FT Report on Nigeria 2008: Heady excitement damped by doubt

Heady excitement damped by doubt

By William Wallis and Matthew Green


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REPORT SECTIONS

- The economy: Oil wealth fails to dent pervasive poverty
- Politics: Struggle between king and kingmaker
- Foreign policy: Emerging world powers vie for influence
- The judiciary: Judges start to carve out independent role
- The civil service: Poor pay undermines a discredited bureaucracy
- arming: Cultivating a new attitude to agriculture
- Fertiliser: Trying to clear up enduring public sector scam
- Oil: Financing shortfall shackles output
- Gas: Masterplan seeks to supply domestic market first
- The Niger delta: Fragile strategies for a complex conflict
- Guest column: Why choke the goose?
- The stock market: Investors shaken by damning analysis
- Actis: Satisfying a basic need with a piece of furniture
- Power shortages: Electricity cuts create ‘state of emergency'
- Telecoms: Explosive growth and a radical transformation
- Starcomms: Benefits of stunted fixed lines
- Banking: No time to lose in quest for sophistication
- Ecobank: Doing well in difficult territory
- Umaru Yar'Adua: In pursuit of respect for the rule of law
- The north: Steeped in a mood of malaise and neglect
- Cross river: When the rhetoric runs ahead of a shabby reality
- On the road: Establishing a few things about our country
- Literary revival: New writers emerge after the ‘big sleep'
- The film industry: A documentation of the African experience
- The new middle classes: Market forces create a local infrastructure for aspiration

When the oil price is standing far above $100 a barrel, it is tempting to think Nigeria is one very large part of Africa on which the world can safely bet. Its once formidable external debt is written off. Foreign reserves have expanded more than 10 times in as many years. A total of $55bn in oil earnings flowed into the treasury last year. As much as $76bn is anticipated in 2008. This is despite a slowdown in production caused by investment shortfalls and violence by militants vying for more power and wealth in the oil-producing Niger Delta.

If a shortage of funds were Nigeria's problem, there would be grounds for a sigh of relief. The country from which one in five black Africans hail is undoubtedly in a better financial position than it has been for generations to rehabilitate its creaking infrastructure, revive state institutions corroded by prolonged misrule, and fulfil its promise as a continental leader.

Moreover, in those parts of the economy where the state has relaxed its grip since the military handed power back to civilians in 1999, the private sector has mostly flourished. Demand for services, such as mobile phone lines and bank accounts, and goods from televisions to cement, has far exceeded expectations – proof to businessmen that statistics recording the extreme poverty in which more than half the population of 140m live, tell only part of the Nigerian story.

The flip side, they contend, is a business community buoyed by a steady trickle of professionals returning from the diaspora and a record flow of home-grown funds. The private sector is seizing opportunities regardless of the federal, state and local governments' more questionable capacity to do the same.

"Even when oil was at $50 [a barrel] people were optimistic. We are at two-and-a-half times that and there is no sign of a drop. You can't ignore that, even if we waste a third," says Atedo Peterside, chairman of the recently merged Stanbic IBTC bank in Lagos.

Excitement about Nigeria's prospects, broadcast by its fast expanding banks and amplified by the competition between Asia, Europe and the US for its market and resources, has proved infectious.

It has been transmitted by private equity groups such as Britain's Actis, which has in Nigeria its largest portfolio of investments outside India, and other fund managers who have carved out lucrative niches on the – according to most analysts – now overvalued Lagos stock exchange.

When hopes for Kenya foundered in the bloody aftermath of a flawed election this year, Renaissance Capital, among the more bullish foreign investment banks tapping into sub-Saharan African growth, was quick to point to Nigeria as a healthy counterweight. That could be interpreted as wishful thinking, or as the sign of a remarkable image makeover for a country perceived until 10 years ago as an international pariah, hovering on the brink.

Yet it is hard to reconcile talk at investment conferences of Nigeria's irrepressible ascent into the ranks of the world's big, emerging economies, with the mood of uncertainty pervasive that has returned to some quarters of the business, intellectual and political elite.

While Nigeria has so far survived its own elections – more flawed in many ways than Kenya's – the strains within society have similar roots to those that fuelled violence on the other side of the continent: a political and electoral system hostage to venal members of the political elite and an economy expanding – unevenly, with huge regional imbalances and a growing gulf between rich and poor.

Adding to anxiety in political circles is speculation about the health of the president, Umaru Yar'Adua. He suffers from a chronic illness and was rushed to hospital in Germany for 10 days recently, but insists that he is fine.

With a Supreme Court ruling still pending on the legality of his election, there is ample motive for Nigeria's multitude of political schemers, who smell an opportunity. By most accounts they are plotting round the clock.

