Jonathan's Tough Choices


Nasir El-Rufai


Nigeria, a nation of over 150 million people generated a little over 2,000 megawatts of electricity last week. Ethnic, religious and political crises have claimed thousands of lives and displaced many more. Infant and maternal mortality are among the highest in the world. Education has practically collapsed. Infrastructure, where it exists is broken and neglected. Yet this year, government will spend more on petroleum subsidies than on power, roads, education, police and health care combined. This perverse prioritisation is indicative of the political economy of today’s Nigeria – and the tough choices facing President Goodluck Jonathan.

At stake is whether Nigeria remains a "Clique Democracy" or a real, people-driven democracy. Of interest to Nigerians and our friends is whether the current leadership has the character, vision and will to defy vested political and business interests to govern decently and grow the economy. A review of Jonathan's 18 months at the helm indicates that this is unlikely to happen. Jonathan's politics of deliberate division and militarization has pitted Northerners against Southerners and Christians against Muslims to the point that obtaining the cohesion and social harmony necessary for economic development will be difficult in the short and medium terms.

The elections of April 2011 and violent aftermath, as well as increasing cases of bomb blasts and assassinations have placed Nigeria at a crossroads once again. It is up to the president to either make tough choices - just to muddle through the next four years - or continue with business as usual, with the risk of propelling what should be Africa’s leading economy towards disaster.

In the last 4 years, the Yar'Adua-Jonathan administration and the ruling party governors have spent over $200 billion of oil and non-oil revenues, including over $23 billion the previous administration left behind in the Excess Crude Account (ECA), with little to show for it. Not a single major infrastructure investment or policy initiative has been concluded in four years! A third of that amount was spent under Jonathan. As Acting President and then President, he drew down the ECA to less than $500 million from the over $6 billion Yar'Adua left behind in a matter of months – practically sharing out the nation's savings account to State Governors, party apparatchiks and traditional rulers to buy their support for his presidential bid.

Not content with spending our national savings, Jonathan borrowed massively. Nigeria's domestic and external debts have increased rapidly. According to the Debt Management Office, our domestic debt rose from N2, 051 billion (US $14 billion) in 2007 to N3, 228 billion ($21 billion) by 2010 in the 30 months Yar'Adua was in charge. Jonathan ramped up domestic borrowing within a year to N4, 869 billion (US $32 billion) - thus borrowing a massive $11 billion in less than 12 months! Our external debt also increased from $3.719 billion at the end of 2009 to $5.227 billion by March 2011. No one can point to a new power station, seaport, rail network or interstate road initiated completed during this profligate period.

Worse still, Nigeria's budget for 2011 (approved barely two weeks ago) shows that the entire oil revenue projections for the year will barely pay the salaries and running cost of the Federal Government! This is in a country where estimates show that 30 million young people have no jobs – a demographic time-bomb waiting to explode. There is little or no investment in physical and human capital, even with the very high oil prices the administration has enjoyed. The result has been looming militancy in the Niger Delta, kidnapping in the East and the growth of violent anarchist groups in the North.

As to the claims Jonathan now has 'his own mandate', and will therefore be different from the poor manager of politics and economics than we have seen so far, I will allow legal luminary Itse Sagay to speak for me: “the desperate politicians of the South-South and the South East are barbarians. And I repeat it; they are barbarians because they did not allow elections to take place smoothly and freely”. The inconvenient truth is that Jonathan's mandate is fundamentally flawed, as a forensic examination of the ballots will prove sooner or later.

But what should be Mr. Jonathan’s focus?

Obviously, internal security should be Nigeria’s priority. Militancy in the Niger Delta, kidnappings, Boko Haram and the regular spate of bomb blasts fuelled by youth unemployment, worsening economic conditions and ethnic and religious divisions across the country point towards a failed state. However, Jonathan has deliberately exploited these divisions – some say subtly encourage them for political gain. Today, Nigeria is a highly fragmented country. A movement away from politicization of national security to the hard work of intelligence gathering and prevention will be more helpful than blaming innocent others.

Macroeconomic stability is another area the administration has to deal with. Food prices have been rising and rental levels escalating in response to the cartelization of building materials pricing. The Hobson's choice before the Central Bank of Nigeria is either to defend the value of the Naira and lose reserves faster than the $1 billion monthly so far, or allow the exchange rate to float and exacerbate inflationary pressures. Sadly, massive election spending, fiscal expansion, policy reversals and falling exchange rates have pushed inflationary trends upwards, left the economy unproductive and scuttled domestic and foreign investments in many sectors.

Few countries have road networks that are as poorly-maintained as Nigeria’s; the country has no functional railway system; seaports are decrepit and inefficient - and in need of massive investment and yet, there is no sense of urgency in government to attract much needed private investment in these critical sectors - and take advantage of the employment opportunities they create. The result is one of the most underdeveloped infrastructure in Africa - and one of the poorest countries in the world.

Even if Jonathan develops the vision and will to implement these urgently needed developmental strategies, he still has to contend with corruption and a broken public service. Corruption drives up the cost of doing business, derails government policy and is a major disincentive to foreign investment - which is critical to the country. An over-bloated, dysfunctional and poorly paid public service makes government both inefficient and costly! But does he have the wherewithal to fight corruption, after allegedly using crony capitalist and state funds - variously estimated at between 1 and 2 billion US dollars to facilitate his ‘election’? Does he have the impetus to induce the states and local governments to invest in human development and fight mass poverty on the one hand, and resist them and other vested interests on the other?

Many of his supporters think Jonathan's legendary good luck will somehow turn things around, but governance requires more than just luck. We have to wait patiently and see how things unfold. And as we always do in Nigeria, pray. While we are praying however, the signals are very scary. Because of the nature of his ascent to power, Jonathan is beholden to several vested interests from whose grip he may not be able to fight free. By all accounts, he spent the last 18 months pandering to those interests to secure his election as president. Shockingly, even before he was sworn in for his first full term, he indicated that four years would not be enough to achieve much. The import is that he may spend the next four years working for his re-election - and the entailing squandering of resources, including racking up massive debts. Just muddling through the next four years and preserving the nation he inherited may turn out to be a major achievement - if he is able to do just that.

Nasir Ahmad El-Rufai, OFR was the Director General of the Bureau of Public Enterprises (1999-2003), Minister of the Federal Capital Territory, member of the Presidential Economic Team (2003-2007), and member of the National Energy Council (2007-2008).