With independence in the 1950s and 1960s, increasingly the African state became more developmental in nature and character. The realization that the absence of private capital, entrepreneurs and technology in post independent Africa was a barrier to economic industrialization, created the basis for the developmental state.
With independence in the 1950s and 1960s, increasingly the African state became more developmental in nature and character. The realization that the absence of private capital, entrepreneurs and technology in post independent Africa was a barrier to economic industrialization, created the basis for the developmental state.
The notion of the developmental state was first conceptualized by Chalmers Johnson who noted that “In states that were late to industrialize, the state itself led the industrialization drive, that is, it took on developmental functions”
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In Nigeria, State intervention in the economic process was overwhelming. The State not only dominated the commanding heights of the economy including the oil and gas industry, mining, telecommunications, power; they also took over such organisations like Daily Times and New Nigeria to the consternation of many. The failure of economic nationalism driven by the development state was not unexpected. The Nigerian Airways, the railways, Daily Times, New Nigeria, the state owned banks and the entire economy gradually declined and by the late 1980s under General Babangida, the economy had collapsed principally due to the clammy and pungent inefficiency of the state as an economic driver
The evident inability of the state to drive and sustain the process of economic growth and development in Nigeria as well as in Africa has been well analysed by both neo-classical and leftist scholars. Karl Marx it was who observed that “The State is non other than a committee for managing the whole affairs of the bourgeoisie” Onimode saw the failure of the Nigerian state in terms of ideological vacuum which Franz Fanon concurs with. Claude Ake also agreed with the notion of state failure being a product of ideological deficiency when he pronounced that "The ideology of development was exploited as a means of reproducing political hegemony; it got limited attention and served hardly any purpose as a framework for economic transformation" Gavin Williams however rejects the dearth of ideology as the reason behind state failure, to him, "The Nigerian bourgeoisie lacks the commitment of a religious socialist or nationalist character of the rationalising, capital accumulating, surplus expropriating classes of Britain, Russia, Germany, or Japan during their period of industrialisation. Perhaps it is this which lies behind the repeated call for a ‘national ideology’, which seeks to subordinate the energy of the people behind a single national goal. In fact the Nigerian bourgeoisie do have an ideology, in the sense of a theoretical legitimisation of the status quo. It is found in the concept of ‘development’..."
As usual, the left including the Marxists, neo-Marxists, Communists, Socialists with their archaic communist clichés miss the point. The Nigerian state like the state anywhere else is not only incapable of being a veritable vehicle for moblising labour and capital formation, it is also structurally deficient in terms of being a player in the market space. The Soviet Union, Cuba, North Korea and the COMECON economies attempted it and failed woefully. As a matter of fact the state is the state and the market is the market and the two do not meet.
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The Nigerian state emasculates entrepreneurship; it is incapable of marshalling venture capital and indeed the workings of the state abhor efficiency in all ramifications. On the contrary the state promotes and elevates inefficiency, ineptitude and decadence. It is not by accident that practically all the state owned industries and parastatals set up after independence have all either been deceased or sold off in the BPE led privatisation exercise, an exercise that remains probably the best thing that ever happened to Nigeria and the Nigerian economy. The Nigerian state indeed like the state anywhere has diverted the destinies of many institutions.
The NNPC set up in 1971 to be the flagship of the Nigerian State in the exploration, production and distribution of our hydrocarbon assets is today no more than a rent collecting agency for the state and a regulator of the oil and gas industry determining who participates and who does not participate in hydrocarbon exploitation and who gets and does not get which oil well. It is a well known fact that NNPC’ major function today is the collection of monthly rents from Shell, Exxon-Mobil, Chevron, Agip et al as well as the collection of bi-annual signature bonuses from the auction of oil acreages. The overbearing and malodorous influence of the state has left the agency too crippled, too leviathan and too inefficient to engage in meaningful wealth creation. A far cry from its peers such as Petrobras and Petronas in Brazil and Malaysia respectively which over the years, as a consequence of appropriate management and little government interference have become wealth generating and emerging multinationals.
The Nigerian Mining Corporation set up to exploit the vast and largely untapped solid mineral wealth of the country, generate capital through export and develop new and appropriate mining technologies is today nothing more than a derelict and decrepit decaying somewhere in the cold hilltop city of Jos. An agency set up with the best of intentions and peopled by well trained and well school professionals has been unable to live up to its economic destiny. Rather than engage in the mining and sale of gold, tin, coal, uranium, tantalite and the many other minerals that dot the Nigerian landscape, the best the NMC came out with was the production of red burnt bricks. Instead of realizing the futility of direct state involvement in this sector and encourage the engagement and participation of private capital and small mining concerns in the exploitation of these solid minerals, the state has sadly and incongruously over time overregulated the many small miners and mining concerns that attempted to invest in this sector out of business through over taxation, multiple taxation and market unfriendly policies.
