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On the Record

Economic Transformation and Developmental Governance in Nigeria: The Promise of the Obama Era

Richard Joseph

Editor’s Note: Nigeria, which has long struggled with governance issues and poverty, is in need of a profound economic transformation. In the inaugural BusinessDay Scholars in Society Forum in Lagos, Nigeria, Richard Joseph addressed the different challenges and opportunities that lie ahead on the country’s path to economic growth and prosperity.

I wish to thank BusinessDay for sponsoring this forum and the distinguished individuals who have agreed to take part in these reflections. My understanding of the four terms in the title of this presentation is not likely to be disputed. Nigeria is in need of a profound economic transformation. When a country possesses the extensive human and capital resources that Nigeria does and its poverty rate has doubled from 1980 to 2005, there is something profoundly wrong about the conduct of its economic affairs. No one will describe Nigeria, in large part, as a well-governed country, or contend that the way in which many public institutions are administered – which is essentially what governance means – contributes positively to its development.

On November 4, 2008, with the election of Barack Obama as President of the United States, not just America but the world entered an era that could be called the Obama era. The American President is widely admired and his mode of governance is impacting public policies throughout the length and breadth of the United States as well as in many nations. “Yes We Can” has become more than a slogan. The promise of the Obama era reflects ideals that most of us hold dear: mutual respect and understanding among peoples; economic growth and prosperity that is shared by all; and inclusion, transparency and accountability in the management of public affairs. We can also regard this promise as a challenge. President Obama is providing a model of how to be a reformist leader in today’s highly complex world: searching for policy solutions that maximize beneficial outcomes for the greatest number of people, and for the nation itself.

In responding to the challenge and opportunities of the Obama Era, Nigerian leaders in government, business, and many civic institutions can realize the long-frustrated promise of this nation to be a leader among nations in the world. On April 29, 2009, Ambassador Johnnie Carson, who has had several diplomatic postings in Africa, delivered a statement for his confirmation hearings to be U.S. Assistant Secretary of State for Africa. Permit me to share with you some of the remarks made by Ambassador Carson on that occasion which are so pertinent to Nigeria and to our reflections today.

Ambassador Carson set forward an agenda for progress to be pursued by the United States in partnership with African governments and peoples: strengthening democratic institutions; preventing conflict; fostering sustained economic growth; and combating global threats. He identified the threats as health pandemics, climate change, food insecurity, narcotics trafficking, and maritime security. Several of his remarks resonate strongly in Nigeria: “Fifty years after most African states achieved their independence, the continent is still striving to realize its enormous potential and to play a more significant role on the world stage.” Other comments he made are equally pertinent: “Africa’s economic potential is vast and its importance as a trading partner will continue to grow…especially in the area of hydrocarbons”. “We must place renewed and sustained emphasis on Africa’s agriculture sector…” “To spur development, create jobs and end hunger, we must help Africa transform its farming sector to achieve a green agricultural revolution.” The only occasion in which Ambassador Carson specifically mentioned Nigeria in his statement was when he discussed the advances and setbacks in democratization in Africa. He then referred to the “deeply flawed elections in a number of countries, including Kenya, Nigeria, and Zimbabwe.”

My task is made easier today not only because I profoundly agree with Ambassador Carson’s statement, and the agenda for progress through partnerships that he outlined, but because I believe that most Nigerians would concur with this framework for collaborative action. The Obama agenda as presented by Ambassador Carson corresponds in many regards with the objectives enunciated in the recent extended interview with President Umaru Yar’Adua published in The Guardian (Lagos). When I speak of the Obama era, I optimistically envision two elected presidential terms, or eight years, and the first eight years of an Obama post-presidency for a total of sixteen years. I worked for six years with former President Jimmy Carter and so I know how important the post-presidency can be. And sixteen years is not a long time. Go back sixteen years and we are in 1993. That was the year in which Nigeria had one of its most successfully conducted elections since independence only to slip under a five-year nightmare of dictatorship and disillusionment.

