Positioning Nigeria For The Top 20 Economies - The Role Of Institutions

Introduction 

The announcement of Nigeria's intention to number among the top economies in the world by 2020 has most likely been received by the generality of Nigerians with large yawns. The simple reason is that we have passed along this route before as members of this august audience would recall the promises of famous target dates like 2000 and 2010 which have either ended up in smoke or become interred with the bones of their inspirers and initiators. Obviously, the proponents of this new line on the sand have a large credibility gap to fill in the hearts and minds of ordinary Nigerians who seem sick and tired of being offered yet another pie in the sky if not, in fact, a pig in poke. There being no pot of gold at the end of a rainbow, the pervading sense of deja vu among our people would need to be cured if the proposal on the table is to have any real chance of fulfillment. 

I believe that we are all generally agreed that the state of our infrastructure and various institutions is such that we would soon land at the precipice of state failure or national collapse except and unless drastic measures are taken without further delay to arrest the seemingly inexorable drift towards apocalypse. Indeed I am on record as saying that our country was already manifesting symptoms of a failing state if it had not actually become a failed state. However, since we are by nature an overly optimistic people, it is not surprising that we still believe that not only can we pull out rabbits from our hats, we can, in fact, also play in the big leagues a mere thirteen years from now. 

Of course, as a well-endowed and exceptionally gifted people, Nigerians have all it takes to become a successful actor on the global economic stage. However, we can only discount Achebe's admonition on our leadership deficit to our peril. Mercifully, leadership is all about being able to set goals and identify individuals that can help actualize those goals. Therefore, if the present leadership can envision where it wishes to take the country within a particular time frame and ensure that round pegs are put in round holes, perhaps, at the end of the day, Nigeria would finally be able to realize its potentials. However, it seems to this observer, at least, that a holistic approach which visualizes Nigeria's predicament as a matrix of the structural and managerial is apt to facilitate a worthwhile or tentatively acceptable prognosis of Nigeria's growth and development within the prescribed time frame. 

It is against this background, therefore, that we would attempt to interrogate the role and place of our institutions in the context of the much-trumpeted endeavour by the current governing class to position Nigeria among the leading countries in the world by the year 2020.

The Imperative of Change and Necessity for New Thinking 

As we all know, change is immanent in nature and countries can be evaluated by their capability to predict changes within their socio-economic and political environments and manage such novel developments with least harm or injury to their declared goals. The transition of Nigeria from a monocultural to a diversified and integrated economy has been the yearning of most Nigerians, at least, from since the era of the "oil boom." However, it should be stated right away that nothing has been more earth-shaking in terms of daring to confront some of the distortions of the Nigerian economy than what we have witnessed in the last few years. 

While the jury might still be out on the success of NEEDS - the lynch-pin of the reform programme of the Obasanjo Presidency - it should be conceded that it bore the hallmarks of an attempt to steer the nation's economy towards recovery. The bold initiative of the CBN Governor to shrink the number of the banks from 89 to 25 in a bid to enhance effectiveness and competitiveness in the banking sector would seem to have justified the strategic sensing and imagination of Professor Soludo. 

Taking a queue from the prognosis of Goldman Sachs that Nigeria would most likely join the ranks of Brazil, Russia, India and China as one of the 20 largest economies in the world by 2025, Professor Soludo and his confederates have recently elaborated a blueprint aimed at achieving that goal five years earlier than that target date - the Financial System Strategy or FSS 2020. In fact, it can safely be assumed that the re-denomination of the Naira announced recently by the CBN Governor but soon after put in abeyance by the Presidency was part and parcel of the strategy to re-position the Naira in anticipation of the role it was expected to play pursuant to FSS 2020. What becomes of the grand scheme to attain the enviable status of one of 20 most developed economies in the world by 2020 (henceforth denoted as 20-2020) without what one of the prime movers of the project considers needful is now simply a matter of conjecture. Besides, the flip-flops in policy would inevitably have sent dangerous signals to the rest of the world regarding consistency and coordination of policies at the highest levels of government. 

Nevertheless, it must be admitted that great deeds are, more often than not, preceded by deep thinking and imagination and the sooner this is appreciated by all concerned, the better the chances of Nigeria putting behind it the years of miasma, diffidence and self-doubt. It was the American President Franklin D. Roosevelt who once said that we have nothing to fear than fear. In much the same vein, we can here recall the motto of the British SAS: Who dares, wins! A society in transition, such as ours, should not stifle initiative but give full reign to fresh, innovative thinking in order for the nation to take the correct steps towards its rendezvous. Indeed we should encourage "thinking the unthinkable," to borrow the words of Herman Khan, if that would lead to solutions of the urgent problems of the day. There really is nothing wrong in thinking big so long as we can attain our dream. As the motto of my primary school says, "Aim high but be thorough!"

