I am sure we have heard the news. Forbes thoroughly slaughtered Nigeria as an investment destination, naming our dear country as where to go if you really want to lose money. After the damage from two major studies in 2018 that left us with the label of the poverty capital of the planet, with desperate need for investment capital to help turn things around, this is a sucker punch. Forbes dubs Nigeria Africa’s money-losing machine.
I was inclined to look past the report and say nothing. Reason, the passion to correct, and the fervour for Nigeria’s renewal lead to comments that sometimes seem to point to things not so palatable. With that, there is danger of being seen as a prophet of doom. No true citizen or patriot desires that label. So, I was going to pass on this; even though in some way, such a choice is reverse treachery, for anyone truly committed to the Common Good. But playing in the Public Sphere challenges everyone with hard choices. So, I was going to vote for silence, with its troubling outcomes. But I remembered my favourite prophet, Amos, and I wondered what that prophet of Social Justice would do, and I reversed myself.
Part of the reasons I did so is because my sense is so strong, from experience of an intimate following of the Nigerian development experience for nearly 45 years, that I feel strongly that if we fail to confront the hard issues again and end up with superficial efforts, we celebrate as progress, the consequences could be cataclysmic. Nigeria just simply cannot afford more band-aid (plaster) on a deep cut. The Forbes finding comes from fundamental problems with our institutions and popular culture, and exercises around the ease of doing business, will not resolve the problem.
To run from sounding intellectual, let me illustrate with personal experience as a business angel involved in many business start-ups and as a serial entrepreneur who believes in testing out just about everything he teaches, in the field.
I wrote a book, Business Angel as a Missionary, chronicling a small part of those experiences of ventures I helped found. So when I say that the greatest risk of doing business in Nigeria is not market risk but regulatory risk and the general attitude of government to business, I talk from experience. While a few in positions of authority in Nigeria may deeply reflect on the consequences of the MTN saga of recent months on the perception of Nigeria as an investment destination, I can speak to personal consequences for my own experience as a citizen in some decent standing. Were I not of a certain die-hard on wealth creation, I would not be embroiled in green fields agric/industrial town project I am currently developing in Edo and Delta states, and settled for using my networks to extract rent from the system.
In 1994, I co-founded the company that got Nigeria on the Internet, Linkserve. When I was making the pitch to investors, presenting the business plan, at a dinner at a Victoria Island restaurant, one of those potential investors, Erastus Akingbola, in an honest comment said the project carried big risk. It would be leasing EI lines from NITEL. That parastatal, he thought, could just wake up one morning and pull Linkserve off the plug. I was rescued by Tunde Dabiri who said there could be ways of mitigating that risk. We raised necessary monies and inspired a quantum leap in value creation with the founding of the firm. Within weeks, Akingbola’s fears came to pass. But we were lucky to mitigate the risk first time out. To compare that experience with that of Israel as reported in the book, Start Up Nation, by Dan Senor and Saul Singer, tells the story.
Having a significant stake in a foremost technology company that should be worth a few billion dollars today should be a due reward for effort. But a variety of ethical, and regulatory issues have left me holding zero today from that effort.
When I teach the role of institutions and entrepreneurship for economic growth, I often turn to the work of Raghuram Rajan and Luigi Zingales in the book, Saving Capitalism from the Capitalists. They show well how the US environment better sustains the process of creative destruction which disrupts but sustains economic advance. Their truth comes so clear in my own venture in financial services.
I had for years told students that the problem with institutional growth in Nigeria was the way Africans relate to being in authority positions. To give a uniform of authority to most in Africa was to make them bullies instantly. Just watch the policeman, soldier, LATSMA person, etc deal with the public. I told them for years that Douglas North’s book on Institutions, Institutional Change, and Economic Performance shows how interested parties engage for the evolution of institutions. The problem, I often charged, was that stakeholders were often shy before power in Nigeria. I even sometimes suggested as root of the problem the fact that in more mature countries, the powerful founded government and thrived on legal plunder which then had to be checked by instruments of governance while in decolonised society’s government patched together by colonials predated local wealth and entrepreneurship. So government is presumptuous and abusive of citizens’ rights and the evolution of governance is on how to contain that.
Here government came first and becomes the first mover, making its authoritative allocation of values the source of wealth and privileges.
My becoming involved with ventures in financial services would reveal to me how right Douglas North and my admonitions, both in class and in my book, Managing Uncertainty — Competition and Strategy in Emerging Economies, were.
First, there was Lead Merchant Bank. Oba Oladele Olashore of the blessed memory had invited a few friends to invest in the venture. I borrowed and mortgaged assets to be part of what would be sturdy small investment bank delivering value. That would be my retirement nest.
All seemed to be going well until the CBN decided size was the problem. A new capital base of N25bn was set. I was away in Barcelona at the World Expo when I heard the news. From there, I wrote an Op-ed piece critical of the Chukwuma Soludo one-size-fits-all solution, citing a few British banks that were up to a hundred years old but serving just a few customers alongside multi-billion dollar High Street banks. But a few stakeholders spoke up. They felt intimidated by the regulator, the way citizens are frightened by men in uniform. It was probably only Atedo Peterside and I that publicly expressed dissenting views. That error has become a model for regulators in banking, insurance, and other sectors where virtue is found in not consulting stoutly the stakeholders. The insurance sector is currently battling that again.
Credit: Pat Utomi, Punch