Much ado about Brexit

I must say that I have found the hysteria around Britain’s decision to leave the EU very amusing. Some of the comments made by persons thousands of miles away (*sideeye* John Kerry, Reuben Abati etc) have been quite comical. First, let me say I voted for Britain to leave and I’ve explained my reasons in another post

I find it amusing that people, knowledgeable ones at that, used the volatility in the stock and currency markets within the first 48hours post the referendum as their justification and evidence of the economic woe that the Brexiteers did not appreciate would be the outcome of a leave scenario. If we place this initial volatility (markets have since calmed down) in proper context then surely this can hardly be used as evidence to support their doomsday scenario! The financial markets were mainly positioned and expected a ‘remain’ outcome. This is evidenced by the overwhelming support ‘Remainers’ received in London, Europe’s financial centre. With the referendum itself being a binary event, surely the initial volatility recorded in the markets was a rational and inevitable reaction to new information rather than a confirmation of economic doomsday or that the British economy had all of a sudden fallen off an irreversible cliff.


The outcome of the Brexit referendum is such that over the long term a multiplicity of economic scenarios is possible. Britain could lose out with the EU gaining, Europe could lose out with Britain gaining, both Europe and Britain could gain and all of these could happen to various degrees over various time periods. Crucially what will determine or more appropriately influence the likelihood of occurrence of any of these scenarios is the future trade deal that will be agreed between Britain and the EU. This crucial trade agreement of course is currently unknown. So how anyone can make categorical and hysterical statement about the foolishness or wisdom of Britain voting to leave at this point is completely befuddling.


The Brexit vote has political and economic implications. The long term political implication in my opinion is harder to guesstimate. But we can make reasonable assumptions on the economic implication without reaching any final conclusion as we don’t have adequate information to form the basis of any finality.


Assumption 1 – the fact is Britain maintains a trade deficit with the EU. The deficit was £25billion as at end of Q1 2016. According to Destatis, a leading provider of official German economic statistics, Germany’s trade surplus with Britain in 2015 was €50b. What this implies is that Britain is a key export market not just for the EU but for its number one backer Germany. Unless Germany and the EU have lined up other countries or regions to replace Britain as a trading partner, it can’t be in their best interest to take and be unwilling to move from a position that may impact Britain’s economy negatively. So my fluid assumption is that the EU would prefer a trade agreement that at least maintains the current economic status quo and is within the long-term run rate trade balance with Britain.


Assumption 2 – whatever trade agreement is finalised between Britain and the EU will be subject to non-exclusivity. This implies that Britain will be able to agree trade deals with other countries and regions that it had been unable to in the last 43years of EU membership. What this further implies is that other countries will at a minimum be competing for part of Britain’s existing trade relationship with the EU. If Britain can improve its productivity then it may be able to agree trade deals with multiple countries without each separate deal cannibalising the other. My fluid assumption here is that agreeing a mutually beneficial trade deal is in each nation’s best interest – we are not in a cold war environment after all.


Assumption 3 – free movement of people. This is the big one. It is so because it has security, political and economic angles potentially influencing its final outcome. The free movement of people has been a boon to the global economy over the last 30 to 40 years. It is not in Britain’s best interest to be too restrictive on immigration especially when one considers that Britain and the developed West as a whole is an ageing population. This demographic change is going to be an economic headwind for developed countries that governments of developed countries have to deal with. The UK for example is currently behind in its fertility replacement rate at 1.9 (EU – 1.4 but needs 2.1 as do all developed countries). That is, working population is reducing whilst retirees is expanding with higher life expectancy due to improvements in healthcare and technology.


Whilst it’s true that markets, especially the financial one dislike uncertainty and seek to imply this in the price of financial instruments, this can work both ways. The market can force the EU to negotiate a trade deal its European Commission President categorically stated months ago Britain will never get whilst simultaneously also forcing Britain to accept free movement of people that it is loath to accept as mentioned by Brexiteers during the referendum campaign. This is a possibility because economic growth in Europe is still anaemic despite the ECB’s humongous quantitative easing programme and that any unreasonable trade deal with Britain will be as damaging to the EU as it may be to Britain.


Further, Britain remains a full member of the EU with attendant rights, obligations and trade even after it triggers Article 50 and puts a clock on the deadline by which a deal must be agreed with the EU. As this article is yet to be triggered and it may take a while yet, there’s little need for panic or hysteria by all concerned.


London as a financial centre has a lot of positives going for it. It already has the infrastructure to support financial markets and maintaining this moat in a final EU/Britain trade agreement should be one of the easier parts of the negotiation. Britain can simply agree as it already does to always have equivalence legislation with all ESMA regulations. It can also agree to translate ESMA’s directives (note: ESMA Regulations are compulsory but Directives are open to national interpretation) to UK legislation as long as it doesn’t contradict UK law.


