Prosperity and poverty of nations: Using global models to explain and mitigate underdevelopment in Nigeria


Ban Ki-Moon











Early in life I often pondered the prosperity of the Western world and the stark poverty and deprivation of much of Africa, especially my own country, Nigeria. Trying to address that enduring curiosity has been a major object of my academic pursuit especially after my first degree in History.

I had realised that in pursuit of that objective, history would be an invaluable tool. I subsequently travelled from the Nigerian shores to acquire a Masters degree in Economic History in a Western university. My thesis was on the history of Nigerian agriculture1, which was one sector where poverty was most evident.

The thesis examined how and why peasant agriculture in Nigeria became consolidated instead of being transformed to generate greater productivity and income under the colonial regime. That condition continues largely to this day. I followed up with a doctoral dissertation, which analysed the economy and society in Eastern Nigeria, investigating the structural obstacles to development and social change.

I went further to examine whether existing theories of development which were Western-centric were relevant to Africa. The answer has been, not quite. As my search continued, I discovered the relevance of political economy in the explanation of what the late Ali Mazrui described as the “African condition.” I have also discovered that great nations do not emerge without great leaders and great sacrifice.

Persisting underdevelopment in Africa is not just a matter of economics but it is located at the intersection of the trinity of economics, politics and culture. Certain cultural values which celebrate ill gotten wealth (not questioning it), leading to the prevalence of corruption cannot be conducive to development.

When several times a country’s budget is swallowed up by corruption over a period of time as we shall see in this lecture, development will definitely suffer. One may say political leadership is the most overarching of this trinity as political choices and decisions can determine economic choices, which in turn can change or alter cultural values. The market is the greatest social force and decisions and actions of governments can determine the optimisation or truncation of market dynamics.

Smithean economics (from Adam Smith) emphasises the sanctity of the market in economic development. Industrialisation can change cultural values as it breaks down primordial relationships. In exploring the roots and persistence of underdevelopment we should at one level focus on the obstacles to market penetration as the growth of the market unleashes the productive forces of society. This I did in a separate study which addressed what I called “the non-capitalist transformation of modes of production” in Eastern Nigeria.

We have since discovered further that in modern times the enlightened hand of government is indispensable in ensuring economic growth and that this growth translates into all-encompassing development which abolishes extreme poverty and inequality. Effective governance and a strong economy are in turn facilitated by strong institutions.

Of late Daron Acemoglou and James Robinson have reminded us in their best seller, Why Nations Fail, that what makes the critical difference between prosperity and poverty, between great nations and lesser nations, is the development of inclusive political and economic institutions that allow free competition of ideas and actions, encourage popular participation in economic opportunities, and rewards enterprise and innovation.

This is the institutional approach to development. Development, one analyst has stated, is struggle of opposites. Why Nations Fail had not yet appeared when President Barak Obama, during his visit to Ghana shortly after his inauguration as the 44th President of the United States, admonished African leaders that what the continent needed most was “strong institutions”, not “strong men.” One should add that a visionary, enlightened and decisive (political) leadership is indispensable for the emergence of a prosperous nation.

I have always believed in the use of scholarship as a tool for social action. That way scholarship can be relevant to the practical needs of society. As an undergraduate I became converted to Marxism at the University of Nigeria, Nsukka, where under the tutelage of the late Professor Ikenna Nzimiro, Inya Eteng both of them of blessed memory, and T U Nwala we held weekly meetings on Marxist ideology.

Marxism gave me my first perspective for understanding poverty, inequality and social injustice. The search for a better society spurred me on, making me to be the mouthpiece of the Awareness 1 Club at Nsukka, the foremost student activist group on campus, whose motto was fittingly, “Towards a Better Society.” My restless intellectual spirit also made me a freelance writer in my undergraduate days and my contributions to newspapers earned me recognition and needed pocket money from the honorariums that I received.

