Today’s QOTD is from Mallam Nasir El-Rufai, former Privatisation Bureau Chief, former Minister of the Nigeria’s Federal Capital Territory, preeminent “ruffler of feathers”, and what the men in the Presidential Palace would gleefully refer to as a ‘Yesterday’s Man’.
“So who is [Presidential spokesman Reuben Abati] referring to as yesterday’s men? Is it [Oby Ezekwesili] that left the government and went to the World Bank and made a name for herself and came back and still has a decent job? Before Segun Aganga was offered Minister of Finance, it was Oby that was offered. President Jonathan offered her the job and I am putting it out in the public for them to deny it. It was Oby that suggested Segun Aganga and another young man in Africa Development Bank. And that was how Segun Aganga became finance minister when Jonathan became acting president. And after he was elected as president, they still followed Oby to South Africa to offer her the minister of power. Does that sound like yesterday’s men? We chose not to be in this government. I can speak for myself and Oby. It’s not because of anything, but you can’t sit back and your country is being ruined by people and you don’t say anything. And when you say something, their response is to smear you.”
[originally published in Ongoing Concerns, a weekly column in NEXT newspaper, May 2011)
In one corner is John Campbell, diplomat, U.S. Ambassador to Nigeria between 2004 and 2007, and now a Senior Fellow for Africa Policy Studies at the US-based Council on Foreign Relations (CFR).
In the other corner is Jeffrey Sachs, economist, Director of Columbia University’s Earth Institute, and a Special Adviser to U.N. Secretary General Ban Ki-Moon.
I have chosen to name the Campbell camp “The BRINKS” – coined from the title of Mr Campbell’s unambiguously-titled book, “Nigeria: Dancing on the Brink” (2010).
The Sachs camp I will refer to as “The BRINCS.” In a May 30 New York Times op-ed, Sachs wrote: “In practical terms, Nigeria would like to make the BRICS — Brazil, Russia, India, China and South Africa — the BRINCS by the end of the decade. To those who only know Nigeria as a country that squanders its oil wealth, this ambition might seem outlandish. But for those of us who have had the chance to work with its leadership, this goal seems fully within reach.”
Weeks before Sachs’ piece (May 2), Mr Campbell wrote an op-ed piece for the same paper, titled: “Nigeria: The Morning After” (which I somehow keep misreading as “The Mourning After”).
Coming from the author of “Nigeria: Dancing on the Brink”, it is not a piece that will surprise many. When Campbell writes that “the elections have polarized Nigeria and resulted in likely underreported bloodshed in the northern parts of the country”, he unwittingly gives the impression that until April 2011, Nigeria was polarisation-free and the North was a haven of peace.
The pre-eminent weakness of Mr Campbell’s position, in my opinion, is his insistence on viewing Nigeria – and interpreting his observations – through a “predominantly Christian South versus predominantly Moslem North” frame.
I find that perspective utterly misleading, ignoring, for example, the fact that the not-insignificant south west (which includes the uber-populous Lagos) is almost evenly split between Christians and Muslims.
Mr Sachs’ perspective is refreshingly different. In the opening paragraph of his piece, titled “Nigeria’s Historic Opportunity”, he declares:
“This country of nearly 160 million people, about one in five of sub-Saharan Africa, is on to something historic. The people feel it. After a sometimes agonizing half-century since independence, Nigeria is on the verge of a takeoff.”
He goes on to list “five solid reasons for optimism” (I’m sure you could easily pick “five solid reasons for pessimism” from any Campbell article).
Perhaps aware that those comments make him liable to accusations of being overly-optimistic, Sachs adds: “Of course, Nigeria still faces very real risks. The country’s population is enormously diverse, with sharp regional and religious divisions. Violence continues to flare…”
This helps create a much more balanced and nuanced picture than Mr Campbell’s jeremiad.
Nevertheless, you can’t help thinking that perhaps Sachs is still guilty of misreading the situation in some way, even if not as grievously as Campbell.
Sachs writes: “The president’s senior adviser on the Millennium Development Goals, working with the National Assembly, has been leading a bold mechanism to transfer federal funds to state and local governments in a robust and accountable manner. All over the country, schools, clinics and water points are being built.”
