Lagos megacity – Seeing in 3D

What do Lagos States’ two megacity projects – the expansion of the Orile-Iganmu-Badagry expressway and the $2 billion two-rail line – and the relocation of a manufacturing plant from Aba to Agbara have to do with economic development? More than meets the eye. These seemingly unrelated events have a lot in common according to the recent World Bank development report “Reshaping Economic Geography”, higher densities, shorter distances and fewer divisions (ie, economic borders) have contributed to the economic transformation of megacities in the world eg, Tokyo, New York, Chongqing, Mumbai etc. In other words, there are three dimensions to development: density, distance and division.

According to the United Nations, Lagos state will become by 2020 one of nine megacities in the world. But the pains of this growth: slums, traffic jams, and heaps of refuse which are felt and smelt daily, mask the gains of urbanisation. Nonetheless, the plans by Lagos State to provide a two-rail line that will make 16 million trips commuting over six million passengers daily suggests Governor Babatunde Fashola and his team are seeing in 3-D. Two places in Lagos: Badagry and Ikeja are linked by road to Agbara Estate, an industrial estate in Ogun State, where Unilever, in line with its February 2000 five-year strategic plan, has just established a 3.5 billion naira detergent factory. The thought of traffic, people and goods, teeming along Orile-Iganmu-Badagry is mind boggling.

As the investor forum kicks-off, it’s obvious that the governor and his advisers have hatched a vision that sees Lagos as a city with a portfolio of assets, they understand what it each of these does best and are engaging the private-sector in realising the city’s inherent potency. Fostering development along these dimensions can be cumbersome, sometimes complicated or straight forward and devoid of instant rewards: policies have to be thought through and implemented, infrastructure, gulping billion of dollars, spanning beyond a government’s tenure, have to be put in place, institutions have to be built etc. Economic development doesn’t just happen. Where there’s no deliberate and disciplined effort at development there’s no economic growth. For the World Bank: “The reality is that the interaction between leading and lagging places is the key to economic development.”

Besides, urbanisation and economic growth are mutually reinforcing. Lagos, situated by the coast of West Africa is naturally endowed for urbanisation; she’s a natural lodestone for people and producers.  Migration of skilled, semi-skilled and unskilled workers to urban areas generates demand for food, schools, roads, sanitation, the exchange of ideas eg, entrepreneurial opportunities, financial services, telecommunication etc. MTN’s offer of seamless roaming in Nigeria, Ghana, Benin and Cameroun is a clear and present example. Needless to say, several Nigerian banks and law firms will be angling to provide their services to both the State government and private investors in raising the funds.

Coupled with migration, agglomeration of producers ie, locating in areas densely populated by other producers eg, manufacturing companies, provides economies of scale (reduction in the average cost of production as output increases) as well as proximity to suppliers, consumers and competitors. Little wonder why Unilever is centrally locating its operations in Agbara. A key component of Unilever’s strategy was to reduce and relocate its manufacturing sites, establish regional hubs and expand, via exporting, into the ECOWAS region; there were benefits to be gained by aligning the businesses of other associate Unilever companies in West Africa.

Yet, economic density and shorter distances at a local level are incomplete without national and international integration. For instance, thinner borders will be a boon for the plans, frozen at the moment, to turn Lagos into West Africa’s financial hub. But then, is it all about Lagos State? As the urbanisation and economic growth of Lagos radiates beyond its borders, it will reach a threshold and spill-over into cities like Ibadan, Oyo State – Ogun State is already a beneficiary. Disparities in resources and living standards within the country and better economic benefits between landlocked and coastal countries can be tackled however unbalanced the economic growth, which need not be exclusive, even if concentrated in a few places. Therefore, “… regional institutions that thin borders, regional infrastructure that connects countries, and such incentives as preferential access to world markets, perhaps conditioned on ensuring that all countries strengthen regional cooperation” are needed policy instruments.

The West African region, inhibited by thick borders inherited from the 19th century scramble for Africa, is mentioned as one of the places were integration is hardest. Divided, distant and without economic density these countries are found among the “bottom billion”, a term coined by Paul Collier, a professor of economics at Oxford University. For Prof Collier, poor countries are caught in one or more traps: “The Conflict Trap,” “The Natural Resource Trap,” “Landlocked with Bad Neighbours” or “Bad Governance in a Small Country.” Nigeria, thank goodness, is ostensibly free of three of these traps. Alas, some of its neighbours are not. Nigeria, as the largest economy in the region, can spur West Africa’s economic makeover from and through Lagos State.

Governor Fashola must be commended for focusing attention on the oft mentioned, but hardly exploited, natural gifts that Nigeria is blessed with: human and geographic resources – other than our crude oil. His daring to see in 3-D can and should be emulated.

The economic cost of corruption

The minister of finance Mansur Muhtar, in an interview with journalists at the end of the IMF and World Bank spring meetings said “One fundamental that came out of these discussions, however, was the key role of infrastructure in stimulating growth of economies at this point in time”.

Nigeria certainly could do with such investments. The country’s infrastructure is horrendous. Developed and developing countries are channelling huge chunks of their stimulus packages into infrastructure upgrades.

The World Bank’s assertion that Africa may lose 10 years of growth if it fails to act like its peers is not an attempt to paint a grim picture. The Bank has upped its infrastructure funding in Nigeria from $600 million to $3.6 billion. Similarly, the Federal Executive Council (FEC) recently awarded contracts worth 373 billion naira for the construction, rehabilitation and expansion of roads around the country.

As a flurry of projects get underway, a boom will ensue – generating consumption and new investments. Yet without transparency and proper scrutiny of bidding processes, allocation of fund and contract awards, investments may end up in a sinkhole. Particularly since the construction sector is one of three focal points of corruption.

Corruption’s epicentres
According to Paul Collier, author of The Bottom Billion, “Among the companies that pay the bribes two sectors seem to stand out: resource extraction and construction.” Banks are the first epicentre. This is where the loot is deposited. Tax havens are known to be popular destinations. Curiously, the government of Ghana will soon grant Barclays bank a license to operate an onshore tax haven; a bus trip or one-hour flight from Nigeria without the need of a visa.

The economic costs of corruption in infrastructure are debilitating – causing a vicious cycle: reduction and delay of infrastructure expenditures; reduction of growth generated by a particular infrastructure, say electricity, forcing consumers to be self-providers; it raises cost of recurrent expenditure and lowers the quality of services and limits access, especially the poor.

Construction’s two features: ‘idiosyncratic’ capital intensity and ‘network’ activity make it prone to corruption. Each infrastructure project is unique ie, designed and built to specification. Thus no two contracts are the same. Standardisation and benchmarking are impossible – it’s easier to price a new truck than a new road.

