POST COVID NIGERIA AND THE ELEPHANTS DANCING IN THE ROOM

Olufemi Adeagbo

COVID -19 has triggered a reconfiguration of global socioeconomic dynamics in a profound way, highlighting the extent of interdependency and integration we share as a  specie. It has also exposed our vulnerability to lethal enemies we can’t see, nor confront with nuclear weapons and defense architectures that have consumed trillions of dollars over the years. We now see that in many countries, citizens don't have depth of savings to last more than a month or two. Economic paradoxes lay bare for us to see with companies racing to governments for bailouts within 30 days of disruption. It is likely to be a whole new world.

In a world presented in “bunkers” and characterizations, the “capitalists” outsourced critical aspects of economic activity to “communist” China, ostensibly to lower production costs and increase profits. Money evened out the ideological differences it seems. China capitalized on a disciplined and production inclined culture to propel itself into a dominant global force with a GPD of $29 trillion. The extent of this “domination” has been all too apparent, with the world looking towards China for production scale to obtain critical items needed to effectively tackle the pandemic. 

Seismic changes in the configuration of economies and business are also all too apparent. Technology will clearly deepen its position as the vital enabler of socio-economic life, spurring both innovation and opportunities, as well as security challenges, at a scale never seen before. Bandwidth hungry video, AR, payment systems and other technologies will be leveraged to compensate for the possible long term decline in 'face to face' contact and facilitate logistics to link people to goods and services. Unfortunately, vital sectors like hospitality, travel and other 'human presence' industries may suffer gravely. A post epidemic “Fear window” is likely to emerge, in the absence of a vaccine.

RECRIMINATIONS

Recriminations and counter recriminations have started and some raise very serious concerns.  China should be open to investigations to exonerate it and blunt the growing swell of conspiracy theories. However if proven that more transparency may have limited the spread early on, then vital lessons will be learnt which will be useful for future outbreak management. There will also likely severe post Covid - 19 conflicts. All sorts of commercial disputes may erupt. The debt amelioration packages under consideration may well have to reflect the extent of impact and liability, and may lead to calls for outright cancellations, and even compensation demands. Where bigger GLOBAL stakes are at play, disagreements may escalate to armed conflict - God forbid. But, humans have always turned to weapons, when reasoning breaks down. 

Whatever happens with liability placement, countries will almost certainly move to mitigate this sort of vulnerability to one producing giant again. Profits may have to yield to more local production across the world. And In the extreme case, we may see fragmentations into blocs, new alliances and even isolationist policies, as countries diversify manufacturing reliance. Dominic Raab, The British Foreign Secretary recently and instructively stated that “ it wont be business as usual with China when this is over.

"China has a positive trade balance of almost $1 Trillion. ”The top exports of China are Broadcasting Equipment ($231B), Computers ($146B), Office Machine Parts ($90.8B), Integrated Circuits($80.1B) and Telephones ($62B), using the 1992 revision of the HS (Harmonized System) classification ' according to the OEC/MIT.EDU analysis for 2018.

Post COVID - 19, All Nations states, perhaps as part of a global mandatory framework ought to put in place manufacturing capabilities that can scale up production rapidly in response to Pandemics. Besides asteroids and nuclear weapons, pandemics represent the single most potent threat to the rapid decimation of human beings, and the economies that sustain us, at scale. Public healthcare investment and remuneration must now be seen in that context, within the mobilization and prioritization of resources. 

NIGERIA IN VIEW

Nigeria  shipped  some  $ 53.6 billion worth of goods around the globe in 2019, a 10.7% increase since 2015 and a 1.3% increase from 2018 to 2019, and ranks 50th  in terms of export and about 52nd in terms of imports. Non- oil was in the region of  $ 10 billion, the highest ever recorded - although some re-exports are included in that figure. However, growth in agriculture productivity, and increase in exports are encouraging. GDP is cited as $ 445 Billion (although the IMF now says the informal economy may be as much as 65% of GDP, leading many to believe that the GDP itself is significantly bigger), and places at number 27 globally, ahead of countries like Argentina, Malaysia, Singapore, Pakistan, and South Africa to cite a few,  but  our population relegates us to number appx 131 in per capita terms at approximately $2,700 ( approximately (about 3 times minimum wage).

