Nigeria’s hollow prosperity

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IOL  ST nigeria Economy0 REUTERS The writer says despite Nigerias rising economy, its people live in squalor and with unrest. Picture: Akintunde Akinleye

West wanted to believe in a boom but now the world has been forced to see Nigeria’s misery, says Adrienne Klasa.

Washington - It is late at night in August, and the talk has turned to politics around our table at the 1970s-era Sheraton Hotel complex in Abuja, Nigeria’s capital.

My companion is a former intelligence officer from the insurgency-ridden north. We are discussing Nigeria’s exponential economic growth over the past decade – how suddenly the West sees the country as a “frontier market”, an “emerging powerhouse”, the vanguard of Africa’s rise.

“Make no mistake, the illusion will crumble,” the officer warns. “This is Nigeria, this is the game: the ultimate 419.”

A 419 infamously refers to the section of Nigeria’s criminal code that covers the prosecution of fraud and scammers. Colloquially, it refers to anything illusory or deceitful. In this overwhelmingly populous, under-regulated and under-serviced country, the term gets thrown around a lot.

Eight months after our conversation, the jig may finally be up. Just a few weeks after what was supposed to be Nigeria’s crowning moment – when new statistics showed it to be the largest economy in Africa – the Islamist Boko Haram insurgency erupted into the international community’s consciousness as the security threat du jour. Now, instead of plaudits, there is fresh news of bombings and attacks every few days. The death toll of a recent attack, on May 20, has climbed to more than 100.

Nigeria’s hosting of the World Economic Forum on Africa in Abuja early this month was supposed to serve as the country’s coming-out party as a global economic force. Instead, it only focused international attention on the escalating violence and the government’s apparent inability or unwillingness to effectively counter it.

Western pundits had been keen to dub Nigeria part of the Mint (Mexico, Indonesia, Nigeria and Turkey) – the countries that are supposed to be the next generation of rising economies, after Brics. As recently as January, economist Jim O’Neill, who coined the term Bric, argued that Nigeria should join the Group of 20.

Nigeria’s finance minister, Ngozi Okonjo-Iweala, was feted during a trip to Washington last month. She courted investors and financial institutions following the debut of Nigeria’s new gross domestic product (GDP) numbers, which were revised in a long-overdue rebasing exercise, boosting the size of the economy by 89 percent to $510 billion (R5.3 trillion).

But the events of the past two months – the bombings, the Chibok schoolgirls’ kidnapping, the government’s embarrassing, dissembling response and the arrival of US, French and Israeli military advisers to attempt a belated rescue – have all served to expose the hollowness of Nigeria’s prosperity. Scratch the surface and look beyond the boldfaced numbers, and it quickly becomes evident that long before these horrific recent developments, Nigeria was grappling with poor governance and failing institutions.

In reality, the growth story was never so simple. Inequality has long been part of the subtext. The majority of Nigerians have actually grown poorer as their country has thrived, exacerbating tensions between the newly rich and those who haven’t seen any benefits from the boom.

“Maintaining the status quo is not tenable,” says Elsie Kanza, Africa director of the World Economic Forum. “It is not tenable to leave populations out of the growth process.”

A few numbers illustrate this point all too clearly. Nigeria’s growth averaged 7.4 percent over the past decade. In that period, the number of Nigerians living on less than $1 a day rose from 54.7 to 60.9 percent. And these disparities do not show signs of improving for the next generation.

According to Unicef, Nigeria has the world’s largest number of children not enrolled in school – about 10 million. Most of them are concentrated in the underserved, majority Muslim north, the same region that serves as a base for Boko Haram’s operations and recruitment.

According to Kanza, the recent abductions are particularly alarming for their potential long-term effects – “for what it means in terms of access to education if parents feel their girls are better off being at home than in school”, she said.

As authorities revealed for the first time mid-month, Nigeria also has a vast population of internally displaced people, many of whom were uprooted by Boko Haram-related unrest. The country is home to 3.3 million displaced people – more than the 3 million disrupted by decades of nearly continuous warfare in the Democratic Republic of the Congo.

Nigeria’s endemic corruption, meanwhile, remains as entrenched as ever. Last month, Lamido Sanusi, then the highly respected central bank governor, made public records demonstrating that at least $20bn had disappeared from accounts at the state-run Nigerian National Petroleum Corporation – a shortfall equivalent to nearly double the GDP of Zimbabwe. Sanusi was fired by President Goodluck Jonathan, who accused him of “financial recklessness” in office. Sanusi then filed suit against the president, saying Jonathan had violated the constitutionally enshrined autonomy of the central bank. But on May 20, a court dismissed Sanusi’s suit, saying the dispute was a matter of contract law between an employer and employee and not a constitutional matter.

The ruling does little to reinforce confidence in the independence of the country’s central bank – or the judiciary, for that matter. Amid all this, the missing billions seem to have become something of an afterthought. The government appears to have no interest in digging into the petroleum corporation’s books, which would align it against entrenched interests fleecing public coffers, in the lead-up to next year’s election.

“Campaign fundraising is closely linked to oil revenues so the timing for a real crackdown is not ripe as the long election season heats up,” said Philippe de Pontet, the head of the Africa practice at political risk firm Eurasia Group.

And the government has made only limited progress in shaking off its dependence on oil. Nigeria’s rebased GDP reveals only 5 percent of government revenues come from taxes “about one of the weakest revenue mobilisation ratios anywhere”, says Razia Khan, head of Africa research at Standard Chartered.

Another 70 percent of revenues come from oil, and oil comprises 97 percent of Nigeria’s exports. “Yes, oil is a much smaller share of overall GDP and the economy itself is more diversified. But its overall dependence on oil earnings remains in place,” Khan said. “It’s still a big concern.”

 

All this is not to say Nigeria’s economic boom isn’t real. As the rebased figures show, the country has flourishing industries in addition to the oil sector, but recent violence and other events should underscore the risks of crowning victors before the title of “country on the rise” has truly been earned.

The West wanted to believe in the narrative of Nigeria’s rise because it would have validated assumptions that growth on this scale could not occur without some underpinnings of political substance and popular benefit.

Now it’s time to revisit these assumptions.

Washington Post-Bloomberg



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