False info and profits
Then there’s the issue of information asymmetry ie, suppliers – contractors – have more information than buyers; a disparity that gives contractors an upper hand. Hence the tendency to inflate capital costs and bribe corrupt bureaucrats responsible for awarding the contract. If they are not corrupt, laxity in procurement scrutiny aids the rot. Alternatively, fewer projects are awarded where the head of the ministry, department or agency isn’t corrupt. Either way, the citizens, especially the poor, bear the brunt.

When the regulator and contractor are in cohort, resource is thus allocated to projects with higher capital intensity. If building new roads are more capital intensive than maintaining them, more new roads get built or vice-versa. Less capital intensive projects are awarded eg, schools, when bureaucrats are either incompetent or lack critical information. Misallocation of resources contrary to reality: a pining need for bridges, roads, water and electricity.

Corruption’s indirect costs on infrastructure are pronounced. Awarding bloated electrification projects to spurious companies is to damn the manufacturing sector to inexistence. Without electricity, the manufacturing sector – unassailably the best means for productivity and job creation – remains uncompetitive.

The status quo most preferred by a cabal of monopolists: legislators, contractors and regulators; feeding fat off Nigeria’s dysfunctional power sector. Also lip service to the rule of law, enfeebled by law enforcement agencies, that bark more than they bite, help corruption to thrive.

These illicit gains find a haven in offshore financial centres. But there’s more that ends up in those well protected accounts: money gained from tax evasion. False profits: robbing the poor to keep the rich tax-free, a report by Christian Aid International, a UK-based NGO, extensively shows how multinational companies (MNCs) evade tax to the detriment of developing countries. Between 2005 and 2007, Nigeria was the biggest low-income country tax-loser with £502 million.

At $160bn (£80bn, at the exchange rate in May 2008), annual tax lost by developing and emerging countries is greater than the £28-42bn annual budget to meet the millennium development goals (MDGs). Halving poverty by 2015 just got harder by half.

Tricks of the trade
There are several tricks of the trade. Transfer pricing or profit laundering is one. In the oil industry, it is done by ‘loading of costs’ on ‘cost oil’ ie, allowable costs for developing a concession up to, and including, break-even point. ‘Profit oil’ is then split between the international oil company (IOC) and host country.

Examples of loading costs: overcharge for physical assets supplied eg, exploration equipment; a service charge (supply of staff and management services) or financial charge “achieved by something called thin capitalisation, by which a company might put in massive loan facility to finance its operation in Nigeria, which is charged for at a high rate of interest from another part of the same company.”

Mispriced trade gives capital wings. Once in flight it can’t be taxed. Lured by offshore or onshore tax havens and their penchant for secrecy, raising taxes can be tasking in developing countries. Before Obama’s Stop Tax Haven Abuse Act a US company could, after pumping prices of say, management services in Nigeria, can claim deductions against their tax bill before paying taxes on offshore profits (which may be tax-free).

A longish description of one trick used by oil companies, by Andy Rowell, James Marriott and Lorne Stockman, authors of The Next Gulf, is worth quoting. “The price might be much higher than the company would be charged for the same loan in somewhere like the UK, for example. It would be justified by the supposedly high-risk nature of the operation in Nigeria. This increases costs in Nigeria and reduces taxes and profits there. Worse still, the loan will be made from a tax haven like Jersey, and when the interest is paid there, it might be well tax-free.”

Halliburton’s 10-year scam confirms how offshore tax havens eg, in the Cayman Islands (some are onshore eg, in Switzerland and now Ghana), aid, abet and arm corruption. Tax evaders, money launderers and fraudsters take advantage of the banking secrecy of these offshore financial centres.

Tax on reserves: an incentive offered to explore for and locate reserves of oil, is another trick. Tax payable is dependent on amount of reserves found. Thus overstatement of reserves reduces taxes paid. Tax on reserves was behind Shell’s reserves fiasco in Nigeria.

Governments of developed countries are also culpable. To think that before 1999 French companies could deduct bribes paid abroad from their tax liabilities. No coincidence then, Technip, one of the companies in the Halliburton scandal, is French. And the investigation was started by a fraud-buster in France. In the US state of Nevada it takes 1 hour and a no-questions asked approach to register a shell company. Limited information or disclosure is needed – a scanned copy of one’s driving licence will do.

The Internet has exceedingly helped. Not only has it bridged physical distance – making tax havens only a click away – it has confounded the taxman’s ability to apportion tax liability. Under the cover of the Internet, transactions are anonymous. Just as well for tax evaders. If the taxman can’t identify who’s liable, tax collection becomes difficult.

This article originally appeared in BusinessDay, May 20th 2009

Things fall apart because the centre holds

A major review of Nigeria compiled by its African peers says too much power is concentrated in the central government, inhibiting “true federalism,” and that the executive branch of government has excessive power compared to the legislature and the judiciary.

The report also says that “corruption remains the greatest and most troubling challenge to realising Nigeria’s huge developmental potential,” making it unlikely that the government will achieve its objective of becoming one of the world’s 20 largest economies by the year 2020.

AllAfrica.com: Executive Branch Have Too Much Power, Says Peer Review

If you take the abuse of office, if you take the corruption, if you take the impunity with which the rich do break the law, it’s something that happens across the board. The people you are dealing with are not isolated individuals. They are part of a group. They are part of a caste.

They’ve got allies in politics. They’ve got allies in bureaucracy. And their allies work with them and they stick together. So it’s never easy to just say you are dealing with these CEOs [who were fired and face criminal charges] and that’s the end of it.

You’ve got to realise, it would be very naïve to think that all the people who have been beneficiaries of their largesse, the political parties that have received donations, the politicians that have been funded, the sentry consultants and contractors that are around them, it would be very naïve to think that they are just going to watch you basically cut off what they see as a major source of financing.

Sanusi Lamido Sanusi, Central Bank of Nigeria, in a recent FT interview

Now, in some cases, governments are willing but unable without support to establish strong institutions and protections for citizens – for example, the nascent democracies in Africa. And we can extend our hand as a partner to help them try to achieve authority and build the progress they desire. In other cases, like Cuba or Nigeria, governments are able but unwilling to make the changes their citizens deserve. There, we must vigorously press leaders to end repression, while supporting those within societies who are working for change. And in cases where governments are both unwilling and unable – places like the eastern Congo – we have to support those courageous individuals and organizations who try to protect people and who battle against the odds to plant seeds for a more hopeful future.

By Hilary Clinton, US Secretary of State at Georgetown University’s Gaston Hall Washington, DC December 14, 2009

10 years of democracy: A tale of two giants

Nigeria and Indonesia make an interesting comparison. Both countries have large populations; regional and ethnic tensions; are resource-rich and have a military past. Both also feature prominently in Goldman Sachs Next Eleven (N-11) dream team. Thanks to their large population, fast growing markets, rising income and economic activity. Though both have weak institutions, they have experienced 10 years of uninterrupted democracy. Beyond these similarities, Nigeria, on many counts, pales beside Indonesia.