National Institutions and the Nigerian Factor 

Part of the unwholesome baggage that we are saddled with as a people is the so-called "Nigerian factor" which is supposed to hinder and hamper the optimal functioning of our institutions. Very often, the Nigerian factor is an alibi for our collective failures and inadequacies so much so that it is usually built into transaction costs in the Nigerian economy. However, the rough edges of doing business in Nigeria can be ironed out through improvement of our various institutions as well as strengthening the legal framework for various activities in the national economy. Enhancement of the law enforcement machinery and conscientization of the generality of the populace on the need to adhere to due process of law in all their actions would go a long way in removing the image of the ugly Nigerian from the consciousness of the international community. 

Of course, it is necessary to recognize the limits of law as an instrument of social change. The law is not a cure-all even if it is an inevitable tool for facilitating human interaction. While we might not go to the extent of the ancient Chinese thinker, Shu H'siang, to the effect that a nation was about to perish when it had most laws, it is simply illusory to exclude law from any attempt to create a new society. As my old teacher, Lon Fuller was wont to remind us, law is the enterprise of subjecting human conduct to the governance of rules. Nonetheless, it is important to bear in mind, if only for heuristic purposes, the issue of whether law was the harbinger of change or merely a mirror of faits accompli

It is submitted that it is through an apprehension of both the structural and managerial dimensions of the crisis facing our society that we would be in a vantage position to tease out the strategic choices that we have to make in order to launch Nigeria along the path of recovery, socio-economic growth and political development. Put differently, we would need to harness the benefits of the political economy approach in order to be properly seized of the problems of underdevelopment confronting our dear country. 

Our national institutions are not operating in a vacuum. They are functioning in a milieu which celebrates social darwinisn. What we have on our hands is a dog-eat-dog society or a form of buccaneer capitalism where everyone is for himself while the devil takes the hindermost. This pre-disposes the functionaries of the various national institutions to cream off whatever they can while in office, knowing fully well that in a country of fools, it is folly to be wise. Since tenure of office is generally tenuous and unappreciated, many who find themselves in positions of leadership and authority in our institutions see little wisdom in not making hay while the sun is shining, more so since even if they violate the Eleventh Commandment by being caught in the act, the creeping plea bargaining possibilities could offer a viable soft landing.

It should be stated, however, that not all have sinned. Nigeria still has a crop of devoted and selfless public office-holders who remain diligent, loyal and honest. If that was not so, we could all have since given up on Nigeria. It is precisely the possibilities offered by increase in the numbers of such patriotic men and women that has enabled Nigeria to pin some hope on a qualitative turnaround in the country's fortunes. Accordingly, we just must continue to plod along in the face of all odds in the belief and hope that things can change.

National Institutions and the Re-positioning of Nigeria 

If indeed Nigeria is keen on fulfilling the prediction of Goldman Sachs five years earlier than the target year of 2025, then a total overhaul and re-appraisal of nearly all its institutions constitute a conditio sine qua non. What is required here is just slightly short of a revolution in both the conception and workings of our various institutions in order to place Nigeria at par with the advanced economies within a very short time frame. 

It is well-nigh impossible in this presentation to dilate on all the institutions requiring adjustment for Nigeria to achieve its stated goal. What, therefore follows is a brief comment on what is considered as some of the key institutions relative to the task at hand. 

(a) Legal Institutions 

As stated earlier, law plays a preeminent role in social ordering. On account of this, a hard and fresh look would need to be taken of the legal framework for decision-making in the economy for any success to be chalked up in what is, arguably, the most ambitious project yet in the Nigerian experience. 

The basis of economic activities in Nigeria being located in contract and property against the backdrop of the Constitution and adjectival law generally, considerable thought has to be given to streamlining the way and manner in which law facilitates everyday living in the country. It is self-evident that law intermediates in all transactions, be they in relation to land, such as estate planning, mortgages and other secured credit transactions, shares, bonds, debentures or intellectual property, the import/export trade and international finance operations. And, this is not to ignore matters of inter-personal relations such as marriage and divorce or adoption or, indeed, gender sensitivity and human rights protection generally. The pervasiveness of law notwithstanding, the investor, whether local or foreign, would like to be assured of his day in court in case things get awry. Therefore, we would need to speedily put in place reforms in the judicial system which would convert our courts from forums for adjourning justice to institutions where litigants can expect to get fair and expeditious resolution of their disputes. Besides, our law of evidence would have to incorporate electronically generated evidence while our criminal law should encompass novel matters of transnational criminality such as cybercrime. Our law regarding issues of aviation, electronic banking, telecommunications, sports, entertainment and other novel or relatively undeveloped topics would need to adopt international best practices for us to be able to strike a claim for 20-2020. 

