This year, 2012, our entire Federal Government budget (which has continued to depend only on oil) is about N5 trillion, while India is expecting $70 billion (N10.5 trillion) from software exports alone (mind you, not all exports, just software exports)!
Perhaps we should remind ourselves of where both India and Nigeria are coming from! In the 1980s, when the Delta Steel Company (DSC) was being built by a consortium of European companies, and Mecon of India was serving as consultants to DSC, Mecon seconded many of its experienced engineers to DSC, who were helping to groom their Nigerian counterparts. While these highly experienced expatriate Indians were chauffeur-driven in brand new, air-conditioned, official Peugeot cars, people in DSC were usually surprised to hear of how some of them were receiving letters from their home office, informing them of the approval of their motorcycle loans! This was at a time fresh Nigerian graduates looked forward to buying new cars after just a few years of working. This was before our present “tokunbo” mania!
India has since then transformed into one of the sensational BRIC (Brazil, Russia, India and China) economies, while Nigeria is retrogressing deeper into poverty, which according to figures from the National Bureau of Statistics (NBS), has worsened from 54.7 in 2004 to 61.9 in 2011! Our State governors are busy bickering over statutory allocation, while their counterparts across the world are aggressively harvesting the infinite opportunities created by globalisation! While we remain on revenue allocation, the world is already witnessing the emergence of a new set of “MIST” economies, which includes Indonesia!
The real tragedy is that even with the pitiable state of our nation, our entrenched interests are still fighting viciously to ensure that nothing is changed! More tragic is that they are using the rest of us, to bring down anybody that tries to change things! As we shrug at, or even support, the troubles of Aruma Oteh and her reforms at SEC, Bart Nnaji and his power-sector reforms, Sanusi Lamido Sanusi and his monetary reforms, and Deziani Alison-Madueke and her oil-sector reforms, what are we really doing? We are helping our entrenched interests to ensure that nothing changes, and to deal with each officeholder that refuses to toe their line!
I would like to take us back to the CBN’s banking industry reform of 2004 (under Prof. Charles Chukwuma Soludo) because of the enduring lessons it seems to hold for our situation today! The most significant aspect of that reform was the decisive deadline it gave to our grossly undercapitalised banks, to recapitalise to at least N25 billion, or lose their licences! Prof. Soludo was almost hounded out of office for daring to advance that policy!
The criticisms that greeted the policy were unusually scathing, with merciless and often hateful condemnations raining on Soludo from all sides, and questioning his competence for the CBN job! Ironically, the attacks were coming from us, not directly from the threatened bank interests. For example, in a very powerful essay, “The Facts that Soludo Left Out”, by Dr. Ayo Teriba, one of Nigeria’s most influential financial experts, after attacking the policy, had charged: “… As a highly respected scholar, the CBN governor will do well to publicly retract his utterances in these regards, in the spirit of academic humility. Consequently, he should withdraw his proposal that all banks must raise their capital bases to N25b …” Similarly, one of Nigeria’s most respected columnists, Simon Kolawole, in a piece titled “Soludo, Banking is not Ludo” charged: “The impression I get is that Soludo has just entered a new terrain, and without acclimatising, he has dived headlong into the unknown …”.
In the end, it was only President Olusegun Obasanjo’s “stubborn” backing of his reformer that saved Soludo and that reform at that critical time, in clear defiance of the National Assembly and all opposition! This not only sent a clear message of the President’s seriousness with reform, but also served as a Presidential inspiration to his reform team that was daring to say “enough is enough!”
That recapitalisation or consolidation ended up changing dramatically the incentives driving our banking sector, and not minding the abuses that later occurred, making a profound impact on our nation, some of which I need to recall here! Our banks that had previously lacked the capacity to meet the funding requirements of serious businesses causing the likes of MTN and Econet to source most of their funds overseas, could now come together to offer local syndicated facilities to blue chips! CBN data showed bank credit to our core private sector rocketing from N1.19tn in 2003 to N4.9tn in 2007! Banking in Nigeria moved from the realm of rent-seeking and “glorified trading in foreign exchange”, to real banking! The consolidation also capacitated the industry to make required investments in modern technology, which heralded new banking platforms that finally moved us to a new era of any-branch banking (where you could now walk into any branch of your bank, and get served as fully as if in your own branch)!