We are however in the top 20 for consumer markets ( 2017 data) perhaps  understandably because of our size. Significantly we are the 13th lowest ‘tax to GDP’ ratio country in the in the world. Instructively and interestingly the latest  World Happiness Report, an annual publication of the United Nations places us at number 80, happier than people in Ghana, China, India, Vietnam, South Africa, Ukraine, Botswana, Rwanda, Indonesia, Morocco and Bulgaria, to cite a few, despite the fact that many have higher per capita income. In a recent report, the International Monetary Fund (IMF) warned that ‘though Nigeria’s debt to gross domestic product ratio has increased to 28%, it remains lower than the average ratio recorded in sub-Saharan Africa”. For context, Rwanda, Ghana, South Africa, China, Germany are all above 50%. Countries like the US,  Singapore ,Italy and Mozambique are above 100% ratio and huge debtor Nations like Japan and Venezuela cross the 200% ratio mark. 

China has loaned Nigeria approximately $6 b funding projects like Olorunshogo and papalanto power plants which were completed in 2007, Transportation and aviation infrastructure and ICT. The last loan obtained by the government from China was $328 million in respect of the National ICT Infrastructure Backbone II Project. Another tech related one is the controversial $399.50 million loan for the ZTE handled public security communication project agreed upon in 2010. The project has attracted attention for the non functionality of the CCTV surveillance components for Lagos and Abuja. The most recent summary of Nigeria’s external debt stock published by the Debt Management Office, shows that at the end of March 2019, Nigeria owed China about US$2.6 billion and paid $138 Million dollars in debt service.

We import approximately $13.5 billion in goods from China , and the highest single component is non-knitted female suits at over $500m, bundled within the $860 m articles of apparels, Not precision machinery. To be clear, many of the inputs from China and other nations create multiplier value for the economy, but a time has come for us to look at what is required and what are non-essentials. Governments can’t legislate this for us, although they must look at their own basket of waste as well, and lead symbolically. We export shy of $2b including oil, cocoa beans, wood and a handful of other commodities resulting in a deficit of some $11.5B with China.

Nigeria has an amazing pool  of human resources across all spectrums of endeavour, and even the Covid 19 crisis has highlighted amazing insights into the possibilities from science and technology and creativity. Mind boggling mineral non-mineral resources remain underexploited. We are a top 10 country in terms of both arable and cultivated land and have a coastline of 900 kilometers. And let us consider this as well. Billionaires like Zuckerberg of Facebook, Jack Ma of Alibaba, Dorsey of twitter are all positioning in the same 'poverty stricken' market. They may understand the dysfunction as a 'trickle down' economy with unknown quantum’s, and see the  spend quite clearly. They may also understand that the resource basket extends beyond oil, and will be exploited one way or another, if not by us, then by others. The upside is significant, despite the lengthy list of negatives. 

However, there are contradictions that defy belief for an economy that has so much vortex of activity and export receipts from oil. The optics of grinding poverty, pervasive slums that are not fit for human habitation, the realties of deprivation, the apparent absence of savings culture or ability, and dysfunction must surely embarrass, anger and trigger a critical re-evaluation of who we really are, and who we aspire to become. 

DEPLETION OF  VALUE AS A CULPRIT?

In addition to the aforestated receipts and internal economic activity, $17.5 billion flows in from the Diaspora, one of the highest receipts in the world excluding inflows via informal channels. The middle class layers transfer money frequently to less resourced friends  and  family in  an “esupport” culture, anchored ostensibly on poverty and hunger, and our long standing culture of supporting less privileged relatives and friends. Electronic Transfers facilitated by Nigerian banks between January and June 2019 totalled  a record N 203.35 TRILLION.

N2.82 Trillion is proposed as personnel cost for the year 2020 by the Federal government. Within that, Education and health - critical Human capital Development components are allocated recurrent expenditure of slightly over N980 B whilst capital is about N144B, for both critical sectors. Over N400 B in Conditional cash transfers, Npower and other social investment initiatives also go into the pot, alongside intervention capital  channeled through institutions like the BOI. N65B goes towards Amnesty, N80 B towards NDDC, and N38 B towards the North East development Commission.

The private sector asserts over 40m SMEs. Millions of  self employed informal entrepreneurs from the suya seller, to the market sellers across the country. Churches never lack an economically active congregation, and yet, there is a persistent narrative of Nigeria being home to 100 million people living in abject and grinding poverty, even when some 80 million are under the age of 14.

Despite shortfalls in releases and the challenges that now face the 2020 revenue profile, the picture should be clear. The poverty shouldn’t be as grinding as it appears and looks. Something is sapping the money into an abyss. Corruption, dangerous disdain for the masses by the elite class, governance lapses, diversion into private pockets and inefficient deployment are all obvious culprits that deprive the country development. But in a trickle down economy where the proceeds of corruption and abuse of office lubricates virtually every segment of society, from bankers who launder to family and community members who draw down at the bottom end, perhaps, we need to take a deeper look at the drivers of corruption and why it remains persistent.

