Nigeria a year after Obasanjo
Associate since 1991
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June 20, 2008
LONDON - Nigeria contains one quarter of the black people of the world. So it is not surprising that a) Nigerians are Obama crazy, b) that that apart, they think the world begins and ends with Nigeria.
The inward focus has much to commend it. In the eight years of the administration of Olusegun Obasanjo he paid off Nigeria’s huge debt, stabilized the currency, cut inflation down to single digits and established macro economic and fiscal policies that not only are effective day by day but are enshrined into law by the landmark Fiscal Responsibility Act.
Economic growth is now a handsome 9% a year and if the crippling power shortage starts to improve within a couple of years - which most expert observers believe it will, given the huge investments now underway in power stations, gas pipelines and electrical transmission - then the growth rate will comfortably top 10%. If it weren’t for the ongoing, seemingly unstoppable, criminal dominated, sabotaging activity in the oil-producing Niger delta, which has cut Nigeria’s oil output by 25%, the figure would go even higher.
Outsiders often chide Nigeria for being simply an oil economy, with all that that implies - inflationary spending, corruption, misallocation of resources and so on. It is not as simple as that. Following the Norwegian example, a high proportion of oil revenues have been set aside in a reserve account to be used for future generations or for emergency use should oil prices drop dramatically.
Agriculture has upped its share of national income in recent years from 35% to 45%. It is growing at a steady 7.5% a year, far ahead of any other African nation apart from Uganda. This is mainly peasant agriculture employing two thirds of Nigeria’s total labour force. Again, it is likely that the pace of agricultural growth will also rise sharply as the effect of higher world prices feeds down to peasant level. Just in the last 3 months the price of cassava, a popular, highly nutritious, root crop, has increased by a quarter, spurring new planting. World Bank economists don’t see any serious negatives for Nigeria in the present rise of food prices- indeed they go out of their way to dissociate themselves from the panicky pronouncements in the international arena.
The most important thing for Nigeria in the rise of food prices and the rapid growth in agricultural production is that the people who benefit most are the poorest part of the population. Consequently income distribution favouring the rural poor is steadily improving.
Manufacturing, in contrast, remains at a miserable 4% of GNP. But it is waiting to go. Once the power crisis is alleviated it will. Foreign investors are already piling in, in particular from India, China and South Korea.
Telecommunications has posted extraordinary rapid growth rates. Nigeria along with South Africa was the first African country to be converted to the cell phone. Now 80% of the country is covered. In the towns even the working class have them. In the villages it is catching on. E-mail is lagging outside of the capital, Abuja and Lagos, but with younger people is winning adherents.
Sadly for Nigeria, despite its successes, the country is now convulsed by a personality clash between Obasanjo and his successor Umaru Yar’Adua. It is not a power struggle because, contrary to pre election expectations, Obasanjo has little power. It is clear that the new administration has a totally different style- Yar’Adua is a fervent believer in due process and wide consultation, Obasanjo was a corner cutter. “Obasanjo sometimes thought he was the constitution,” said one senior diplomat.
Yar’Adua has good reasons on his side but it has slowed decision making to a crawl. It has also led to a controversial nullification of some of Obasanjo’s later decisions - for example inviting Mittal to take over the country’s moribund giant steel mill and the building of a new railroad from south to north.
It has also led to the replacement of Nuhu Ribadu, the highly effective head of the Economic and Financial Crimes Commission, a body established with special investigative and prosecutorial powers to fight the massive corruption that has seen billions of dollars siphoned off into private bank accounts. Ribadu even put Obasanjo’s hand picked chief of police behind bars. But critics have accused him of a bias against Obasanjo’s opponents. Right or wrong his dismissal has led both the American and British ambassadors to confide that the future integrity of the Commission is a major worry.
It will take another year before it will be clear if Yar’Adua’s way of working will drive the country as fast forward as Obasanjo’s did. Meanwhile, the economy, liberated from its shackles by Obasanjo’s free market reforms, does much of the driving itself.
Next column on Nigeria, too
Copyright © 2008 Jonathan
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