I cannot imagine that countries like China, Japan, Singapore, other Asian markets, the US wouldn’t want the opportunity to enter into a trade agreement with the UK. President Obama and more recently John Kerry’s comment about UK being at the back of the queue on trade agreements is quite frankly juvenile. Nations can and have negotiated multiple agreements simultaneously. Besides the economic reasons why a mutually beneficial agreement needs to be encouraged and reached between EU and Britain, there’s also the security angle. Britain’s GCHQ and security services are known to be the best if not one of the best in the world. Britain is one of the few countries that is meeting and committed to maintaining the 2% of GDP expenditure on defence. Cooperation with Britain on terrorism and the various security challenges the world is currently facing is paramount if the world hopes to conquer these challenges.


So keep calm and keep on Brexit.




Much ado about Brexit

Rationalising governance beyond ‘economic diversification’

One of the often used words by President Buhari, Vice President Osinbajo and others on their team during the last general election and the year since is “economic diversification”. The Presidency believes our economy isn’t diversified and aims to cure Nigeria’s overdependence on the oil and gas sector.

Periodic economic data released by the good people at Nigeria Bureau of Statistics suggests that our economy is divided into 19 activity sectors and as much as 46 if we are to expand to activity sub-sectors. The data released for Q1 2016 GDP suggests that the oil sector contributed 10.3% to our GDP whilst the non-oil sector contributed a staggering 89.7% of economic activity. What is unfortunate is that the oil sector contributes over 70% of government’s revenue and some 90% of government’s foreign revenue. According to IMF’s assessment of Nigeria in a report released in April 2016, Nigeria’s non-oil tax revenue has been on average a meagre 4% of GDP for the past 8 years against 14% for Indonesia and 16% for oil exporters. IMF’s assessment suggests that government’s non-oil revenue based on current activity within the non-oil sector should actually be 18%, well ahead of comparable oil exporters. The report goes on further to show that government’s take of corporate income tax (CIT) is a paltry 1% of GDP against 4.5% for other oil exporters and 4.6% for Indonesia.


What this tells us is that economic diversification isn’t the issue that requires resolution but government’s source of revenue. The government depends far too much on the oil sector for revenue. This isn’t the fault of the citizens but government laziness especially during the military era. There appears to be a mindset within Nigeria and certainly within the various levels of government that if the government does well, then Nigeria does well. This is evident in the existence of various industry cabals and the ease with which industries in face of any difficulty clamour for government patronage or protection. We need to change our mindset to that which dictates that when businesses do well, then government does well. Our government has to depend politically on its citizens and economically on businesses rather than resource rent. This change of mindset is absolutely critical if we are to successfully shift our economic structure to one that is market based. The government of President Buhari and the CBN have commendably taken a big step towards this by liberalising the foreign exchange regime. Its next focus has to be on improving the ease of doing business in Nigeria as well as its efficiency at collecting tax revenue and broadening the tax base in the near term. Whilst it has attached tax collection efficiency and improved collaboration with FIRS in its bailout condition for States and Local governments, it needs to do a lot more at the federal level.


As a left leaning government, some of the measures and steps this government needs to take will be counterintuitive and will fly against what a populist or socialist government will intuitively want to do. This government is predisposed to economic interventions and big government. It wants to revive Nigeria Airways, Nigeria Railways, Ajaokuta Steel amongst others – which suggests it believes government (or this government) can run businesses better even when there’s evidence (hello River’s monorail) in recent history of members of this government ruining businesses.


The ease of doing business report makes for horror reading and is quite clear what the government needs to focus on. Rather than market intervention, the government should stay out of the way of businesses by having as few regulations as possible. Government should focus on reducing bureaucracy and red tape around registering businesses and collecting taxes. The government will do much more for businesses by concentrating on infrastructural development than interventions. The IMF cautioned in its report mentioned above (page 19, item 29) that government’s intervention in agriculture is distorting allocation of resources and investment decisions with further unintended adverse consequences.


Linked to improving the business environment, the government needs to make it easier for Nigerian manufacturers to export their goods and services. The Doing Business (DB) report showed that it takes 159 hours to complete export border compliance procedure in Lagos against 108 hours in Sub-Saharan Africa and 15 hours in OECD countries. It cost $786 for export border compliance in Lagos against $542 in Sub-Saharan Africa and $160 in OECD countries. For export documentary compliance, it takes 131 hours in Lagos against 97 hours in Sub-Saharan Africa or 5 hours in OECD countries. The assessment of the difficulty in importing to Nigeria is even worse than exporting. Overall, the report concludes that Nigeria scored 18.05 DTF on Trading Across Borders, which is a whopping 82% below the best performer. The DB cost methodology excludes tariffs as well as cost of domestic transport, meaning it is all self-imposed non-necessity or graft or in Nigerian parlance corruption. These additional costs never make it into government purse.