Whether I was mobilising civil society in Europe for protest against environmental degradation by IOCs in the Niger Delta; speaking against military occupation of Ogoni at the United Nations Human Rights Commission in Geneva in the dark days of military dictatorship in Nigeria; discussing the need for the formation of a government of national unity with ruling party leaders in Zanzibar after a divisive national election in that country; addressing young students who have probably not met a black African at a middle college in Punjab, India; visiting a Buddhist temple in Sri Lanka as a tourist; conducting research among the oppressed Dalits in rural communities near Mumbai, India; joining a protest in Trafalgar Square, London for the release of Nelson Mandela; or joining another picket in Time Square, New York in support of Jesse Jackson’s first bid for the U.S presidency in 1984, what has always motivated me was the quest for justice and equity, and the fusion of scholarship and social action.

One important perspective on Nigerian economic life and nation-building which I derived from my understanding of socialism was my belief that ethnicity was a passing phase of our national development as primordial ethnic identity would be replaced by class relations as economic development proceeded. How wrong I was. Today we know better. Ethnicity has since been getting reinforced as the struggle for the country’s political space and resources continues to assume basically an ethnic character. Nigeria’s challenge now is how to manage ethnic relations instead of wasting effort on how to combat them, which was the approach to nation-building in the immediate post-colonial years.

Over the years my fascination with socialism has waned, especially since the end of the Cold War and the collapse of the Soviet Union and my understanding of human nature. Having read George Orwell’s Animal Farm and followed developments in socialist societies up to the last days of the Soviet Union, I have come to believe that neither capitalism nor socialism on its own can guarantee social justice. But Marxism remains a vital tool for understanding social relations.

A central objective and responsibility of most governments across the world is to create wealth and improve the living condition of citizens. Since the origins of prosperity and poverty is a complex and broad field of scholarship for which I am not adequately prepared in this limited lecture2, I am going to provide an outline of the origins of economic development, indicating how Nigeria initiated the development process since its colonial days and why the country has not made a breakthrough. I will end the lecture by proposing a simple theory which in my view will point the way to development and prosperity in the country.

The key issues highlighted in this introduction will become clearer as we sail along on the voyage of exploration of the lecture. With humility I invite my informed audience to join me on that intellectual voyage.

Part I: Economic development: How it happens
Clarification of Concepts

It may sound pedantic but for the sake of contextual clarity, it is necessary to define with simplicity certain concepts which we may take for granted that are key to the understanding of this lecture.

Economic growth
This is the growth in the productive capacity of a country. It is the increase in the market value of the goods and services produced by an economy within a period of time. It is conventionally measured as the percent rate of increase in real gross domestic product (GDP). Of more importance is the growth of the ratio of GDP to population (GDP per capita), which is also called per capita income. In a broader sense economic growth is the statistical expression of a country’s economic performance.

Simply defined, development is the incremental improvement in the quality of life. In ensuring human well being, economic growth must be combined with development. There can be no development without growth. But there can be economic growth without development as conventional measurements of growth such as income per capita presuppose the equal distribution of the proceeds of economic growth, which is not correct.

A country may be relatively well off by conventional indices of growth, but this may not be commensurate with the quality of life of the general population. For instance, Nigeria in 2014, became Africa’s largest economy, over and above South Africa. But we know that the level of economic development in South African is not the same in Nigeria. To further distinguish growth from development new indices have been adopted in recent years to measure social development. These include access to the basic needs and conveniences of life, education, health and sanitation, potable water, electricity, mortality rate, environmental quality, and gender equality.

In trying to generate economic growth and development, mankind has been undermining the prospects of future development as not all initiatives carried out in the name of development are in the long term interest of society. Big dams constructed to enhance agricultural production or to generate electricity end up becoming an albatross for the local community as they may cause flooding and destroy local agrarian livelihoods. Some dams drain water from rivers to which are connected, affecting the populations that depend on such water sources. In the attempt to develop mankind has been consuming both renewable and non-renewable resources at an alarming rate, especially the industrialised nations, depriving future generations of access to the resources.