Perhaps the institution with the severest problem in terms of compatibility with the desiderata of 20-2020 is the Police. The situation in the Police and other law enforcement agencies such as the SSS, Customs and Immigration are sufficiently well-known to bother recounting here. If Nigeria is unwilling or not prepared to adopt the Iraqi solution of total disbanding and re-constitution of the security apparatus, then it should, at least, agree to consider a fundamental rethinking and re-structuring of the Police and kindred security agencies if we are going to move anywhere near 20-2020. 

The foregoing also applies, mutatis mutandis, to agencies such as the EFCC, ICPC and the Code of Conduct Bureau. The fact of the situation is that we need to go back to the drawing board on these bodies in order to empower them logistics-wise and remove possibilities of arbitrariness, abuse of power and selective enforcement so as to ensure the fulfillment of their mandates without the unsavoury manifestations of the recent past. Security is indeed a first charge in any attempt aimed at re-positioning Nigeria. A situation of general disrespect for law and order is, quite simply, dysfunctional, inimical and counter-productive to the strategic interests and needs of a country such as ours at the present point in time.  

(b) Banks and other Financial Institutions 

The reforms effected in the banking and insurance sectors in the recent past are, undoubtedly, geared towards re-positioning Nigerian financial institutions pursuant to the goal of making the country a key player in the sub-region and beyond in the not-too-distant future. However, it is an open secret that despite the taunted gains of the consolidation exercise in the banking sector, Nigeria's largest banks are still trailing behind South African banks. The fact that most of our banks are coming back into the capital market to shore up their capital base and give them greater leverage within the international financial system is an indication of how much ground that our banks need to cover in order to be reckoned with in the international finance market. 

What has been said about the banks applies equally if not, in fact, more strongly to our insurance companies whose capital base, until very recently, rendered them midget players in minor leagues of the international insurance business, especially in relation to mega projects, marine insurance and re-insurance. The usually high returns in terms of invisible income which Nigeria had hitherto lost to foreign underwriters should encourage the country's insurance companies to continue to expand their capital base and improve their managerial capacity in order to maximize the economies of scale and thereby become key players in the global market. Pursuant thereto, the activities of all the regulatory bodies in the banking and financial sectors-the Central Bank, Securities and Exchange Commission, Nigeria Deposit Insurance Commission, National Insurance Commission, National Pension Commission-would have to be streamlined to enhance the efficiency of the banks and insurance companies in a highly competitive world.  

Furthermore, the verifying agencies, in particular, CBN and SEC should endeavour to reduce the time lag between subscription for shares and allotment in order to encourage prospective investors in the banking and insurance sectors and the economy generally. A country that wishes to be listed among the world's leading economies has no choice than conform with international best practices in all facets of its economy, not least, the banking and insurance sectors which are the hub of any economy. Investors in the capital market deserve better protection from stockbrokers some of whom have swindled them almost with impunity. Admittedly, the Central Shares Clearing System has initiated the SMS-alert scheme and the special account to protect the investing public. However, with the interest shown in our emerging market by the outside world, it is necessary to devise novel means to protect investors, whether local or foreign, from the antics of some of the operators on the Stock Exchange floor if we really intend to become one of the biggest players in the international finance market, come 2020. The desire of Nigeria for more direct foreign investment as an emerging capital market also necessitates continued support for agencies such as the Nigerian Investment Promotion Commission and the Corporate Affairs Commission so that the much touted "one stop centre" for foreign investment could become a catalyst for attracting investment from the capital exporting countries and Nigerians in the Diaspora. 

To the extent that Nigeria has adopted the free market as the modus operandi of its economic development, to that extent must it be ready, willing and able to do away with what Ted Heath once characterized as "the ugly and unacceptable face of capitalism." This is especially true of a country such as ours which intends to break loose from its deformed capitalist state status and transform into one of the world's key capitalist players within an incredibly short spate of time. Consequently, it can be stated without equivocation that if we cannot iron out the creases in the capital market right now, the 20-2020 goal could well become a pipe dream. 