The Growth and Development Challenge

In Nigeria the usual point of reference is 2020 along with the curious notion of 20-2020 which refers to Nigeria’s aim to join the twenty countries with the largest economies by that date. It is unlikely that Nigeria will leapfrog over more than twenty countries that are ahead of it in the next eleven years. More realistically, we should speak of 2025 as a target year for Nigeria to have made substantial progress towards achieving the Millennium Development Goals (officially slated for 2015), and more pertinently, to have undergone the transformations needed to build a productive economy that can provide remunerative employment for most of its adult citizens.

Author

Over the past ten to fifteen years, Nigeria has made significant progress in certain economic sectors, notably banking, telecommunications, and the airline industry. However, the two sectors for which there is enormous scope, and which can provide the level of employment growth desperately needed, namely agriculture and manufacturing, are weakened by the infrastructural deficiences identified by President Yar’Adua, especially power and transportation.

Building on the achievements of former Governor Bola Tinubu, the major achievements being made by the Administration of Governor Babatunde Fashola are recognized by any regular visitor to Lagos state. Economic transformation and developmental governance are taking place before our very eyes, creating models for emulation by other states in the Federation. Do not be surprised if government officials from other large cities in the world who confront the multiplicity of urban challenges, from Caracas in Venezuela to Cairo in Egypt, soon appear in Lagos to borrow ideas and practices.

I found it interesting that President Yar’Adua acknowledged that Nigeria may begin losing potential investors to Angola because of that country’s greater stability and the continuing violence and uncertainty in the Delta region. Just a few weeks ago, I attended a conference in Washington, DC on the Politics of Development and Security in Africa’s Oil States at Johns Hopkins University. Angola was given high marks by a few panelists for the progress being made in the management of its oil industry. One speaker even raised the prospect of Angola making such progress in key economic areas that it could be in line to becoming a “success case”.

Angola’s official daily petroleum exports have moved past Nigeria’s even though Nigeria’s reserves and potential production significantly exceed Angola’s. And the reason for this progress is not only because of the organizational advantages that Sonangol, the national oil company, enjoys over Nigeria’s complex and underperforming petroleum bureaucracy. Persistent violence in the Delta has led to a significant loss of petroleum exports from Nigeria. If the unknown amount of crude oil lost to theft (or bunkering) were added to the barrels legally exported, Nigeria would still be Africa’s leading oil exporter with a potential capacity of three million barrels a day (bpd). The recent military actions against the armed militias in the Delta might succeed in bringing oil exports just over the two million bpd mark, where it has stood for decades. Nevertheless, severe institutional and governance deficiencies would still leave Nigeria unable to build the level and density of productive activities required for sustained economic growth.

Building an Electoral Democracy

Nigeria’s chosen developmental path is a democratic one, similar to India and Brazil. However, unlike these countries, it is hobbled regarding one of the most fundamental infrastructures of democracy, namely, a fair, violence-free, and efficient electoral system. The recent partial re-run election in Ekiti state confirms the concerns expressed by Ambassador Carson. I direct you to the last section of my book published two decades ago, Democracy and Prebendal Politics: The Rise and Fall of the Second Republic, entitled “The Crisis of Nigerian Democracy”. It is so pertinent to the challenges today that I give permission to Nigerian newspapers to serialize those chapters. Chapter 10 addresses “The challenge of the 1983 elections: a Republic in peril” and Chapter 11 is on “Electoral fraud and violence: the Republic’s demise”. As we now look forward with some trepidation to the 2011 elections, it is important for Nigerians to remember how much electoral fraud and violence contributed to the collapse of one of the most elaborately prepared constitutional democracies in Africa, namely the Second Republic of 1979-1983.