Indonesia has since moved on, in relatively gigantic strides. Its economy is diversified and forecasted to rebound, from the global downturn, within the year. To boot, Indonesia made the G20 club of nations; along with some other N-11 countries: South Korea, Mexico and Turkey. (By the way, South Africa, which isn’t on the dream team, is a member of the group of 20 countries that generate 85 percent of the world’s output).  Oddly enough, Indonesia made the G20 list way ahead of Goldman Sachs’ projections.

Three booms…

Nigeria, to make top 20 by 2020, needs to look east, to Indonesia. We could do with some classes on sustained growth. Considering that both Nigeria and Indonesia started off from the same point.

Both countries have witnessed oil booms with different outcomes. Nigeria’s experience during the 1973-74, 1975-1980 and the 1990 oil booms were marked, initially, by saving excess income before cowing to political pressures to spend. Indonesia, on the other hand, spent prudently. It focused on infrastructure, education, capital-intensive industry and agriculture in particular.

Nigeria did plan to spend, except that the projects were few, of high cost and steeped in squandermania. With little, if any, spent on infrastructure (transport and communications); mining and manufacturing; agriculture and water supply; health, education, and housing.

During the first oil boom Indonesia turned the spigot of investment on agriculture: 20 percent compared to Nigeria’s 2 percent. Yes, the money was used to subsidise fertilizers and pesticides, but also for irrigation, roads and schools in rural areas. Oil revenue-funded fertilizers, coupled with the high-yield rice variants, pared down Indonesia’s dependence on imported rice.

By 1985 Indonesia had attained food self-sufficiency. Meanwhile Nigeria’s sputtering investment in agriculture dwindled, such that subsistence rather self-sufficiency, the desired goal, was attained.

…And then bursts

For Nigeria, each boom has been tailed by a bust and then a crisis. In 1983, Nigeria’s total external debt outstanding and disbursed was $12 billion. A conservative estimate of proven oil reserves was $75 billion. Yet by 1985-86 Nigeria could not reschedule a mere $2 billion in insured trade credits. Why?

Nigeria’s external borrowings were collateralised by oil. Its oil dominated economy plus serious policy and institutional failures made creditors nervous and unwilling to reschedule Nigeria’s debt. A credibility gap made attraction of Foreign Direct Investment (FDI) difficult; even for investments with a high rate of return. Nigeria had developed a classic “debt overhang”.

Indonesia, in contrast, edged itself out of poverty, hyper-inflation (almost 1,500 percent a year) in the 1960s. Macroeconomic stability, control of inflation and budget deficits was entrusted to a quintuplet of technocrats. These ensured that economic growth, greater domestic participation – in oil and non-oil sectors – and equitable distribution of income across ethnic groups and regions.

Active private sector participation and export-led growth, based on its large labour force complemented Indonesia’s prudent fiscal measures. Not all of its policies were sound. Large fuel subsidies were maintained totalling an estimated $7 billion in 2007; with similar negative effects to those Nigeria.

Nonetheless, “Indonesia has managed to achieve a four-fold increase in GDP per person through political stability, good economic policy, rapid productivity improvement in agriculture, poverty-focused policies, and an effective response to large oil revenue volatility” according to a 2007 oil and gas briefing note:  Avoiding the Resource Curse, by the World Bank.

By 2007, Indonesia’s GDP was thrice that of Nigeria’s. So also was Gross National Income per head (GNI) on a purchasing power parity basis. A considerable difference since Nigeria’s population is less than that of Indonesia by 7.8 million people.

Growing ahead

Goldman Sachs reckons that after the BRICs ie, Brazil, Russia, India and China, the N-11 countries are the next set of large-population countries “that could potentially have a BRIC-like impact in rivalling the G7.” As the global downturn slows and green shoots sprout – especially in Asian countries. East Asia is been touted to be the epicentre of the next wave of economic growth.

Five broad areas – macroeconomic stability, macroeconomic conditions, human capital, political conditions and technology, compose Goldman Sachs Growth Environment Scores (GES). These are further broken into 13 components to assess the growth environment of the N-11. On this path to sustained growth, Nigeria, ironically, compares well with Indonesia eg, in terms of investment and openness. Still in several areas and overall, Indonesia ranks higher than Nigeria.

For instance, based on the World Bank’s 2009 Doing Business rankings, it takes less time to enforce a contract, start a business and deal with construction permits in Indonesia. Nigeria does slightly better than Indonesia in the four other areas: paying taxes, trading across borders (import and export) and registering property.

GES components such as rule of law, schooling and life expectancy matter. Pay offs from improving such conditions can be large. “Even without such dramatic progress, a move halfway in that direction could be what turns the growth story of Nigeria or Bangladesh into something like Vietnam.”

Vietnam is considered the closest to ‘Best in Class’ ie, of the N-11 it has managed growth comparable to the BRICs. Nigeria is the furthest away. That was March 2007. Obviously, and as rightly noted by the N-11 report, some progress eg, Nigeria’s fiscal position, hasn’t been captured in the latest scores.

A more recent scorecard: Business Environment Rankings (BER), by Economist Intelligence Unit, a sister company of The Economist, gives an up-to-date picture. The business rankings model, examining ten separate criteria, measures the quality or attractiveness of business environment in 82 countries. The rankings show each country’s performance for the last five years and the next five years. The BER uses a 1-10 scale; the higher score the higher the quality of attractiveness.

In the last five years (2004-08) Nigeria’s total score was 4.41 and ranked 78th. During the same period Indonesia was ranked 61st with a total score of 5.46. For the next five years (2009-13), both countries’ position on global ranks drops by one. However, Indonesia’s total score increases by 0.14 points to 5.59 while Nigeria’s declines by minus 0.11 points to 4.30.

On a regional basis, Indonesia can be considered well placed. Asia retains its number three position in the business environment rankings. “Ahead of the Middle East and North Africa, Latin America, eastern Europe and Sub-Saharan Africa, but behind both North America and western Europe.” Asia has managed to sustain its business attractiveness because some Asian governments have allowed the outbreak of a virus: entrepreneurial capitalism. Is Nigeria allergic to this virus?

What’s politics got to do with it?

Like it or not Nigeria’s economic future has a political twist. Power generation, catching and pinning down corruption, security of life and property are public goods essential for sustainable economic development. For a thousand entrepreneurs to bloom, government must play a forbearing, not intervening, role.