As part of its restructure and optimisation of the sources of government revenue, I’ll advocate that the government elevates CIT, VAT and PAYE above tariffs collected on imports and exports. Whatever the government gives up in those tariffs can be made up in CIT, VAT and PAYE which are more linked to economic activity. By reducing its emphasis on import and export tariffs, the government will be able to reduce the bureaucracy and red tape within our customs. The current importance of revenue generation by customs directly feeds the bureaucratic monsters that are the custom officials which has turned officers into demagogues whose favour businesses court. I’d suggest that government changes the mix of compensation for custom officers. For example, if the average wage of a custom officer is N100k, I’d make 30% of that basic or guaranteed with the remainder linked to how close our ease of Doing Business rating is to OECD countries. I’d also add a government discretionary bonus (up to 2.5x basic) to the total compensation as a means of incentivising officers to suggest ways of improving our customs processes and follow through to implementation. Officers that are a hindrance to efficiency will only get basic salary or worse lose their employment.


Finally as part of the reduction of the cost of governance, I think the government needs to privatise or hand-off several of the research institutes listed in the federal budget. For example, the Federal Ministry of Science & Technology has about N54b budgeted to it. The ministry has 96 research institutes under it. Less than 15% of the Ministry’s budget is actually allocated to the ministerial headquarters, meaning 85% is consumed by the various institutes. From that N46b consumed by the institutes, about half (N23b) of it goes on personnel cost with the remainder marked for capital expenditure. Please note that a lot of the capital expenditure is ‘purchase of motor vehicles’, hardly a catalyst for economic recovery. The question is, we have been supporting these research institutes for years, what exactly have we received as return on our investment? If the personnel working within these institutes believe they add value, then let them source for funding from the private sector. The privatisation does not need to be politicised or made complicated. It can be done through a simple management buyout (MBO) with the government selling the institutes to their management for a nominal fee, say N1m. The management of these institutes can then prove their usefulness by selling their research to the private industry. They can even sell their research abroad if there are takers and be a source of forex to our newly floated FX market. I am almost certain that the first thing the management will do once privatised is lay off unnecessary staff that are currently a burden to government. Of course government can give grants to support life changing or economically important researches at its discretion.


Our civic focus on the reduction of the cost of governance needs to go beyond #OpenNASS.



Rationalising governance beyond ‘economic diversification’

Punishing businesses, rewarding politicians

One of our innate desires as humans is to seek comfort wherever we may find it. Being comfortable is our motivation for why we do most things. We work to afford things that’ll make us comfortable, comfort is a key consideration when searching for a partner (business or social), and we seek relief from pain sometimes going to extreme measure such as taking drugs (hard) to get comfort. We seek comfort even for pride or ego’s sake. We exercise for comfort, drink alcoholic and non-alcoholic beverages for comfort, socialise or engage in other relaxation activities for comfort. We also seek comfort at societal level. It is why we want justice and equity to right wrongs, real or perceived. In general, we find comfort satisfying. 

This innate desire for comfort is also central to decisions made in politics, economics or enterprise. We reward businesses that help us maximise our comfort utility by continuing to patronize such businesses. When we’re truly satisfied we also help such businesses, mostly altruistically, through a marketing phenomenon known as ‘word of mouth’. In contrast, we tend to punish businesses with unsatisfactory products or services by taking our custom elsewhere or through the same word of mouth spread our dissatisfaction (e.g. Arik Air). It is why customer satisfaction is a critical success factor for any business that hopes to do well and why businesses often operate on the mantra that the customer is always right. Further, and in democratic politics, we generally reward politicians or political parties that make our lives (more) comfortable with votes and keep them in office whilst punishing those that make our lives miserable by voting them out of office. Well, the last part of the previous sentence is how democratic politics should work. In Nigeria, this doesn’t seem to be the case, at least at societal level.


