our democracy became more of our undoing, because we had these 36 governors and an FCT minister that followed the culture of the class of 1966.

They were all clamouring to share the national cake. As far back as 2000, I began to screen about the need to save. I won’t talk about the behind the scene things. I was then invited to by President Obasanjo to a forum at which all his principal officers were present, including the Vice President, Secretary to the Government of the Federation and Finance Minister, among others, at the Villa.

After that, one state commissioner for finance, although my good friend, came to me in Ibadan when I was given some awards by the Nigerian Tribune Newspapers and accused me of supporting the Federal Government to take the money of the states. I told him that because he is a well-known banker, he should know better, particular something about mutual funds. If Nigeria were to invest this money, the dividends accrued from these investments would be shared as per their percentage of ownership. How does it become Federal Government taking over your money? At that point he left me quietly because he knew that his argument didn’t hold water. But these governors continued that argument and the money was split. Where is the money today?

Severally, I said that we need to save in this boom times because oil prices would crash again. The only reason oil prices were being sustained at the high rate over a long period was the sudden emergence of India and China and their energy needs. I even dared to offer a formula that we should not allow more than $40 a barrel for our budgetary process. If we survived at $9 a barrel, surely at $40 a barrel, we are actually enjoying a windfall. Everything from 40 to 70 should go into a stabilisation fund, a saving which was to be drawn from if oil prices crashes. It was ignored, but see where we are presently.

I will give examples of countries that has done well with those strategies. We talked about Dutch Disease. That means obviously that Holland must have suffered from it and that’s why the concept is called Dutch Disease. In the ’40s and ‘50s, Holland enjoyed a boom from gas price and the Dutch began to enjoy windfalls and developed certain bad habits- they had all kinds of grants if one falls sick. After a while, everybody in Holland were sick just to get grants. When they began to cut down on these general abuses, they actually discovered that most difficult feigned another ailment- backache and now if you have backache, the diagnosis of backache is high, as well as the grant. So, every Dutch had backache, which afforded them another version of grant.

But at a point, Holland managed to walk its way out of Dutch Disease. Norway was a great success story of country that did not allow mineral resource windfalls to drown it, they saved and saved big. Their sovereign wealth fund is one of the most attractive in the world now. In Africa, one of the great examples is a country called Botswana. Between 1968 and 1980, Botswana had the fastest growing economy in the world from diamond export and Botswana managed to build up a future fund.

How come we in Nigeria had not come to learn from these experiences?
You know, Nigeria is a very generous country. In many countries, youths alone will go after these governors. What did they do with the money? There is no development in virtually all these states. So, the fundamental statement of our economic policy in our democratic experience is that it became a democratisation of the inability to think. Fundamental to it is the failure of the political party’s process. Political parties have failed Nigeria in an amazing way because the members have nothing to offer? They are supposed to be agents of socializing people into certain views on how societies should be organised. The most important thing they do is the search for and selects bright young people, socialize them into a certain worldview of how to manage society and they then become the people who run for office and become custodians of that perspective. Our political parties failed Nigerian people because the only objective of political party in Nigeria is to secure power for personal use.

Now, if you want to make comparison, people would say the politicians are greedy and corrupt. They may be or they may have been, but I think that was not the biggest problem. The biggest problem was that there was no vision and no sense of the future.

Suharto of Indonesia was very corrupt, but he also realised that the future was important and that he needed to change the future for the people of Indonesia. He brought together some of the smartest young intellectuals in Indonesia, who as it happened, were mainly doctorate degree holders in Economics from the University of California, Berkeley. That’s why the Indonesian team was called the Berkeley mafia. Whereas Soweto and his family were stealing, these group of young intellectuals, shaped policies for their country and ran it in a way that ensured a prosperity that the people of Indonesia are enjoying today. If you even go to Latin America, Chilean leader set such pattern, even though he was a brutal dictator and the prosperity of Chile was anchored on the actions that he took.

What happened in Nigeria is that the culture of the class of 1966 was primarily anti-intellectual. Maybe, they did not think through it as a policy, but they forced Nigeria’s brightest minds to live the town.

Where really are we in the last two years?
Of course, class of ‘66 is still running Nigeria. Buhari is part of the class of 1966. Is Obasanjo still around? Yes. What about TY Danjuma, Ibrahim Babangida? They are still around? Nigeria is still in their hands, and the worst part is that they have created cronies. What is required is a full understanding of what went wrong with Nigeria so that we can begin to correct it. Ignorance was a critical part of the problem. That is why we have the duty to educate.

The mistakes with the savings of excess crude earnings alone are so glaring that I think people everywhere should understand our problem. But we just chose not to understand that more than anything, we should educate the Nigerian people about why leaderships is an intellectual activity. We need to think.

