“Premium on Political Power” - Nigeria and the unproductive craze for political power

We are intoxicated with politics. The premium on political power is so high that we are prone to take the most extreme measures in order to win and maintain political power, our energy tends to be channelled into the struggle for power to the detriment of economically productive effort, and we habitually seek political solutions to virtually every problem. Such are the manifestations of the overpoliticization of social life in Nigeria - Late Professor Claude Ake

The eminent professor's quote, although almost three decades old, still rings true in the Nigeria of today. Since he spoke those words the political parties have changed, some of the actors in this political drama of shame have also changed, the styles of the Babarigas and suits have changed and even the internet and mobile telephony have also come to change the way we live and communicate. However, one factor in our lives still remains as constant as the Northern Star: many Nigerians still continue to regard the pursuit of political power - either through a ballot box or the barrel of a gun - as a "do or die" affair entirely devoid of principles and focused solely on self-aggrandizement, preservation and crass opportunism.

Although elections are keenly contested in every country with considerable sums spent on campaigns, Nigerians and other Africans have taken them to a whole new level and have proven to be only too willing to shed blood over the results. I have often wondered why this is the case, and the simple answer is: Government is TOO DAMN LUCRATIVE. The most lucrative line of work in Nigeria is not financial engineering, neither is it biotechnology or some other “esoteric” endeavour, but public “service”. The quickest and surest way to riches does not involve innovating to bring about new inventions, business models or even entire industries as we have seen developed world tycoons do, it simply requires an election to an executive or legislative post (executive preferably as you have control over budgetary spending and security votes).

I have therefore come to the conclusion that the best way to infuse some sanity into Nigerian and African politics and break the vicious cycle of violence that trails elections is to drastically reduce the size, functions and revenue streams of our governments. I am convinced that our politicians will not become less rapacious and vicious simply out of the kindness of their hearts, they will do so only if there is little or nothing for them to embezzle and by snapping the arteries that feed the great vampire squid called the “political class”. One tested way of blocking these “arteries” is Privatization: Nigeria and other African countries need to accelerate the pace of their privatization programmes and ensure that every “State Owned Enterprise” is auctioned off. I don’t care who they are sold to or what prices they are sold for: although I would be glad if they are sold at fair valuations to competent and credible organisations but that isn’t even a deal breaker for me. The critical point is to ensure that these companies cease being “wards of the state” with business operations existing solely for the enrichment of political party members.

Many Nigerians can still remember a time when the largest banks in the country were majority owned by the Federal Government, with many politicians – and military apologists – coming to regard the chairmanship and directorships of such banks as nothing more than “jobs for the boys”. The board members were making out like bandits while the banks were underperforming and neglecting their desired intermediation role in the economy, thereby hurting the very taxpayers that ended up subsidizing their inefficiencies. As if that was not enough we had to endure decades of import license regimes – our own insidious version of the Indian “license Raj”, which created black markets through which politically connected people made good money from just auctioning off these “pieces of paper”. As if this was not enough to test the patience of the ever long-suffering Nigerian populace, obtaining an amenity as basic as a telephone line became a jostle for supremacy as only people close to the powers that be could avoid a waiting list that was many years long. Now most people can just walk across their homes, buy a SIM card and be instantly connected for less than a thousand naira and I am sure nobody bothers to be friends with the district managers of NITEL (the state-owned company that has now lost its telecommunications monopoly)

Given the near eradication of the above mentioned absurdities, one will be tempted to declare victory and believe that we have climbed out of the abyss. However, this is far from true as the same disease is manifesting though different symptoms. Fertilizer distribution in the agrarian communities of Northern Nigeria remains a key avenue for patronage, with many fertilizer distribution lists closely approximating the membership lists of the political party in power. I still struggle to understand why the Federal and State Governments should concern themselves with importing and distributing fertilizer? This is something that can easily be left to the private sector with market forces ensuring that “rent seeking” middlemen are cut out with the farmer assured of constant supply at competitive prices without having to belong to the party in power. Electric power is another issue, as long as PHCN retains the effective monopoly for generating, transmitting and distributing electricity, Nigerians will continue to suffer the near-total absence of power while politicians use the Company as a time-tested and dependable avenue for patronage. Every year billions of dollars will be spent on generating plants, building transmission lines and buying transformers yet little discernible progress will be made in the electricity situation. The simple solution is to get these assets out of the government’s hands, private concerns will run it more efficiently and deliver reliable electricity to consumers at a fraction of what it will cost the government.

If Dr. Jonathan seeks to write is name in gold lettering in the annals of Nigerian history,, he would have to tackle corruption head-on and the best way to start is by instituting an aggressive privatization plan to sell off every concern that is not directly related to ensuring a social safety net and providing security law and order. I believe strongly that politicians in Nigeria - and Africa in general - would not get on the “straight and narrow” simply because it is the nice thing to do, they will only do so because of structures that constrain what can be mismanaged and misappropriated. It’s high time we starved these “great vampire squids” of blood!!

Electricity in Nigeria: Light at the end of the Tunnel?

“It is not written on the face of Nigerians that thou shall not have reliable electricity” – Prof. Bart Nnaji.

