Opportunity knocks

“CHANGE”. THE ELECTION-CAMPAIGN slogans of the All Progressives Congress (APC) emblazoned on large billboards across Nigeria in March were light on policy prescriptions. Nigeria’s main opposition group at the time, and now its governing party, offered a simple promise: it would be bound to be better at governing Africa’s most populous nation than the incumbent government of Goodluck Jonathan and his People’s Democratic Party (PDP). “A lot of people were in the anybody-but-Jonathan camp,” says a prominent Nigerian businessman. Yet in the days before the vote on March 28th, amid fear of violence and talk of another military coup, many Nigerians would have been happy just to see a peaceful outcome. The previous election in 2011, Nigeria’s least violent in recent years, still claimed some 700 lives in outbreaks of violence across the north.

So Nigerians’ expectations were limited, which made the latest election all the more remarkable. In the face of vigorous attempts by both parties to rig it (with the PDP seemingly somewhat better-resourced and more successful at it), Nigeria’s independent electoral commission presided over a vote that was the country’s freest and fairest in decades and could broadly be said to reflect the will of its people.

More significant still was the result. The election of Muhammadu Buhari, a former military strongman, marked the first time in Nigeria’s 55-year history as an independent state that a ruling party was ousted by the ballot, not the bullet. After being governed by military dictators interspersed with elected politicians (see chart), Nigeria confounded the world by showing that a fragile democracy had taken root. Among the most surprised were leading figures in the PDP, which had held power since the end of military rule in 1999, successfully rigged every election since and fully expected to do so again.

The change in government has brought a new sense of optimism to a country that has generally failed to live up to its enormous promise. The one bright spot in recent years has been Nigeria’s rapid economic growth, averaging over 7% a year over the past decade, making it one of the world’s fastest-growing economies. Last year the country’s statisticians recalculated its GDP figures to take account of new industries such as mobile telecommunications and discovered that it had become Africa’s biggest economy, ahead of its main economic and geopolitical rival, South Africa.

Yet the benefits of that growth have been unevenly distributed and the economy has failed most of Nigeria’s people. The impressive growth rates hide a series of government failures that have held the country back from achieving its potential. Economists reckon that it could be growing about four percentage points a year faster, a rate that would allow GDP to double every six years or so. Such growth is desperately needed in a country where tens of millions still live on less than $2 a day.

Nigeria has vast oil and gas wealth, fertile soil, untapped mining riches and entrepreneurial people who excel abroad. But at home poverty has barely declined, inequality is rising and corruption is rife. A country that should be the region’s breadbasket cannot even feed itself. It ought to be Africa’s biggest oil and gas producer, yet it suffers crippling fuel shortages and the whole country produces only as much electricity as a single medium-sized European city.

And even such economic growth as it has achieved in recent 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 government’s finances, which still depend largely on oil, trimming its revenue by almost 40%. Many of Nigeria’s states are bankrupt, and the new government has inherited massive 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 fragmenting. Most of three states in the north-east, Adamawa, Borno and Yobe, covering an area about the size of Belgium, were under the control of Boko 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 prospect that it might fall. The loss of a city of almost 2m people would have forced Nigeria’s army to cede much of the north to the jihadists.

The turnaround has been extraordinary. An offensive against Boko Haram that got under way in February has driven the militants from most big towns and pushed them back into a few forest and mountain redoubts. Mr Buhari, who enjoys wide respect within the army, has promised to pursue this campaign with vigour. His asceticism and intolerance of corruption were on display even before his inauguration. One of his first orders was that his motorcade should obey the rules of the road and not inconvenience other drivers by blocking crossroads so that he could whizz through.

Quick, hand me my moral compass

Kleptocratic ministers and state governors who had expected another term at the public trough were soon looking for safe havens at home or abroad. Billions of dollars that had been stolen from the public purse were said to be making their way back. Officials were negotiating amnesties in return for handing back their loot, driven by a new fear that rules long put aside when Mr Jonathan was in office would now be enforced. “A lot of guys I know are getting their income tax in order,” says one Nigerian businessman. Civil servants have taken to turning up for work at 8am sharp instead of shambling in hours later.

That spirit of change has spread through the ranks of the country’s businessmen too. Investors are dusting off business plans for factories, hotels and shopping malls that had been languishing because the bribes to get them going had proved too much, or because they feared someone else might pay bigger ones. Foreigners have been snapping up Nigerian bonds and shares again, hoping that Mr Buhari’s government will revive economic growth. Even women selling groceries in the markets are filling up their stalls again, having run down their stock before the election because they feared it would be looted.

This report will argue that at last Nigeria has a realistic chance of fulfilling its potential. For that to happen, the new government has much to do, perhaps too much. It needs to focus ruthlessly on a few areas where it can make a difference quickly. The most urgent of these will be to improve security, not just in the north-east but also in the fractious “middle belt”, a stretch of states that more or less bisect Nigeria from east to west, as well as in the Niger Delta.

Mr Buhari will also need to restore faith in the institutions of government by clamping down on corruption. A good way to start will be to end energy subsidies that have become a perfect breeding ground for graft as well as a drain on the public purse. To unleash growth, he should forget about plans to promote industry by imposing high import tariffs, and instead concentrate on helping farmers get their crops to markets. With less meddling in markets and more private investment, electricity generation could quickly double. Given cheap and reliable energy, other parts of the economy, from manufacturing to film-making and e-commerce, could take off. But none of that will happen without a clean-up of Nigeria’s rotten politics, dominated by political “godfathers” whose interests lie in preserving the status quo, not the change that a majority of Nigerians voted for.

Books:
“Nigeria: Dancing on the Brink” by John Campbell. Rowman & Littlefield.
“This House Has Fallen: Nigeria In Crisis” by Karl Maier. Basic Books.
“Reforming the Unreformable: Lessons from Nigeria” by Ngozi Okonjo-Iweala. The MIT Press.
“There Was a Country: A Personal History of Biafra” by Chinua Achebe. Penguin Press.
“Boko Haram: Inside Nigeria's Unholy War” by Mike Smith. I.B.Tauris.
“The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa's Wealth” by Tom Burgis. William Collins.
“A Swamp Full of Dollars: Pipelines and Paramilitaries at Nigeria's Oil Frontier” by Michael Peel. Chicago Review Press.
“The State of Africa: A History of the Continent Since Independence” by Martin Meredith. Simon & Schuster.

Reports:
The World Bank’s Nigeria Economic Report
The IMF’s 2014 Article IV Consultation-Staff Report;
The IMF Selected Issues Paper
Nigeria’s renewal: Delivering inclusive growth: McKinsey Global Institute
Nigeria's Infrastructure: A Continental Perspective: World Bank 2011
Nigeria’s Interminable Insurgency? Addressing the Boko Haram Crisis
Who Speaks for the North? Politics and Influence in Northern Nigeria
Nigeria Industrial Revolution plan
AGRICULTURAL TRANSFORMATION AGENDA
Nigeria MDG Report
Oxford Poverty and Human Development Initiative
Challenging the myths of urban dynamics in sub-Saharan Africa: the evidence from Nigeria

Websites:
National Bureau of Statistics
Transparency International’s Nigeria page
BudgIT