So besides the well rehashed adverse impacts of corruption on a country, the question to ask is “where does  all  this illicit and licit money evaporate into? ” The simple answer may lie in our habits and value paradigm as a society which also includes those who loot government and private sector coffers at all levels.

Irrational behavior and lack of self control ( now recognized as a determinant of economic outcomes, and spearheaded by the 2017 Nobel winning economist, Richard Tahler ), leading to these dysfunctional outcomes may be root causes that better define us and explain the perfidious descent. Tahler ’s citation states that he won the prize for "incorporat[ing psychologically realistic assumptions into analyses of economic decision-making. By exploring the consequences of limited rationality, social preferences, and lack of self-control, he has shown how these human traits systematically affect individual decisions as well as market outcomes.". In essence, without affecting the spectrum of rationality positively, infrastructure investments may be under optimized by a society increasingly shackled by irrational behaviour. 

Like drug addiction ( which is also a multi trillion Naira hole as codeine, meth, cocaine, skunk, tramadol etc; have become pervasive); the desire to acquire vanities, satiate temporal sensory pleasures, in addition to all sorts of obscene and inexplicable ostentation, simply continue to suck resources away from the things that matter. The motivations are, simply put, often irrational, and not driven by “poverty” or ‘insecurity about the future”. In fact, these are the logical outcomes, not necessarily the cause. Greed has since morphed into avarice, and has now reached irrational proportions, and there are simply too many "crazy" examples to point to. 

The Chatham house report, titled “Collective Action on Corruption in Nigeria, a Social Norms Approach to Connecting Societies and Institutions,”said that close to $400 billion was stolen from Nigeria’s public accounts from 1960 to 1999. It added that between 2005 and 2014, $182 billion was lost through illicit financial flows from the country. Leadership over decades have failed to forge “a culture of uprightness”that the followers and generations coming behind can imbibe. Rather, It has been a culture of corruption, scandals and pomp that has relegated substance, and supplanted appearances and manifestations of wealth as the indices of societal status.

A KPMG report on Gambling in Africa, states that about 60 million Nigerians adults (18-40 years old) are into active sports betting, gambling almost N2 billion per day. Our informal economy boosted by Social media based businesses,remains largely unmeasured and uncaptured. 17 million Nigerians reportedly use drugs, and “pay for play” sexual activity aka “runs” has become a seismic trillion Naira Industry pervasive across our tertiary institutions and polluting a vital age band. Despite the unemployment narrative, small business struggle to find committed workers (even when they are ready to retrain and give skills). We have reportedly overtaken US in porn consumption (which in addition to a huge quantum of unproductive activity may explain why we expend over $5b per annum on data per annum). According to a 2011 WHO study 77% of our ordinarily beautiful dark skinned women now bleach their skin at significant cost.

Between and 2017, Nigeria and Republic of Benin (Benin in the period accounted for $599 m in fake hair imports, suggesting the bulk of this figure belongs to Nigerian consumption) expended $1.3 Billion. According to a 2016 US Dept of Agriculture study, $6 billion was expended  by Nigerians on alcohol (with 70% being local brews). We still expend about $3 billion dollars on car importations.  Data saps over $5b per annum. But the productive use component is unknown. Our ‘owanbe’s’ have attained global recognition for scale and frequency, and they do fuel a lengthy value chain from small chop suppliers to make up artists.

Our irrational desires, and wasteful habits of consumption triggers corruption and  other mechanisms to cheat the system, or one another. Often, the worst victims are the poor who have been displaced so badly that the have given up the desire to compete or fight. The tools simply aren’t there, nor the motivation. They simple settle into a status of perpetual poverty, and we happily refer to them as “ poor and underprivileged” with scant thought about uplifting them to basic minimum standards. It is as though the  validation  of  some, depends on the wretched existence of others. This impacts the economic and governance outcomes for corruption of electoral systems to depletion of development resources. 

Many citizens, who ostensibly feel the brunt, and should have the highest motivation to reject the political culture of theft and waste, increasingly don’t care much for productive endeavor, but simply want to extract money from others and from the system, however it happens. Governance flaws have diluted moral authority and today we see gangs brazenly marching through cities in a show of force. These are dangerous indicators of sitting on a self concocted keg of dynamite.

This vortex of irrational behavior eschews long-term benefits for instant gratifications at all levels, and often defies understanding, especially when conventional input output economic tools are used without factoring the extent of irrationality inherent within our society. But we know that demand shapes supply, and demand comes from the desires and preferences of a society.  If irrational, the outcomes will be irrational too. Our poverty is multidimensional, with a considerable portion adducible to self imposed ignorance, selfishness, hypocrisy, acceptance of slum pervasiveness, withered standards, and a crudity of behavior. 