In the words of Vice President Jonathan Goodluck “where the market is basically competitive or when a modicum of regulatory capacity is present, private ownership yields substantial benefits and accelerates the prospects of economic prosperity, job creation and increased tax revenues for government”

A thought that can be rephrased in the words of  Carl Schramm, president of the Ewing Marion Kaufman Foundation and co-author of Good Capitalism, Bad Capitalism and the Economics of Growth and Prosperity, “Governments do not, indeed cannot, make wealth—only their citizens can. And when government protects their freedom, the world’s growing population of entrepreneurs, in the bargain, expands human dignity and establishes the foundation of ongoing growth on which civil society ultimately depends.”

The ethics of business

The Ethics of Business is a presentation I made months ago. The audience was predominantly made of up of secondary school students. I doubt if they got the message. All the same as the new normal moves from fad to fact, there are salient points that I think should be borne in mind. In addition to teaching b-school students economic history.

Entrepreneurship and the rule of law

President Yar’Adua, during the official opening of the new head office of the Corporate Affairs Commission (CAC), has called for it. Kofi Anan, former UN Secretary General, in a recent interview, did same. The world is abuzz with transparency, a consequence of the rule of law. Rule of law, as a political concept, puts order in the jungle. Checks and balances that check unruly politicians and balance interests.

Broadly defined, it means a just society where human rights eg, free speech and association are guaranteed. Narrowly defined, rule of law constitutes property rights and efficient judicial administration. That is, the rule of law provides stability. Stable laws mean businesses can predict, to some extent, future outcomes of risks embarked on today. Where rules are foggy, daring entrepreneurs (kamikaze) will price this instability into their risk, thereby raising transaction costs. Hence, some economists say institutions matter, others opine that institutions rule.

Legal institutions that curtail corruption, enforce property rights (assuming land ownership is properly titled) and enforce contracts presuppose that the rules are public, comprehensible and relevant. Otherwise asymmetry of information about the rules gives undue advantage to those who have access to such information.

Disclosure or transparency in social, economic or political relations is a desirable good. Nigerian banks are now being haunted for not providing sufficient financial information. Disclosure is now the new valuation benchmark. Their foreign peers, especially those in the lightly regulated shadow banking sector eg, hedge funds, are now under regulatory fog light. But there are exceptions to the rule of law. China’s growth story defies the notion that the rule of law causes economic growth. China’s legal system hardly matches that of most western countries.

The rule of law is better considered as one more jigsaw piece in the puzzle of understanding how countries grow rich – it aids, not cause, economic growth. Nonetheless the ability of Chinese technocrats, to devise and implement good policies, and recognition of some property rights are noteworthy. In Shanghai, China’s business capital, “judges are better trained and foreign investors sometimes win cases against Chinese companies” notes Michael Skapinker, of the Financial Times, in a special report on Shanghai.

This lends credence to positive relation between GDP per person and the rule of law. In other words, a well equipped judiciary, police force and civil service count. Thus investments in enhancing governance, the quality of bureaucracy and reform of law enforcement agencies are justified. Beyond these, the improper tinkering of macro and micro economic policies makes a mess of the rules and produces undesirable results.

Micro and macro matters

After fifty years of development aid to developing countries, the verdict is that there’s being more pain than gain. Neither has dependence on income from commodity booms helped. Paul Collier, professor of Economics at Oxford University, says aid hasn’t worked because the focus has been on macro issues.”It’s largely a microeconomic agenda and so the macro depends upon the micro.”

The micro agenda is what Federic Sautet, of the Mercatus Centre at the George Mason University, calls “the local institutional context faced by economic agents”. Economic agents ie, firms and consumers, in developing economies, in addition to sound macroeconomic policies, need institutions cognisant of domestic business realities.

To Collier, “The micro agenda that seems to work there involves freeing up firms to be able to enter quickly and exit quickly. Using the database from the World Bank’s Doing Business surveys, this is what we find. Where countries have easy entry and exit for firms, the consequence of a falling commodity price is much smaller for GDP.”

Multilateral organisations, economists and analysts say Africa needs a prolonged phase of investment – in physical infrastructure through public and private capital – to catch-up with the rest of the world. According to Prof Collier, “To catch up, to converge with other economies, [investment in Africa] needs to be over 30 percent. So they must move from under 20 to over 30. That’s a big change.”

Concretely, catching up means investing in investing ie, building capacity (public expenditure, honestly, efficiently, and up to standard) to make better investment; to live down the past era of bad reputation by committing to certain actions that can build credibility. This requires both multilateral and local institutions.

The road to entrepreneurship

Nigeria hardly lacks entrepreneurs, but to dismiss that the right institutional context: definition and enforcement of rules eg, property rights, overlooks what drives entrepreneurs to takes risks.

Institutions provide guidance and allow for routine. Both reduce uncertainty. A businesswoman will thus likely take unimaginable risks to start and nurture a business. That willingness to take risks is a simple but powerful fact that cannot be overlooked if Nigeria genuinely seeks to grow economically.

In other words, the road to domestic entrepreneurship is not only paved with asphalt (one day business registration at the CAC). Road signs (comprehensible and convenient taxes, tariffs and trade requirements) which are neither changed overnight nor visible to a select few and traffic wardens (government officials) that facilitate, not frustrate the flow of cars, matter. In short, everyone knows and follows the rules. And those who don’t are prosecuted.

Still, the argument on either side of the entrepreneurship divide mixes issues. The government urges and cajoles for private initiative making promises of “machinery, policy reform etc” – sound bites that signify nothing. On the other side, would-be entrepreneurs are galled by the lack of capital to fund their ideas – banks are the culprits. These same banks are also known to bilk entrepreneurs of their business plans. With such a scene, chances are that fewer businesses will be set-up.

The problem is neither the absence of capital or ideas. Both will find themselves where requisite institutions exist – particularly legal institutions that curb corruption, enforce contracts and property rights thus ensuring the risk taker keeps the fruit of risk-taking.

Entrepreneurship is being tagged the sure-fire means of escaping the downturn. Though entrepreneurs are not unique to a particular economy, some economies, however, have an advantage – institutions that demand and ensure business is done according to the rules have matured overtime. Such institutions define and enforce the rules of the game eg, the level of information disclosure.

Alas, in Nigeria this isn’t the case. Information asymmetry: incomplete, irrelevant incomprehensible and not publicly available is the oil with which most transactions are greased. When information is ambiguous or costly to obtain or subject to whims and caprices of a few – politicians, bureaucrats and business organisations, society suffers.

Formal and informal rules

Informal norms matter as much as formal rules. Economic performance is hindered when formal and informal rules don’t overlap. For instance Lagos State’s geographic digital mapping is planned to create a database of every piece of land in Lagos. However, in identifying who owns what, where and why, it’ll be mistaken to ignore traditional family rules that govern land ownership in Lagos. Without an overlap, enforcement becomes costly – justice delayed is justice denied.

