The Nigerian plan for “Securing Development” – Analysing Ngozi Okonjo-Iweala’s plans for Nigeria’s future.

For those of you who have never had the pleasure of hearing the Nigerian Finance Minister, Dr Ngozi Okonjo-Iweala speak, you have certainly missed a treat. As the former head of the World Bank and with a raft of accolades from Time and Forbes as well as a highly regarded series of books and publications on global economics, she is truly an inspirational story for Africa’s potential, but it is her vision for Nigeria and sub-Saharan Africa which I wish to discuss in this article.

On the 19th of June 2013, Dr Ngozi Okonjo-Iweala gave a speech at the IISS in London where she expanded on the phrase by the current Head of the World Bank, namely “Securing Development”. I have attached the link to the text from that speech here if you would like to read, but for this article I want to look at the issues and solutions for Nigeria that were highlighted in her speech and my further reading to see if I can boldly suggest any further ideas for consideration.

 

The Challenges:

First and foremost it is important to highlight the incredible range of challenges facing Nigeria and to avoid creating a vast list I will draw attention to those that should be seen as core issues:

  1. Unemployment (and underemployment),
  2. Poor infrastructure (particularly in respect of Energy),
  3. Poor Governance (specifically corruption),
  4. Demographics (namely young with a high birth rate) and,
  5. Education (or rather appropriate linkages between skills taught and skills required).

In respect of unemployment, as Dr Okonjo-Iweala highlighted in her talk, unemployment in Nigeria currently stands at 23.9% as a national average, with that figure even higher in certain states and almost certainly higher during the non-agricultural months of the year. Almost inherently linked to this however are the issues of demographics and education, with poor governance and infrastructure providing a further inhibitor to improvements in this space.

Furthermore, according to Dr Okonjo-Iweala, the African continent has the lowest average age of anywhere in the world, with over 70% being below 25, though the figure in Nigeria is marginally higher at 63% under 25. Combine this with a high fertility rate and it is very clear to see that the educational institutions and the employment market have to work extraordinarily hard even to maintain the current status quo, let alone achieve improvements.

Of course linked to all these challenges is the “Resource Curse” and in Nigeria this has been of particular significance due to its status as the largest producer of oil in Africa and 6th largest worldwide producer (According to NNPC). The problem here was aptly termed and summarised by Dr Okonjo-Iweala as the story of “Jobless Growth”, where the state may derive significant wealth from resources, but it does not lead to significant employment and more specifically because it has little effect on employment, the wealth is concentrated to a smaller band of people.

In fact the story of growing inequality in Nigeria is closely linked the story of poor historic governance, where the reliance on kinship and networking has been the key to accessing the patronage which the Nigerian state can offer. This in turn has made foreign investment more difficult and less attractive which in turn has harmed the development of the Nigerian economy, particularly in respect of developing the nation’s infrastructure.

 

The Solutions and the Opportunities:

Now of course many of these current weaknesses are in fact potential opportunities for Nigeria’s development. A large, young population who are not highly skilled provides an environment to develop lower skilled manufacturing and textiles which underpinned the growth and development of Asia’s “Tiger Economies” and would play a key role in helping to develop the infrastructure and manufacturing base in Nigeria to “Secure Development”.

Large natural resources also provide the opportunity to develop much of the country’s infrastructure and reduce inequality, such as the Bolsa Famille projects in Brazil or the Social Security system in Norway. They can also help to even improve governance if they lead to higher basic wages which may dis-incentivise corrupt activities, a model practised in Singapore.

So what is Nigeria doing to address these problems as well as maximise on these opportunities and furthermore are their methods the correct ones?

