This is a piece I recently wrote for the Washington Post’s Monkey Cage Blog on how Nigeria’s new government maybe shifting towards the mineral sector, and how this could address regional disparities in growth.
Although he was elected in March of this year, Nigerian president Muhammadu Buhari did not name his Cabinet ministers until 5 p.m. on Sept. 30 — the day of his self-imposed deadline. The most striking thing about Buhari’s Cabinet appointments is that they demonstrate a shift toward economic diversification away from oil. This has major implications for how neglected sectors like mining may be given a boost, but also how Africa’s largest economy will be run over the next few years.Read More »
Last week, I was at a conference organised by the Natural Resource Governance Institute (NRGI), formerly Revenue Watch Institute, on the challenges and opportunities presented by falling commodity prices. It was attended by the best in the academia, in policy and in civil society in the field.
A breakdown of the panels and speakers is available on the NRGI website.
There were a couple of things which stood out that are worth highlighting and documenting.
I have been invited by the Royal African Society to participate in a panel discussing the forthcoming general elections in Nigeria, and the underlying political, economic, social and global issues around it.
When Nigeria is mentioned, one of the first things that comes to mind is the notorious oil sector. Once the Nigerian oil sector is mentioned, the oil-producing- and until recently, restive Niger-Delta region comes to mind. Once the Niger-Delta region is mentioned, the Nigerian federal government’s Amnesty Programme initiated in 2009 to quench the fire of restiveness and militancy in the region comes to mind. To this effect, a report assessing this amnesty programme was recently published by the United States Institute of Peace (USIP). It also assesses possible future conflict triggers and trends for the Niger-Delta. The report “finds that there is limited consensus on the prospect and scope of future violence in Nigeria, particularly with regard to the upcoming 2015 presidential elections.” Read the full report on the USIP website (PDF).
Here is a summary of the main points:
The Niger Delta has now enjoyed four years of relative calm. However, there is a significant chance the region could see renewed violent conflict in the next one to two years.
Dividends from a 2009 amnesty for local militants are real and substantial. They include dramatically improved oil production and revenues, fewer deaths and kidnappings, more relaxed travel restrictions, better elections, and job placement for some ex-fighters.
Critics of the amnesty claim the program fails to treat the root causes of conflict, is corrupt and unsustainable, and promotes warlordism and the spread of organized crime, among other things.These criticisms are not without basis, but they often lack context and balance.
Major conflict drivers in the delta are still in place, and no long-term peace plan exists. The coming period likely will bring strong flash points and triggers, particularly around the 2015 presidential and gubernatorial elections.
Wavering leadership on security, the closedown of the amnesty program in 2015, decreased support for President Goodluck Jonathan’s candidacy, and close electoral results could all lead to violence in the delta.
It is possible nonetheless that the election season will pass without a major, prolonged return to violence in the Niger Delta. Nigeria’s fractured opposition parties may fail to produce a consensus candidate, and the delta is likely to vote overwhelmingly for President Jonathan.
The role played by distributions of oil wealth is a particular wild card. It is also still very much unclear how far conflict around the 2015 elections will reflect deeper sociopolitical divisions in Nigeria, or how deep such divisions run.
This report finds only limited consensus on how any future violence will look. A majority of sources agreed only on a few likely trends—for instance, an increase in kidnappings and the spread of armed attacks outside the Niger Delta.
Its a very interesting and enlightening report. Four additional points to note include:
The report states a caveat: “There has been no rigorous assessment of the amnesty program’s successes and failures to date, and this report passes no final judgment.”
It states that “the amnesty program’s most ambitious goal—job placement for participants—has had demonstrable, if somewhat limited, success. Thus far, the Amnesty Office says it has placed roughly 40 percent of its thirty thousand charges into education and skills training programs. More than five thousand ex-fighters traveled abroad to the United States, United Arab Emirates, South Korea, South Africa, and Ghana, among other places, and more are being processed for deployment… The program does seem to be outperforming older, more moribund government job-training programs…. Amnesty Office officials said in late 2012 that perhaps one hundred to two hundred ex-combatants have found long-term work in maritime services, fabrication, and related fields.” (p.3).
Though the report states that “…no long-term peace plan exists…”, a five-year Niger-Delta Action Plan (PDF) has been unveiled by the Nigerian government, via the Ministry of Niger-Delta Affairs. The plan is to run from 2013 to 2017.
It concludes with this fascinating warning: “The road ahead is far too busy for doomsday forecasts, and Nigeria tends to embarrass those who predict its imminent unraveling.” (p.13).