This phenomenon is most observable at sub-federal level as it is difficult to ascertain why citizens have kept voting for the same politician or party given the failure of governance since our return to democracy. For example, in Ogun State, why was Gbenga Daniel rewarded with two terms of office? Did he or his party really improve the lives of the citizens of the state? Take Osun State and Governor Aregbesola as another example, has he improved the comfort level of the residents of the state? The economic stats doesn’t (and certainly his financial management) suggest he has, yet people turned out in droves for him and rewarded him with two terms of office. Or Benue State where Governors Akume and Suswam were rewarded with two full terms with little to show as reward for the citizens of the state. This continued reward of politicians where there is elevated doubt about their impact on the comfort levels of their citizens seems quite irrational to me and goes against what should be the natural and logical reaction of citizens to unsatisfactory governance. In the case of Osun, for example, what would have been rational is that even if APC apologists in the state can’t quite bring themselves to voting for other parties, abstaining from voting all together should have been their rational reaction. Commendation, however, should go to the residents of Lagos, they’ve consistently voted for the party that has improved their comfort levels, resisting the urge to change in 2015 even though familiarity and the shadow of the Jagaban proved almost too tempting to switch parties. Even if the resources of Lagos don’t quite match the outcome of governance, progress of Lagos over the years relative to other states can’t be denied.


So the question is why have we continued to struggle to react rationally to the failure of governance? The simplistic answer, though with a measure of truth, is ethnicity. In the years immediately following independence, persons from the North ruled Nigeria. This neither made the North’s development catch up with the South West’s pre-independence level of development nor make it keep pace with the rate at which the East developed. This trend of the tribe of the occupier of the Presidency (or its pre-1999 equivalent) having no developmental impact on his indigent region has continued to this day. That one’s tribesman is occupying the Presidency hasn’t in our history translated into tribal or ethnic socio-economic development. Voting along ethnic lines has been an irrational reaction to continued reward of politicians and political parties.


The more complex reason I believe is that our democracy is still largely non-participatory. By non-participatory I mean that at the onset of the 4th republic, elections were easy to rig so the will of the people was not always reflected in the outcome of elections. Whilst it has become harder to rig, and whilst one could argue that the last presidential election reflected the will of the people, the elections in general were still fraught with irregularities, voter intimidation and election rigging. The most fundamental reason though, in my opinion, is that the Constitution of the Federal Republic on which the foundation of our democracy is based is almost fatally flawed. The present Constitution, like past rigged elections, doesn’t reflect the will of the people. It certainly wasn’t drafted by the people or their representative. The document was designed by the military and a few privileged Nigerians, to become binding on all Nigerians. For example, the document as currently designed implies that Nigerians can’t be trusted to govern themselves in the manner they deem fit within each federating unit. Although the Republic is referred to as “Federal”, none of the federating units willingly gave up the rights and powers to the federal government. Rather, majority of the powers as contained in the “exclusive legislative list” were taken by the federal government through military might with the military allocating whatever weakened right or power they wanted to the State and Local governments. Democracy should be a government of the people, by the people and for the people. By definition, the people should collectively determine which of their inalienable human rights they want to give up to their government. The power of the government, in form and substance, at any level must devolve from its citizens. The citizens must be able to take back or amend such powers whenever they deem fit. Since our return to democracy and it’s been 16 years, there has been no attempt to fix the flaw in our Constitution and worse the citizens have been unable to compel their representatives in the legislature to review the Constitution to reflect their will on how they want to be organized as a society politically and economically. Basically, we have a political inclusion problem.


One of the things that we could do to improve the political inclusion, participation and the exercise of our civic duties is to separate the general election cycle of the various levels of government, specifically the executive and legislative ones. I advocate that the general election for the executive arm be separated by at least two years from that of the legislature, at all levels of government. As our democracy is still very much based on party politics, this separation could potentially help focus the minds of the legislators on their oversight responsibility of the executive as any underperformance of the executive in the two years preceding the legislative elections would impact the legislators whose party control the executive. Legislators will not only need to participate in policy formation, but will need to closely monitor policy implementation as well as any deviation from initial estimated impact. The memory of citizens will also be short which would potentially require more than stomach infrastructure to persuade them to append their vote for a particular candidate or party. Further, this separation should enable citizens to track government performance against election manifesto better. If politicians expect increased scrutiny of their election manifesto and delivery, they’ll be persuaded to only promise what they can deliver or better not change tack when they get into office.


This last paragraph of course assumes that we will begin to punish politicians for bad governance delivery as we punish businesses when we’re an unsatisfied customer.

Punishing businesses, rewarding politicians

Quick wins to stave off recession, is it doable?

Nigeria suffered negative GDP growth in Q1 2016 according to data released by Dr Yemi Kale and the good people at Nigeria Bureau of Statistics.

Unfortunately, and given the continued news about job cuts, backlog to salary payments, contractor debt and mobilisation, Nigeria seems headed for an official recession by the end of Q2 2016. Dolapo Oni wrote an article suggesting ideas on what the Nigerian government could potential do within one month to grow the economy by at least 0.01% in Q2 2016 in order to avoid an official recession and stave off its attendant issues.