When weighed against these pressures, the pace of change under the year-old government has begun to some Nigerians to seem precariously slow. "I've heard it said that this is not just a ‘go-slow' [the name given to the notorious traffic jams in Lagos]. It is a road-block," says MD Yusuf, a veteran politician and former inspector-general of police, reflecting on a perception taking root that the enigmatic president has pressed the pause button while wrestling with political demons and – on the economy – working out just what to do.

For those who pin their hopes mostly on oil and gas, this might not matter. With prices as high as they are, there is no shortage of grease with which to oil the wheels of the patronage system on which political stability tends to rest. Yet given the legacy of decay associated with the country's turbulent, coup-ridden past, Nigeria cannot afford to drift.

Hundreds of thousands of students graduate each year from the country's under-funded universities. In the absence of sufficient jobs, many resort to crime. Cash so far has proved an insufficient answer. Despite billions of dollars in investment under the former government of Olusegun Obasanjo there is scarcely more electricity in 2008 than there was 10 years ago on the national grid, which by some estimates meets only 5 per cent of potential demand.

The economy should be growing this year at 11 per cent, says Aderemi Babalola, minister of state for finance. The continuing power crisis, together with the problems in the Niger Delta, will shave off at least 2.5 per cent of that, he says.

More worrying, says Dele Cole, a veteran diplomat and politician in a guest column in this report, is the effect of criminality "choking the goose that lays Nigeria's golden egg". On a bad day, more than 200,000 barrels of oil are stolen by militant gangs, who ferry it out to tankers plying their illegal trade on the high seas. The proceeds, which by some accounts may now run beyond $10bn a year, he says, have a similarly corrupting effect on security services and institutions as the narcotics trade in other countries and militate against a resolution to the Niger Delta crisis.

In the crumbling and congested oil city of Port Harcourt and the nearby states of Bayelsa and Delta, where more than half the country's oil is pumped, all pretence at providing public services appears to have been abandoned by state governments, comments one northern industrialist who visited recently for the first time in years.

His part of the country has its own woes. Swathes of the rural north, once home to the world's largest groundnut crop, survive now on subsistence farming.

Mr Yar'Adua, who cuts a quiet, ascetic figure in contrast to his domineering predecessor, has promised a new kind of government: one that sticks firmly to rules, respects the constitution and brings a sense of service to public office.

So far, the focus of both his government and the National Assembly has been on investigating what went wrong in the immediate past. It has also been on reforms to the oil industry which, if successful, could curb corruption and promote greater investment. But they will need to be handled carefully to avoid spawning further worry in a country that is already one of the most challenging places for energy companies to operate.

For much of the past year, Nigerians have waited, distracted by a slew of investigations into the deal-making that took place under Mr Obasanjo and seemingly prepared to give his successor the benefit of doubt. But there is mounting impatience at the absence of a more forward-looking agenda.

"The PDP [ruling People's Democratic party] leadership is acutely sensitive that time is running out for us to join the league of developed nations. It has been said so many times that 50 years ago our GDP was higher than the Asian tigers. There is now a sense of urgency," says Ojo Maduekwe, the foreign minister. It is a view repeated among private sector businesspeople who, sensing the opportunity Nigeria has, hope the momentum is irreversible but are frustrated by delays.

There is no choice but to continue pushing forward with reforms if the country is to avoid decline, says Larry Ettah, managing director of UAC Nigeria, a diversified conglomerate. "It's a marathon, but it has to be approached in the spirit of a sprint."



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Re: FT Special Report on Nigeria - 2008
Yashuaib1 posted on 06-25-2008, 10:10:37 AM
A perfect and fair commentary. Call it a PR editorial. We can still achieve more in th next three years of this administration.
YAShuaib
Re: FT Special Report on Nigeria - 2008
Bode Eluyera posted on 06-25-2008, 10:20:48 AM
All these developments should have taken place more than 40 years ago had it been that we are not ruled by INCOMPETENT, CORRUPT, VISIONLESS AND MORALLY BANKRUPT MILITARY/NORTHERN LEADERS LIKE GOWON, MURTALA, ABACHA, BUHARI, BABANGIDA, SHAGARI AND NOW YARADUA.

Secondly, if at all there is any development, they are brought about by INDIVIDUAL EFFORTS of enterprising Nig-gerians, and not by these empty headed president.

Thirdly, can we talk of development when a SUBSTANTIAL amount of Nig-gerians don't have access to basic ammenities like WARE and ELECTRICITY. This should be the FIRST YARDSTICK for measuring development, and not SPECULATIVE FINANCIAL TRANSACTIONS.