President Yar’Adua has promised firm action to bring an end to the violence and havoc in the Delta region. While violence in the Delta deprives Nigeria of the full value of its potential earnings from oil and gas exports, an arguably greater threat to Nigerian stability, and thus its economic prospects, is the uncertainty connected with its electoral system. President Yar’Adua has ordered a security probe of the violence, intimidation, and other electoral misconduct during the Ekiti re-run elections, and he has invited Nigerians to send their own suggestions to the National Assembly as it considers the electoral reforms he has submitted to it. I hope this issue will receive the sustained high-level attention it deserves. There is nothing that undercuts development in Africa as much as violent conflict, as Ambassador Carson has stated and as Paul Collier argues in his book, The Bottom Billion. Whether fraudulent and violence-marred elections Nigeria in 2011 would provoke the military to return to the political arena can be debated. What worries me more is that it could be the tripwire to a conflagration this country has not known since the civil war.

How can Nigeria transition to an electoral democracy in the next two years? This is as much a national emergency as the power crisis President Yar’Adua identifies. Many countries have made the transition in recent decades from authoritarian to democratic systems that rest on a firm infrastructure of democracy. A critical component of such systems is an impartially administered electoral system. Permit me to read several lines from a recent article by my colleague, E. Gyimah Boadi, Director of the Center for Democratic Development in Accra, on Ghana’s December 2008 and January 2009 elections:

The country has enjoyed vast improvements in the quality of each successive election under its Fourth Republic…The independence and administrative capacity of Ghana’s Electoral Commission (EC) improved with each election. In addition, the country’s key democratic institutions – the judiciary, the Commission on Human Rights and Administrative Justice (CHRAJ) and, arguably Parliament – continued to develop and solidify.

From 1979 to 2009, Ghana and Nigeria moved back and forth between military and civilian rule. At the end of this obstacle course, Ghana has emerged, according to Gyimah-Boadi, as “a beacon of hope for democracy in Africa”. There is often a preference in Nigeria for muddling through problems rather than decisively resolving them. Muddling through, however, will not work with regard to such a key component of a competitive pluralist democracy as how fairly, honestly, and efficiently the electoral system operates. I urgently recommend that a politically independent group of Nigerians conduct forums in which party politicians are brought together to agree on mechanisms to halt the recourse to fraud and violence in elections. And the invitation that President Yar’Adua has made for Nigerians to submit their own suggestions to the National Assembly regarding amending the 2006 Electoral Law and the 1999 Constitution is an opportunity of which they should avail themselves.

Nigeria’s Mighty Problem: State Capture, Rents, and Corruption

I have adopted the term “mighty problem” from personal notes Abraham Lincoln wrote about slavery in America five years before he ran for U.S. president. To the question whether America could “continue permanently – forever – half slave and half free”, he responded: “the problem is too mighty for me. May God, in his mercy, superintend the solution.” There is a mighty problem in Nigeria and many other African states which has so far defied solution, generates deep and persistent inequities, and is responsible for much of the economic underperformance in the continent.

President Barack Obama is aware of this problem, as reflected in comments he has made about governance and corruption in Africa, the erosion of state capacities, and the inability to provide adequate public services and create a sense of inclusion among the diverse peoples of many countries. The mighty problem is the failure to create a modern state that, to a significant extent, serves the public good. What we have instead are entities that are captured by individuals and groups who fasten on the rents from mineral exports or foreign aid, and maintain their privileged access to state resources via a cornucopia of corrupt practices. These inequities are then protected through the use of state force including rigged elections. All of this is well known to Nigerians and is regularly reported on in the Nigerian media. For systematic studies, I recommend three recent books: Daniel Jordan Smith: The Culture of Corruption: Everyday Deception and Popular Discontent in Nigeria (2007); Ricardo Soares de Oliveira, Oil and Politics in the Gulf of Guinea (2007); and Pierre Engelbert, Africa: Unity, Sovereignty, and Sorrow (2009). Also of importance for public policy in Nigeria is the work of Alexandra Gillies on reform strategies for the petroleum sector:

http://www.cmi.no/publications/publication/?3295=reforming-corruption-out-of-nigerian-oil-part-one
http://www.cmi.no/publications/publication/?3348=reforming-corruption-out-of-nigerian-oil-part-two