Let me first say that if it is indeed possible to stave off recession with a month to go, then the government should do everything it can and take every step necessary to do this as Nigerians have already suffered enough.

However, I fear it may already be too late for anything to be done.

First, per Dolapo’s article, I don’t think quantitative easing or ‘printing new money’ is what Nigeria should do. Dr Nonso Obikili explains it here better than I ever could. Second, the article calls for government to pay outstanding debts to contractors on major infrastructure projects in construction and agriculture to stimulate job creation, pay outstanding MDA and security forces debts to power distribution companies and pay workers salaries to stimulate consumption demand and by extension the FMCG sectors. All of these are very good ideas.

My challenge is that the article not only assumes predictability of behaviour of recipient of these government disbursements but also the rationality of their behaviour. The problem is, it is difficult to predict how recipients will behave when they receive this cash. Also, what may be a rational behaviour in reaction to this cash receipt to Dolapo may be irrational to the recipients, that is, our definition of rationality differs and certainly our timescales differ. For example, whilst we may assume that some of the recipients will spend the cash on feeding and hence potentially stimulate agriculture, it doesn’t mean people will consume more (enough to bring economic activity above zero) in the month of June to stave off recession. Or we can assume that perhaps more beer will be consumed but will the breweries actually produce more or just ship what has already been produced but in warehouses? Could brewery reaction be to ship what they’ve already produced and not necessarily order more inputs down the value chain which is what is really needed to stave off recession?

The manufacturing sector has been in negative growth for more than a quarter and actually needs the government to relax its foreign currency restrictions so it can source its inputs more than government printing money. Most company’s plan their orders ahead, if they’ve been cutting jobs, we can safely assume they’ve been cutting their input orders. If this is the case, then can they really ramp up production or employment in such a short time for such a short demand cycle? Typically company management plan to increase their capital expenditure or investments when they have confidence of a sustained demand. Can sustainability be attached to the current demand cycle or the one that will potentially be stimulated by Dolapo’s measures? Further, how will power distribution companies likely treat this cash alert? Probably pay down debt. If they choose to invest it in capex, I can’t imagine it’ll be for short term investments. That will be tantamount to gross capital allocation indiscipline. In fact given the structural issues in the power sector, I doubt it is in the interest of the government to encourage short term investments over medium and long term ones.

Workers owed salaries once paid can simply hold the payment in savings out of fear of current economic condition. Some may change it to foreign currency again out of fear. Many more may use it to pay for foreign school fees or other things that do not lead to increase in local demand that will directly benefit or stimulate local production.

Finally given the ex-post nature of GDP estimation, that we staved off recession won’t be known for a couple of months, so end of August at the earliest. Meaning the confidence to be gained from the short term fix won’t be known until when we’re more than half way into Q3. For Dolapo’s suggestions to have maximum impact and achieve stated objective, the government won’t only need to disburse cash but also attempt to compel recipients of how the cash is to be spent and when too. Government may also need to consider whether it should focus the disbursement on sectors that have been growing like Transportation & Storage or Arts, Entertainment & Recreation or the ones that have dragged the economy into recession like Manufacturing, Construction, and Financial & Insurance. In making its decision, the government will need to ensure that it chooses the sector with the faster pass-through and the most durable in reaching underlying value-chain. The disbursement has to be very precisely targeted to achieve maximum pass-through. Dolapo’s ideas aren’t impossible, it just seems like more than a month’s job to me.

Quick wins to stave off recession, is it doable?

On Presidential Report Card

There’s a good democratic practice I’d really like to be introduced to our politics and if possible that the National Assembly makes mandatory through legislation. The practice I’m thinking of is an adaptation of the Prime Ministers Questions (PMQs) that is the norm in British politics. Whilst we don’t practice a parliamentary system of government, I have an adapted version to the presidential system we do practice in mind. Here it is: 

On an annual basis, the National Assembly should summon the President to its complex for a Presidential Accountability & Stewardship Debate (PASD). This annual event will serve as an opportunity for the President to give an account of his stewardship over the past year as well as offer citizens and their representatives the opportunity to ask the President questions directly. The PASD could be held annually on May 29.

The format of the PASD could start with a Presidential address for 30-45min, a 15mins break, followed by a moderated panel debate for an hour, another 15mins break and finally an open question session for 45mins to round up.

Presidential address – 30 -45mins

Break – 15mins

Moderated Panel Debate – 1hour

Break – 15mins

Open questions – 45mins

Currently the President delivers a speech on May 29 from the Presidential Villa. I think that should change and should be delivered at the NASS in front of the representatives of the people. This is symbolic and at least creates the perception that the President is reporting back to those he or she is responsible to – the highest office in the land – The Office of the Citizen.