At the core of Dr Dr Okonjo-Iweala’s speech was the lack of access to finance which all of Sub-Saharan Africa struggles from, even in her country of reference, Nigeria. To address this she outlined that Nigeria is currently following the following strategies:

  • The creation of a Nigerian Development bank (assisted by Brazil and others),
  • The Privatisation of the Nigerian Power Market,
  • De-regulating the structures around creating private oil refineries,
  • Publishing in the papers where state revenues from oil are being spent,
  • A large housing campaign  to boost home ownership and stimulate new jobs,
  • Developing raw material exports further, such as milling rice and refining Oil so that they can “Add Value” to the products and maximise their returns,
  • Creating linked apprenticeships and training programmes to get people working in industry and learning the skills they need and,
  • The creation of a significant entrepreneur fund for anyone with a business idea, where candidates are trained in business and if successful will receive large state grants to start their business.

Now while this list of ideas are very impressive and (to coin a questioner from the IISS) appear to come from “The World Bank playbook”, they appear to be glossing over the most fundamental areas of concern to accessing finance: Transparency and the Rule of Law.

In China today we are already seeing the damage that a lack of transparency can have on market confidence and frankly it’s not hard to understand why investors don’t like not knowing the reasons why decisions are made and why a lack of confidence in the validity of economic data, reduces the incentive to invest.

Furthermore, Africa as well as Latin America has a long historic legacy of amending the rule of law when the need for populist policies has arisen which has in turn led to frequent nationalisations of foreign assets, discriminatory policies against foreigners and currency controls which make it harder for investors to realize the returns on projects to their shareholders.

All of this therefore would lead me to make the following suggestions to help Nigeria succeed in its current strategies and to “Secure its Development”.

  1. Use a combination of performance related pay increases within the Public Sector, with a review of government expenditure to be audited by an external 3rd party (or group of 3rd parties) and made publicly available.
  2. Improve the security of foreign investor’s assets by reducing the degree of protectionism involved in purchasing Insurance in Nigeria, and by agreeing to allow International Arbitration on any major project whose life spans over a period of 10 years.

In the first instance, a greater domestic and international confidence in State institutions is critical to the future development of Nigeria. Thus, by combining a “Carrot & Stick” methodology to the Public Sector, which simultaneously generates confidence from the general public (due to 3rd party presence) and undermines criticisms of the audit by Trade Unions (by increasing pay), Nigeria will be able to further enhance its Public Sector image and create a better partner for International Organisations and Businesses to work with.

In the second argument, the current Insurance framework in sub-Saharan Africa (and Nigeria is no different), sees the remittances of Insurance Premium out of the respective country as lost investment, thus the country tries to arbitrarily force a proportion of each risk (and therefore Insurance Premium) to be retained locally.

Excluding the fact that most Insurance companies in Nigeria cannot afford to pay the higher end of claims in full even when they happen, this is a disaster for Foreign Investment because not only does it add an additional cost burden to investing in projects, but it also complicates the process of actually having a claim paid. In short if financial products which are designed to help facilitate Risk Mitigation cannot be effectively utilised in Nigeria, then many investors (Particularly low-risk funds such as pensions) will be unable to invest.

So those are my humble suggestions to Dr Okonjo-Iweala and even if, as I strongly suspect, my idea’s do not become government policy (one can only try right?) then I still wish Nigeria the best of luck with its latest reforms. As a country with aspirations to take on a leadership role for Africa and the wider International community, we could all do with a strong successful Nigeria at the heart of Africa.

Advertisements

Water Politics and the basics of Statecraft

As if being the President of a nation that has just emerged from a nearly uninterrupted period of autocratic rule with 40% of the nation below the poverty line and an Armed Forces who spent 30 years trying to remove you wasn’t hard enough? For those who are lost, I am of course referring to Mohammed Morsi, the current president of Egypt.

The story of The Muslim Brotherhood’s performance in government since the start of the Arab Spring may be about the only real consolation for the ex-Mubarak era officials, but the recent crisis with Ethiopia is one where few Egyptian’s would want to gloat about. Again you may be asking what I am talking about….

