Sunday, September 1, 2013

The Genius of Okonjo-Iweala's Economics

By Chuks Isiugo

What is the purpose of governance in Nigeria? That is one question, simple as it seems, that is key to diagnosing Nigeria's worsening ailments. Perhaps it's not being addressed because everyone knows what the answer is: plunder! By some suppressive mechanism, this truth is never allowed to rise to the surface of our national consciousness. And we've had successions of governments going around peddling the bare-faced lie that government is about development.

 Yes, indeed, governance once was about development. When the first human communities were built it wasn't difficult for them to see that individuals needed to cede some of their personal interests, freedoms, to a collective, a sovereign that became the common interest, that worked for the interest of all, with equity and fairness, to avoid a life that was brutish and short. They could see that then, it's now that they don't. 

Well, of course, megalomaniacs always tried to seize that collective power for their personal aggrandizement. History is replete with the many revolutions fought to tame such huge egos and humble them. But when they assumed the nationalist garb, they became justifications for imperialist plunder and fascist atrocities. 

 Thus was Nigeria born: a contraption designed to plunder and rape more than 250 ethnic and language groups, making up a fifth of the population of Africa. At least its creators had a purpose and brought their efficiency to bear. Roads and rails were built to wherever they needed to evacuate resources. Schools were built where they needed to train manpower. Courts were established where they needed to impose order right after the gunboats had passed through. They had a purpose. 

But when they handed over the contraption they had built to the newly trained Nigerian operators, there was a problem. The contraption needed to be re-purposed so that it was no longer a tool for plunder but one for development. That never happened for the leaders could find no better use for the machinery they inherited and couldn't turn swords into ploughshares. 

So, to ask the question again: what is the purpose of governance in Nigeria? Answer: plunder! That explains why a census is not a headcount in aid of management planning but the deliberate inflation of numbers in order to lay claim to a bigger share of the commonweal; that is why people agitate for more states and local governments, not as cohesive units of administration and social organization but as sharing centers for the national cake; that is why David Mark as Minister of Communication confidently declared that the telephone is not for the poor man at the same time the technology to democratize it was far advanced; that is why politics is a do or die affair because you get a chance to be a sharer, dishing out pieces of the national cake however caught one's fancy; that is why more money is spent on defense and national security than education and health, because those who have made it to the round table at the very top need to be protected - and we don't need surplus humanity, so why give them health and education?

 Things have gone so bad with perhaps the most self-destructive political elite in the world that the more revenue that accrues to the government, the worse things have become for their people. Since 1999 Nigeria has earned more money from crude oil exports than all previous years put together, with states such as Delta and Akwa Ibom earning more than accrued to the national coffers at the time General Yakubu Gowon declared that he didn't know what to do with money in 1975. Yet there was no visible impact on basic services and public works.

 It's all too clear now what James Ibori did with Delta's money and Diepreye Alamieyeseigha with Bayelsa's: they stole them. More than 300 billion naira was budgeted to build a major highway linking important economic regions, it remained a death trap for the duration of a regime that made the award - even a successor minister wept over it - and yet no work was done. The man who presided over this got even bigger roles in successive governments. Even the very road to the seaport in Lagos through which they import their luxury goods decayed without eliciting any urgency in them to mend it.

 By the time of Ngozi Okonjo-Iweala's second coming as finance minister, now serving Goodluck Jonathan, 75-77 percent of the national budget was going to recurrent expenditure, - to pay salaries, allowances, run the office - with the rest invested on capital projects, such as new roads, railways, schools, hospitals. That is, 7.7 naira out of every 10 naira the government spent went to cater for public servants that are not up to two million people, less than 2 percent of Nigeria's 170 million people. Then 2.3 out of every 10 naira went for the rest of the say 168 million people. Can you beat such insanity! In recent years government officials took caprice even further by refusing to dispense capital budgets and sharing the money among themselves at the end of the financial year rather than return it to the treasury. It's been established that our lawmakers are the best paid in the world, our president's kitchen among the best stocked and his aircraft fleet of the most wide ranging brands.

 Okonjo-Iweala was quick to seize on the disparity between capital and recurrent spending, how it was outrageous and needed to be reversed if we should aspire to development, when she took office. She was amply supported by the Central Bank Governor Lamido Lanusi, who questioned why we needed so many states, so many lawmakers, so many ministers (for plunder of course). It was as if he had forgotten the purpose of the Nigerian state; he promptly got chided by the lawmakers, who also initiated a law to whittle down the powers of the central bank governor. (For an example of why the size of the capital budget matters, Lagos state under Babatunde Fashola has consistently spent an average of 65 percent of its budget on capital projects and the impact is clear for allto see; translate the scale to Nigeria and you'll get the big picture).

Negotiations with stakeholders in the three arms of government for a medium-term economic plan initiated under Okonjo-Iweala could only secure a concession to reduce recurrent from 75 percent to 68 percent over three years from 2012 to 2015. Anything more would have rocked the machinery of plunder badly, putting its passengers at great risk. It was best to proceed delicately. At that point it seemed to me that Okonjo-Iweala had failed in her bid to transform a reprobate.

What has since emerged instead is indeed evidence of her genius. Loans, loans, loans of various kinds have been arranged from mostly the Chinese and other multilateral lenders to finance infrastructure projects without tampering with the recurrent funds available to public officials. In fact they may even get more. Chinese funds will now build us four brand new airport terminals, build us new railway lines and power stations, help us develop our economy without the rigour of financial discipline. Hopefully we will emerge from it a diversified, flourishing modern economy, one of the top 20 globally by 2020. A win-win situation, as they say. A looter continua! And there lies the genius of Okonjo-Iweala!