It was also the consolidation that capacitated the banks to achieve the nationwide branch expansion that the government had been demanding since the 1980s. We saw bank branches exploding nationwide, with brands such as Zenith and Oceanic particularly expanding phenomenally! The impact of this was phenomenal on the economy. The number of depositors surged! Bank deposits surged to N5.4 trillion in 2007, from only N1.4 trillion in 2003 (CBN figures)! New ancillary businesses mushroomed overnight to meet the swelling needs of these expanding banks (in the areas of networking, systems integration, media and branding, security services, etc).
Qualitative employment naturally exploded for Nigerian youths, as the expanding banks and their ancillary-service providers snapped up young Nigerians in large numbers! The story was the same in our capital market, where the recapitalisation spurred a spate of public offers, private placements, and daily transactions that drove the market to unprecedented indices, boosting business, industry and employment; and creating wealth for investors. All the earlier apprehensions of labour unions about consolidation became unfounded! Instead, we saw the gradual re-emergence of Nigeria’s middle class!
So optimistic did our national outlook become, that Goldman Sachs’ research report for 2007 listed Nigeria among its ‘Next 11’ group of countries expected to catch up to the fastest developing BRIC economies! That reform might even have been most providential, considering what could have become of the Nigerian economy if the global meltdown that soon followed had met us with a financial sector driven by fragile, undercapitalised banks!
I am sure the people at CBN will have a lot more to say about the benefits of that consolidation; but the point of highlighting them is to help us see the kind of progress the nation is denied each time our powerful vested interests hound and bring down any officeholder that dares to change things! The scenario is replaying itself with many of our present officeholders that are trying to change things- Aruma Oteh, Bart Nnaji, Alison-Madueke, etc!
For example, consider our oil sector: Some of the most transformational initiatives of President Goodluck Ebele Jonathan (where exciting clouds with real earth-shaking potentials are gathering) are coming from that sector! For the first time, an industry that had operated in the darkness of powerful untouchables is being fundamentally ripped apart! What many Nigerians don’t realise is that all the unprecedented revelations and debates we are seeing today in that industry are coming because somebody, rather than simply toeing the old line, is daring to change things! In January this year, we almost dramatically deregulated the downstream sector, in an initiative whose impact (had it succeeded) might have liberated the industry from the grip of a few individuals, and dwarfed our Soludo and telecoms reforms! Although Nigeria temporarily lost that battle, it was still a highly significant ministerial initiative!
Similarly, the all-important Petroleum Industry Bill (PIB), which had clearly forgotten the destination of the 12-year journey it started since 2000 with President Obasanjo’s “Oil & Gas Reform Implementation Committee” (OGIC), is now suddenly contemplating reality! This means that all those years of regulatory uncertainty, blocking billions of dollars of oil-sector investments, are coming to an end! Again, for the first time in our petroleum history, we now have a “Nigerian Content Development Act”, which has transformed the capacity for local participation in the sector. All these are happening simultaneously with other reforms, including the quiet construction of a massive, unprecedented gas distribution infrastructure, which among other things, is bringing reality to the power plants that previous governments had constructed across the country without provision for gas supply (it is only in Nigeria we can do that)!
The budget for that infrastructure project did not disappear into private pockets, as with our past turn-around maintenance projects! Nigeria’s new emerging gas infrastructure now includes one of the biggest pipeline projects ever in this country, which supplies gas to the 700 megawatts power plant at Olorunsogo, Ogun state! Clearly, our oil industry is seeing something more serious than the cosmetics it was used to! Perhaps, the next round of public hearings will finally unearth the identities of the powerful individuals that allocated Nigeria’s oil wells to themselves and their children!
I have never met our Petroleum Minister, Mrs. Deziani Alison-Madueke, nor any of her assistants; and it is not for me to make her case. But if transformation is what Nigeria desperately needs, Madam Minister has shown unprecedented guts in taking it to our hitherto untouchable oil industry! The vested interests are highly alarmed and fighting back, trying to cow her with denigration and vicious criticisms! Of course, she cannot be this daring, and expect anything less! But all of us should know that Nigeria’s future is crying for her success!
Above all, the President must continue to boldly support the few members of his cabinet who are daring to change things! The transformation of our nation and even the legacies of his Presidency will come from them! He deserves our commendations for his efforts on Aruma Oteh, whose untold sin could be her reforms at SEC, which have so much upset the establishment.
•Gabriel Zowam is a reform & process improvement expert.