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Is NIGERIA BROKE?

By Pat Utomi on 30/07/2013

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The politics of signaling on the economic health of a nation is high art. When public officials who yesterday waxed lyrical on the robustness of the economy, in the face of naysayers who strive to make light of economic growth numbers suddenly begin to argue that there is no money available, something is amiss.

In our contemporary experience the dramatic switch from promoting buoyancy to expressions of distress by the stewards of the economy and financial services, is to highlight irritation on how crude oil stealing has affected the treasury’s intake.

All this has confused the unfortunately simple folk and simple minded are active in public life presuming to know but who do not quite understand the game of talking up economic performance. Of course there is psychology and idiosyncratic response to all decision making. In choices about where and how to invest, the issue is even more subject to how reality is perceived. Take the example of how a perception of crime varies between those who follow Nigeria and South Africa.

Many who refer to high crime rates in Nigeria as an impediment to investment often do not seem aware that the incidence of criminal activity is much higher in South Africa and indeed in some parts of leading US cities. But because of weak institutions, poor management of issues around crime and the weak selling of Nigeria, the country’s lower crime rates are perceived to be much higher.

A good example comes from personal experience. Back in 1984, not too long after I returned from graduate studies in the United States I persuaded a Nigerian who was in school with me to return. He came home with his Caucasian American wife who had probably never left the American Midwest and began his NYSC programme attached to a firm I had founded immediately I returned in 1982. His wife got a job at the American International School in Lagos.

One day, after school, she was at their Ikeja home while her husband was at work and armed robbers arrived at about 4pm. She was quite traumatized and drove straight to the US embassy with a message left for her husband: “We either return to the US together straight away or I return alone for good”. I intervened, trying to persuade her to change her mind. To the question: “You know this can happen to you in Indianapolis”, she said “yes”. Then went on: “But there I can call the police and know for sure that there will be a quick response; here it is highly improbable”. I could not refute the veracity of her comment.

It was a clear pointer to how weak institutions like the policing function were making perceptions of uncertainty higher than reality thereby making economic intercourse poor and transaction costs high, thus reducing competitiveness. The bottom line is there is need in the course of nation building and governance to either talk up the state of things, market the economy or talk down problematic stuff. In truth the vacillation between high growth economy chests pounding by officials and pointing to being broke to dissuade those vandalizing crude oil delivery systems and the integrity of the process that produce the blood line that keeps Nigeria alive is currency of modern statecraft and should be no cause for alarm.

So is Nigeria broke? Not really. But those who must share the FAC account every month to run the governments of Nigeria and to extract the economic rent that make them seemingly thrive are naturally in panic from disruptions of such vital blood link. In that circumstance a big cry out is expected.The real dilemma for me is what should be the right emphasis here, monies being lost to crude oil thieves or the damage being done to the environment by the crude manner in which the crude is stolen.

I am more worried about the despoliation of the environment and damage to the eco-system that will leave long term harm on future generations than that there is less money available to today’s profligate power-wielders.
Indeed, if it were not for the damage to the environment and the injustice in loss of what is the commonwealth to a few crooks, I would be happy that the revenues from oil were entering the treasury in a diminished manner. A constricted flow of oil revenues may force a rethink of our parasitic politics, bloated governance structures and governing mindset to wealth creation and nation building as different from today’s prebendal booty-sharing. I am often remembered for an interview published in London’s Economist in 1996 in which I said Nigeria would be better off if its generals and politicians could take the oil and move out of Nigeria, that the Nigerian people would be better for it. While this was said, albeit tongue in cheek, I realize that some countries have not suffered the so called curse of oil, and that revenues from oil have been channeled into driving growth of other sectors. Norway may seem like champion here in both overcoming Dutch disease and ensuring future generations get their share of God’s gift, but Malaysia’s accomplishment with PETRONAS and diversification of United Arab Emirates economies that now see many Nigerian elite spending much time in Dubai, is good example of how it can be different.

The simple truth beyond the games of talking up and talking down economic activity, which are a necessary part of managing a modern economy driven by market psychology, is that Nigeria is not broke but it can become fatally broken if business as usual persists. Yes crude stealing is grave danger for more reasons than sabotaging what Shell can remit to the government treasury, and must be stopped, but it is not reduced oil proceeds that has economic activity in Nigeria in jeopardy. The real danger is the politics of sharing which has triumphed over cake-baking and job creating economic growth policy making.

•Pat Utomi (shown in photo) is a Political Economist and Professor of Entrepreneurship based in Lagos. He is founder of the Centre for Values in Leadership. This piece is courtesy of his Facebook page, wherevit was first published this morning.

Source News Express

Posted 30/07/2013 05:43:55 AM

 

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