While there may be no doubt about the impressive work Amina az Zubair is doing with the MDGs (she has been publicly commended by Bill Gates, and NEXT columnist Jibrin Ibrahim recently wrote a tribute in which he referred to her as “a shining star”), I’m curious about that “bold mechanism to transfer federal funds to state and local governments in a robust and accountable manner.”
And which National Assembly is Sachs referring to? The same loan-and-allowance-and-contract-loving House-of-Bankole? I’d also like to know more about those schools and clinics being built “all over the country.”
While I essentially share Sachs’ optimistic stance, I am tempted to dissociate myself from some of his pronouncements. My own optimism is, at the moment, founded less on concrete achievement than on the ordinary, yet powerful possibilities for change that a relatively fresh beginning offers. (Hope-for-the-sake-of-hope is how I described it in a recent column).
Anyway, there we have them: Sachs versus Campbell. Two influential Americans, putting forward their thoughts about Africa’s most populous country and one of the leading exporters of crude oil to theirs.
One thinks Nigeria is falling apart (and his voice is unfailingly loudest whenever signs emerge that the end is near), the other thinks Nigeria is coming together.
Let’s make one thing clear: sentiments will always be involved in the business of argument and debate. From his article we get a hint of Sachs’ closeness to Nigeria’s corridors of power, and specifically to Goodluck Jonathan.
Mr Campbell on his own part is closely associated with Jonathan-opponent Atiku Abubakar, and is a member of the board of Abubakar’s American University of Nigeria in Yola.
Perhaps that partly explains where both men are coming from.
So, back to the ring. Where do you belong? Are you a ‘BRINK’ or a ‘BRINC’? Is Nigeria coming together – or falling apart?
In 2015, which of these two Americans – Jeffrey Sachs and John Campbell – will say: “I told you so!”?
And, most important question of all, what role will President Jonathan play in the ring: Bricklayer – or Demolition Man?
Charles Robertson (@RencapMan on Twitter) is Renaissance Capital’s Global Chief Economist and Head of Macro-strategy Unit. He was in Lagos recently for Rencap’s 4th Annual 1:1 Pan-Africa Investor Conference in Lagos, from February 11 to 13, 2013. I didn’t attend the conference itself, but got a chance to meet Mr. Robertson at a cocktail that Rencap hosted on the evening of Day 1, at Avenue Suites in Victoria Island.
It was my first time meeting him – in person. We’d previously exchanged a couple of emails in the past, and engaged in Twitter debate.
So it was a pleasure to finally meet the lead author of THE FASTEST BILLION: The Story Behind Africa’s Economic Revolution, launched November 2012, and with foreword written by Ngozi Okonjo-Iweala, Nigeria’s Minister of Finance and Coordinating Minister of the Economy. (I’m going to be reading and reviewing it in March – watch this space).
We talked about Nigerian data, the ease of accessing it. He was impressed by the quality of statistics available online from Nigeria’s Central Bank (CBN) and the National Bureau of Statistics (NBS). According to him it’s much better than the data he had access to when he covered Greece as an analyst in the late 1990s.
Minister Akin Adesina came up in our conversation – I consider him one of the few inspiring, optimism-sustaining faces in the Goodluck Jonathan cabinet. [In my opinion it’s a tragedy that the phones-for-farmers scheme played out the way it did. My feeling is that the Minister needs to pay as much attention to his communication strategy as to his reform agenda].
We also discussed the Nigerian government’s reform programme – originating of course in Obasanjo’s 1st term as President; clearly Nigeria is in a better place today – in terms of creditworthiness and investor perception – than ever before. Robertson pointed out that the fact that international markets will today lend to Nigeria at 4% interest rates is “remarkable.”
He said something quite interesting about the “penalty of success” that tends to accompany reform programmes: that a time comes when “the people creating success are [no longer] seen as necessary to sustain it.” Food for thought, definitely!
The African Middle Class
The question I most wanted to ask Robertson about was to do with Rencap’s report on the Nigerian Middle Class. I’ve always thought it unrealistic, saccharine. Rencap’s benchmark is of course much more realistic – and Robertson made sure to point it out in his response to me – than the ones put forward by the African Development Bank’s report, which considers $2 per day disposable income as the baseline for measuring the African Middle Class.
In that report, The Middle of the Pyramid: Dynamics of the Middle Class in Africa, the AfDB defines the African Middle Class as individuals with “per capita daily consumption of $2-$20 in 2005 PPP US dollars.”