I’d suggest that the moderated panel debate is composed of the President, Senate President, Speaker, Minority Leaders of the Senate and House of Rep, Attorney General and two representatives of two Civil Service Organisations.

It shouldn’t be compulsory for other Senators and Members of the House to attend the PASD. In fact Senators and Members of the House that are not principal officers should be actively discouraged to attend. Priority of attendance should be given to two representatives of every political party that is registered with INEC. With respect to identifying which civil service organisations (CSOs) are to be invited, the NASS on its website should, at least three months prior to the event, request applications from CSOs to participate in the PASD. Every CSO that applies to participate should then be included in an online poll (the poll could be open for two weeks) to determine which CSO will be part of the Moderated Panel Debate. CSOs should then solicit votes from members of the general public. The top two CSOs with the most votes will be ones that will join the Moderated Panel Debate. Two representatives from the top 20 CSOs from the online poll would then be invited as members of the audience that’ll get the opportunity to ask questions during the Open Questions session.

Besides taking questions from the audience within the debate hall, the Moderator of the event could also take questions from social media submitted by Nigerians.

My hope for the above is that Nigerians get the opportunity, at least once every year, to ask their President questions on stewardship of the mandate given at the general election. No question should be off topic during the PASD. This will ensure that whoever is President will have detailed knowledge of every aspect of their government or on issues plaguing the nation that their cabinet may have shielded the President from being aware of or that the President is wilfully avoiding for ‘emotional balance’.

On Presidential Report Card

Mismanaging self-interest 

Mismanagement – “the process or practice of managing ineptly, incompetently or dishonestly” – Yourdictionary

Growing up in Nigeria during the 80s and 90s was tough for a lot of people. Families did all that they could to ensure their immediate basic needs were met – some parents did multiple jobs, sought connection with the right people, attempted to plug themselves within the right patronage system, applied for visa lottery etc. Ah….US visa lottery…a lot of families applied for that. Getting a member of the family to “escape” abroad, through any means necessary – visa lottery, genuine migration visa or the infamous “oluwole method” where fake passports and visas were procured at significant cost to facilitate an escape became a sort of raison d’etre for many families. Parents sometimes sold everything they had in order to fund one child’s escape with the hope that, once established abroad, they will in turn help their siblings either by arranging for them to emigrate too or send money for a better living standard until their own escape is secured. Any family without a member living abroad seemed like an oddity then. This societal reality was obvious in almost every Nollywood movie released during that period – an escaped family member becoming the hope for the rest of the family, sometimes even a whole village.

Occasionally, the frailty of human nature will sometimes lead the “abroadian” breadwinner to develop an ego turning them into an overbearing demagogue. No family decision can be made without them, drip feeding assistance to the rest of the family to ensure their snooty status is not threatened or worse taking steps against siblings that show potential to surpass them in “perceived” success. This unnecessary fight against ones own can be observed in the wider society in our interethnic rivalry, fear of domination and lack of empathy that is so easily stoked by the political elites. What this means to me is that we’re mismanaging selfishness or self-interest i.e. greed is not always good. This mismanagement is corrupting several of our societal institutions and moral values.

There’s a tiny grey area between self-interest and selflessness. Acts committed within this grey area can either be classified as self-interest or selflessness depending on the angle one chooses to look at the act from but this isn’t always so clear cut. Adam Smith’s theory of the “invisible hand” is a classic example of this grey area. The invisible hand, also known as enlightened self-interest, is a philosophy in ethics which states that persons who act to further the interest of others (or the interests of the group or groups to which they belong), ultimately serve their own self-interest. In his 1776 book “An Inquiry into the Nature and Causes of the Wealth of Nations”, he states: “Every individual necessarily labours to render the annual revenue of the society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it … He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.” In plainer English, one might say, if I steal and especially get away with it, then others might steal too thereby creating a thieving society which helps no one.

You see, we can be selfish without greed or have an enlightened self-interest where although what we are doing is purely for our own benefit but in pursuing this we create what benefits the society as a whole. For example, my passport is in need of renewal and I need to go to the immigration and customs office to get it renewed hopefully within 30mins (postal renewal will be even more awesome). For this to happen and for it to be a standard procedure, the immigration official will probably need to be well paid, motivated, work in a good environment under decent condition and be happy to deal with me as a customer. If these conditions that should on average enable the customs officer provide service in the manner that I want do not exist, then rather than be upset at them directly, what is prudent for me is to attack the system or governance dysfunction that has created a suboptimal passport renewal process and general working condition. By pursuing what will benefit others purely out of my own self-interest, in this regard, I will also be improving my own general welfare.