Non-enforcement of formal rules means informal rules take priority. When disputing parties resort to formal rules, the divergence between formal and informal rules is likely to hamper amicable or just settlement.  Both formal rules informal values and norms can also degenerate. Local representatives of Tafa Balogun rose to his defence after he was charged for pilfering (grand larceny?). Perhaps explaining why his indictment was not punitive. Thus, rather than deter antisocial behaviour, divergence of formal and informal rules reinforces reoccurrence. People are likely to abuse this gap.

If entrepreneurship is never in short supply and is a veritable source of economic growth, why are some countries rich while others are poor? Is the lack of increase in knowledge, that prerequisite for increased productivity, is one reason. But the context of the rules that structure how the economic game is played matters; even when the business person is knowledgeable and able to discover and exploit a profit opportunity.

If the gains from an exchange will be fairly distributed, better still gives credit to whom it is due, productive entrepreneurs will thrive. When the formal rules capture most of the gains or value generated, entrepreneurs are likely to spend time and money dodging the system – resources better invested in increasing productivity. But an exchange has nasty consequences when the rules eg, dodgy award of fuel import licenses, legally permits rent seeking at the expense of consumers and tax payers.

If the rules of the game: formal laws and informal norms over conduct, are poles apart and can be twisted to one’s gain – a zero-sum game ensues. That is one, man’s gain is another man’s loss; a mentality typical of Nigerian politics. Little or no room is made for mutually benefiting exchange. Counterparties, motivated by materialistic self-regard, rely on ‘connections’ as their competitive advantage. Public officials, in utter disregard for rules, will dole out contracts to the highest bidder (though not necessary the most competent, and certainly not the most honest).

Nigerians studying abroad: A resource drain or gain?

Nigeria’s export of cocoa may not be on the increase but her export of students sure is. According to a source, between 2004 and 2007, 245 Nigerians, among numerous others, gained admission into 47 higher education institutions in the UK.

Last year, two Nigerian friends, soon-to-be MBA graduates of London Business School, were blithely looking forward to working with Boston Consulting Group and Credit Suisse, an investment bank. With an internationally acclaimed MBA (number one on FT 2008 rankings) under their belt and thousands of pounds of debt, such tasty offers are undeniably irresistible. Then came recession, retrenchments and relocation (it isn’t confirmed if either of my friends was affected).

Nonetheless, Nigerians seeking a second degree abroad, are undeterred, especially by the cost. A former colleague is shelling out approximately £11,000 for a 16-month Masters degree in the UK. Almost quadruple the £3,145 (plus subsidised loans and bursary) paid by UK and EU nationals. According to a 2006 report by Australian Education International, total cost: tuition, living cost costs and other expenses, for a UK Masters degree rounds up to a hefty $53,257. A new found market for Nigerian banks; supplemented by personal savings or family.

Furthermore, limited options of comparable quality at home; instruction in English; friends or family living abroad (this helps offset some of the living cost) and possibilities of sealing a job with an international company; increased chances of emigrating, make for a happy convenience for all involved: students, placement organisations and the universities.

Though not all get admitted into champion league UK schools eg, Oxford, Cambridge and Imperial College, they are content with making the premier league eg, Sheffield, Glamorgan, Cardiff, Robert Gordon, and Hertfordshire. For a moment one may think these were Nigerians trading tackles in football. Nigerian football and universities share some similarities. Both are underfunded, uncompetitive and nary near international standards. Thus our footballers and students develop itchy feet and travel abroad in pursuit of the Golden Fleece.

Consequently, Nigeria bears the brunt – up until now. The brain drain may become a gain. Anecdotal evidence from the previous two years has it that a host of Nigerians are being lured back home. Newly capitalised banks (and other financial services companies), international oil majors and telecommunications companies are dangling offers that match, sometimes surpass, those abroad – the recession looming in developed countries is certainly now a clincher.

Not to mention multinational companies (MNCs) in the fast moving consumer goods (FMCG) industry. A burgeoning Nigerian middle class, thanks to the upswing in the economy, has spurred the likes of Unilever and Procter & Gamble to expand.

Competition for talented employees ensues, hence raising salary expectations. For the MNCs in particular, there’s a huge demand for local talent attuned to doing business in emerging economies such as Nigeria. A 2008 survey by the Economist Intelligence Unit (EIU): People for growth, captures the mood of MNC executives in emerging markets “Bridging the talent in emerging markets is only going to get tougher.”

So how will supply douse demand? A sneak preview of what these companies demand, at least for the next three years, should help. In summary, ability to deal with and manage change, thinking strategically, communication and interpersonal skills, and project management skills are the most wanted, and difficult to find.

Unfortunately, not all our graduates are churned out prepared. An in-house survey, by an international oil company, on the quality of new graduate hires hints that much. The survey revealed gaps in primary job skills (ie, currency of knowledge, knowledge depth and practical skills, exposure to, and sometimes awareness of, modern techniques and methods of practicing their profession) and communication skills ie, written and spoken English. Shocking, sobering and saddening.

What needs to be done? Keep lining the pockets of the UK, her universities and tax system, with hard to find foreign exchange? No. Wipe the tears to see the way. As Nigerians migrate from Wall Street and the City to Broad Street, the immediate benefit is a stopgap to talent shortage. Assuming the skills acquired in foreign schools are applicable here or at least those repatriating can quickly adjust to Nigeria’s business peculiarities. Ostensibly, in terms of courses studied, there’s ample to sample. A flurry of business related degrees abounds.

Of the 245 that gained admission between 2004 and 2007, 39 percent enrolled in management courses (Masters in human resource management and international management were the hottest), 25 percent signed up to study economics and finance, and 20 percent got admitted for an MBA.

Yet there are doubts about the quality of UK degrees. One such worry is that the courses are hurried. In the US, inventors of the MBA, it takes 18 months – 24 months to conclude a full time programme. UK degrees can be done in one year. A bargain for the university while shortchanging the student, potential employers and exporting country?

More tellingly is the recent The Times Higher Education global ranking of universities. Four UK universities: Cambridge (3rd), Oxford (4th), Imperial College (6th), and University College London (7th) made top ten of the top 200 universities in the world. Manchester, Bristol and Warwick – popular destinations for Nigerians, were 29th, 32nd and 89th respectively. High levels of investment have been attributed to the American dominance of the league. Little wonder America universities keep spewing Nobel laureates.

Growing concerns about why a Nigerian university cannot make the list is, yes, food for thought, but more in need of reform and adequate funding. We need to get our act together.

Not only are we losing out in the international talent market (nothing wrong with that, as value is always trailed by money), our advantage as an English speaking country is unexploited. While we swoon over Ghana’s exemplary elections conduct, throngs of Nigerian students are streaming into the country to study for their first degrees. Phooey!

