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2021: Nigeria needs massive jolt of reforms to escape its fragility


By Olu Fasan

THE year 2020 is gone, unsung! The year 2021 is here. But what will it bring? I mean, what will the new year mean for Nigeria? For the entire world, we already know, sadly, that COVID-19 is mutating and still ravaging.

But, despite the 101,331 cases and 1,361 deaths, as of January 12, Nigeria, a country of 200million people, is not in the grip of COVID-19, and it would be misguided to let the pandemic to mask the far greater existential threats that this country faces.

Truth be told, without fundamental reforms, Nigeria is at serious risk of being trapped in permanent decline or stasis. This country’s fragility and systemic weaknesses are simply too deep to be sustainable. Its institutions risk crumbling, and majority of its people are in danger of becoming permanently locked in extreme poverty and utter misery. So, when I asked what 2021 would mean for Nigeria, what I’m really asking is whether radical actions would be taken this year to begin the process of turning this country around, or whether it would be the same old story, the same old tinkering at the edges of reforms.

As readers of this esteemed newspaper will recall, I asked the same question last year. In a piece titled “2020s:  Nigeria is sclerotic, only radical reforms can stem deepening decline” (Vanguard, January 2, 2020), I asked: “So, can transformational change happen this year?” After some analysis, I concluded: “The answer is no”, adding: “President Buhari simply has no appetite for radical reforms.”

How accurate was that prediction? Well, we will come back to that and the prediction for this year. But first, let’s look back at the year 2020 from economic, political, social and security perspectives. How did Nigeria perform in 2020?

Also read: 30m Nigerians affected as COVID-19 raises Learning Poverty to 63%, others ― World Bank

2020: A year in review

Without putting too fine a point on it, 2020 was a very bad year for Nigeria on the economic, political, social and security fronts. I will leave COVID-19 out of this analysis because, as I said, this country was not as hard hit as many other African countries. For instance, considering its population, Nigeria’s infection and fatality rates are modest, compared with South Africa’s 1,246,643 cases and 33,579 deaths, at the time of writing.

Nigeria’s second recession

That, of course, did not stop the government from blaming COVID-19 when the economy slumped back into recession last year, for the second time in less than five years, after the recession of 2016. But what about the ill-advised lockdowns, with no support for businesses and poor Nigerians? What about the 15-month closure of Nigeria’s land borders, which destroyed many small businesses? And what about the harsh business environment that forced ShopRite, Africa’s biggest grocer, to decide to exit Nigeria?

Indeed, foreign investment plummeted last year. For instance, in the second quarter, foreign direct investment was just $148.6m, a decline by one-third from the previous year. Portfolio investment flows fell to $385.3m in the three months to June , down a whopping 91 per cent from a year earlier, according to the Financial Times. Foreign investors fled Nigeria last year at the same time as they were going to Ghana. Of course, with businesses facing foreign exchange restrictions and huge dollar shortage, Nigeria made itself unattractive as one of the best places to do business in the world.

The upshot of all this was an economy that was in dire strait. Unemployment was 27.1 per cent last year, underemployment was 28.6 per cent. Inflation was nearly 15 per cent as at the end of 2020. The World Bank was forced to warn that Nigeria’s economy was at risk of “unravelling”, saying that personal incomes could be sent back “four decades”. The bank also warned that Nigeria could have 100million people in poverty by 2022! So, it is beyond dispute: 2020 was a terrible year for Nigeria on the economic front.

Buhari’s lost security battle?

But 2020 was also terrible on the security front. President Buhari ran for office on a national security platform, but five years in power, he seems to have lost the national security battle. One estimate has it that there were as many as 8,000 reported deaths in the Northwest alone in 2020. The abduction, and subsequent release, of the Kankara schoolboys by Boko Haram, a supposedly technically defeated terrorist group, was the most high-profile security incident in 2020. But there were thousands of unlucky victims of insecurity all over Nigeria.

For instance, Nigerian highways have been overtaken by gangs of criminals, who wield AK-47 and other dangerous weapons and set up fake checkpoints to kidnap, rob and kill people. What about the Fulani herdsmen that continue to destroy farms, ransack villages and create huge supply shocks that are causing rising food prices and growing poverty in Nigeria?

In a poignant article titled “I went below the poverty line in 2020”, the venerable Vanguard columnist Dr. Dele Sobowale recently told the story of a friend whose farms were destroyed by herdsmen as well as armed bandits and kidnappers who invaded his farmland “sending most of his farm labourers (mostly women) scampering for safety.”

Economic insecurity or poverty is, of course, one of the causes of such dastardly attacks. But when they happen, they create a vicious circle, dragging in more people into the poverty net and increasing the levels of insecurity. There is a strong nexus between economic insecurity and physical insecurity, and a government that ignores this relationship will tackle neither, as the Buhari government obviously has failed to do!

Several years ago, the then British Labour leader, later prime minister, Tony Blair, declared that he would be “tough on crime and tough on the causes of crime.” That must be the approach to insecurity: tough on insecurity and tough on the causes of insecurity. Yes, there are warped ideologies, but the major causes of insecurity are joblessness and poverty.