I reside in the UK and currently about 45% (a little lower actually) of my earnings is deducted as tax and other social contributions by the government. Would I prefer to keep more of my earnings, of course but given what the deductions go towards and how I daily experience the benefit, I am more than happy to give up my earnings. You see, the roads are almost always in great condition, my kids can get hospital treatment whenever, an ambulance is more likely to get to me and back to the hospital on time in case of an emergency (when we had our first child). I want nurses, doctors and the police to be well paid so they can afford a good standard of living i.e. be able to afford a mortgage or rent a decent property, go on holiday, buy stuff for their kids etc. Not because I love them so much, but for my own self-interest knowing that the police officer is more likely to be in a better frame of mind to help should the need arise or the doctor and nurses are less likely to make mistakes when carrying out diagnoses and treatments because they aren’t under pressure from low standard of living.

Point is let us not mismanage our self-interest. In serving or looking out for others we are invariably looking out for ourselves. Let us all worry about the environmental issues in the Niger Delta and condemn the government’s continued inept approach at dealing with the issue, even if you don’t really love Ijaw people. You see by looking out for the ND interest, perhaps pipeline vandalism will not be so rampant. Perhaps our gas supply will be better. Perhaps our electricity and other energy headwinds will abate. By serving and looking out for the Niger Delta, the rest of Nigeria will be looking out for itself.

Let us not be weary in doing good, for at the proper time we will reap a harvest if we do not give up. Therefore, as we have opportunity, let us do good to all people, especially to those who belong to the family of Nigeria – Apostle Paul.

Mismanaging self-interest 

Corruption vs Mismanagement 

My dear country Nigeria is in serious need of rationalisation – a rationalisation that goes beyond government or political class inanity. It appears every adult Nigerian needs to reappraise their value system and sense of humanity with the aim being to ascertain whether or not we are getting the basics right. Basics like common decency, sanctity of life, basic self-management, basic selflessness, basic health – personal and communal.

Much has been made of how corruption is the bane of our society, but I disagree with this. Our biggest challenge and bane in my opinion is mismanagement. As individuals and a society, it seems we are unable to manage most things right or appropriately. This issue of mismanagement isn’t new either. It has been a challenge prior to independence.

Our independence should have happened earlier than 1 October 1960 but mismanagement. When independence finally arrived, we mismanaged our expectations. The founding fathers mismanaged democracy by not committing to it fully. The fear of ethnic domination (read political class’ loss of influence) ensured they couldn’t see beyond their noses. In truth Chief Awolowo realised this and tried to warn his compatriots, but they ganged up on him (NPC and NCNC coalition). Chief Awolowo had his faults, no doubt, but any democracy without opposition or where the incumbent seeks to eliminate opposition is no democracy at all. If our democracy does not encourage an active opposition, then we’re mismanaging democracy.

We like to quote Singapore and Lee Kuan Yew as models Nigeria and its leaders should embrace, whilst LKY was ruthless (rightly or wrongly) at supressing communism in Singapore, what he did do was submit himself publicly (and at least annually) to opposition (televised) debate to encourage and support the right opposition as a replacement to communism. LKY didn’t just submit himself to local opposition but also to foreign ones. He never saw it as an irritation, but more as a way of putting his policies through opposition fire in order to distil it as you would liquor or purify as you would gold. But not us, we prefer to ridicule opposition by calling them “mushroom” parties, or eliminate them through our “winner takes all attitude”.

There’s no society on earth that does not suffer some form of corruption. Denmark has ranked top on Transparency International’s corruption perception index and even it has never achieved a score of 100. Its highest score of 92 in 2014 suggests there is still some 8% of corruption in the country. Whilst Denmark was the least corrupt country, it isn’t the country with the highest per capita income according to World Bank data. It came 7th on that metric in 2014, the year it scored its highest on the corruption index. Although Qatar is 22nd on the corruption index, it is 3rd on the per capita income table. Finland is 2nd on the corruption index but 16th on per capita. Kuwait is 55th on corruption index, but 24th on per capita table. Apologies for stating the obvious, but the implication is that more corrupt countries had better per capita income than less corrupt ones. The point is waging an anticorruption war shouldn’t be our main focus but our mismanagement of corruption as with everything else should be. Of course if we want to play maths, I’m sure we’ll find a link, most likely an inverse one, between corruption and per capita income. What corruption does is undermine societal trust – trust in political, economic, judicial systems and other institutions necessary for reasonable development.