The reality of the 21st century is that innovation, high technology and intellectual capital rule. Mineral wealth will fuel our economic growth to a certain degree; however we have to start developing the human capital that will tinker with other innumerable resources to stimulate the economy. This is critical for maintaining and enlarging the non-oil sector’s increasing share of the economic cake. Or we wait till we have guzzled all our resource endowments.

Fortunately there are several alternatives. Nigeria can either choose the China or Taiwan way. Chinese universities are being flooded with money, with the hope of attracting Chinese with PhDs back home, to reinforce the brain power of its ivory towers. Taiwan, on the other hand, encourages its students to study abroad, with grants and scholarships as well. This is geared at spicing the palates of its university professors with myriads of research interests.

Both options could also be combined. Also, the government could supplement national, state and private universities fees with research grants based on criteria such as grade point averages of students, research output etc – regularly raising the bar with international standards as a benchmark.

Consequently, a competitive market for government supplement will not only ensure universities charge appropriate fees, but also deliver value for money in terms of teaching, research and accommodation. Students who opt for a university education will thus require total or partial alternative funding. This is where the banks come into the picture. Nigerians are in the words of Obama: “fired up and ready to go”, when it comes to earning a degree. Loans with benign payment terms (no hidden charges please) are bound to redound, positively, on bank balance sheets and the economy.

Deregulate, diversify, develop

From all indications President Yar’Adua is bent on deregulating the downstream oil sector. Hopefully it will finally unfetter the country from enslavement by a powerful few. Yes, issuing more licenses for the importation of more petroleum products will increase competition.  But complementary actions are required.

Since plans to build new refineries aren’t on governments’ to-do list; equal access to infrastructure: pipelines, jetties and terminals will hopefully follow soon. This will convince investors to build refineries and ensure petroleum products are competitively priced.  But, once free from this burden, will government now squarely face its responsibility of providing decent public services? Does it have the capacity and capital to sustain growth?

Betting on oil income, at least for the short to medium term – thanks to the global meltdown and the continued unrest in the Niger Delta – is out of the question. With a 30 percent shortfall, revenues to finance its expenses and stimulate the economy, has taken a hit. Nigeria’s foreign reserve and excess crude account, saved for a rainy day through fiscal prudence, now need to be spent efficiently. Transparency and plugging leakages eg, by propping the capacity of ministries, departments and agencies to ensure value for every naira spent on critical infrastructure must now take precedence.

Spend or save?

Paul Collier and Anthony Venables, professors of economic at Oxford University, in their research: Managing resource revenues: lessons for low income countries, offer striking ways for tackling the issue. According to them, an oil-rich country’s decision to accumulate foreign assets to smooth volatility of oil income (as Nigeria has) is justified. However, it must decide how to best invest these savings.

They argue for using “revenues to promote growth and investment in the domestic economy and thereby put consumption on a rapid growth path”, rather than outright consumption or accumulation of foreign assets. They note, however, that consumption makes sense; so long as the return on investment – measured by the social wellbeing of citizens, is greater than either of the two investment options: foreign or domestic. In other words, consuming oil income today trumps foreign or domestic investment if the number of people living on $1 per day can be significantly reduced.

Neither lender nor borrower be

Foreign investment could be either as a borrower or lender. A lending country accumulates foreign exchange reserves or builds up a sovereign wealth fund (SWF). The borrowing country on the other hand will use its resource revenues to pay down its debt – not a good option given that indebtedness raises the interest paid by countries. Besides, Nigeria’s past is replete with lessons about the consequences of borrowing based on unrealised and uncertain oil income.

Yet Nigeria is characterised by capital scarcity with high interest rates and limited access to international capital markets – propounded by her sovereign rating downgrade. Alternatively, the government is mulling over a concessionary loan from the World Bank to fund priority projects. An undersupply of public infrastructure and an uncertain investment climate is depressing private investment.

The role of complementary public inputs, particularly electricity generation, to reduce the cost of private investments is now clear as noon. If not, under-investment in public and private assets will remain the norm. Thus, to yield high returns, domestic investment of resource revenues is inevitable.

This is the potential. That unrealised opportunity, recently alluded to by President Yar ‘Adua. Yet realising this potential is hinged on determining the investment opportunities that give the best return. These increase domestic spending (consumption and investment); further growing the economy and increasing future consumption. But there’s a snag. Technical capacity – more pronounced in the public sector, is in short supply.

How to spend it

For instance, selection and operation of projects that give best return on investment are hampered by limited information on the timing of oil windfalls and technical capacity eg, social cost-benefit analysis of projects. Misaligned incentives – what’s in it for me – also encourage socially sub-optimal decisions.

Oil windfalls, abrupt and volatile by nature, coupled with technical incapacity result in inefficient resource allocation. Expenditures need to match the scale and timing of the income. Otherwise a plethora of white elephant projects – as in the past, fritter the savings from the recent oil boom.

To address the snags of technical capacity and oil shocks, Profs Collier and Venables make a case for incremental spending and capacity building eg, public expenditure management, project appraisals and procurement techniques, to spend revenues efficiently on domestic investment that benefit current and future generations (beyond the period of the windfall).

They also contend that increasing transparency and accountability, as regards resource revenues and procurements, is a disincentive to misappropriate funds. Monthly publication of allocations to the three tiers of government, for example, should be continued.

However the disequilibrium in the allocation of funds and crowding out of the private sector must be avoided. Assuming the financial sector commands investors’ confidence.  News and rumours about share manipulation don’t wash with local and foreign investors; delayed action by regulators further stokes uncertainty. More so, it hinders the markets’ much needed development of breadth and depth.

So far, government bonds eg, FGN and Lagos State are the brides to court. Then again, with dwindling revenues the three tiers of government will turn to banks to raise funds. Symptomatic of how past windfalls, better still budgets, have been inefficiently executed.

Can legislation of fiscal prudence be replicated in the states and local governments? Thankfully, the debt management office (DMO) has placed a cap on borrowable funds. Piling debt, in anticipation of either rising oil prices or on the assumption of debt repayment by another government, must be discouraged. It is an incentive for sub-optimal expenditure.

Yet there are underemployed resources which can be exploited to generate demand and in turn increase income and wages. Growth sectors such as Nigeria’s vast arable lands and the infrastructure to support them will attract investments. Barriers, regulatory or otherwise, for doing business must be minimised. In addition to incremental expenditure on public services, an investment-friendly climate counts. So does the political environment.

Politics and economics

Resource-rich economies are known for their paradoxes. For instance, after a commodity boom GDP increases for the first few years. Two decades down the line a resource extracting economy produces less than it would have done. One key issue is that resource rents – huge profits from extracting the resource less the cost – don’t mix well with democracy. Without checks and balances embedded in a constitution, with institutions to enforce compliance, reform or economic diversification become difficult. Legislative reform like the fiscal responsibility act has so far spared the Nigerian economy from the throes of the global meltdown.