The study classifies that middle-class into 3:
a ‘“floating class” with per capita consumption levels of between $2-$4 per day…’
a ‘“lower-middle” class with per capita consumption levels of $4-$10 per day…’
an ‘“uppermiddle class” with per capita consumption levels of $10-$20 per day’…
Do you, like me, find that ridiculous? A Lagos or Nairobi upper middle class surviving on $20 a day?
Rencap is more realistic, but even then, I still have issues with their assumptions. [Now, as a disclaimer, I’m not an economist, and not the most comfortable person in the presence of numbers. I did however enjoy, and if I recall correctly, excel in, secondary school Economics].
Rencap’s Middle Class report is based on a survey of only 1,004 Nigerians, in Lagos, Abuja and Port Harcourt.
Now, here are some highlights of Rencap’s “findings”:
Their average monthly income is in the range NGN75,000-100,000 ($480-645, or roughly $6,000-7,000 pa).
Educating their children well is a top priority, and over half send their children abroad to complete their education.
A sizeable 76% of our sample work in the public sector; of those working in the private sector, 38% run their own businesses.
Put those two together, and you’ll be forgiven for being confused. How do you send a child abroad on an annual salary of $7,000 (less than N1.2 million per annum) – in LAGOS or ABUJA? Where’s the rest of the money coming from, o thou civil servant?
The findings above raise a lot of questions. $7,000 in salaries is Lagos is less than what a young entry-level employee in banking or telecoms or oil & gas will earn. It’s barely enough to pay for BOTH an apartment (minimum rent one year, Lagos-style, two in many cases) AND a car (which is a necessity for the Lagos middle-class, in the absence of mass transport services targeted at the middle-class). How does a middle-class male Lagosian afford accommodation, a car(s), fuel a generator, pay school fees (including at least one denominated in dollars or sterling), on N100,000 per month? Obviously we’re not getting the real picture.
Robertson acknowledged the fact that the Rencap survey is not flawless – assembling data / statistics in a country like Nigeria is a tough and thankless job, and usually happens with minimal or no support from the government bureaucracy. But it is at least is a starting point in the direction we need to be heading.
I have a couple of thoughts on the Middle Class.
1. No doubt there is a growing middle class in many African countries. The evidence is all around us. Compared to the late 1990s, when dictator Sani Abacha was in power. Civil service salaries have since risen appreciably (credit for this goes to President Obasanjo’s government), the country is awash with more money, on the back of rising oil prices, and over the last decade the explosive growth in sectors like telecommunications and entertainment (music, Nollywood) and ecommerce have helped create wealth. Nigeria is today a significant (sometimes the ‘leading’) growth market for a good number of consumer companies, from PZ Cussons to Diageo to Unilever, and for luxury brands like Hennessy and Porsche. [Robertson told me about an Economist Africa conference at which he spoke in January, in London, alongside Strive Masiyiwa, Founder and Chairman of Econet Wireless Holdings and President Diageo Africa, Nick Blazquez, on a panel focusing on the African Middle Class. There is clearly a lot of excitement about a “rising” African Middle Class and consumer spending.]
2. One of the oft-told stories about China and Brazil is one to do with how their governments have managed to lift millions of people out of poverty, into the middle class. Brazil’s happened under the watch of President Lula (2002 – 2010). I’m fascinated by these stories, and wonder why a country like Nigeria is failing to replicate that, despite the proliferation of schemes like NAPEP and PAP. (I’m assuming those were aimed at nudging people out of absolute poverty into a post-poverty-but-not-yet-middle-class class). Why is Nigeria spectacularly failing to achieve a mass uplift of its citizens into the middle-class, the way China and Brazil have done / are still doing?
Which leads me to my next point:
All the optimistic reports and the excitement aside I do not think – and I may be mistaken – Nigeria is creating a statistically-significant new cadre of middle-classers. Emphasis on statistically-significant and new. No doubt there’s a growing middle class in Nigeria, but I suspect that this growth can be attributed mainly to 2 classes of individuals:
1. Ex-members of a once-thriving middle-class that was decimated by the mismanagement, Structural Adjustment Programme (SAP), and all-out military repression of the 1980s and 1990s; and who are now being readmitted into the M-club (this would include civil servants ie school-teachers, University staff, Government health professionals; and Entrepreneurs/businesspersons/service-professionals ie tailors/fashion designers, shop-owners, private-practice lawyers, accountants, architects, doctors, etc).