Economic transformation and the boosting of developmental governance must go hand-in-hand with the transformation of day-to-day institutional practices. At the National Economic Summit in Abuja last October, I discussed the need for a different Nigerian mindset, and those remarks are available on my webpage at the Brookings Institution so I will not repeat them here: www.brookings.edu/experts/josephr.aspx. I believe that good institutional behaviors can gradually drive out, or contain and minimize, bad ones through determined action. I attended a recent talk at Northwestern University by the noted French scholar, Jean-Pierre Olivier de Sardan, on State Capacity and Global Health in Africa. One idea I found intriguing from his presentation was his discussion of what he calls “practical norms” in African organizations. What he meant by this is that in many African institutions – he was speaking of health delivery but his comments are more widely applicable – the actual norms of conduct are usually quite different from those that are formally professed. Members of these institutions learn to operate in different modes – using the language of international norms in their dealings with external donors, for example, while operating on quite different bases internally.

In Nigeria today, there is a constant struggle within institutions to eliminate this dualism. It is a struggle as important as any that takes place in the political arena. The so-called “Nigerian factor” reflects a willingness to slide around the rules and to deliberately construct inconveniences. It becomes in the interest of office-holders to create such inconveniences so that they can extract gratification for removing them. I refer to this as a “toll-gate culture”. Whatever the task to be performed, a toll-gate can be introduced that obliges individuals to pay to have it lifted. The most visible and pernicious toll-gate is, of course, the practice of impressment by traffic police to obtain bribes. These pervasive practices are not just instances of systemic corruption but a dimension of social injustice in Nigerian daily life. Elite members of the society are likely to be waved on by traffic police while the weak and powerless are imposed upon.

In addition to being a moral and human rights issue, toll-gate practices also have a fundamentally deleterious economic impact. It can become economically rational for individuals to impede the flow of commerce rather than facilitate it. President Yar’Adua acknowledged the problems with Nigerian Ports and Customs. Government policies to encourage or discourage certain imports are countermanded by the toll-gate practices of customs officers. A conscious effort can be made to alter incentive structures so that individuals are rewarded for institution-building conduct and also held strictly accountable for their actions.

I believe that Nigeria should call on the greatest available knowledge world-wide to introduce ways of transforming harmful behavioral practices. This is not just a visionary perspective. We all know of Nigerian institutions that foster institution-building practices through determined effort. Some of those institutions are represented here today. In our recently published book, Smart Aid for African Development, Alexandra Gillies and I emphasize incentives and accountability as major tools in pursuing behavior modifications necessary for improved economic performance. Since individuals act on the basis of perceived incentives to impede the prompt and efficient conduct of particular operations, it makes sense to build an alternate system of incentives that rewards individuals according to the accomplishment of specific tasks.

Mahatma Gandhi once stated: “Be the change you want to see”. We should not assume that developmental governance in Nigeria can only be tackled on a grand scale. In fact, it may be more effectual to think of making those transformations in the many public, semi-public, and private entities in which we operate. Since 2006, for example, I have been involved in creating a research programme at the University of Ibadan, the Research Alliance to Combat HIV/AIDS (REACH), with a grant from the Bill and Melinda Gates Foundation. From University faculty members, to graduate researchers, to field assistants in the twelve community sites in four states in which surveys have been conducted, we have insisted on total compliance with ethical standards. In a meeting with field researchers in one site earlier this year, I told them that in carrying out the door-to-door surveys, and inputting the information, no Nigerian factor was permissible. The concocting by field researchers of bogus information would only give us bogus data leading to bogus findings. Whenever a departure from strict professional ethics occurred, at whatever level, we have confronted it swiftly, fairly and firmly.

As Daniel Jordan Smith reports in his book, even young Nigerians who spend their days sending 419 letters from internet centres know that what they are doing is wrong. Zero tolerance for criminality, in whatever form it appears, must be part of the transformational ethos of Nigeria. Political power in Nigeria often rests on the proceeds from state capture that have been underway for decades. The example of Angola is pertinent in this regard. It is well known that vast fortunes have been made through the capture of rents from petroleum exports by state elites. Yet Angola has been able to establish an oil industry that increasingly operates along what scholars call Weberian, legal-rational, bureaucratic lines. Most of the great fortunes in the Western world can be traced to practices that we would today describe as oppressive and corrupt. Some of those fortunes have even provided the capital base for large philanthropic foundations! Yet a transition can occur so that capital acquired through corrupt and criminal means can be converted into a developmental resource. That does not justify what happened. However, such fortunes can be reclaimed to draw down the immense social debt that has been incurred.

