Opportunity Knocks
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SPECIAL REPORT NIGERIA June 20th 2015 Opportunity knocks 20150620_SRnigeria.indd 1 09/06/2015 11:03 SPECIAL REPORT NIGERIA Opportunity knocks Having consistently failed to live up to its huge potential, Nigeria CONTENTS now has a rare chance to turn itself round. Jonathan Rosenthal assesses its prospects 3 Population We happy few ACKNOWLEDGMENTS “CHANGE”. THE ELECTION-CAMPAIGN slogans ofthe All Progressives Congress (APC) emblazoned on large billboards across Nigeria in March 4 Politics Apart from those mentioned in the Miracle in Abuja text, the author is indebted to many were lighton policyprescriptions. Nigeria’smain opposition group atthe others, including: Alim Abukakre, time, and now its governing party, offered a simple promise: it would be 5 The economy Samuel Adenekan, Fatima Akilu, bound to be better at governing Africa’s most populous nation than the After oil Diezani Alison-Madueke, Timi Austen-Peters, Olufemi Awoyemi, incumbent government of Goodluck Jonathan and his People’s Demo- cratic Party (PDP). “A lot of people were in the anybody-but-Jonathan 6 Nigerians abroad Miiguel Azevado, Attahiru Bafarawa, Secret weapon Yaliafa Baga, Roddy Barclay, Malek camp,” says a prominent Nigerian businessman. Yet in the days before Bou-Diab, Alan Cameron, Osita the vote on March 28th, amid fearofviolence and talkofanother military 8 Infrastructure Chidoka, Paul Clark, Issam Darwish, Peggy Diby, Darnesh Gordon, Tom coup, many Nigerians would have been happy just to see a peaceful out- Can’t spend, won’t spend come. The previous election in 2011, Nigeria’s least violent in recent years, Hansen, Yemi Kale, Okendo Lewis 9 Corruption Gayle, Mukul Mathur, Tukur Muham- still claimed some 700 lives in outbreaks ofviolence across the north. The only thing that works mad Baba, Kingsley Obiora, Isoken So Nigerians’ expectationswere limited, which made the latest elec- Ogiemwonyi, Oluseun Onigbinde, Temitope Oshikoya, Bolaji Osunsa- tion all the more remarkable. In the face of vigorous attempts by both 11 Security nya, Andrew Pocock, Clifford Sacks, parties to rig it (with the PDP seemingly somewhat better-resourced and Keep it calm Simon Shercliffe, Gbassey Tarawali, more successful at it), Nigeria’s independent electoral commission pre- ¢ £ ¡ Rak erma and Nell Whitehead. sided over a vote that was the country’s freest and fairest in decades and 13 The north Thanks are also due to the many Down on its luck people who preferred to speak could broadly be said to reflect the will ofits people. anonymously. More significant still was the result. The election of Muhammadu 14 Buhari’s chances Buhari, a formermilitary strongman, marked the first time in Nigeria’s 55- Can he do it? A list of sources is at yearhistory as an independent state that a rulingparty was ousted by the Economist.com/specialreports ballot, not the bullet. After being governed by military dictators inter- An audio interview with the author is at spersed with elected politicians (see chart, next page), Nigeria confound- Economist.com/audiovideo/ ed the world by showingthat a fragile democracy had taken root. Among specialreports the most surprised were leading figures in the PDP, which had held pow- 1 The Economist June 20th 2015 1 SPECIAL REPORT NIGERIA ruption is rife. A country that should be the region’s bread- basket cannot even feed itself. It ought to be Africa’s biggest oil and gas producer, yet it suf- fers crippling fuel shortages and the whole country pro- duces only as much electricity as a single medium-sized Euro- pean city. And even such economic growth as it has achieved in re- cent years is now under threat. Lower oil prices will reduce growth by about one-third this year. They will have an even greater impact on the govern- ment’s finances, which still de- pend largely on oil, trimming its revenue by almost 40%. Many of Nigeria’s states are bankrupt, and the new gov- ernment has inherited mas- sive unfunded liabilities. Worse, an insurgency in the north has claimed about 20,000 lives and forced some 1.5m people from their homes. Just a few months ago Nigeria seemed to be at risk of frag- menting. Most of three states in the north-east, Adamawa, Borno and Yobe, covering an area about the size of Belgium, were underthe control ofBoko Haram, a jihadist group bent on murdering and raping its way to the establishment of a self-proclaimed “caliphate”. A siege of Maiduguri, the capital of Borno state, and fighting in its streets in January raised the 2 er since the end ofmilitary rule in 1999, successfully rigged every prospect that it might fall. The loss of a city of almost 2m people election since and fully expected to do so again. would have forced Nigeria’s army to cede much of the north to The change in governmenthasbroughta