Quality governance plays an important role in arresting decreasing GDP (the norm in resource-rich countries) and harnessing the gains of booms to sustain output. Profs Collier and Venbales say: “The governance challenge for resource-rich Africa is to strengthen checks and balances in the face of pressures to weaken them.” Examples of checks and balances are independent courts, provision of public goods via taxes and electoral reforms – that ensure heroes, not villains, get into power. A Sisyphean feat, if the rerun in Ekiti State is anything to go by.

Nonetheless Nigeria’s foreign reserves have to be invested. Saving excess revenues have helped smoothen oil income volatility. But the rate of return is lower compared to domestic investment. Bridging the gap between Nigeria’s economic potential and actual output needs a stimulus. The CBN cannot plan to use the reserve to support the naira forever. A sequence of incremental investment, reforms and capacity building, to improve the economy’s absorptive capacity, are compatible with saving for a rainy day.

What next after the banking crisis and amnesty?

Nigeria’s banking crisis and the return of peace, however tenuous, to the Niger Delta is a teachable moment. Both present a chance for broad reforms. The plan to spend $2 billion from the Excess Crude Account (ECA) is cheery news. But it’s far from enough. Hitherto, the economy has been systemically mismanaged. Corruption in Nigeria is legendary. A clutch of kleptocrats, ethnocrats and businesspeople can drive any economy to the brink of disaster. Self-serving people are never in short supply, especially when there’s no rule of law and institutions. More so, as 2011 draws nigh, electoral reforms, to stem electoral banditry, need to be put in place.

Nigeria’s government: executive, legislative and regulatory, has its fair share of blame. Its action and inaction, in the management of the economy, partly caused the both crises. Yet, the present situation would be a terrible thing to waste. Take the issue of fiscal federalism.

Repeated calls for fiscal decentralisation are not new in Nigeria. Political pressures for devolution are, in the main, driven by multiple ethnicities and/or wide regional disparities in incomes or resource endowments says a report, Macro Policy Lessons for a Sound Design of Fiscal Decentralization, by the IMF. Beyond these, fiscal decentralisation illustrates “a desire for more participatory government and greater voice of local constituents in the allocation of budgetary resources.” The paper distils lessons from IMF member countries, including Nigeria.

It offers ideas on the design and implementation of intergovernmental fiscal arrangements. There isn’t a “right” model. Varied policy and institution-building issues; strong influence of history, politics, social and economic factors; coordination and sequencing make that difficult. In addition, macroeconomic conditions of different countries, balancing efficiency and distributional matters and reflecting the relevant institutional factors were considered.

Nonetheless, Nigeria can benefit from some of the lessons. Primarily, resources of subnational governments’ must be matched by their responsibilities. Therefore, the resource-responsibility sharing formula must bear in mind the capacity of local and state governments.

To promote accountability and responsibility among states and local governments, control over their own resources is necessary. A set of minimum conditions, say, public financial management (PFM) requirements, may have to be complied with. Also, it is important to recognise that the tax base and tax collection abilities of subnational governments differ.

As it is, Nigeria’s fiscal system gives little fiscal autonomy to subnational (state and local) governments. Mismatch of revenue and responsibilities is the cause. Take the inane delineation between federal and state roads. These in turn hardly lift a finger to generate revenues internally; they are overly dependent on federally generated revenues. This goes against the principle of subsidiarity. That is, the right for subnational governments and civil society (family, groups associations etc) to do what they can do on their own.

Rather, economic, institutional and juridical assistance from the central government fosters initiative and responsibility. The implications are overwhelmingly positive. State and local governments that generate funds from taxes are more likely to be responsive and accountable to civil society. The practise of democracy will in turn be more representative and participatory. Labour and capital, of citizens, will move elsewhere, if the state local governments are inefficient. Faced with competition from other states or local governments, there is an incentive to improve service delivery, be more accountable and less corrupt. In short, fiscal decentralisation encourages competition.

State and local governments play the most significant role in delivering basic services. Fiscal centralisation breeds over-dependent subnational governments. A declining trend in internally generate revenue (IGR), by states and local governments, over the years asserts to this. Unaccustomed to fending for themselves, and with weak institutions eg, Board of Internal Revenue (BIR), they are hard pressed to offer decent governance. Alternatively, a matching mechanism (ie, states and local governments IGR efforts are rewarded by federal allocations) may encourage looking inwards thus reducing dependence on the centre.

Fiscal decentralisation has its “dark side”: macroeconomic disruptions and debt crises. State governments and banks are swarming the bond market. The Debt Management Office’s (DMO) lid on borrowing and plans to have states ascertain their GDP are steps in the right direction. Nonetheless, “it is the design of intergovernmental fiscal relations, more than the degree of decentralisation, that affects efficiency and growth, as well as macrostabilisation.”

Sadly, ministries, departments and agencies (MDAs) responsible for formulating and implementing devolution policies are incompetent and corrupt at that. Public (and private) administrative skill is a scarce resource in Nigeria. Gravitation towards civil service reform (in all tiers of government) and public-private partnership (PPP), where appropriate, are options that have to be explored some more.

For instance, PPPs can form clusters to provide services such as health, waste management and road construction for geographically close states and local governments. Rather than disperse resources through proliferation of services. No less, an efficient judicial system, to check brazen rent-seeking and fiscal indiscipline, is necessary. However difficult and time-consuming overdue legal reform may take.

Infrastructure development and job creation

Financial Derivatives, a financial advisory firm, estimates Nigeria’s infrastructure deficit is $100 billion. The Infrastructure Concession Regulatory Commission (ICRC) puts it within a $60-$90 billion range.

Related ratios from the World Bank’s Little Data Book on Africa 2008 put things in perspective. The ratio of paved to total roads in Nigeria is 15 percent. 51 percent of Nigerians have access to electricity. (Access isn’t synonymous with uninterrupted supply). Of every 100 Nigerians, 24 are telephone subscribers; while there are 6 Internet users per 100 Nigerians.

Peter Drucker, in his 1992 book Managing in a time of great change, listed information and technology ie, the insatiable demand for telephone services in developing and emerging countries and the growing need to repair, replenish and upgrade physical infrastructure especially transport systems eg, roads, railways, bridges, harbours and airports as the other new markets. Drucker’s predictions are no less true today, as governments seek ways to outgrow the downturn.

Developing countries that jumped into the global competitive boat have sailed on adequate infrastructure. This has supported self-sustained economic growth and social wealth. Infrastructure (power supply, transportation, telecommunications, water supply etc) are a prerequisite for industries keen on effectively managing their costs while providing high quality service. Innovation and trade (industrialisation of developing countries) are the antidotes for returning the world economy to a new normal.