Transformative Leadership: Challenge and Promise of the Obama Era

In October 2008, a few weeks before the U.S. presidential election, I gave a lecture at the University of Ibadan entitled, Smart Aid and Accelerated Growth: What an Obama Election Victory can mean for Africa. That talk is also available on my webpage at The Brookings Institution. After six months in office, there is another key message from his presidency: the importance of transformative leadership. In so many areas of American public life, President Obama is demonstrating that salutary change is possible through inspired leadership that combines vision, values and pragmatism.

For Nigeria to break out of its decades of weak economic performance and deepening poverty, leaders must emerge in many sectors determined to have a transformative impact. Nigeria is blessed with a federal system that has created, as I have elsewhere stated, 811 units of governance at the federal, state, and local levels. Despite its shortcomings, the federal framework is a vital one and can facilitate innovative economic and political action. My colleague, Professor Ebere Onwudiwe, places responsibility for Nigeria’s travails squarely on individuals who have misused their positions of power and leadership:

They have stolen much of our collective wealth and left us with little to fight our massive poverty. They have not created a united country which is the basic thing you need for development. They have failed to give us appropriate infrastructure fit for economic competition in a globalized world. They have not even given us the level of peace and stability needed to attract sufficient foreign investment that will spur our development. They have not managed to diversify our economy despite the billions they have earned from oil. They have maintained a huge destructive anti-development gap between policy and implementation…

When asked about the many domestic problems he has inherited, in the financial, health care, and energy systems among others, President Obama argues the need for bold leadership: “now is the time for us to make some tough, big decisions.” “Part of my job is to bridge the gap between the status quo and what we know we have to do for our future.” As an exercise, I extracted comments from an extended interview that President Obama gave to The New York Times and adapted his words so that it is Nigeria rather than America he is addressing:

The touchstone for economic policy is whether it allows the average Nigerian to find good employment and see their incomes rise. We want to grow the economic pie, but we want to make sure that prosperity is spread across the spectrum of regions and occupations and genders and ethnic groups. Economic policy should focus on growing the pie, but it also has to make sure that everybody has opportunities in that system. There are economic advantages that come from transparency, openness, and the reliability of our markets. But we also need a more vigorous regulatory regime.

A new economic foundation for Nigeria will require better schools, alternative energy, more affordable energy, and a better regulated financial sector. There is an unsustainable feel about what has happened in our economy over the past ten or fifteen years.

For example, I would like to see us build a smart power grid which would be a big project similar to our interstate road system, but we lack enough workers with the necessary technical skills.

We have to improve our educational system and make sure that what is learned at secondary and university level is more robust and effective. Youths must acquire the kinds of skills that will make them competitive and productive in a modern, technological economy. All students should receive some technical training if we aim to compete successfully in today’s global economy.

I did not have to do modify President Obama’s words and syntax much. While the United States and Nigeria are widely different in many ways, the essential challenges they face regarding economic transformation and developmental governance are not wholly dissimilar.

There are many resources available in Nigeria, and in the global arena, to apply to the tasks of economic transformation and developmental governance. Earlier this month, Canada’s International Development Research Centre (IDRC) and two American foundations announced a major Think Tank Initiative to build the skills that will enable policymakers to make “good national development policy decisions” based on “robust research and analysis grounded in local realities”. Twenty-four policy research centres have received funding, a number of them in Nigeria. At the federal and state levels, Nigeria is embarking on an era of major infrastructural and economic investment projects. Not only is it necessary to obtain good policy input, building the institutions to implement policies wisely will be an immense challenge.