newsense of opti- the jihadists. mism to a country that has generally failed to live up to its enor- The turnaround has been extraordinary. An offensive mous promise. The one bright spot in recent years has been Nige- against Boko Haram that got under way in February has driven ria’s rapid economic growth, averaging over 7% a year over the the militants from most big towns and pushed them back into a past decade, making it one of the world’s fastest-growing econo- few forest and mountain redoubts. Mr Buhari, who enjoys wide mies. Last yearthe country’s statisticians recalculated its GDP fig- respect within the army, has promised to pursue this campaign ures to take account of new industries such as mobile telecom- with vigour. His asceticism and intolerance of corruption were munications and discovered that it had become Africa’s biggest on display even before his inauguration. One of his first orders economy, ahead of its main economic and geopolitical rival, wasthathismotorcade should obeythe rulesofthe road and not South Africa. inconvenience other drivers by blocking crossroads so that he Yet the benefits of that growth have been unevenly distri- could whizz through. buted and the economy has failed most of Nigeria’s people. The impressive growth rates hide a series ofgovernment failures that Quick, hand me my moral compass have held the country back from achieving its potential. Econo- Kleptocratic ministers and state governors who had expect- mists reckon that it could be growing about four percentage ed another term at the public trough were soon looking for safe points a year faster, a rate that would allow GDP to double every havens at home or abroad. Billions of dollars that had been sto- six years or so. Such growth is desperately needed in a country len from the public purse were said to be making their way back. where tens ofmillions still live on less than $2 a day. Officials were negotiating amnesties in return for handing back Nigeria has vast oil and gas wealth, fertile soil, untapped their loot, driven by a new fear that rules long put aside when Mr mining riches and entrepreneurial people who excel abroad. But Jonathan was in office would now be enforced. “A lot of guys I athome povertyhasbarelydeclined, inequalityisrising and cor- know are getting their income tax in order,” says one Nigerian 1 2 The Economist June 20th 2015 SPECIAL REPORT NIGERIA 2 businessman. Civil servants have taken to turning up for workat the north-east but also in the fractious “middle belt”, a stretch of 8am sharp instead ofshambling in hours later. states that more or less bisect Nigeria from east to west, as well as That spirit of change has spread through the ranks of the in the Niger Delta. country’s businessmen too. Investors are dusting off business Mr Buhari will also need to restore faith in the institutions plans for factories, hotels and shopping malls that had been lan- of government by clamping down on corruption. A good way to guishing because the bribes to get them going had proved too start will be to end energy subsidies that have become a perfect much, or because they feared someone else might pay bigger breeding ground for graft as well as a drain on the public purse. ones. Foreigners have been snapping up Nigerian bonds and To unleash growth, he should forget about plans to promote in- shares again, hoping that Mr Buhari’s government will revive dustry by imposing high import tariffs, and instead concentrate economic growth. Even women selling groceries in the markets on helpingfarmers get theircrops to markets. With less meddling are filling up their stalls again, having run down their stock be- in markets and more private investment, electricity generation fore the election because they feared it would be looted. could quickly double. Given cheap and reliable energy, other This report will argue that at last Nigeria has a realistic parts ofthe economy, from manufacturing to film-making and e- chance offulfilling its potential. For that to happen, the new gov- commerce, could take off. Butnone ofthatwill happen without a ernment has much to do, perhaps too much. It needs to focus clean-up ofNigeria’s rotten politics, dominated by political “god- ruthlessly on a few areas where it can make a difference quickly. fathers” whose interests lie in preserving the status quo, not the The most urgent of these will be to improve security, not just in change that a majority ofNigerians voted for. 7 We happy few Nigeria’s population has been systematically exaggerated NIGERIANS, THEIR NEIGHBOURS grumble, did their own count and claimed 17m. think of their country as the Texas of Africa, Even allowing for all these swings and where everything is bigger and better. On roundabouts, some researchers, using so- size, at least, they are largely right.