(c) Energy Institutions 

It is self-evident that without the ability to power the economy, it is chimerical to envision the location of Nigeria among the world's best at the target date. If, today, we can only generate about 3000 megawatts of electricity and are, therefore, unable to guarantee 24 hours power supply at any place in the country, it goes without saying that it is but a forlorn hope to arrive at the prescribed destination except and unless drastic measures are taken to beef up electricity generation, transmission and transmission. President Umaru Yar'Adua has, in fact, threatened to declare an emergency in the energy sector but it is clear that the emergency already exists. What is lacking is the much-needed drastic remedy to a drastic situation. 

As far as the energy institutions are concerned - Power Holding Company of Nigeria, the Nigeria Energy Commission, Nuclear Power Regulatory Agency, NNPC - all they require are their respective marching orders, based on a well-thought out, integrated energy policy for the country. The Freudian slip by an ex-Minister that we can only expect uninterrupted power supply by 2056 should be recognized for the fluke that it was. If we are really intent on playing in the big leagues by 2020, the power issue must be considered the topmost of priorities. There are no two ways about it. If we fail in this sector, we can as well bid goodbye to any aspirations toward 2020. 

(d) Educational Institutions 

One of Nigeria's worst kept secrets is the deterioration in the quality and standards of its educational institutions, from kindergarten right up to the tertiary level. Nigerians are yet to get out of the shock that none of our universities was listed among the world's best 6000 universities in a recent ranking. Even among the first 100 universities in Africa, it was unflattering to learn that the leading Nigerian university could only manage the 44th position. 

Yet, without massive investment in human capital development, all hope and desire to be listed in the ranks of the top economies of the world by 2020 can only be mere wishful thinking. The production of the requisite high-level manpower to drive the engine of the Nigerian economy is mainly a task entrusted to the tertiary institutions. The examples of India and Singapore are there for all to see. To produce on a massive scale the necessary manpower to actualize the dreams and goals of Nigeria for the next decade and a half, there should be a heavy infusion of funds to rehabilitate and refurbish the facilities of the country's educational institutions in order to bring them at par with those of the industrialized world. The current hemorrhage among high caliber staff, otherwise known as the "brain drain," coupled with the exodus of our young intending students to foreign institutions constitutes a massive vote of no confidence on the higher education available within the country. As President Yar'Adua recently observed, that Nigeria has had to rely on the expertise of Nigerians in the Diaspora is a telling indictment on human capital development in the country. 

Accordingly, Nigeria has to provide the attractions that some members of our intelligentsia are seeking elsewhere in the form of comfortable provisions and requisite ambience for high quality academic activities. In return, our higher educational institutions would need to bring their curricula up to the level of the 21st century and offer competitive pedagogy and comparable research capability as well as a continuing commitment to public and community service. Furthermore, greater emphasis would need to be laid on science and technology, especially information and communication technology in order to speedily bridge the gap between Nigeria and the industrialized world. 

Summary 

The efforts of all those who decided to pick up the gauntlet thrown by Goldman Sachs deserve applause. If some countries had not set seemingly impossible goals such as landing a man on the moon or moving from the third to the first world within a particular time frame and succeeded in achieving them, others would not have dared to dream dreams which look, at first glance, somewhat utopian. It is in this context, perhaps, that Nigeria's present vision needs to be understood. 

For the thrust towards 20-2020 to bear fruit, however, Nigeria would have to embrace new thinking, especially in relation to its institutions and those charged with managing and operating them. Legal institutions, banks and other financial institutions, institutions of the energy sector and educational institutions are some of the institutions which should constitute the core of institutions that require re-tooling in order to nudge Nigeria along the path of actualizing the 20-2020 objective. 

If the country succeeds in this endeavour, Nigeria would have broken the jinx of failed ambitions and unfulfilled promises. As the most populous country in Africa, endowed with tremendous natural and mineral resources, Nigeria is better placed than most countries to realize its goals. All that is needed is the political will and massive support of a doubting population. The fact that Nigeria is way behind in the attainment of the Millennium Development Goals is already a clog in our self-confidence and generally can-do mentality. Nevertheless, the 20-2020 agenda should, therefore be another test and opportunity for the Nigerian governing class to convince an incredulous population that it indeed possesses the wherewithal to fulfil the nation's destiny.


* Paper presented at the 13th Annual Nigerian Economic Summit (NES#13), held at Transcorp Hilton Hotel, Abuja, September 5-7, 2007.

** Professor and Head, Department of Jurisprudence and International Law, University of Lagos, quondam Vice-Chancellor, University of Ado-Ekiti.



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Re: Positioning Nigeria for the Top 20 Economies - The Role of Institutions
Aguabata posted on 09-15-2007, 16:40:27 PM
This is a master piece, it looks relatively simple to achieve most of these issues, how i wish if we pressure Yaradua to make good changes with fairness '
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