In conclusion, I will leave you with one suggestion and an outline of how I hope to respond personally to this era of challenge and promise. Ambassador Carson has set forward a four-point agenda. His fourth agenda item, on global threats, essentially consists of five different challenges. There is significant overlap between this agenda and the seven-point agenda announced by President Yar’Adua during his inauguration two years ago. Nigerians could put together a collective response to Ambassador Carson’s eight points by identifying concretely what Nigeria’s priorities are in each of these areas, what steps should be taken to advance them, and what the United States and other partner nations can do to help accomplish them. I will repeat the Carson/Obama Agenda for Progress in Africa:

  • Strengthening democratic institutions
  • Preventing conflict
  • Fostering sustainable economic growth
  • Combating health pandemics, climate change, food insecurity, narcotics trafficking, and maritime security.

Such an exercise can rejuvenate US-Nigerian relations and provide the impetus for the launching of collaborative initiatives. With regard to my personal commitment, this talk marks thirty-three years of engagement with Nigeria. Thirty academic sessions have gone by since I left Nigeria in September 1979 with my bags packed with the research notes that would be turned into the book, Democracy and Prebendal Politics in Nigeria. Today, the positions advocated by me, and by like-minded colleagues, are widely reflected in discourses on Nigerian public policy.

As the Obama era unfolds, there are four contributions I hope to make to help fulfill the agenda for progress and transformation:

  1. Writing up the narratives of African, and especially Nigerian, struggles for peace, democracy and social justice that I have personally experienced. There are stories I need to tell that can inform and inspire others, especially the younger generation.
  2. Providing policy advice regarding key development and democracy challenges in Africa. In the case of Nigeria, at the top of this list is the failure to establish a fully independent, non-partisan, and capable electoral system such as Ghana possesses.
  3. Advancing analyses of Africa’s mighty problem which is the failure in many countries to create a universalistic, legitimate, and capable state. One of my popular courses when I taught at the University of Ibadan, 1976-79, was “The Theory of the State”, so I have been wrestling with these issues a very long time.
  4. Helping design a Nigeria Project on sustainable growth and development that would draw on the extensive technological resources, notably in the United States, to address key economic and infrastructure challenges. Major programs have started on energy security and alternative energy at Northwestern University. I am an affiliated faculty member of the Institute for Sustainability and Energy at Northwestern as well as the University’s Transportation Center. The Chicago Council on Global Affairs, of which I am a Board Member, has recently completed a major study on agriculture development in South Asia and Sub-Saharan Africa. And the Brookings Institution of which I am a non-resident Senior Fellow has started an Africa Growth Initiative. Both of these two programmes, by the way, are funded by the Bill and Melinda Gates Foundation. So all around me there is an upsurge of intellectual activity focused on the major issues of our globalizing world, and which reflect the enthusiasm and optimism that the presidency of Barack Obama has awakened in American public life. I would like to use my network of contacts in Nigeria, the United States, and other countries to help foster mutually beneficial partnerships for growth and development.

By 2025, if the necessary transformations have occurred, Nigerians should bask in the economic growth that has taken place and the developmental governance for which they have become known. This vision can become a reality. Returning to Mahatma Gandhi: “Be the change that you want to see”. I sincerely believe in that maxim. Transformative processes in individuals, groups and organizations can inspire others and eventually catalyze far-reaching changes throughout Nigerian economy, society and political system.

Epilogue

The discussion during BusinessDay’s Scholars in Society Forum on May 21st showed that a consensus exists among Nigerian businesspersons, academics, journalists, and civic activists regarding the structural and behavioral impediments to growth and development. From the comments made by a number of participants, including the three other members of the panel, the situation in many respects is more dire than they were depicted in my inaugural lecture. The forum took place during the course of my fourth visit to Nigeria in a span of six months. Together these events have deepened my awareness of the widening gap between popular aspirations for a democratic, secure, prosperous, and equitable Nigeria and the political and institutional dynamics in play. My commitment to the personal agenda outlined in my conclusion has been reinforced by experiencing anew Nigeria’s considerable growth and development prospects alongside its many political and governance disabilities.

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