The Renaissance Dam project which was unanimously approved by the Ethiopian government today marks the beginning of a $4.7 Billion project to divert the course of the Blue Nile. The members of the Upper Nile states say that the project, which will generate 6,000MW of energy (10 times the current usage in Ethiopia), will be good for regional economies and that delaying water into the Egyptian part of the Nile will in fact improve water flow over the year and reduce water loss through evaporation. Needless to say the Egyptians don’t seem to be persuaded.

In fact, the Egyptian government is so upset and uncertain about how to react that the most senior members of government have even been suggesting directly bombing the dam, arming rebels in the country and a wide plethora of malicious acts against another Sovereign nation.

But how do we know this I hear you ask? Well for that thank the wonderful media relations staff of the Muslim Brotherhood who decided, at late notice, to broadcast the discussions of a high level meeting of senior Egyptian members of government…and not tell them it was being broadcast…..I’m genuinely serious  (See the following link.)

Now admittedly this could be a lot worse for Morsi.

1. He personally didn’t agree with violence whilst being broadcast and

2. The country they threatened is Ethiopia….

As you can see the list of good points in this scenario is fairly thin on the ground, so I am going to boldly suggest a few points here to President Morsi on basic statecraft:

  1. It is always easier to stop something from happening if you get involved before it begins. Egypt could have offered to send its own assistants to help structurally survey the sight and in return for help on the project they could use the leverage to negotiate the water they get. Failing that they could simply have galvanised the international community by calling for a moratorium to the project on the grounds of a required Environmental survey along the length of the Blue Nile. Both of these options now would be difficult at best to implement.
  2. If your character and credibility is questioned by the comments of an individual, distance is a powerful thing. Statements of intent also help and firing the individuals (even if they didn’t know and thought it was a free forum) sends a message of good faith to try the negotiation tactic once again.
  3. Exerting power through soft means: economic, quiet words with friends in the diplomatic community, leaning on organisations with influence, is often far more effective than threatening to drop a bomb. As one of the largest and wealthiest states in Africa with a significant amount of military capability (important for the development of the AU) and a leader for many in the Muslim and Arab world (not to mention their leading role in the Non Aligned Movement), Egypt has tremendous soft power leverage and again this should have been exercised earlier in the projects lifespan.
  4. Divide and Conquer. It is an age old, tried and tested technique, but with the water from the Nile being so vital to the survival of the states along the Blue Nile delta, it would seem that the failure to break-away some of the 7 nations who agreed to the Dam deal with the Ethiopian government is the sign of pretty poor statecraft.

So now we wait and see the outcome of the latest debacle. Will Morsi recover and be able to offer a compromise that at least publically spares him face with the Egyptian people or will he be humiliated in front of the entire nation (as well as humiliating the Brotherhood on the global stage)….or will the Egyptians carry out a military response and what would the consequences of that be……well ok admittedly consequences  in a truly lightning and exciting manor may be difficult for Ethiopia in this particular context, but at least politically the fall-out could have wide-ranging implications for Egypt’s standing both internationally and at home.

All of this however simply underscores a more fundamental point though which is that when the chips are down it appears, at least in Egypt, that having water in your rivers is more important than electricity to charge your iPod.  

 

Being a British 20 something – And why perhaps we should be learning a thing or two from the Europeans.

Forgive me for breaking with convention but I thought I would write an article for fun. I hope you enjoy!

Another fine Sunday morning, another rather unpleasant groggy feeling and dry mouth. The combination of which will be familiar with anyone who has experienced a night out of drinking, albeit it is not exactly one that people remember fondly….

For some time I have always wondered why it is, that since I hit 18 (and my friends and acquaintances included), we go out every week (or second), spend a disproportionately large share of our income (either pre, during or post evening), to essentially poison ourselves, put on weight, feel rubbish and (depending on the individual) act like a total idiot.

And yet we do it again….and again….and again…..

Now I know every country in the world (legally or not) drinks to a certain extent and parties (some pretty damn hard), but what I don’t really understand is why it seems so consistent in the UK that the end game (or nearly always final result) of a night out for a 20 something in the UK ends up with them “sh*t-faced”…..again the question I ask is WHY??

