I want to tell you a story about a man called Fakunle and his friend whom we shall call Stephen. Fakunle grew up in 1950s Badagry in the days before Nigeria had its first expressway, and Lagos was still a two-day journey away from the border town. His dad had three wives and multiple children, so there was no chance of having extra resources for something like school fees. Fortunately, the Premier of Nigeria’s Western region Obafemi Awolowo had introduced a free basic and secondary education policy, so Fakunle was able to go to school and expand his mind.
After secondary school, he packed up and left Badagry to do his A-levels at the Federal School of Science (now Federal Science and Technical College) in Yaba, Lagos, where he met Stephen. Fakunle and Stephen both aced their A-levels and found themselves inundated with American and Russian university scholarship offers. At the height of the cold war, the US and the USSR were locked in a battle for the minds of the best and brightest of a newly independent Africa.
Stephen took a USSR scholarship and left to study Medicine in Hungary, while Fakunle took an American scholarship and went off to Ghana to study Biochemistry. After their programs, they both returned home at the peak of the oil boom in the 70s and walked into successful careers, complete with a house and car.
Then things started to change in the 80s. Salaries came in late; promotions took longer and became political. The word “generator” entered their vocabulary. Their kids had to go to private schools because state schools had become substandard. Bribery became standard. Physical infrastructure began to deteriorate. Both men realised that they were becoming poorer in real terms after currency devaluation.
They remembered a time when Nigeria rewarded hard work, competence and good faith. What had happened to the country that effectively guaranteed them a full ride from cradle to career? Neither of them had the answer, so they dealt with the circumstances as best they could. Stephen took a job offer in Hungary and moved his family with him. Fakunle moved his family into a GRA and spent the next 30 years working hard to shield them from Nigeria’s reality.
In 2017, Fakunle died, leaving behind five children, three of whom no longer live in Nigeria. In keeping with how he lived his last three decades on earth, his last journey from his house to the morgue took place in a private ambulance after the government service failed to show up. At his funeral, Stephen and his other friends kept shaking their heads and repeating the question, “What happened? What happened to this country?”
“The Good Old Days” of African Socialism
As you know by now, Fakunle was my dad, and all events and people described in this story are real. The sense of grief and longing for a lost country is very real. Amidst their anguish however, what my dad’s friends failed to understand was that the heady, optimistic, cash-flush Nigeria of their youth was never going to last.
Newly freed from the shackles of colonial resource expropriation and tax impositions in the 1950s and 1960s, Africa’s post-independence governments found themselves with huge pots of cash and apparently endless things to spend it on. Military Head of State Yakubu Gowon famously remarked at the height of the 1970s oil boom that Nigeria’s problem was not money, but rather how to spend it.
As a result of this abundance mindset, my dad and his contemporaries grew up with the expectation that Nigeria would always be a sort of African Saudi Arabia, with an endless supply of government funding to do everything from subsidising Nigeria Airways flight tickets to building steel mills.
As mentioned earlier, the Cold War provided an incentive for the USSR to promote communist thinking in Africa’s upcoming middle class at that time. Even if beneficiaries of Russian generosity like Stephen did not necessarily subscribe to Communism, the fact that their mere citizenship of a country called Nigeria gave them access to such privileges created a set of expectations for what Nigeria could and should do for them going forward.
As politicians generally do, Nigeria’s leaders were happy to feed this petroleum-fuelled optimism, tying down government funds into every type of recurrent expenditure one can imagine, from refined fuel import subsidies to state-owned football clubs.
What Nigeria is, and what it is not
On the surface, Nigeria is a highly entrepreneurial environment, populated by business-minded, resourceful people. Below the surface however, our entire economic structure is held up by a plethora of 70s-era government largesse that is now unsustainable to the point of becoming a national existential crisis.
Nigeria’s government interferes at all levels of the country’s economy, including agricultural subsidies, import subsidies, onerous business licensing regulations, multiple taxation, retail price controls, exchange rate controls, import and export licensing and tariffs, and import prohibitions to name just a few. For a country with a GDP of just about $500 billion, Nigeria’s government is overextended not just in financial terms, but on an operational level.
Nigeria is not in fact pursuing a socialist ideal, but is actually trying to be statist – a country that exists at the mercy of the state, instead of the other way around. Clearly, this cannot work with the world’s largest population of extremely poor people to deal with, because the government budget of barely $20 billion – a significant part of which goes unfunded – is too small to make any meaningful impact.
Rather than recognizing its limitations and getting out of the way, the Nigerian state insists that it must dictate to the economy, and the results are clear for all to see. The World Bank recently revealed that Nigeria spent N731 billion (about $2 billion) on fuel subsidies alone in 2018. That means that the Nigerian state now spends nearly 9 percent of its total annual budget on one single unnecessary recurrent expense.
Statism is incompatible with our reality
When Nigeria’s political elite began to incorporate aspects of communism in their ruling doctrine, two significant facts were ignored.
