Chinua Achebe was arguably the greatest writer of our time. His works remain evergreen and have been translated into numerous languages across the world. One of his titles that I can never get tired of reading is ‘Things Fall Apart’, the epochal tale of how the near perfect Igbo society was torn apart and its values destroyed by the arrival of the colonialists. One interesting episode he related in the book was about Obiakor, the palm wine tapper who, at some point quit his job, ostensibly after the oracle had advised him to stop climbing palm trees or risk falling off from one and losing his life. Another was about Unoka, the good-for-nothing father of Okonkwo, the hero of the book. He was said to have earlier gone to consult the oracle not too long after his own father had died. The oracle, as the story went, informed Unoka that his dead father wanted him to sacrifice a goat to him. Unoka retorted brusquely and asked the Oracle to find out from his father, who was asking for a goat, whether he ever had a fowl when he was alive.
Nigerians had some time ago, been described as the happiest people in the world. Don’t ask me what parameters were used to arrive at that conclusion, but we all lapped it up and glowed in the attention that came with it. For now, what I know is that we are no longer anywhere close to the leaderboard of that ranking. In fact, if there is a ranking for unhappy people, we may not be too far from the top, just as we rank in many other indices that portray low quality of human existence. Be that as it may, our sense of humour has remained legendary and is even getting more exceptional. Even in the face of our excruciating and deteriorating condition of existence, a Nigerian would always find a way to make light of any situation and get people to laugh. Indeed, the self-deprecating humour of Nigerians has become as creative as that of the Irish. As news broke within the week that the US government was set to return another batch of the Abacha loot, this time $308 million, the social media went agog with all sorts of hilarious comments about the recovery of the loot. The following was one of the more remarkable posts that went viral: “Over twenty years after, one of our ancestors keeps sending us alerts from yonder. Nigeria is such a lucky country to have caring ancestors. Thank God we are not like those wretched African countries whose ancestors keep asking for sacrifices from the living”.
Even though the American government and the government of Jersey got us into an agreement on how the funds would be used to ensure that the repatriated loot was not re-looted, we remain grateful to them for helping the living with the reserves created by one of our remarkable ancestors. The agreement, signed on behalf of Nigeria insists that the funds must be used for infrastructure in clearly identified projects. Specifically, the agreement states that part of the funds would be deployed to the completion of the 127.6 kilometre Lagos-Ibadan Expressway. A portion of it would also go towards the completion of the Second Niger bridge which the Federal Government awarded to Julius Berger at a cost of N206b last year. The scope of work includes the construction of 1.6 kilometer-long bridge, 10.3 kilometre Highway, Owerri interchange and a toll station. This project is expected to be completed in 2022. It is said to be 40% completed at the moment. Finally, the remaining part of the fund will go into funding the Abuja- Kano 375 kilometre highway awarded to Julius Berger in 2017 at a total cost of N155.7b
All these were sounding well until further information came in that all the money was not coming back. Trust them not to do anything for free! To compensate them for helping Nigeria repatriate the looted money, the government of Jersey will retain $5 million in respect of its costs and expense in the recovery of assets, while the US will retain up to $5 million in respect of its costs and expenses, according to the agreement. The emissaries from our departed ancestors don’t come cheap at all!
As if that was not enough, the sum of $18 million was paid into the Royal Court of Jersey pending resolution of a claim by a third party. Besides, there is no evidence that the looted funds that have spent over 20 years in a bank in Jersey attracted any interests whatsoever. We are, however, mindful not to shout too much so as not to annoy the ancestors and the oracle who could in turn keep back the money and ask that we come and offer more sacrifices instead. One good part of the agreement is the appointment of the Nigerian Sovereign Investment Authority (NSIA), commonly known as the Sovereign Wealth Fund, as the independent administrators of the projects under the funds. There was also the appointment of independent auditors and the establishment of a monitoring team comprising the three governments to ensure that the implementation of the agreements are not in breach.
Of course, we are aware that following the announcement of the agreements, there have been agitations from some local commentators as to the fairness or otherwise of the location of the infrastructure as some regions seem to have been left out. Since we know that there is still the approved budget for the year, and we also know that this money cannot solve all our problems, we have chosen not to pay too much attention to the agitation in this piece. We are also privy to an interview granted by Hamza Mustafa, former personal staff of the late Head Of State to the effect that the recovered money was part of the loot of some subsequent heads of State after Abacha. Our response would be to thank him for disclosing that indeed, he is aware of some other loot by subsequent leaders and since we are interested in recovering all loots, the authorities should get more information and vigorously pursue the newly disclosed funds as we are certain that the funds under discussion came from that benevolent ancestor.