In extracting oil on which the Nigerian economy haplessly depends, oil companies have been polluting the environment, destroying the marine and terrestrial resources that had historically sustained indigenous livelihoods, thereby creating poverty instead of alleviating it. This type of development cannot be sustained. For development to have long term benefit it has to be sustainable, hence the concept of sustainable development, which is defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”3

This is a state of abject want, the absence of the basic needs of life. Manifestations of poverty include lack of money, hunger and malnutrition, illiteracy and ignorance, lack of decent clothing and housing. Poverty can be regarded as one of the most vicious socio-economic diseases of all time. If you are poor you are voiceless and powerless, helpless against natural and man-made challenges. Even the fundamental human right of right to life is challenged and abridged by poverty as a poor person can die at any time from any of the preventable and treatable diseases. A poor person cannot enjoy his constitutional rights, hence the United Nations has included economic rights in the broad-based structure of human rights. Poor nations have inaudible voice and no respect in the international community.

This term can be applied to a society or country that has not attained its development potential. It is a wide-ranging concept that includes all aspects of national life – economic, social, and political institutions and practices. In socio-economic terms, underdevelopment demonstrates poverty in all its manifestations – high rate of unemployment, a mono-cultural economy, low wages, low income, poor infrastructure, high levels of income inequality.

A country may be underdeveloped politically when its political institutions are dominated by primordial and negative social values which impede national progress. Ethnic politics, corruption, graft, election rigging, varieties of dictatorship including military rule, violent conflicts, insecurity, lack of rule of law, weak national institutions, hence weak governments, external economic and political domination – are all aspects of the politics of underdeveloped societies.

The term “underdevelopment” is controversial with heavy ideological undertone. To talk of an underdeveloped society is to presuppose an imposed condition of underdevelopment by a superior external force or authority which is often connected to capitalism. Colonialism and later day control by developed capitalist powers are often blamed for the “underdevelopment” of much of the non-Western world.4 The term is seldom used by Western liberal scholars.

The origins of economic development
Historically two routes have been followed in the attempt to consciously promote economic growth and create prosperity in modern times. These are the market system (also known as capitalism) and the socialist system. While Western liberal scholars and politicians hardly use the term “capitalism”, preferring instead “market economy”, Marxists or leftist intellectuals prefer to talk of capitalism. I am going to use the two terms “capitalism” and “market economy” interchangeably.

Capitalist development
Prehistoric man survived by foraging. The Bible tells us that in the beginning God created Adam and Eve and located them in the Garden of Eden. They did not have to struggle in order to survive as everything needed for their well being was provided in that garden.

In disobedience they ate the “forbidden fruit”, whatever that means, and God, in annoyance, pronounced a curse on them. Part of that curse was that they have to struggle in order to survive. In a recent Sunday school class in my church, a bold and inquisitive worshiper asked why God should punish the couple when He did not warn them against eating the forbidden fruit.

Regardless, Adam and Eve and their progenies, now faced the eternal struggle for survival. At this point they lived on nature’s bounties as there was yet no scarcity. So the need for economics did not arise. But the disadvantage of surviving on nature and living a peripatetic life is that civilisation could not develop as there was no organised society. As the Nigerian experience with nomadic education has demonstrated as late as the 21st century, it is difficult to organise an unsettled people and make them to conform to the nice values of civilisation.

The transformation of the Stone Age foraging economy into a sedentary society through the domestication of plants and animals marked the beginning of civilisation. It was a critical milestone for mankind. Because the origin of agriculture is dated to the Neolithic Period of about 10,000 – 3000 years ago, this critical development in the evolution of society has been referred to as the Neolithic Revolution, a term coined by the Australian archaeologist Gordon Childe.

It started in what another historian, the American Orientalist, James Henry Breasted, called the Fertile Crescent, the arch-like territory stretching from the Nile Valley in Egypt to Mesopotamia in present day Iraq. As settled communities evolved, rudimentary forms of government developed and states and empires followed. Social hierarchies developed, elites emerged and the lower classes had to produce to sustain the ruling classes. In much of the ancient world the natural economy gave way to the feudal system.