Of course, a lot of thinking is going on within government especially with the decline in oil prices and the tail wind effects of the pandemic on economic well being. Now, with the potential of debt relief, elimination of fuel subsidies, the heightened impetus for ruthless elimination of leakages in Government expenditure; and many other other "opportunistic" factors, The COVID 19 situation may be a once in a lifetime window to address this critical irrationality issue through symbolic and persuasive leadership. Economic outcomes and living standards can't be higher that the average mentality and conduct of a society. All segments of society can be afflicted by the same things - irrational and corrosive behaviour, and pandemics that threaten all. Equally potent are fears of social unrest that may crystallize into reality with cataclysmic consequences, and no escape route for anyone. If  this realization can’t shift minds, I doubt anything can.

We must now shape the structure of that demand through DELIBERATE MINDSET ELEVATION AND REFORMS in consonance with infrastructure investments, that will create sustainable jobs for millions, realistic living remuneration through market driven wealth redistribution initiatives, healthcare insurance for all, identity capture for all, and long term socio economic development for ALL.

A WORLD CLASS HUMAN CAPITAL, SECURITY AND DEVELOPMENT INITIATIVE focusing on bringing educational, hospital and emergency service ( police, firestations) infrastructure to minimum world - class standards, and ensuring a credible framework to develop and certify skills. Millions of multi-skilled jobs can be provided with these sort of 'renewal' projects. We travel the world and see things built by humans and even back home, there are a handful of world -class examples that can be used as minimum standard and specification templates. The "jankara" approach to even our constructions and finishings must be eschewed. World class standards.

A PRISTINE NIGERIA component focused and transforming our communities ( Urban, peri urban and Rural) into dignified living environments form the visually dysfunctional and unhygienic urban jungles that pervade, will also go a long way in our development drive. We can’t easily breed refined and progressive minded individuals from slum like environments. The development of  elite enclaves proves that we can deliver human grade environments. We have just chosen to remain comfortable with slums, and slum bred citizens whose instincts may be honed to ultimately consuming the elites and their offspring. 

With the likely shift in manufacturing paradigms and alliances,  and the AFCFTA, manufacturing at scale can no longer wait on excuses of inputs like power. If companies like NBL, Flour Mills and many others can produce and generate billions in profits, large scale aggregated manufacturing parks can deliver environments for scale activities, in addition to an immediate government catalyzed retooling of moribund factories, that can be revived within a relatively short period – and they do abound. We can't become a dumping ground for output from factories across the world who recognize our appetites. We must push back through real productivity and this goes beyond infrastructure investments, but reaches into the realms of mindset reform through action. Trillions are depleted in that web of drugs, sex trade and alchohol addiction and others, that also fuel an apathy towards productive endeavour. These are ELEPHANTS IN THE ROOM AND THEY CAN'T BE IGNORED MUCH LONGER.

The accelerated implementation of the six - world class parks recently approved by President Buhari must become an apex priority project, with replicability as a consideration. Near urban, and hydroponic farming methods  - which are gaining ground - ought to be accelerated to ensure certain agric produce are closer to markets, consume less inputs, and also free up underutilized land space in peri-urban and rural areas for manufacturing. The time for massive focus on solar in powering manufacturing has come. We should also move from policy to action in respect of uplifting rural communities to minimum living standards , not sit comfortably with the notion that rural must mean underdeveloped, unenlightened, poor and dirty for ever. We must find some humanity within our greedy souls.

The ‘bias bunkers” must be weakened , if not decimated completely. Whilst differences may exist between diverse ethnicities, they can’t become focal points for suspicion, hatred, negative competition and division. These things weaken us, and yet, never has it been more urgent to breed a quantum of people large enough to lead, drive others, and deliver development. Every generation has a responsibility to improve on what its forebears did, warts and all; not endlessly complain, dance, slay and slide in to an abyss of entitled behavior, that mischaracterizes them, and obscures the amazing work that some of them do. Nirvana will never arrive in the midst of dysfunction and lack of collective commitment, and history is indeed replete with gory examples of societies that fell into cultures of waste, consumption and unproductivity. 

Lord Lugard opined about us as far back as 1926 as follows:

Full of personal vanity, with little sense of veracity

Lacking in self-control, discipline, and foresight.

His thoughts are concentrated on the events and feelings of the moment, and he suffers little from the apprehension for the future, or grief for the past.

·He loves the display of power, but fails to realize its responsibility... 

Perhaps the two traits which have impressed me as those most characteristic of the African native are his lack of apprehensionand his lack of ability to visualize the future."

Lord Frederick John Dealty Lugard, The Dual Mandate, pg.70 (1926)

Surely a point of shame, anger and self - awareness must come upon us to prove that we are better than these characterizations, before the water truly runs dry.