Fourth, we don't have to rely on FT for an objective assessment of our economy. It's high time we learnt to prepare our own objective reports. Moreover, we should not florget that these publications are western owned, and have their own HIDDEN AGENDA. Personally, I don't trust them. I have read a lot of EXAGGERATED or UNSINCERE reports about Russia, most especially its economy, business and political enviroments in western publications.

Very often, these publications try to MANIPULATE or influence public opinions or governments of developing countries with their reports. And we must also not forget that the lobbying industry in the west is worth hundreds of millions of dollars, if not more. FT will NEVER write about the fact that multinational oil companies pay Nig.geria just 5% for the privilege to deal its oil. They will NEVER write about the fact that multinational oil companies pay HALF-BAKED westerners/foreigners 1000 times for the same jobs carried out by a better qualified Nig-gerians. They will NEVER write about the fact that multinational oil companies employ half-baked foreigners for jobs that could be carried out much better by a more qualified Nig.gerians and for much lesser salaries. They will NEVER write about anything that will jeopardise the interests of western companies and businesses. Therefore, we must be very careful/wiery in our interpretation of these kind of reports when formulating policies.

Finally, I STRONGLY BELIEVE THAT IF THE SOUTH CAN GET RID OF THE UNPRODUCTIVE AND PARASITIC NORTH, OUR DEVELOPMENT WILL BE AT LEAST 20 TIMES FASTER BECAUSE WE WILL BE ABLE TO CONCENTRATE ALL OUR RESOURCES 'EXCLUSIVELY' ON OUR OWN DEVELOPMENT, AND NOT SQUANDER THEM ON THE NORTH.
Re: FT Special Report on Nigeria - 2008
Bode Eluyera posted on 06-25-2008, 10:30:48 AM
QUOTE:
A perfect and fair commentary. Call it a PR editorial. We can still achieve more in th next three years of this administration.
YAShuaib


Yes you are right. We can still achieve more in the next 3 yeras but WITHOUT THE NORTH, THE DESCENDANTS OF USMAN DAN FODIO.

WE CAN STILL ACHIEVE MUCH MORE BUT WITHOUT THE UNPRODUCTIVE NORTH, WHICH HAS BECOME A PARPETUAL LIABILITY, BURDEN, PARASITE AND EMBARRASSMENT TO THE SOUTH.

WE CAN STILL ACHIEVE MORE IN THE NEXT 3 YERAS BUT WITHOUT THE NORTH, WHICH IS A CLOG IN THE WHEEL OF PROGRESS.

WE CAN STILL ACHIEVE MORE IN THE NEXT 3 YEARS IF WE CAN GET RID OF YOU GUYS IN THE NORTH FOR GOOD!!!!!

BY THE WAY, DO YOU WHERE THE BILLIONS OF DOLLARS THAT WAS USED TO BUILD ABUJA, WHERE YOU ARE PRESENTLY LIVING, CAME FROM? NOW PLEASE TRY TO IMAGINE IF THE BONAFIDE OWNERS HAD SPENT THESE BILLIONS ON THEIR OWN DEVELOPMENT AND NOT SQUANDER THEM IN DEVELOPING ABUJA AND THE NORTH AS A WHOLE ALL IN THE NAME OF BUILDING A 'FAKE AND NON-EXISTING' ONE NIG.GERIA.'
Re: FT Special Report on Nigeria - 2008
Zanderlex posted on 06-25-2008, 11:10:37 AM
I love Nigeria. I am very optimistic about her economy and development but I see a mirage in this article......more like a PR move. The true impression on the ground is very different from what this article portrays........we are more like a dumpster without rules.
Re: FT Special Report on Nigeria - 2008
Igwe posted on 06-25-2008, 11:55:32 AM
If any Nigerian believes s/she will get a balanced economic report from western institutions like the FT, then I would say think again.

Thank you.
Re: FT Special Report on Nigeria - 2008
Dele26 posted on 06-25-2008, 12:44:09 PM
QUOTE:
A perfect and fair commentary. Call it a PR editorial. We can still achieve more in th next three years of this administration.
YAShuaib


Aboki Shuaib,
You have achieved nothing and can not possibly achieve anything

The increasing scale of armed robbery attacks, bad roads, and unstable electricity supply are the major issues to be addressed and not the sponsored image laundering
Re: FT Special Report on Nigeria - 2008
Ifeolooni posted on 06-25-2008, 15:45:12 PM
in fact i have a copy of the ft with me here when i saw it my interest went up but when i saw the pix of those private sector rent seekers i new this na propaganda
those who run our sexist banking system lest i forget their money laundering hobby

olodumare shannu!!!!!!!!!!!!!!!!
Re: FT Special Report on Nigeria - 2008
B4best posted on 06-25-2008, 20:07:47 PM
[