So I thought I might take a punt and a speculation on why this is the case (And why this perhaps is very similar in certain countries in the world but not others). In essence I think it’s because of this:

“The reason why a large proportion of 20 something’s in the UK go out so consistently and get so hammered is because, whether they know it or admit it, we are all really f*cking terrified about everything”

That’s right. I think we are all really, really, really scared. And not just about one or two things but about everything:

As I see it by the time you hit 20 and before you clear 30 you seem to be stuck in this weird scenario for which nothing in your life to that point has prepared you for: namely full individual accountability for every aspect of your life and secondly full freedom to decide your own course in life (with no “Right” answer to follow).

Whether it is jobs, moving from home (or in my case trying to!), relationships (or lack thereof, whether intentional or other), lifestyle (work/life balance), choosing where home is (especially difficult if you don’t feel you can work where you have spent your life living or have never had a fixed home before).

What is also scary I think, and I believe most people will sympathise to various extents, is probably best explained by my analogy below:

“From birth to 18, life is like a ship sailing from the mouth of a river to the sea, with a fixed rudder and a firm wind in the breeze. Those on the boat may not like the route or the journey but it is a clear one they must follow none the less. Then suddenly, as the boat finally reaches the sea, the rudder relaxes and the wind dies. The boat is now cast adrift with no clear direction and the crew now have to decide what to do next.”

Cliched?….probably. But the point I still believe is pertinent. We all go through school and through childhood with certain socially imposed constraints that channel us to a fixed point in our lives: Nursery – pre-school – prep school – secondary school – …….

For some the decision gets kicked back longer. This is what is euphemistically called “Higher Education” or more accurately “Cr*p I am not ready for the real word! Lets learn something vaguely productive, hopefully meet some cool people and somehow earn more money than we would have done before hand when we leave. After all I can decide my career for the next 30-50 years in 3 years of studying right???”

This is why I think we all drink. We drink on dates because we are nervous (it loosens our guard), we drink with friends (it makes it easier for us to talk about what we are really interested in with a cover if the other party is unimpressed by content), we drink with family (that may be habit or awkwardness or higher alcohol quality related….all are valid) and we drink with work colleagues (because getting a straight answer from a sober work colleague is usually enough to drive you to drink).

Of course I do not mean by this that we would all be tee-total if we didn’t drink. Far from it. But I do think if we can learn one thing from our counterparts in Southern Europe (and many Latin origin states as well), it is that drinking can actually be enjoyed without being hammered at the end of it.

Now do people from southern Europe and Latin states get drunk? Obviously yes they do! But the mentally appears at least to my mind to be subtly different.

The pace of life I believe is the key.

In our 20’s we feel a huge amount of pressure to start jobs, find a life partner (Or at least be looking), find a new home (flat, house, etc) and all of these things, things that will define our lives, we have to decide before we have even past what by most modern estimates will be only slight more than the ¼ life mark in our existence (Latest figures are we will claim working pensions in the UK when we are 75…).

So I want to propose an idea for those who want to stop the “Binge Drinking” culture (which by any other historical reference should be more accurately referred to as “Drinking”!), which is to actually start to talk to people about what really is important to them in life as a fundamental part of our education.

It is remarkably consistent that regardless of age or nationality, this is a question that truly unites all 20 something’s worldwide. The only difference is on how we respond to it. In Europe (especially the South) people seem to have more time to decide and to move at their own pace. In the UK we seem to have to move from home and have a job the minute we finished studying (often at a much earlier age than in Europe) and then be married or on our way by 30…..That seems pretty terrifying.

So to end this long rant here is my simple thought encapsulated:

20 something’s often drink so much and so hard because we are all so scared about not knowing what we want, what’s expected of us and most importantly perhaps is how we get there.

If maybe we spent as much time learning about “skills needed for life” on actually thinking about what it is that people want from life then maybe we would all be a bit happier, a bit more sober and the alcohol companies a little poorer.