I present a very perfect piece of article...
By Nasir el-Rufai, former minister of Federal Capital Territory and former director of the Bureau of Public Enterprises
Nigeria, a nation of over 150 million people, generated only 2,000 megawatts of electricity this week. Ethnic, religious and political crises have claimed thousands of lives and displaced countless more. Maternal mortality is among the highest in the world. Not a single university in the country appears among the top 5,000 universities in the world. Infrastructure, where it exists is broken and neglected.
Yet, this year, government will spend more to subsidize petrol (about USD 5 billion) than on roads, education, health and power combined. This prioritization is symptomatic of the political economy of today’s Nigeria.
At issue is whether Nigeria remains a “Clique Democracy” or a real, people-driven democracy; whether the current leadership, sworn in again on Sunday has the character, vision and will to defy vested political and business interests to govern decently and grow the economy. Without a major change in the way our country is governed there is reason to fear that what should be Africa’s leading economy, will instead be courting disaster.
President Goodluck Jonathan’s first 18 months at the helm did not bode well. The politics of division has pitted northerners against southerners and Christians against Muslims to the point that obtaining the cohesion and social harmony necessary for economic development will be very difficult.
In the last 4 years, the administration led first by Umaru Yar’Adua, then by Jonathan spent over $200 billion of oil and non-oil revenues, including over $23 billion the previous administration left behind in the Excess Crude Account (ECA) – designed to create savings from revenues above the budgeted price of oil. There is little to show for it. No single major infrastructure investment or policy initiative has been concluded. About a third of that amount was spent under Jonathan’s watch. As Acting President and then President, he ran down the ECA to less than $500 million from the over $6 billion he inherited – sharing out the nation’s savings account to State Governors and traditional rulers to win their support for his presidential bid.
Not content with spending our savings, Jonathan borrowed massively. Nigeria’s domestic and external debts also increased rapidly. According to the Debt Management Office, our domestic debt rose from N2, 051 billion (US $14 billion) in 2007 to N3, 228 billion ($21 billion) by 2010 in the three years Yar’Adua was in charge. Jonathan ramped up domestic borrowing within a year to N4, 869 billion (US $32 billion) – borrowing a massive $11 billion in less than 12 months. Our external debt also increased from $3.719 billion at the end of 2009 to $5.227 billion by March 2011. No one can point to a new power station, seaport, rail line or interstate road completed.
Worse still, oil revenues for the year will not cover the salaries and running cost of the Federal Government according to projections in the 2011 budget. This is in a country where around 30 million people have no jobs. There is little or no investment in physical and human capital, even with very high oil prices the administration has enjoyed. The consequence is militancy in the Niger Delta, extremist violence in the north. Nigeria is now more divided – along religious and ethnic lines – than at any time since the civil war in the 1960s. Internal security must necessarily be the priority.
The administration must also re-establish macroeconomic stability. Sadly, election spending, policy reversals and falling exchange rates have pushed inflationary trends upwards, left the economy unproductive and scuttled domestic and foreign investments in many sectors.
Few countries have road networks as poor as Nigeria’s. The country has no functional railway system; seaports are decrepit and in need of massive investment. And yet there is no sense of urgency in government circles to stimulate activity in these critical sectors – and take advantage of the employment opportunities they create.
Even if Jonathan develops the vision to implement urgently needed developmental strategies, he still has to contend with corruption. Corruption drives up the cost of doing business, derails government policy and is a major disincentive to foreign investment. But does he have the wherewithal to fight it? Does he have the impetus to fight mass poverty on the one hand and vested interests on the other?
His supporters think Jonathan will somehow turn things around. But good governance requires more than good luck. We have to wait patiently and as we always do in Nigeria, pray. While we are praying however, the signs are scary. Because of the nature of his ascent to power, Jonathan is beholden to vested interest groups who helped him on his way and from whose grip he may struggle to fight free.
Even before he was sworn in for his first full term, he indicated that four years would not be enough to achieve much. This implies that he may spend the next four years working for his re-election – with all the consequent squandering of resources that we saw before the elections just gone. In these circumstances simply muddling through may prove to be an achievement.
Nasir el-Rufai is the former minister for the Federal Capital Territories
http://blogs.ft.com/beyond-brics/2011/06/01/post-election-nigeria-muddling-through-or-economic-disaster/