The above quote is from Prof. Bart Nnaji, professor of robotics, former Minister of Science and Technology, power sector entrepreneur and most recently the man charged by Acting President Goodluck Jonathan with delivering a new power sector blueprint. Prof. Nnaji’s statement summarises the frustrations felt by many Nigerians regarding the power situation in Nigeria and the attendant negative impacts that the power sector has on the Nigerian economy.

If the “Olduvai Hypothesis” statement of electricity being “the lifeblood of civilization” is true, then Nigeria must still be in the stone age with our businesses and households existing as though Thomas Edison was yet unborn. Our electricity sector is one of the worst in the world and is more reflective of a post-conflict society rather than that of a country that claims to be “the giant of Africa” and whose politicians are quick to state an ambition to be one of the top-20 economies in the world by the year 2020 (i.e. “Vision 20-2020”). Many economists agree that the parlous state of electric power supply in Nigeria is fully responsible for knocking one or two percentage points off our GDP growth rate as the most elemental of businesses, such as barbershops and photocopy centres, have to generate their own electricity and be left at the mercy of an equally precarious petroleum products supply chain. I firmly believe that the Nigerian economy will be set for unprecedented growth once businesses are liberated from the yoke of a power sector which has remained moribund despite billions of US dollars in government spending.

The key, in my opinion, to revamping the sector is not more government spending but a near complete liberalization of the sector. We must apply market-driven best practices to the power sector and fast track the unbundling, commercialisation and eventual privatisation of the PHCN. Market forces must be brought to bear in every aspect of the electric power value chain right from the gas supply infrastructure to the last-mile to the customer. Nigeria must be one of the few countries in the world in which gas-fired power plants will be fully completed and commissioned without the gas supply infrastructure to the plant sorted out. We must have a couple of hundred megawatts of electricity generation capacity idling because there is no gas supply to the plants, in a country ranked 7th in terms of proven natural gas reserves in the world. The answer is simple: the Oil companies would not invest in the domestic gas gathering infrastructure until the gas purchase contracts are at economically competitive prices which will ensure that they recoup their investments with a decent return on invested capital. The Federal Government can threaten all it wants but the honest truth is that domestic gas supply will remain poor until the gas supply arrangements are at market rates.

Secondly, the government must get out quickly from existing plants as well as those under construction or even contemplation and sell them to private operators. Most Nigerians above the age of 20 can vividly remember the pre-GSM era when NITEL officials were demi-gods who needed to be bribed, begged and even fed to fix lines that were disrupted due to the organization’s own inefficient billing system. I firmly believe that had NITEL kept its monopoly and the Federal Government pumped in enough money to rival all the investments by the various GSM companies to achieve our current 67 Million active lines, we would still not be able to check our account balances and we may never be able to make any calls on weekends when NITEL officials will want to spend time with friends and family. Anyone who thinks I am exaggerating should check the last time he saw someone make a phone call on the Mtel network ( NITEL’s GSM subsidiary).

Distribution Companies should be privatised quickly to competent private operators who will seek to profit by ensuring that the little electricity we generate gets to the consumer and is not wasted due to the inefficiencies of people who will complain of a lack of ladders. Generation Companies should be sold to profit motivated people willing to negotiate gas supply contracts at rates that will ensure that thermal gas plants do not turn to mere architectural masterpieces. Furthermore, these Gencos will also sign agreements to supply electricity to Distribution Companies with Service Level Agreements which will attract penalties when the terms are contravened. These investors will ensure that multi-million dollar turbines purchased are not left to rot in the ports, incurring demurrage for 4 years!!. Finally the National Grid, due to its sensitive nature, should remain under government control but with management and operation outsourced to a competent international firm whose compensation shall be transparently tied to the performance of the grid. Even the notion of a single National Grid should be also up for debate, why can’t we have multiple grids? Why must a Generating Company in Delta State seeking to sell power to the Port Harcourt distribution company have to go through a National Grid Station in Osogbo, Osun State?. We can break the grid into manageable chunks and get on with giving Nigerians electric power.

Will all this market determined rates lead to higher tariffs? You bet it will! My response to that is that the current PHCN tariff is artificial, Nigerians currently pay multiples of it by way of very expensive self generated electricity. The cost of small scale diesel-generated electricity, the main power source in Nigeria, is many times higher than any tariff a commercially minded electricity utility will charge. The government may choose to subsidize commercial tariffs over a period of time using some of the proceeds of the commercialisation and privatization programme. However, I think many corporate bodies and manufacturers will gladly pay higher fees, even in the absence of subsidies, as they will be spared the the capex of power generators and the recurring costs – and headaches – of purchasing diesel. I am sure MTN will be glad to stop maintaining 2 diesel generators per cell site and avoid its over N700 Million monthly diesel bill.

To deliver on these goals, the government must strengthen the regulatory capacity of the electricity sector’s regulator: Nigerian Electricity Regulatory Commission (NERC) to ensure that the reforms are carried out and the system works as envisaged.

Nigerians are one of the most enterprising people on planet earth and they will do much more with reliable electric power supply. I hope Acting President Jonathan writes his name in platinum by devising and executing a plan that rescues us from an electricity sector that has subjected many to subsistence living and exposed the nation to ridicule.