The parable of the prodigal son (a guide to economic development)

You've probably heard the parable of the prodigal son a couple of times, so I won't make you read the whole thing (however for those who want to, you can find it here). However I will share a quick overview, before going into my interpretation, which as the title shows, focuses on economic development (one of my favourite topics). So a man had two sons. The younger one decided to take his fate into his own hands, and asked his father for his share of the inheritance, while he was still alive. People in the village would probably have gasped - what did the boy know about managing wealth? Did he really think he could make it on his own in the cold, hard world, without his father's support and guidance? Villagers' doubts aside, he collected his share and went out into the world to try his luck. Well, he failed, miserably too. But he learned from his failure, swallowed his pride, and went back to his father to ask for a job. His father would have none of that, and instead threw a lavish party for his son who had returned home.

Let's pause for a second before getting to the part about the older brother. The prodigal son showed initiative. Yes he was brash, but he was willing to be his own man. He was no coward, this prodigal son. Stupid, perhaps, but no coward. He saw no reason why he could not do what he had seen his father do, i.e. make money and manage it. And he had the guts to ask for what he wanted. And he got it! He failed, but he was humble enough to face reality, and made his way back to his father to learn what he thought he knew when he left. I can easily see him becoming a wealthy business man a couple of years after returning home, the humiliation he suffered in foreign lands prompting him to learn all he could from his father while he was still alive. The prodigal son displayed certain traits: believed in himself and his abilities; considered it posssible he could do as well as his father; asked his father for what he wanted; struck out on his own; faced reality when he failed; humbled himself and returned home; learned all he could to ensure he never suffered again.

Now let's discuss the older btother. Interestingly, he doesn't really appear till later in the parable. We know he exists from the very first verse, but he seems to remain in the shadows till his brother comes back home. It's almost as if he is defined by the actions of his younger brother, the brash one. So, he's retuning from the field where he's been working all day with the slave hands. He doesn't even know there is a party going on at home. No one has sent for him. No one has informed him. He has to ask a slave hand why there is a party going on. That says a lot about him, and his position in the hierarchy. I would go as far as saying he saw himself as more of a slave, than a son. Listen to what he says, "Look how many years I've stayed here serving you, never giving you one moment of grief, but have you ever thrown a party for me and my friends? Then this son of yours who has thrown away your money on whores shows up and you go all out with a feast!". His view of himself is right there, isn't it? He sees his position as serving his father, and not giving him a moment of grief (interpretation - not making demands, and respecting his own needs, which he surely had). Then there's the expectation that his father should have rewarded him for his good behaviour by throwing a party for him and his friends. Listen to how he even describes his brother, "this son of yours who has thrown away your money". Did you catch it? He said "your money", not "our money". He still saw himself as having nothing, with everything belonging to his dad. His dad's response shows the older son was totally mixed up - "son, everything that is mine is yours!" Of course it was. It had always been, but the older son could not see that, and the younger one did. 

Now let's bring it home. I saw some pictures of Victoria Island flooded after the most recent downpour. There was a particular picture in which a car that had been parked was almost covered by water. Then I remembered how I had often seen live power cables dangle from poles, and give off sparks. I just imagined that happening with water everywhere. I'm sure you get the picture. Then I started to wonder why things like this happen in Nigeria. What does it take to clear out drainage so water can flow? What does it take to fix power cables so they don't dangle? We do not see things like this in the developed world, so why are they so rampant in Nigeria? I argue that it is because we think more like the older son, than the prodigal one.

Remember the traits of the prodigal son I listed three paragraphs ago? Well, the West (and increasingly, Asia) displays most of them. They believe in themselves. They seriously consider the fact that they can do what God/nature does (China is said to have used new technology to stop rains from falling at the last Olympics). They insist on getting what they want, and they are willing to go it alone to achieve their goals. They face reality when things don't work out, and are humble enough to go back to the drawing board to get answers. They are always asking questions, always conducting research, always learning. Yes, at times they show the less than stellar traits of the prodigal son: arrogance, thinking it's all about them, depravity, etc. But hey, no one's perfect, least of us we lot in Nigeria. We hide behind a moral facade, but we all know that we can be as depraved as the next man (which I am sure was the same for the older son, who probably had desires like his brother, but just knew how to hide them). Unfortunately for us, we also share many other traits with the older son: we expect God/nature to do things for us, to reward us for our worship, our behaviour, our tithes. We are too timid to demand for what we really want as a group, which explains why our leaders can steal and do whatever they want, and nothing happens. We do not see that the wealth of the world is ours as much as it is the West's, and we seem comfortable being fringe players. Like the older brother, we are defined by the actions of our younger brother (if you believe that life started in Africa). They tell our stories for us (for example, the Broadway show "Fela"), define us, and determine what we can or cannot do (the West's influence in choosing African leaders has been well documented, and Wikileaks showed how we are still being manipulated behind the scenes).