2. Young people who are leaving University and finding jobs in banking and telecoms and technology and construction and e-commerce and oil & gas, and earning salaries decent enough to sustain a comfortable life in Lagos: a car, an apartment, regular clubbing, summer holidays, etc. These people move from their student budgets to expenditure levels that are several multiples of the student budgets. I wish we had numbers for this class – I estimate it’ll be something in the region of the tens of thousands annually (no more than that), a negligible number placed against the size of the unemployed youth market.
These young people are not a NEW middle-class, as far as I’m concerned. They are tertiary institution graduates already set up to belong to the middle-class. The new middle-class I’m looking for – and which I fear does not exist to any appreciable extent – is the one in which people are rising – in large numbers – out of poverty into middle-class wealth without the benefit of middle-class upbringings or a tertiary education starting point. I’m thinking of examples like the following:
a. A subsistence farmer in a rural area who graduates into mechanized farming, and sees a significant rise in his income (this is very important considering that agriculture is the largest employer of labour in Nigeria).
b. A young Nigerian with limited formal education who succeeds at a vocational entrepreneurial venture — plumbing, carpentry, welding, trading (succeeds enough to rise into middle-class and have the opportunity to give his children a life far better than the one he enjoyed). I’m thinking of a street-hawker who somehow graduates into owning a proper shop in a proper market. I’m thinking for example of all the young traders in Alaba International Market who go on to gain their “freedom” after years of apprenticeship and then set up thriving businesses of their own.
I did try to explain the POV above to Mr. Robertson (he told me he came out of a working-class English background), and he seemed to agree with me.
I’d like to know what readers think of this African Middle Class concept. The AfDB report. The Rencap report. The unbridled optimism regarding the growth of an African Middle Class. Is this for real, or are there serious cognitive biases at play here? Do you agree with my argument – or have a different one?
Originally published in NEXT newspaper on September 5, 2010
NO EVIDENCE NIGERIA IS BROKE.
By Tolu Ogunlesi
In 2004, as part of a reform programme embarked upon by President Obasanjo, which included the liquidation of much of the country’s external debt, a special account – the Excess Crude Account (ECA) – was created outside constitutional provisions, for the purpose of saving all oil revenues in excess of a benchmark price set in the annual budget.
When President Obasanjo left office in 2007, the account held $20 billion. The funds stayed intact until the end of 2008. In 2009 alone, $12 billion was withdrawn. As at August this year, the account held only $460 million.
The bulk of the withdrawals have been shared amongst the three tiers of government, to make up for shortfalls in the national budget. The 2010 budget, worth 4.6 trillion naira, a 50 per cent increase on the 2009 figure, is one whose scale has alarmed analysts.
“Earlier reforms in Nigeria had helped to establish the country’s reputation for a substantial saving of its oil windfall, boosting its external creditworthiness. The 2010 budget, with the magnitude of increased spending that is envisaged, will go some way towards undoing that reputation,” Razia Khan, Standard Chartered Bank’s Regional Head of Research for Africa said in a March 2010 report.
The government’s defence is that expansionary spending is needed in the light of the global recession. “The 2010 budget is based on government’s determination to stimulate the economy out of the recent global economic crisis through targeted fiscal interventions,” Iyiola Omisore, Chairman of the Senate Committee on Appropriations announced last February.
The Excess Crude Account, into which the windfall that Ms. Khan alludes to went, is now at the centre of heated debate about the management of the country’s wealth, the bulk of which is derived from oil and gas revenues.
“The excess crude revenue has been used over the years for different reasons that hardly served the nation’s interest,” Minister of Finance Olusegun Aganga admitted in July, while canvassing for the establishment of a Sovereign Wealth Fund in line with global best practices.
In May, when it became obvious that the government had to depend on the Excess Crude Account to fund the monthly allocations to the states and local governments, the Minister of State for Finance, Remi Babalola, described Nigeria’s expenditure plans for 2010 as “unsustainable.”
“We may thus be constrained to consider amending the revenue profile of the 2010 budget or re-negotiate with all relevant stakeholders the monthly distributable amount pending improvements in the budgeted revenue profile,” Mr Babalola said.