The best way to fight corruption sustainably is to institutionalise its management and be transparent about it. Let all of our laws be made easily accessible and in languages citizens can understand. We also should reform our judiciary, including the police and make them truly independent. The working condition of the Nigerian Police Force needs vast improvement. Their pay, equipment, training, quality of recruits, health and life insurance covers are all in need of professionalization. We cannot mismanage our security forces or the judiciary and not expect corruption to be a symptom or outcome of such dysfunction.

The Constitution makes the security and welfare of citizens the primary purpose of government. In order for this primary purpose to be met, basic welfare facilities such as primary healthcare, community policing, basic education – primary and junior secondary, basic promotion/support of business activity, basic dispute mediation and/or justice need to be provided by the government. Are our government, at any level, delivering excellence in any of these basic primary purposes? These primary purposes are the foundation that any society with developmental aims needs to excel at. If we are not excellent in any of these basic activities, how can we expect or hope to deliver on more complex socio-political and economic issues?

Are we managing our economy well? The short, medium and long-term outlook for our economy is painful. We’ve always mismanaged our economy right from pre-independence. Government’s role in our economy has been overbearing and more about rent-seeking and maintaining patronage of a select class. The public and civil services are mismanaged – a significant portion of the public service/servants are adding zero value to the government or society. The proof is all around us – or if you’re in doubt look at the budgets at all levels of government and the institutionalised “yam” process within it.

Is the private sector any better at management? There are various ways one can look at this. One obvious way is to look at how well the private sector can withstand economic shock or to what extent non-oil industries catch cold when the oil industry sneezes. To what extent is the private sector taking or seizing initiative? How well are they lobbying government especially the legislature to ensure enabling laws are passed or revised where necessary? To what extent is the private sector creating or taking advantages where service/products gaps exist? Is the banking sector especially taking any risk in the real sector and away from public sector? Is the banking or finance sector sufficiently lobbying the right arms of government to create a better business environment for providing capital/lending?

Since the oil price crash, newspaper headlines have been filled with one cabal or another seeking government protection, patronage or companies laying off staff. But more importantly, is there any company, industry or sector that we can refer to as a “centre of excellence” any where in Nigeria? This is a genuine question. Is there a company, industry or sector that delivers “excellence” at least two-thirds of the time in product and service quality, operational efficiency, staff welfare, website functionality etc? To be fair, I have observed pockets and instances of excellence, for example, BudgIT NG (God bless you guys), Nigeria Bureau of Statistics (Dr Kale and team – chop knuckle), Social Liga & TPL promo campaigns and I’m sure there are probably others. I am certain that if we ask most Nigerians now about their general life management (family, career, finance, citizenship, business/personal relationships etc), few to none will admit to being less than consistently excellent. This begs the question, if most are individually excellent, then why is the aggregate so deficient of it?

Several opinions have been posited on devaluation or the Naira’s current valuation and why the government should devalue the naira. Mr President said he remains unconvinced by these opinions. What he hasn’t done is provide us the reasons why he is convinced that his current stance is appropriate. Why or how will the short-term pain of his current stance turn into long-term gain? What is that long-term gain and why should Nigerians accept it? What will be the sign(s) of the inflection point for this long-term gain? That is, how long is this short-term pain expected to last?

Fellow Nigerians, take your time to consider every sector you can think of. Let’s for the sake of argument agree that consistency is defined as two-thirds of the time (this is even short of 70% normally needed to get an A in an exam). See if you can find consistent excellence, whether from the private sector in any industry or public service local, state or federal. And while we are at it lets also consider if we are managing being a citizen right. What liberties are we as citizens willing to give up for a better society? Did we give the liberties up or were they taken from us? Do we agree to the liberties our Constitution says we’ve given up to our government? How do we ensure that what we’ve given up is used judiciously? How are we ensuring that the process that produces those that want to offer to represent us in government meet our standards? We give up our liberties because through collective bargaining and bulk purchasing by our reps in government, we expect to get a better deal than if each citizen were to negotiate or provide their own security, hospital, road, rail, airplane or airport etc. Are we getting due or reasonable returns?

Delivering excellence on any endeavour, in any area of life is about management – efficient and effective management of time and resources. When management is inefficient – then we get symptoms like bad products, injustices, bad finances, inadequate infrastructure, inadequate strategy, low quality service, insecurity and of course corruption. It is time we ask ourselves and our representatives the (mis)management question.

The only way to finish up is to recite the second stanza of our national anthem:

O God of creation, direct our noble cause

Guide our leader’s right

Help our youths the truth to know

In love and honesty to grow

And living just and true

Great lofty heights attain

To build a nation where peace

And justice shall reign.


Corruption vs Mismanagement