So my take is that until we change our attitude to God/nature, we will remain like the older brother - on the outside while the economic party between the West and Asia is going on. How do we change this? We have to stop living in deception. We have to honour our desires and wishes. We have to ask for what we want (improved quality of life for our people) and be willing to take risks to secure it. When we fail (and we will fail every now and again) we have to face reality, learn from our mistakes and move on. We have to conduct research to discover the secrets of the world hidden in plain sight, and apply them to solve our problems. God will not come down from Heaven to clear blocked drainage and reattach dangling power cables. He's provided all we need to do those things. It's time we stepped up to our responsibility to exercise dominion. And if we're not ready to, we'll remain slave hands to our younger brothers.

The case of The Speaker's 10 billion (part 6)

Bankole arrested (see details here).

A step in the right direction, but I am not rejoicing yet. Remember Tafa Balogun? He stole billions (see here for full list of charges), yet spent under a year in prison (see here). He is now a free man, enjoying the remainder of his loot that the EFCC was unable to trace.

So kudos to GEJ for stopping Bankole from eloping (he was meant to have fled the country this morning). But I reserve my applause until this case reaches its logical conclusion, with all the funds returned, Bankole jailed and stripped off all honours, and checks and balances put in place to ensure this type of thing does not happen again.

Let's see how this latest episode of the ongoing soap opera in Nigerian government (which I have titled "The lifestyles of the corrupt and infamous") unfolds.

A day out in the park...

I'm sitting on a bench
overlooking a valley
with shadows of clouds
moving across the green fields below
where I see a tree here, there
and an orange roof in the distance
it's a beautiful sight

A rabbit darts through the shrubs
a stone's throw from me
and birds are chirping
on either side
of the bench Peter built
which I sit on
I know his name
for he left his signature
on the back rest

I look around
different shades of green
lime, rusty, brown
if this isn't bliss
I don't know what is

A golden retriever walks lazily behind me
some meters ahead of its owner
I look away from the handsome dog

and see a beautiful brown butterfly
dancing between my legs

Such peace
such rightness
till a bloody jet flies overhead!

Sanusi was right, forget the seven-point agenda!

No disrespect to the late president, but the seven-point agenda was a lot of hot air. I sincerely hope GEJ does not continue the farce. I wonder why politicians over-complicate things that are relatively simple and straight-forward. Could it be that they themselves do not understand the issues? Or is it that they think they have to sound smarter than they are, for our benefit? 

A simple example will drive home my point. President Yar'Adua was a family man. While alive, he was responsible for making sure his wife and children had food to eat, clothes to wear, a house to live in, etc. How would he have known if he was doing a good job? Two options come to mind: 1. Compare aspirations to actual; 2. Compare actual to what contemporaries are doing. Nothing complicated about that. He would have set up processes and structures to ensure that he met his aspirations or outperformed his peers. He would have decided on jobs to take and investments to make with that singular purpose in mind. Would he have needed a seven-point agenda? I think not.

Nigeria does not need a seven-point agenda, a Vision 20: 2020, or any other similar government proclamations, which the authors, as well as the citizenry, know are not worth the paper they are written on. What we need is development. Plain and simple. We need our leaders to think about the country the same way they think about their families. We need our leaders to care enough about Nigeria's international reputation, and be angered that we are poster boys for lack and under-development. Am I asking for too much?

Let's return to the late president. Had he approached the management of Nigeria's affairs as he surely approached the management of his family's, what might he have done differently? Well, what would have been a good aspiration to have for his "children"? A per capita income of $10,000, which would put us at about the same standard of living as citizens of Poland, Lithuania, St. Kitts and Nevis, Libya, Chile and Seychelles. Don't laugh, there are millions of Nigerians who would gladly move to any of these countries (even Libya, with all the fighting going on!).

To achieve this target per capita income, the president would have had to find ways to get per capita GDP up to $10,000 from its present $1,118, in essence growing Nigeria's GDP to $1,400 billion ($10,000 for each of the country's 140 million people). Let's put that figure in perspective - our documented GDP for 2009 was $173 billion. Growing our GDP by 800% would put us on par with Spain, Canada and Russia. I think you would agree that these countries would be more to the liking of most Nigerians, than those listed in the last paragraph. The GDPs of the three countries place them in the top twelve economies in the world, and aside from Russia, these countries have significantly lower populations than Nigeria, meaning per capita income figures are much higher than the target suggested for Nigeria (Spain's is $31,774, while Canada's is $39,599).

Now comes the hard part - what could Umaru have done to achieve this level of development? The same thing the governments of the developed countries do:

1. Provide an enabling environment for individuals and businesses to add value locally and globally - invest in health and education (especially research), provide infrastructure, ensure access to credit so people can purchase goods and services.