Back in secondary school, I distinctly remember being taught in Social Studies class that Nigeria operates a mixed economy – an admixture of socialism and capitalism. It made little sense to me then, just as I am still struggling to understand what this mixed economy means now. More recently, I’ve had cause to believe that Nigeria does have a mixed or rather, a dual economy – not the capitalist-socialist variant my secondary school teacher mentioned – where parallel economies exist side by side within the national economy.
The Nigerian economy has evolved considerably since my secondary school days in the late 1990s to early 2000s. One such change is the wave of liberalisation, privatisation and deregulation that swept across significant parts of the public sector from the early 2000s under the Obasanjo regime. These include the privatisation of the Nigeria Telecommunications Limited (NITEL), liberalisation of the telecoms sector which led to the introduction of GSM mobile telephony, the re-capitalisation of the banking sector from 2005, the (on-going) process of deregulating the downstream sector of the oil industry which culminated in the contentious partial removal of subsidies and so on. All these should leave no one in doubt that Nigeria is on a steady path towards fully-fledged capitalism.
These liberalisation policies along with the boom in global commodity prices, mainly oil, which Nigeria heavily relies on as a primary source of foreign exchange (90%) and government revenues (85%) along with the booming banking and telecoms sector, have led to massive inflow of revenue and steady economic growth, averaging 6 to 7 per cent per annum. Nigeria is one of the 10 fastest growing economies in the world. According to global investment bank Goldman Sachs, Nigeria is one of the Next Eleven or N-11 emerging countries driving the global economy, after the BRICS countries. With the upcoming revision of GDP figures, Nigeria, like Ghana in 2010, could overnight be upgraded to an upper middle income country.
Without being overly pessimistic, it is easy to be confounded (I certainly am) by these figures and projections, especially when one considers the stark reality on ground that sometimes contradicts the figures. Looking at Abuja or Lagos, one could easily conclude that Nigeria is an emerging country and the next big driver of the global economy. The new shopping malls, the exclusive hotels, the “happening” joints, the brightly painted duplexes and the endless stream of air conditioned SUVs on the wide roads can give the impression that Nigeria is catching-up with the United Arab Emirates (UAE), and we do hope it is. However our fervent optimism should be tampered with pragmatism over our real pace of development.
There is the general perception that Abuja, the capital city and Lagos, the commercial nerve-centre are anomalies – they are the exception rather than the norm – and are far removed from the realities of the other 35 states in Nigeria. It is not uncommon to hear people in other parts of Nigeria speak of Abuja and Lagos with such awe and fascination, as they would, of a North-American or Western-European capital. This could also explain the high rate of not just rural-urban migration, but also urban to urban migration, particularly to these two cities. Many of my friends and classmates from Ahmadu Bello University (ABU) Zaria are now domiciled in Abuja and Lagos because this is where the “opportunities” and “infrastructure” are. If I were living in Nigeria, I would most likely be living and working in either of these two cities.
The fact is that there is just so much more to Nigeria than Abuja and Lagos both of which account for less than 20% of its over 170 million people. Sometimes, it’s tempting to assume that some consultancies and development organizations go to Abuja and Lagos, interview a few bankers, high-ranking civil servants and successful “business owners” and then conclude that Nigeria is “emerging” and rubbing shoulders with Malaysia and Indonesia. A huge bulk of the population is engaged in the informal sector which data and projections do not sufficiently capture.
In many parts of Nigeria, a traditional and informal economy exists side by side with the trappings of modernity; and by implication, grinding poverty and stupendous wealth paradoxically coexist. In the north-western city of Birnin-Kebbi, the capital of Kebbi state, it is not uncommon to see peasant farmers use donkeys, camels and other beasts of burden as a mode of transportation while big Japanese and German SUVs carrying public officials, politicians and business men zoom past. In Kano, spacious, and exquisitely-designed elegant mansions abound in tree-lined GRA areas, while bright yellow tricycles, reminiscent of New Delhi in India, popularly referred to as KEKE-NAPEP (named after a poverty alleviation program that introduced it) dot the busy streets.
Overall, there is certainly more to Nigeria which these reports and figures arguably fail to capture, and of course which leave many like me at best deeply confounded and confused, and at worst dismissive and cynical at such projections. While certain parts of the economy are “growing”, the same cannot be said of other sectors where the bulk of the population is engaged, leaving the impression that there are parallel economies within the national economy and conclusions drawn from the “booming” sectors are conflated to cover other sectors as well. Global consultancies would do well to factor in and capture these nuances and complexities.