- First of all, even though colonialism was rightly seen as a result of western capitalism, decolonization did not necessarily mean ditching the economic framework of capitalism. An examination of how western countries used capitalism to achieve world leading economic results within their own countries would have served Nigeria better than an emotionally satisfying “screw you!”
- Secondly and more importantly, the USSR was an incredibly well organized and – for a while – well run industrial powerhouse, in addition to being perhaps the world’s foremost military power. Centrally planned economics could just about work for them because their government had the infrastructure to make it happen. Nigeria by contrast, is a country that has never successfully carried out a proper census – there is no comparison.
The Nigerian state simply does not have the ability to carry out the responsibility it insists on arrogating to itself, and those in power have a track record of using state power wrongly. Siting a moribund steel mill in Ajaokuta instead of Onitsha, against professional advice because of ethnic politics is just one example of a vast number of blunders made by a state that consistently overreaches itself. Our government needs to accept that it does not have cash like the Saudis or central planning ability like the Chinese. It is nothing more than your bog standard African state struggling to pay its staff every year.
From the layperson’s point of view, there also needs to be a realization that Nigeria is NOT “rich.” Nigeria is actually one of the poorest countries on the face of this planet. A lot is often made of the two million barrels per day worth of oil revenue that come in, but Nigeria has a population of at least 150 million people. For the government to afford to provide services worth just $1,000 to every Nigerian citizen annually it would need at least $150 billion – about 7 and a half times our total federal budget.
Nigeria’s primary economic problem is not “corruption” as a good number of populists and semi-literate talking heads would have us believe. The main problem is poverty. Empowering the state to further police how the existing pie is shared will not in any way change the reality that the pie is too small, and we need to bake a bigger pie.
The solution to Nigeria’s economic quagmire is for the state to get out of the way of innovators, job creators and investors so that they can get to work baking a bigger pie, instead of fighting over who allegedly stole what part of the pathetically small pie we are forced to share. The dollar ocean of the 70s is gone forever, never to return, so the government needs to let go of its nostalgia of being some sort of sugar daddy. Now more than ever, the state needs to shrink itself and promote the economy instead of the other way round.
There are fortunes several times the size of crude oil in everything from remote outsourcing to secondary production. It is the state’s duty to enable such innovation, rather than shut it down and try to be everywhere at once, effectively insisting that everyone must be uniformly and earnestly poor. The status quo can only encourage the so-called corruption we hear about so much.
Small Government Does Not Mean “Atlas Shrugged”
A feature of the conversation around this topic is the false premise that Nigeria faces a choice between the death-by-a-thousand-cuts status quo and a state of nightmare capitalism where the rich feast on the poor. Stoked by Abuja’s old populists in new clothing, Nigeria’s everlasting class war has taken on the false appearance of being a zero-sum game between continued survival of “the masses” and the unrighteous profiteering of “the rich.”
The point has been made earlier that regardless of how much the government extends itself to interfere in Nigerian markets, the bogeyman of elite capture is already very much here with us – petroleum marketers who benefit more than anyone else from fuel subsidies for example, are very much members of “the rich.” Even more important however, is the point that reducing government interference in Nigeria’s economy does not mean condemning Nigeria to a becoming an unregulated libertarian fantasy from the pages of an Ayn Rand book.
As Cambridge University Economics professor Ha-Joon Chang famously argued, there is no such thing as a “free market,” because economics is inherently political. Even the U.S., which is regarded as the standard-bearer of capitalism, has extensive social welfare regulations covering education, healthcare and employee rights. Conversely China, which is a Communist state on paper, has one of the most business-friendly regulatory environments in the world. Both countries have tweaked their economic ideologies to fit their own realities and it has worked for them.
If Nigeria intends to achieve better results than the past half century, we need to find our own midpoint between the myth of perfect socialism and the myth of a completely free market. This midpoint would clearly prioritise expansion of the ‘pie’ by enabling innovation, investment and business, while focusing government intervention on education, research, healthcare and infrastructural investment.
To this end, the Nigerian state needs to establish once and for all what Nigeria’s ideology is. In a recent conversation with a respected friend and mentor, Dr. Richard Ikiebe, he made the point that every successful nation has an economic and social ideology that is clearly expressed in its constitution. Thus everyone knows for example, that the U.S. is a capitalist state with socialist extensions. China is a communist state with capitalist extensions. Both are now the most powerful countries in the world with GDP of $14 trillion and $11 trillion respectively, so clearly they are doing something right.
What is Nigeria’s ideology? What is our national purpose, and how do we intend to achieve it? At what point will the Nigerian state consult the people to establish what we want and how we want it as a people? Does our constitution – written in private by a small group of people – really represent the thoughts and aspirations of the 177 million people in Nigeria’s 6 geo-political regions? That ultimately leads into a much wider conversation about the continued existence of Africa’s most important country.
David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. His work has been featured in the New Yorker Magazine and the Washington Post. Hundeyin is a US Department of State nominee for the International Visitors Leadership Program (IVLP).