Since then the government has asked ministries and agencies to cut their 2010 budgets by almost fifty percent. But even that has not made a significant dent on the projected expenditures. “In spite of the recent budget cuts, capital expenditure for this year still comes in at about N1.5 trillion, which is more than double what was spent last year,” Mr. Aganga told NEXT on Wednesday.
The size of the budget means that Nigeria is projected to record a budget deficit of more than 5 percent of GDP for 2010.
Quantity versus quality
Bismarck Rewane, analyst and CEO of Financial Derivatives, a Lagos-based economic research consultancy, says that a deficit is not the problem. “The strategy to get out of a recession is to have a deficit budget,” Mr. Rewane said, adding that the global recession means that most countries have to resort to deficit budgets until the economic climate improves.
He added that the real issue is not so much the “quantity of spending” as the “quality”, and that the question that should be asked is “What have we achieved with our spending?”
Echoing this view is Olufemi Awoyemi, financial analyst and Managing Director of Proshare, an investment advisory consultancy. For Mr. Awoyemi, the crucial question is: “How much is going [towards] infrastructure?”
Those arguments are in line with statements made by Mr. Aganga during his screening by the Senate. “I know there has been an increase of about 50 per cent in the budget and we are running a budget deficit of between 5-6 percent of GDP,” he told the Senate. “That in itself is not necessarily a bad thing. What is more significant is that money is allocated to projects that will deliver strong social and economic returns which means that the emphasis is going to be now on implementation, making sure that the quality and efficiencies of spending are looked at strictly.”
Nigeria is not broke
Analysts say that national insolvency – as in the case of Greece – is closely tied to debt levels and the ability to meet interest payments and that Nigeria’s current debt levels do not warrant the level of alarm about its financial situation, especially bearing in mind foreign reserves of $36 billion ($5 billion less than a year ago).
Mr. Rewane insists that the issue of the management of Nigeria’s finances should not be sensationalised, and that there is no evidence that the country is broke. “I think we should be cautious about jumping to conclusions,” he said.
“Nigeria is not broke in the sense in which it is being described,” says Mr Awoyemi. “I have never heard the Minister of Finance say that Nigeria is broke.” He says the country actually deserves credit for “[doing] better than most in dealing with the global recession.”
He however highlights two major problems in the way the Nigerian economy is currently being managed: a challenge “in terms of (spending) prioritisation” and the fact that the country “does not have a budget plan that goes beyond twelve months.”
Commenting on the implications of the depletion of the Excess Crude Account, Obadiah Mailafia, a former Deputy Governor of the Central Bank, said: “If there were to be any sudden external shock in terms of petroleum prices, on which we depend for much of our earnings, it means we’d have no cushion.” He added that the depletion of the Excess Crude Account may negatively affect the country’s credit rating.
A lengthy shopping list
The latest of the disbursements from the Excess Crude Account was $2 billion withdrawn in July and shared to the three tiers of government. Before this was the $4.8 billion withdrawal for the same purpose in March, while President Jonathan was still Acting President.
Of the almost $20 billion in withdrawals since 2007, only a quarter has gone on specific infrastructure projects: $5.34 billion withdrawn in 2009 to fund the construction of new power plants as well as a transmission and distribution system. The rest has been shared by the Federal, State and Local governments.
“A significant part of our budget is going into wasteful expenditure,” Awoyemi says. Prominent on the government’s expenditure list for 2010 are 50th anniversary celebrations, the purchase of three new jets for the presidential fleet, and the conduct of the 2011 elections. Close to $1 billion dollars will be spent on these projects alone. A salary increase for civil servants and the military and police will cost the government 267 billion naira this year. Federal legislators are also seeking doubling of their quarterly allowances. In July the Senate passed a supplementary budget worth $4.3 billion, from which the wage increase will be funded.
To meet the persistent shortfalls in distributable oil revenues the government has, apart from the Excess Crude Account, also turned to the international markets for borrowings. More than $5 billion dollars of foreign debt will be taken on this year, more than doubling the current debt level, apart from a $500 million international bond that will be launched before the end of the year.
(CNN) — On Friday a car bomb exploded at the United Nations compound, in the Nigerian capital, Abuja, killing at least 18 people and injuring several others. It is the latest, and most ambitious in a series of bomb explosions that have hit the city in the last year.