Thankfully, provision of infrastructure, once the exclusive domain of governments, is attracting a surge of private finance. Understandably, governments, due to financial crises, budget deficits and narrow tax bases, need alternative sources of finance. More so, loans from banks do not match the long-term nature of most infrastructure projects.

Some States in Nigeria, like Imo and Kwara, following the footsteps of Lagos, have tapped the capital market to raise funds. Since 2008, all three states have issued the first tranche of fixed coupon bonds. A good proportion of the borrowed money will be used to develop critical infrastructure.

Kwara State, gradually turning into an agriculture cluster, will spend 13 percent and 5 percent of the 18 billion naira on a mixed dam in Asa and an agriculture irrigation project respectively. More than half of Imo State’s 18.5 billion naira bond will be gulped by critical infrastructure. Lagos State, with its immense appetite for infrastructure, plans to fund a considerable part of the mega city project via subsequent bond issues (275 billion naira in total).  As an asset class these bonds offer a decent return. Their success is a sign of investor’s confidence; Lagos State’s 2008 issue was 15 percent oversubscribed.

Chances that more States will follow suit are uncertain. As the economy contracts so will allocations from the Federal account. Also, states with a broad and effective tax system are in the minority. If they do succeed, a higher coupon rate and, say, a higher percentage of monthly deductions paid into a sinking fund, may be required to lure investors. For instance, Niger state recently concluded plans to raise a 6 billion naira development bond. A 14 percent fixed rate redeemable bond that will be used for road reconstruction and rehabilitation.

All said, grossly inadequate electricity supply has lurched Nigeria into near permanent darkness. Trapped under a power spell, the country is waiting to hear the presidency declare a state of emergency.

The economy is shrinking as industries either cut down production shifts or wind down. Doughty businesses, weighed down by rising diesel and low pour fuel oil (LPFO) prices, are struggling to pass on the cost to consumers. Decline in capacity utilisation means that either layoffs or freezes on employment are the painful, but necessary means to remain in business. The economy is paying for it.

Fragile peace in the Niger Delta is offering an opportunity. A rethink, to quicken development particularly in the area and the country, is overdue. Nigeria can copy India’s liberalisation of its power sector. Prior to liberalisation, the central and state governments generated power in India. Reforms were introduced when the State Electricity Boards (SEBs) could not meet the country’s demand-supply power gap.

Specifically India’s reforms expanded the role of Independent Power Plants (IPPs) in transmission, generation and distribution; liberalised electricity sale and re-sale rules (Nigeria’s current Price Purchase Agreement (PPA) is investment unfriendly); removed restrictions on captive power; and permitted up to 100 percent foreign direct investment (FDI). As of 2007, 33 percent, 55 percent and 12 percent of electricity installations in India was owned by central government, state government and private investors respectively.

Nigeria, faced with prolonged darkness and limited socioeconomic growth, can adopt a similar framework; albeit with a few changes. Each of the 36 states or a cluster of regions should be constituted into State Electricity Companies (SECs) or Regional Electricity Companies (RECs).

Past experience of the inefficiency of State-owned enterprises (SOEs) suggests that these companies be run as Public-Private Partnerships (PPPs). Whether on build operate and transfer (BOT) basis or any of its variants. However, private electricity companies should be encouraged; healthy competition drives innovation and service quality. In addition, experts suggest the encouragement of off-the-grid power generation eg, private industrial and commercial clusters.

Also, it’s imperative that all arrangements diversify their energy sources: water, gas, wind, solar, biofuel etc.  Overall, a friendly investment climate, to attract foreign and local investors, is important. Power generation is a long-term investment. Broadening and deepening Nigeria’s financial market will provide alternative funding sources.

The uptick in corporate bonds issuance and sanitisation of the banking system should broaden funding alternatives. Money raised by the banks, complemented by FDI, can be used to fund Nigeria’s electricity-starved economy. Because, as a new world order ushers in a new normal, governance, innovation, industrialisation, infrastructure, agriculture and education are requisites for any prospective global player.

Nigeriana lineguage

The nature of technology is such that it is not the preserve of any race or time. It advances through the acquisition of new knowledge, from discoveries. Advancement in technology usually contains  a lot of elements of the older one. With a good understanding, control and production of any technology, [poor] countries can skip a number of new technologies they failed to acquire during their foundation period and join the developed world in the creating of the next technology.

From Demas Nwoko, one of the Zaria “rebels” along with Uche Okeke and Bruce Onbrakpeya, who propagated African art culture and a philosophy of self-reliance through technological and cultural synthesis.  That synthesis is happening online. Two sites caught my attention Lineguage and Pax Nigeriana are amazing works by young Nigerians using technology to tell stories. Enjoy!

Giving peace a chance

Some modicum of peace has returned to the Niger Delta. May it stay, grow and spread. Wishful thinking? Let’s give peace a chance. Just realised how naive I am about the palaver down south. Years of neglect and dithering over the matter have spilled oil over trouble waters – a 2005 article by Michael Peel of the Financial Times (FT) is rather prescient. Karl Maier’s prophesy that This House has Fallen did not come to pass, but it detailed the seeds of Delta unrest, and beyond. The heart of the matter is complex, even for a Nigerian – from slave trading to the oil (palm) bartering to crude oil drilling and gas flaring. Michael Peel’s A Swamp Full of Dollars attempts to get into the heart of the Niger Delta war.

At the petrol station today, people thronged to buy petrol with 20 to 50 litre plastic kegs (yours truly was one of them). Destination: innumerable fuel-guzzling generators, mostly from China. Nicknamed “I better pass my neighbour” these generators and others from the UK, Korea etc, are a status symbol, more like a necessity – a permanent din that serves as background music.

Official figures say Nigeria splurges 900 billion naira ($6 billion) on importation of generators. Toss in money spent on diesel, kerosene and petrol importation (not to mention the shady subsidy) and behold, Nigeria, a country blessed with the slick stuff can’t gas turbines to produce electricity or refine crude oil to meet local demand.

Is this a Paradox of plenty or the curse of black gold? No wonder why the banks stay optimistic? All the same, as a new world order ushers a new normal, governance, innovation, industrialisation, infrastructure, agriculture and education are requisites for any prospective global player.

Sight and sounds from Africa

A chronicle of Africa. Recently discovered pictures taken years ago by Priya Pramarkha, a Kenyan photo journalist who died during the Biafran war. Pic 4 is interesting (look out for the Bournvita advert). A friend I sent it to said “Superb! I’ve always said I’d give anything to be able to live 1 day in the Nigeria of the 50s/60s.”

Also check-out: The singer who defied Nigeria’s generals, a review of  the critically acclaimed, award-winning musical “Fela!” on Broadway. Enjoy!