Check this book out... { I am currently reading a book titles Kingmakers: The Invention of the Modern Middle East. It includes a chapter about Dame Flora Shaw and her husband, Lord Frederick Lugard, who was one of the British governors of Nigeria in the early 20th century. According to this book, she invented the name "Nigeria." The book contains a statement which reflects the preference still being given to the northern Muslim states by the Nigerian federal government}
Re: FT Special Report on Nigeria - 2008
Yashuaib1 posted on 06-26-2008, 04:39:49 AM
Dele you said: "You have achieved nothing and can not possibly achieve anything (mad;mad). The increasing scale of armed robbery attacks, bad roads, and unstable electricity supply are the major issues to be addressed and not the sponsored image laundering"

I was to give it back to you very very BAD when I saw the word MAD in your message b4 I later realised that it is one of those smilies. All the same the crises and societal problems didnt start with YAR'ADUA but from the previous administration. Cant we give them the chance for heaven sake?
YAShuaib
Re: FT Special Report on Nigeria - 2008
Bode Eluyera posted on 06-26-2008, 10:34:25 AM
QUOTE:
Dele you said: \"You have achieved nothing and can not possibly achieve anything (mad;mad). The increasing scale of armed robbery attacks, bad roads, and unstable electricity supply are the major issues to be addressed and not the sponsored image laundering\"

I was to give it back to you very very BAD when I saw the word MAD in your message b4 I later realised that it is one of those smilies. All the same the crises and societal problems didnt start with YAR'ADUA but from the previous administration. Cant we give them the chance for heaven sake?
YAShuaib


Alhaji Shusara,
Lafiaa ko? Ina kwana?

I notice that you are a good propagandist, unfortunately, your UNREFINED/CRUDE tricks will only work with people with SHALLOW MINDS.

Please, IN THE NAME OF ALLAH, GET THIS INTO YOUR HEAD ONCE AND FOR EVER: The crises and societal problems did NOT start with the previous administration. IT STARTED WITH TAFAWA BALEWA AND GOWON, THOSE INCOMPETENT, CORRUPT, VISIONLESS AND MLORALLY BANKRUPT DESCENDANTS OF USMAN DAN FODIO THAT CALL THEMSELVES LEADERS, AND IMPOSED THEMSELVES ON US. You people are out to give a dog a bad name in order to make its hanging much more easier. You are out to 'completely discredit Obasanjo. You have even gone as far as, and as low as even declaring that ABACHA, AFTERALL, WAS NOT A THIEF BUT A GOD SENT SAINT AND MESSIAH. You people have no boundaries. You have completely lost your sense of moral. You will go to any length to defend your selfish and dirty interests. This is one of the reasons why I am proposing that WE SHOULD GET RID OF YOU GUYS BECAUSE "YOU HAVE NO CONSCIENCE AND ARE HYPOCRITES."

I beg your pardon? Did I hear you say 'give you guys more chance? Alhaji, haba, ARE YOU A SADIST?!!! Sorry, but we just can't give you guys any chance again. We have suffered enough. Your northern brothers have brought so much sorrow, tears and pain to us. Your brothers have turned Nig/geria to one of the poorest countries in the world - that live on less than $1 a day and with one of the lowest life span in the world, despite the enourmous amount of mineral and human resources.

ALHAJI ENOUGH IS ENOUGH A BEG. We can't allow you to continue experimenting with us in the name of building a fake and non-existing Nig*geria that we never subscribed to in the first place. Let Babangida, Gowon, Danjuma, Kingibe, David Mark, Buhari and your other cousins use YOU for their SADISTIC EXPERIMENTS. If not for the British, we would have NEVER NEVER NEVER be in the same country with you. This is the BEST TIME to correct this historic TRAGEDY for good. WE JUST NEED TO GET RID OF YOU PEOPLE. You need your own seperate country where you can practise your LOVELY SHARIA, cut one another's hands, fingers, toes, legs and even HEADS without any hinderance. Your people have done MORE THAN ENOUGH DAMAGE TO THE SOUTH. You are a SERIOUS THREAT TO OUR DEVELOPMENT!!!

Sorry, if that sounds TOO HARSH, but believe me, sometimes we need to look at one another in the eyes and say what is on our mind. Don't take it personal. Moreover, MARRIAGE SHOULD NOT BE BY FORCE. I JUST CAN'T UNDERSTAND WHY YOU GUYS ARE AFRAID TO BE ON YOUR OWN. IF IT'S BECAUSE OF THE OIL, THEN, PLEASE BE BOLD ENOUGH AND COME OUT OPENLY SO THAT WE CAN START ADDRESSING YOUR FEAR. WE ARE READY TO BRIBE YOU SO THAT YOU WILL LET US GO OUR AWAY. I REPEAT, MARRIAGE SHOULD NOT BE BY FORCE.
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