The last one, in June, targeted the police headquarters in Abuja, killing two people.
Boko Haram, an Islamic extremist group (sometimes referred to as “the Nigerian Taliban”) has been claiming responsibility for these bombings. “Boko Haram” translates loosely as “Western education is forbidden/sinful.”
The group holds all government authority in contempt and wants to establish a Sharia state in Northern Nigeria. Boko Haram has been in existence for several years, proselytising, and running a mosque and religious school, but did not rise to national prominence until it attacked police stations and prisons in parts of Northern Nigeria in July, 2009.
In retaliation, Nigerian security forces launched a ruthless crackdown. Hundreds of people were killed; the Boko Haram camp destroyed, and its leader, Mohammed Yusuf, arrested. He would later die in police custody, and a number of officers are currently facing trial. (Some of the group’s anger is traceable to what it claims is the highhandedness of the Nigerian police and military).
U.N. Secy.-Gen. condemns Nigeria attack
U.N. office in Nigeria bombed
The violence perpetrated by Boko Haram is typically cast by the international media as evidence of tensions between Nigeria’s “predominantly Christian South” and its “predominantly Muslim North.” There have also been suggestions that the Muslim North is unhappy that a Southern Christian is president, at a time when, according to the terms of an informal North-South power-rotating pact in the ruling party, a Northerner ought to be president; and that Boko Haram’s activities are a manifestation of that unhappiness.
At best this is an oversimplification of issues, and at worst dangerously misleading.
(On)Going Concerns, my weekly column for NEXT, appears on Wednesdays, in print and online. This week’s piece (Feb 23, 2011) below:
Choosing the next president
By Tolu Ogunlesi
Former Australian Prime Minister, Kevin Rudd recently told the Financial Times: “I believe in politics for the two questions it asks of us. One is: ‘What do you stand for and why?’ And the second is: ‘Do you know what you are talking about?”
These are excellent questions to carry over into the Nigerian situation.
Think of Nuhu Ribadu. What comes to mind is a man who came into public reckoning on the strength of his fearlessness, and determination to rid Nigeria of financial crime. Think Fola Adeola and Pat Utomi, and their impressive resumes speak for them, evidence of a consistently-manifested genius for visionary thinking, and for the management of people and resources. Tunde Bakare brings “conviction”, “fearlessness” and “integrity” to mind.
I think of Dele Momodu and of a certain drive and eclectic ambition; a man who, once he sets his eyes on a goal, will work to make it happen. Muhamadu Buhari evokes frugality and (to borrow from Wole Soyinka) “dis’plin” – qualities sorely needed in a country ravaged by lawlessness and recklessness.
Now think of Goodluck Jonathan, and what comes to mind? Perhaps it’s time to confess my confusion. Has Mr. President done a great job of letting us know what exactly he stands for, and to what extent he knows what he’s talking about. I honestly can’t say for sure.
Maybe it’s simply a personality issue. Mr. Jonathan does seem to be an introvert, which in itself is not a bad thing. But I fear that he is not doing a good enough job of asserting himself in the office he occupies. (Now, sadly, this is one of those lines that I fear someone in one of the anti-Jonathan camps will seize and proclaim on Facebook, for campaign purposes).
My article, An ‘Evening of kingmakers’ – PDP Presidential Primaries 2011, has just appeared in Y! online, here
President Goodluck Jonathan (right) and V. P. Namadi Sambo (left) - Photo Courtesy http://www.thisdaylive.com
An excerpt:
There must have been millions of Nigerians watching through the traditional media – the live TV and radio broadcasts.
Unlike four years ago, however, there was another community observing – those tuned in through social networking media. What that group may have lacked in size (the truth is that there are far fewer people within than outside it) they more than made up for in the aggressive energy with which they pushed out their opinions – on Twitter, 140 unruly characters at a time.
This community didn’t exist when the PDP selected the late Umar Yar’Adua as its Presidential candidate in December 2006. Its members did exist of course, but the ‘wiring’ and ‘platform’ that made it possible for them to ‘network’ and aggregate their voices into one raucous, witty, irreverent conversation didn’t exist back then.
U.N. Secy.-Gen. condemns Nigeria attack
U.N. office in Nigeria bombed