2. Use political clout and muscle to ensure individuals and businesses have access to international markets - a country's citizens should be able to work anywhere in the world, if they have the right qualifications. A country's businesses should also be able to compete globally. Nigeria's reputation is not helping in this regard!

3. Get out of the way - ensure systems to foster development are in place, do not change policies at whim!

The developed world has followed this formula to a tee. That is why we have American oil companies running our oil sector. This is why we have foreign companies extracting our minerals. Also explains why we have foreigners managing our domestic airlines. Few people in Nigeria thinks twice about hiring a foreign firm or a foreign national to do important work in the country. Why? Because experience has shown they are likely to be more productive and more trust-worthy. Which explains why we have Indians running some of the biggest companies in Nigeria today (Globacom, being a key example).

Until Nigeria is conducive for business, as well as self-development and self-expression on an individual level, we will not see the kind of growth that will lift the bulk of our people out of poverty. Can you imagine a Nigeria with an economy the size of Canada's? What would major cities like Lagos and Abuja look like? You would see diverse businesses in key high-growth sectors (ICT, finance, medicine, etc.), a functional postal system, variety of on-line retailers, an abundance of private-sector owned buildings for commercial and residential purposes, a functional ports system, an active tourism sector, luxury goods retailers in high-brow areas, etc. 

The picture I just painted is similar to what you see in developed countries, isn't it. Why can't it happen in Nigeria? Largely because the private sector is not productive enough and also does not invest enough, and also because the government discourages it from doing either. It's time we killed this dysfunctional co-dependency, and let each sector do what it does best, as best as it can. That should have been Umaru's focus. That should be GEJ's focus. One agenda, one focus, less hot air.

Two men on the tube...

They're both greying
Asian, clearly
Exchanging banter
After a hard day's work
An occasional smile
A responding twinkle
The youth of their hearts
Belied by the lines on their faces
Their hands are rough
(they're labourers, you see)
But their eyes are soft
Just like their hearts
One complains about his rough hands
Bruised after a day of carrying bricks
The other shows his own cuts
And then reaches in his bag
To bring out a tube of hand lotion
The message seems clear
I lost myself in our chat
And forgot about my hands
Till you showed me yours
Two men on the tube
Oblivious to the world around them
Only they know where they're going
And that's okay, very okay
Because they're together, neither is alone

What's in my head?

You can't see it
Whatever it is
You can't tell what I know
Where I've been
Just by looking at me
Am I smart? Well read?
Am I "slow"? Can you tell?
Let's say I'm a book
What does my cover tell you?
Is my cover my skin?
Is it my clothes? My physique?
Have I read that book?
The one you hold so high
For all to see?
Have I met the author?
Read all his books?
You'll never know
Just by looking at me
And I'll never know
If all I've suggested is true
Just by looking at you
We're even then...

The case of The Speaker's 10 billion (part 4)

Yesterday’s post marked the halfway point in this series, so I think it makes sense to briefly summarise the main points I made in prior posts, before going on to the topic for today, namely Nigeria’s challenges in, and potential for, economic development and job creation. 

I hope by now I have been able to convince you of two points: the amounts usually involved in government corruption scandals in Nigeria are inordinate, even by global standards; and the spread and magnitude of corruption is largely due to an implicit agreement between Nigerians and their government, that allows the latter to run its own oil-based “parallel universe”, fuelled by private oil companies (couldn’t resist the pun). Based on the latter point, I propose that Nigeria has three sub-economies, as follows:

a. Sub-economy #1 - oil-based, and part of documented GDP. Revenue largely from oil companies. Expenditure determined by government.

b. Sub-economy #2 - non-oil based, and also part of documented GDP. Revenue and expenditure determined by hard working Nigerians. 

c. Sub-economy #3 - non-oil based, but undocumented. Similar to sub-economy #2 in terms of revenue and expenditure.

Sub-economy #1 gets the most attention in public discourse, yet at best accounts for only 15% of documented and undocumented GDP. As a nation we have become so fixated on the distribution of government revenue (read, oil revenue), to the extent that we have let it take on an importance that it may not deserve; we seem to be more interested in how this particular cake is divided, than in making all cakes bigger. And in so doing, we have also given our government a lot more credit than they deserve for our development. The truth is, our government, even if it were about to do away with corruption today, cannot finance the public goods and services we need on its own. According to the CBN, in 2009, all three tiers of government earned NGN 6,263 billion, and their aggregate expenditure was NGN 7,258 billion (the government financed the deficit largely from domestic borrowing). If you divide total government expenditure by 140 million (the figure for Nigeria's population), you get a figure of about NGN 52,000. This figure represents what each Nigerian could have gotten in 2009, had the private oil companies by-passed the three tiers of government, and shared the oil revenue due to the nation amongst all of us. It doesn't amount to much, though, does it? And your personal experience probably tells you it costs much more than NGN 4,300 a month to run one's own "local government" in Nigeria (diesel for the generator alone used to set me back about 5 times that amount).