Much of Sub-Saharan Africa did not experience feudalism as there was no overarching landlord class to which a tenant peasantry paid rent (African peasants never paid rent as they subsisted mostly on communal land). These two features – a class of landlords and a rent-paying peasantry which had no control over the land they cultivated was a central aspect of feudalism. The feudal economy was dependent on peasant production which survived for thousands of years. Gradually money came into use. Monetization accelerated the growth of commerce, and new social forces and the growth of cities, which undermined feudalism and eventually led to its demise.

Capitalism gradually emerged from the bowels of feudalism. Contrary to popular interpretations, commerce is not synonymous with capitalism. Many societies developed commerce which did not transform into capitalism. Capitalism is a distinct social relationship marked by the separation of the producer from the means of production. The peasant producer, for example is cut off from the ownership of the means of production, which in his case is land.

In the medieval European setting the peasant was merely a tenant on the land that he cultivated, which was owned by the landlord, to whom the peasant paid rent either in kind or in cash, but mostly in cash during the later Middle Ages.

Under the market economy or capitalism the worker is separated from the ownership of his means of production, which in his case is capital. The entrepreneur or capitalist is the owner of the capital and the worker who provides the labour is paid a wage.

In pre-capitalist economies, which almost universally were based on agrarian production, this separation was not there. The peasant produced much of what he used or consumed and exchanged the surplus either for money or in kind, depending on the level of cash penetration of the local economy. This combination of subsistence and market production is what socially identifies the producer as a peasant.

With the development of capitalism the peasant was effectively cut off from the land as he became proletarianised, that is, without any means of subsistence. If he produces almost entirely for subsistence, he is labelled a primitive man or husbandman. If he produces entirely for the market, he becomes a capitalist. A capitalist is the only producer who produces what he does not consume or utilise. He produces only those things which he can sell and make a profit. With the development of agrarian capitalism in Europe, especially industrialisation, the hordes of European peasants were converted to workers. Some of them became capitalists, owning farms and enterprises for which they employed workers. That is how the peasantry as a social class became extinct in much of Europe.

The process of proletarianisation, for whatever reasons, started in Europe, where the peasants were driven off the land to make way for commercial agriculture. Having been proletarianised and rendered desperate they were now cheaply engaged as agricultural labourers. That was the beginning of the capitalist revolution, which for whatever reason started in England as noted and spread to the rest of Europe. Agrarian capitalism culminated in the Industrial Revolution, which started in England. The capitalist revolution marked the beginning of the disappearance of the European peasantry as a social class.

This is the emergence of the market economy, which is marked by:
Private ownership of capital (means of production) as opposed to state or public ownership (socialism)
Production is for sale, as opposed to own use
Production is for profit
Every factor of production is a commodity (land, labour and capital), that is, it can be bought and sold
Competition, which spurs
Innovation, which is driven by profit

Predominant, perhaps universal mediation of exchange by use of money in its various forms.
The advent of capitalism engendered a great upheaval in English society. With the disappearance of the security of livelihood for the large masses of the proletarianised peasantry who must now work for a capitalist in order to earn a living, and with the capitalist employing ferocious means in order to extract maximum labour power hence profit from hapless and helpless workers and without the regulatory and restraining power of government, the society was literally in a state of chaos (government, which had limited power at the time dared not intervene or else incur the wrath of the powerful class of landlords and entrepreneurs). But this was constructive chaos or benevolent disorder, the sort of social force that destroys an old older and set society on a new trajectory.

English capitalism was brutal. The super exploitation and suffering of workers who had no rights, was unimaginable. The brutality of factory condition in England was best illustrated by the proverbial story of Oliver Twist. Hungry, gaunt and grimy, Oliver Twist, a child labourer, made the mistake of asking for more at the factory soup kitchen. This effrontery earned him a heavy bang on his head of the large serving spoon.

Yet the plight of Oliver Twist was mild compared with that of many other factory workers.

To Be continued!

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