The Steel industries at Aladja, Oshogbo, Katsina and Jos were all left to rancify and decay through mismanagement, the major hallmark of and corruption, the signature of the state. Until they were sold off by El-Rufai, these industries which were set up to be the launching pad of Nigeria’s industrialisation drive contributed practically nothing in terms of initiating industrialisation and foreign exchange inflow. Ajaokuta initiated with fanfare never even got off the ground despite billions of dollars pumped into it and hoary promises by successive governments. Nothing globally symbolizes a white elephant project as much as Ajaokuta. It still does! After its concession by the BPE, it is scandalous and heart-rending that that naked behemoth was taken over by the same state that for twenty years was unable to complete it not to talk of making it work. The Automobile assembly plants, the Niger Dock, and many other state run enterprises all met the same fate, the fate of failure occasioned by the supritendentship of the state; a state whose basic features are its corrupt and inefficient nature
It was against this background of state failure, depleting resources and pressures from the international community that President Olusegun Obasanjo reinvigorated the Bureau of Public Enterprises and appointed an equally invigorating Nasir El-Rufai to head it. The BPE between 2000 and 2003 when El-Rufai ran the agency and between 2003 and 2006 engaged in perhaps one of the largest sale of state owned enterprises that led to unviable and ill-run SOE’s being sold off to willing private entrepreneurs both local and foreign. The steel firms were sold off, so were the auto assembly plants, state run oil marketing firms, sugar companies and many others including NITEL the perpetually inefficient state owned retard. The exercise despite few glitches was a huge success with many of these industries and firms doing very well now, creating new jobs and expanding both horizontally and vertically under new ownership. The telecommunications sector, once the stronghold of NITEL which itself could only provide less than two hundred and fifty thousand phone lines in over fifty years of existence was liberalized and new entrants came in and revolutionalised the industry. Today there are over sixty million phone lines in Nigeria, a feat achieved in less than a decade as a result of the engagement of private capital with the industry and the disengagement of the state from the sector.
The corrosive power of the state reared its ancient head when the economically naive government of Musa Yar’adua government reversed the sale of NITEL, the refineries and the concession of Ajaokuta steel. This sad travel into a vicious and disparaging past though unjustified was widely hailed by a populace that is easily susceptible to populist policies. Yar’adua promised Nigerians that the refineries he forcibly took from its owners would all be working at full capacity by December 2007, six months after they were re-acquired. Until he died some three years later, none of the refineries were working at all. NITEL remains a shell of its old self and as for Ajaokuta, the government that took it over still has no clue whatsoever about what to do with that leviathan
Since 2005 successive Nigerian governments have espoused their desire to make the country one of the twenty leading economies by the year 2020. It is estimated in the most informed quarters that to achieve this feat, the country needs a sustained annual GDP growth rate of between 10%-15% over the next ten years. The Minister of Finance predicts that our economy will grow at double digit next year; this is despite the fact that since 2006 our real GDP growth rate has not exceeded 6% on average. Nigeria’s real GDP in prices in 2000 was $48.1 billion, $53.3 billion in 2002, $56.5 billion in 2003, $60.6 billion in 2004, $63.7 billion in 2006, and $66.4 billion in 2007. Since then it has fallen sharply mainly as a result of the flip flop and inhospitable policies of the Yar’adua administration including the reversal of the sale of the refineries, the re-acquisition of NITEL and Ajaokuta and the inquisition of the economic policies executed between 1999 and 2007 eventuating in a massive capital flight out of the country. This capital flight was further exacerbated by the global economic crises which led to a near collapse of the stock market, a situation that saw the Nigerian stock exchange fall in capitalization from over 16 trillion naira in 2007 to a little over 5 trillion naira since 2008. At this rate, it is unlikely if not impossible to achieve the desire of being amongst the twenty leading economies by the year 2020. What then can be done?
One major issue that will add value to the realization of the vision 2020 is the consistent and persistent implementation of domestic reforms, including accelerating and deepening the privatization programme as well as oil and gas reforms. Government should also monitor the results of these reforms against obvious benchmarks and specified timelines. Holding on to state owned enterprises will only continue to drain resources out of the nation’s treasury especially as investigations into the activities of these SOEs by the legislative arm of government have shown that these SOEs have contributed practically nothing to the national treasury since their inception.
Just like other places in the world where privatisaton has taken place – U.K, Brazil, India, Poland, Czech Republic, Slovakia, Chile, Egypt, Russia, etc, the privatized entities have emerged to play leading roles in the economies of these countries while the unviable ones have fallen by the wayside. It is pertinent to learn lessons from other climes, and the obvious lesson here is that sustained divestment of government from the commanding heights of the economy add value to the treasury and the economy as a whole. I posit that the privatisation exercise so far embarked upon by the BPE despite a few hiccups has been of immense positive value to the national economy and state. Consequently President Jonathan must make sure that government does not retain ownership of any enterprises. The state is not genetically made to play the role of the market neither is the market’s DNA designed to play the role of the regulator. While there should be co-operation, the state must realize that for economic development to take place and thrive, it must provide the enabling environment for the market and market players to thrive.
nosa james-igbinadolor wrote in from Abuja. He can be reached at [email protected]
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