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.
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