This is now all too tiring Nigeria

So many things about Nigeria worries me. We seem to be perpetually stuck in a mobius rut and are unable to break from the loop. Besides wide penetration of communications technology, we haven’t solved any issue of significance since our independence. Issues such as decent governance, business environment, rule of law, security, standard of living, peace, infrastructure — the bedrock of any society with progressive aspiration continues to elude us. To make matters worse, we seem to be more divided than ever as a nation in the 57 years since independence. President Buhari has been worse than bad for our unity. Even more worrying is how divided those between the ages of 18–45 are, particularly those that have self-tagged as the youth intelligentsia. From my observation on social media, there appears to be very little common ground among these youths, they seem to contend on every issue. The problem is, if there’s little on which they agree, how then will they come together to chart a common cause that advances Nigeria? These contentions are laid bare by the reaction to Audu Maikori’s arrest, President Buhari’s ongoing vacation, mindless killing in Southern Kaduna, DSS power reach, the Presidency’s foolishness on CJN and on and on the list goes. The intensity of the contentions make it so difficult to establish truths and facts with those in or around the government preferring to drown out facts with opinions and propaganda. These are the guys that hope to take over in the future….diplomacy, tolerance, fraternity all seem like considerations outside their worldview.

One of our everlasting issue is that of investments. We’ve been battling inadequate investments in both the public and private sector for years. In the same time, we’ve watched other nations with similar history to ours crack the same challenge. Many of their experts have written books, created college courses on how to crack the issue yet we refuse to learn — preferring to stick our heads in the sand. The desire for our government, particularly at the federal level, to be the source of all things good in the country as well as the source of all investments and capital is antithetical to attracting the size of investment we need. Our governance and economic system, regardless of who is in power does not enable capital formation on the scale we need. The main cause of this in my view is the narrow property rights in our laws as well as our definition of what capital is and our interchangeable use of it to describe finance or funding. The definition of capital goes beyond financial assets and encompasses non-financial assets. The effect of this narrow definition of capital is that we have a lot of dead capital in our country. Just as tangible assets can be funded for productive use, non-financial or intangible assets can also be financed for economic productivity and the profit motive. For example, Mark Zuckerberg or Iyinoluwa Aboyeji both had non-financial capital, their intellectual skill/property, that were funded by investors to create Facebook and Andela with far reaching consequence for the world. Without investors recognising the skill of Mark and Iyin as capital and their funding of it, then these capital would have remained dead. Right now, Nigeria is littered with a lot of dead capital. An example, which prompted this piece, is in the image below.

Courtsey: Babajide Fadoju

The Unsung Champion in the image above has capital. Her capital is her cooking skill and it is something of value. But right now it is dead capital because it lacks funding. The Champion knows that there is value in her capital which is why she’s ventured to run it as a business. However, she lacks the funding to give her capital life. For her capital to gain life, she needs to be able to register as a small business. She’ll then be able to sell shares in her business to generate funding to maybe buy a mobile restaurant, apply to a bank for loan, apply for insurance, consider expanding or creating a franchise, employ people, get a mortgage, buy a car, spend on her children….the possibilities are in multiples. What she needs from government is ease of being able to register her business, be documented with ease and a legal framework that makes documenting her skill as capital simple. She doesn’t need government to create a line item in its budget that will be used to fund “SMEs” or go on a welfare binge! She’ll rather that that funding goes to say building and funding primary health centres.

Another example of dead capital are “illegal refineries” littered all over the South South region. I don’t know how easy it is to build and operate a refinery, but given how difficult it’s been for the federal government to operate one efficiently, that these guys in the SS can is clearly impressive. They’ve demonstrated under very harsh conditions that they have the capital/skill, what they require now is funding to give life to their dead capital. It has been quite myopic of federal government not to have enabled this downstream industry by putting a regulatory framework in place. The “illegal refineries” don’t need government funding, they don’t need the FG to create a line item in its budget to support it. They don’t even need or want a subsidy regime. They’ve been quite successfully making money without subsidy. What they need is the legal framework that makes their capital easily quantifiable and assessable. Like the Unsung Nigerian Champion above, the framework will enable them register as a business, source funding from the financial market, be able to sell shares, issue bonds, export their product, employ people, expand operations etc. The industry will require skilled employees and may fund universities or technical colleges. The potential competition in the industry could drive innovation (that could help with cleaning up the land) that may be useful in other industries. The possibilities with this will take a lot of funding pressure off government budgets, making it easier for it to focus on its primary responsibilities. These are just two examples — one can imagine the size of economic activity locked away by dead capital, the biggest of which is that hampered by the Land Use Act. This issue of dead capital was extensively researched and covered by Hernando de Soto in his celebrated book The Mystery of Capital. The book discussed how developed countries managed to unlock dead capital and also offered practical implementation methods that third world countries can use to unlock it, fund development and reduce poverty.

Whilst this announcement by Ag President Osinbajo led FG is a step in the right direction, it is grossly inadequate for the size, scale and pace of funding that we need. Because like the rest of the world we practice fractional reserve banking, as long as deposits in Banks increase from economic activity, banks and other financial institutions will be able to create credit (within regulatory risk framework) to fund investor’s appetite for returns which will in turn fund the expansion of economic activity and development. However, for dead capital to get the funding it needs, there must be total confidence in the nations monetary authority, legal tender and price stability. Without this confidence, which is currently grossly lacking in Emefiele’s CBN, the 60day PEBEC action plan will be like trying to fetch water with a basket. The government, as we have come to realise, can’t borrow enough, sell enough crude to generate the revenue that will adequately fund investment and development. It should help itself and society by revising our legal framework so that dead capital can be funded. This revision of law puts little pressure on government’s finances and will create the environment where “government does well when businesses do well”

In my opinion, Senate President Saraki and Speaker Dogara are more important than President(s) Buhari and Osinbajo in the grand scheme of advancing Nigeria. We have a significant problem with law. There are too many MDAs established by law. Government cannot enable business environment, modernise or update our property rights without appropriate legislation. We need the NASS to work on double quick pace to “repeal, streamline and replace” a lot of our laws. But there’s a lack of vision within our political elite that drains hope from some of us that we will witness a sane Nigeria in our lifetime. Quite a few young people have voted with their feet already. A lot more are considering emigrating. What do I mean by lack of vision? Let’s consider President Buhari’s extended medical vacation in the UK. This is a de javu moment for Nigeria given what happened with President Yar’Adua. Did our NASS take any visionary steps to amend our constitution following that episode to cater for future cases? Actually yes — somewhat. They amended the law to say the President must handover whenever s/he is proceeding on vacation. But should that have been the limit or extent of their consideration? Should they not have considered multiple scenarios and ensure that the amendment was sufficiently robust to cover extended vacation, medical incapacitation, require President-elects to submit to a thorough medical assessment that will be fully published prior to swearing-in? So all considered, the NASS lacked comprehensive vision in this instance.

I previously wrote about the insincerity of our elites and the need for new leadership and attitude as we cannot keep going round in circles battling the same ancient devils. We need both our economic and political elites to get their heads out of the sand and realise that serving the broader interest of the society is the most efficient way of actualising their self-interest. With government being a continuum, there’s no better time than now to do the right thing. If Saraki, Atiku or El Rufai become President in 2019, won’t they rather not have fighting herdsmen as an issue? Won’t they prefer to have a monetary policy with price transparency that is market led in the FX regime? They all need to act with the urgency of now so that they can deal with high quality problems rather than the low ones that seem to peg us down.