So what do we do? Or better yet, what would I do, if I had the ability to change things? My over-arching approach would be to strengthen sub-economies 2 and 3, on a state by state basis. I would also seek to reform sub-economy 1, to enable it provide essential, foundational public goods and services (electricity, security, education and water, for example) at national and state levels. Should such a reform prove unsuccessful (wouldn't hold my breath on that one), I would bring in private businesses to provide the essential public goods and services to Nigerians for a fee, and levy a tax on sub-economy 1 (an at-source tax on oil companies) to generate revenue to subsidize payments made by Nigerians. That last bit will likely never happen!

But strengthening the truly productive sub-economies is feasible, and it makes good sense. We have a large population that needs food, clothes, fuel, housing, entertainment, etc. It is a shame that we rely on imports to satisfy some of our most basic needs (the importation of toothpicks and pencils come to mind, despite the abundance of wood in the country). Our businesses also have access to other West African markets, which have similar needs, and are likely having these needs being met more by Chinese companies, than Nigerian ones. Take Ghana, for example. China accounts for the highest percentage of imports at 17% of total, while Nigeria comes second with 12% (though I suspect some of the goods from Nigerian-based businesses are imported from China, and other countries, for onward delivery to Ghana). In Benin and Togo, China accounts for 36% of imports, while Nigeria’s imports are less than 4% of total in each (figures for Nigeria don't even register on the data source I checked - the CIA Factbook). 

For Nigerian businesses to be strengthened to meet domestic and foreign needs, they require an enabling business environment which provides adequate infrastructure, access to capital, an educated workforce, and a functional legal system, to name a few critical requirements. The lack of these has contributed to Nigeria being ranked as number 137 (of 183 countries) in IFC’s Ease of Doing Business national rankings. These ranking are only for businesses in the formal sector, so one can imagine how much tougher it is for businesses in the grey economy (sub-economy 3), who have peculiar challenges of their own, because they are on the fringes of the formal economy. Hence they tend to be limited in their ability to raise capital, obtain insurance services, and secure other inputs that formal businesses can gain access to. The micro-finance banks were set up to address the capital needs of this sub-economy, but only time will tell what their impact has been.

A strong business sector would also help with another problem Nigeria is facing—high unemployment. According to the World Bank, 25% of Nigeria’s working age population (people between 15 and 65 years of age) are unemployed. Of the 75% that are employed, 65% are self-employed, and 10 percent are in wage employment. Of the 10% in wage employment, about half are in the public sector (recall the point made in yesterday’s post about the fact that the Federal Government alone employs over one million people). Hence even the population statistics show the relative imbalance in the sub-economies, as sub-economy #1 is unlikely to account for more than 6% of employment (including employment in the public sector, as well as direct and in-direct employment in the oil industry), while it accounts for about 15% of GDP. But I digress. Having an environment that enables private enterprise will allow businesses in the formal and informal sectors to create jobs, which will go some way in reducing the likelihood that one out of every four adults you and I meet in Nigeria will be unemployed, or worse, unemployable (more on that tomorrow). 

In closing let me share the story of Foxconn, a story I love to tell to anyone who will listen. You may have never heard of the company before, but you have surely heard about the goods it produces – iPods and iPhones, to name just two. The Taiwan-based company was founded in 1974 with US$7,500. Its mission was to provide low-cost electronic components to what was then an emerging electronic products market – imagine what the computer industry looked like back then (more info here). Thirty-five years later, Foxconn now ranks 112th on Fortune's Global 500 list, coming out ahead of Deutsche Bank and Microsoft (you can see the 2010 rankings here). Bloomberg estimates are that the company has 1.3 million employees across all its businesses (see for yourself here). This company employs almost 5% of Ghana's population, and 1% of Nigeria's. Talk about impact! How did Foxconn do it? It saw an opportunity long before others did (this shows the importance of research, which I will discuss tomorrow), and it was within an enabling environment that allowed it to exploit said opportunity. 

For Nigeria to develop, stories like Foxconn's have to become the norm, and not the exception (as is the case with the likes of Dangote, Glo and Oando, today). The only way our economy can grow and create jobs for our labour force of over 45 million people (11th largest in the world, by the way) is if more businesses succeed in adding value domestically, regionally and globally. And these businesses need an enabling environment to succeed. But don't look to the likes of Mr. Speaker to help with that; they are too busy building their retirement nest eggs, so their great-grand children's great-grand children will still be living off the interest on the capital they are stashing away today.