This class also managed to demonize thinking so much that when you are thoughtful in Nigeria, people will say it is theory. Nigerians should have gone beyond this to believe that thinking is something that doesn’t work. Everywhere in the world, when leaders gather, they are looking for thinkers to be around them. But in Nigeria, we chase them away. As in popular culture, people in the street say, grammar. That is one of the cultural damages.

What economic policies do you think should have been tweaked prominently in the last two years?
Nigeria has huge number of young people everywhere. We desperately need to provide employment to these young people to harness their energies. We desperately need the things that would improve them from being humans to human capital- quality education and healthcare and the culture of entrepreneurship. How do you provide these things and expand the territory in which they can thrive, which is quality infrastructure, lots of incentives for venturing and ending the belief that government will fix everything, when in reality it doesn’t have the capacity? So, we desperately need these to get people who can be champions, put them in some sectors and say look, your duty is to grow, let’s say, cocoa value chain and in five years we don’t want to see any raw cocoa beans exported from Nigeria. We want manufacturing activities in a particular value chain and we want to see people go to any kind of schools specifically for the capacity to process cocoa and get varieties of manufactured cocoa products.

So, these zones of development are going to focus on becoming world champions in cocoa derivatives. If we don’t get this far in two years, you are fired and if you do better than we are talking, you are our hero. Then you’ll get these champions to drive specific value chains and create a base of development, let’s say, Benue State for sesame seed value chain, just like that across the country.

There is too much of politics in Nigeria, we need to get rid of more politicians and get more statesmen, people who can even think outside party politics. The central thing driving us should be Nigeria, the future, the children, productivity and growth. These are realities and should happen, but they are not happening.

How do you see this anti-corruption drive?
I’ve always been a very strong supporter of any initiative that would reduce corruption. In that sense, anything that should strive is okay but we have to be very careful to recognise that more important is prevention than jailing one person out of all fraud talks. The kind of system that you put in place that would reduce digression is very important to reduce corruption. There are so many kinds of systems that you put in place that are so transparent that anybody can see anybody’s hands moving there, hence there is more or less the likelihood that you have corruption cases the way it is now. The more you involve stakeholders in monitoring, the less likely you would have corruption. I don’t think we are doing enough to correct them. We are emphasizing too much on the publicity aspect of “I catch a thief” and that is even creating a wrong image around the world that Nigerians are all criminals- that they are hiding monies in apartments and burial grounds. I am one of the greater victims, because I am always somewhere around the world and after delivering my speech they would tell me that my country cannot organise anything. Sometimes, even if they don’t say it, you will know they are thinking it.

Is the herdsmen crisis part of the general economic challenge?
It is a very sad thing that we leave very small problems to become big ones. Even back in the ‘60s, there is a certain agreement with the herdsmen to raise the cattle wherever they are, kill, eat and transport the frozen meat in refrigerated coaches and by train to different locations. But many systems were allowed to fail during the ‘70s, ‘80s and ‘90s that brought us to where we are now and people are insisting that it is the only way.

I think this is an unfortunate situation and behavior that we have allowed to develop and politics have made it unnecessarily complex, which should not be the case. People are damaging and destroying people’s properties every day and killing the people and it seems it’s just a little thing. The whole strategy is wrong as far as I am concerned and it’s going to only end up being the greater disuniting factor in Nigeria, because people can’t continue to watch their relatives die cruelly without saying enough is enough. Unfortunately, the poor Fulani person, who may not be part of the trouble, will be the target of ethnic hate across the country.

Do you share this sentiment that Nigeria is coming back from recession?
See, this obsession with certain statistical numbers over incomplete understanding of people’s serious situation, I believe, is part of our problem. What is recession? Decline in growth, quarter over the quarter and so we are in this technical thing called a recession. If you manage to begin to grow the economy, say you have one quarter of positive growth and another quarter of positive growth, how much has that really changed the life of the average citizen out there? That is why for me, one of the best ways to look at history is the way offered by one of the great sociologists of the 20th century, Wright Mills. He argues in his famous the sociological imagination that you do not understand history until you get to that intersection point of statistics where some people died in the pursuit of personal troubles and until you understand a family that has managed to borrow, cheat, steal to put six children through university and all of them are unemployed. Until you can understand their circumstance, you don’t understand history and it means you don’t understand whether recession is over in terms of statistical numbers or not. So, playing this game in terms of recession is totally meaningless to me.

I really don’t care whether we are in recession or we are not in recession, what I care about is the quality of life of Abubakar, Rasheed, Chukwuemeka, that is what really matters and it has not escaped mystery yet. Was it not Goodluck Jonathan who said that Nigeria was thriving? After all, it was the fastest growing Jet market in the world? That is a layman’s language in describing the thriving growth of an economy.

The measure of distribution of income in our country is a disaster, the country where many people cannot eat one good meal a day and a number of people are buying private jet, which is ill gotten wealth. If they worked for it, you will see the jobs created by their enterprise, but they have private Jets in reverse and don’t have people in their employ. These are the kinds people that need invitation to come and explain themselves.

In this article:
Pat Utomi


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