Strong private-sector and high productivity are antidotes to poverty

But Nigeria lacks the conditions for tackling joblessness and poverty. The government is fixated on its so-called National Social Investments Programmes, NSIP. Of course, direct cash transfers to the vulnerable and poor are part of the solution to poverty. But, in a country where about 90million people are in poverty, projected to rise to 100million by 2022, what impact can a cash transfer programme, which currently reaches few than three million people, have?

Furthermore, at 60 per cent of the economy, Nigeria has the highest informal sector in Africa. According to the World Bank, just 10 per cent of the working-age population is employed in the formal wage labour, that is, only 10 per cent are earning wages. So, what are the remaining 90 per cent of the working-age population doing? Well, they are unemployed, underemployed, or stuck in the informal sector, struggling to eke out a living.

Clearly, the best answers to unemployment and poverty are a robust private sector and high productivity. But both are absent in Nigeria. The private sector is hamstrung by a multitude of supply-side constraints, and productivity is extremely low because of the appallingly low stock of human and physical capital.

Think of it: according to a World Bank report, about 50 per cent of Nigerian workers have only primary education or less; 30 per cent never attended school; just 20 per cent of Nigerian adults aged 18-37 years who completed primary school can read. How can such a low-skilled labour force generate the productivity necessary to improve living standards and reduce poverty? Yet, Nigeria does not prioritise investment in human capital.

Social and political tensions

Of course, the consequences of neglecting human capital accumulation are not only felt through low economic productivity or high insecurity, but also through social and political tensions. There is no doubt, for instance, that the #EndSARS riots, triggered by the Lekki shootings, got out of hand because uneducated, jobless youths hijacked the situation to wreak havoc on the streets of Lagos. Poorly educated and jobless youths, who feel left behind by the state, are always a potential danger to society.

What’s more, they are also tools in the hands of unscrupulous politicians who use them as thugs during elections, as often happens in Nigeria. As the 2023 general elections draw nearer, expect desperate politicians to begin to build private armies among those that government and society have abandoned. So, by neglecting human capital but fostering masses of poorly educated and jobless youths, Nigeria is sitting on a ticking time bomb.

Reforms in 2020? What reforms?

The foregoing economic, political, social and security situations called for radical reforms in 2020. But little was forthcoming. Of course, on the economy, the Buhari government, forced by fear of a recession, took some measures that even the World Bank hailed in 2020. The government removed the fuel subsidy, raised electricity tariffs and increased VAT. But none of these fiscally-driven measures stopped Nigeria from entering a second recession last year.

Truth is, those measures were necessary but not sufficient. What about President Buhari’s much-trumpeted announcement in May last year that he would implement the Oronsaye report on the rationalisation of federal parastatals and agencies? Surely, merging federal parastatals and agencies, which were 541 when Oronsaye produced its report, but are now about 821, according to a World Bank study, would be a radical measure. What about abolishing the multiple exchange rates? What about reversing the import bans and exchange controls that distort the economy and make it uncompetitive?

On the security and political fronts, President Buhari introduced absolutely no reform in 2020. He refused to replace the patently underperforming service chiefs, despite a National Assembly resolution asking him to remove them after their tenures had expired. Furthermore, President Buhari refused to countenance any political reform. He remains adamantly opposed to political restructuring, even though it is obvious that unless Nigeria is restructured unless Nigeria has a new political and constitutional settlement, it will continue experiencing ethnic and political tensions, and thus stunted progress.

What will 2021 bring?

So, let’s return to our original question: what will 2021 mean for Nigeria? Would President Buhari launch the reforms that would start the process of transforming Nigeria? Well, like I said last year, the answer is no! And to understand why we only need to refer to his New Year’s message in which he set out his government’s agenda for this year. According to President Buhari, his government’s priorities this year is as they’ve been over the past five years, focusing on what he termed SEA – Security, Economy and Anti-Corruption.

But nothing is really new or radical. Take security, he said he would “re-energise and reorganise the security apparatus and personnel of the armed forces and the police.” But Buhari is a system-maintainer, not a radical reformer. He is unlikely to replace the service chiefs. Yes, he may redeploy some officers, but the structural weaknesses that make the military unable to tackle and defeat Boko Haram will not be addressed. There’s corruption in the military, the morale of the rank and file is low, the security apparatus lacks sophistication and nimbleness. None of these will be addressed this year.

What about the economy? Again, it’s the same old policy of “revamping the economy” to achieve the goal of “national food self-sufficiency.” That means more food import bans, more protectionism and, of course, higher food prices and, as many experts have warned, potential famine this year. The fact that the Buhari government closed Nigeria’s land borders and expect “pent-up demand” to be bursting at the seams after opening them 15 months later shows the government’s level of economic illiteracy. And it is the same economic illiteracy that underpins its deluded policy of food self-sufficiency! Well, on the “A” in the SEA, namely, anti-corruption, the less said, the better. Since President Buhari came to power in 2015, despite the anti-graft hype, Nigeria’s abysmal rankings on Transparency International’s “corruption perception index” have not improved. Buhari will do nothing to change that this year.

Nigeria needs a massive jolt of reforms, but expect nothing to change in 2021

Truth is, to escape its fragility, Nigeria needs root-and-branch, systemic reforms on the economic, political, social and security fronts. But President Buhari is a political seaman, not a steersman. The former is shaped by events, the latter is a visionary and transformational leader, who wants to take his nation to greater heights. Sadly, Buhari is not that leader!

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