It is very interesting that this repatriation story came exactly one week after our intervention on January 27, calling for a new approach towards raising investible funds in the country. We had insisted that the frenzy towards the attraction of foreign capital for growth in the investment sub sector of the economy may be misplaced.
About the same time, the private sector arm of the World Bank, the International Finance Corporation, IFC, announced that Nigeria had been delisted from the top 5 investment destinations in Africa. Of course, there were very good reasons for that and quite frankly, one was surprised to realise that we were still on that list till recently. This is because we had been lacking in most of the criteria required to remain on that list in the last few years. We must all agree that as an economy, we are very slow at carrying out the required reforms. The economy remains palpably fragile as economic growth continues to underperform population growth. Human development indices continue to show declining numbers in several key areas like education, financial inclusion and healthcare delivery. Infrastructural decay continues to scare away investors, particularly the local ones as the cost of doing business continues to soar. Our records in the area of security is anything but encouraging. Even in the area of corruption, we are still seen as doing an abysmally poor job of containing it, despite all the public declarations that we continue to make. Therefore, the question would be: why would an investor consider us as one of the countries that is safe to put his money? The truth is that no discerning analyst will be surprised at the action of the IFC. One question we should ask ourselves is this; if one were not a Nigerian, what would be the compelling reason to come and invest in this country?
While it is not our intention to celebrate our delisting, we believe that the right response should be that we had considered delisting ourselves before the IFC delisted us. I believe that message should not be lost on our policy makers and relevant government agencies. It is instructive that most of the conditions that make the environment conducive to attracting foreign investment are also the conditions that would equally attract local and diaspora investors. We need to make this point so as not to be understood to mean that we should call the bluff of foreign capital and come back and remain the way we are. Doing that will also scare our locals from investing in our economy. The reality, however, is that there are a few conditions that our locals may not make heavy weather of, that foreign capital will not accept.
So, going back to the huge investible funds in the diaspora and the repatriation of looted funds that are kept away abroad, we somehow agree with Mr. Hamza Mustafa to some extent. It is not debatable that sizable funds are kept in non-interest yielding accounts abroad and those funds have been there for several years. We seem to have focused only on repatriating the Abacha loot and we believe strongly that this is necessary. Nevertheless, we also believe that it is imperative to come up with strategies of getting most, if not all, funds in foreign bank accounts back to the country. This was one of the key points we argued a fortnight ago. I think we should listen to the people that had advocated some kind of amnesty for the owners of such funds who had safely hidden them abroad. This is because if it is true that they can continue to hide such funds and deny us their use, then we gain nothing by pretending to operate from a moral high horse while losing the opportunity of getting those funds back here to work for us. Interestingly, most of these people are aware that stealing, indeed looting, has not stopped in this country. The whole process should be set up in a way that no public show is made of such repatriation. It could be a straight and confidential agreement between the state and the individual. Some tax incentives could be an added sweetener to such a deal. For those funds that would go straight to the Central Bank of Nigeria, an attractive interest rate could be worked out for holders of such funds. A window of one year could be created, beyond which, the government could seriously and vigorously pursue those who would not take advantage of the window to bring back their funds. The government should also continue to negotiate to bring back funds like the recent Abacha loot and ensure that these funds are returned at the shortest time possible.
Having addressed funds deposited in foreign accounts, it is also important to focus on domestic capital formation. There are different ways to encourage domestic investment in the economy. The most effective is through economic policy. Economists believe that under normal circumstances, human beings are rational and would act in their self-interest which in turn would positively affect the entire economy. Of course, there are exceptions to this rule, just like every other rule. Economic policies that encourage high interest rate regime would encourage saving the money in the bank rather than taking risks like hiding the money under mattresses and cellars. Economic policies that make it possible for people to make money by selling foreign exchange will encourage speculation in the foreign exchange market. In that case you have so many people hawking foreign exchange on the streets.
If the rate of inflation is higher than interest rates, then the rational investor would rather invest the money than save it in the bank and face the prospect of earning negative real interest rates. If the cost of production is escalated by the cost of infrastructure, investment in the local economy would decline. If the level of ignorance is so high, people may take decisions that make no sense at all, simply because they can’t do any better. Like I pointed out earlier, they may start hiding their money under their pillows or digging the ground and burying them. It is in this respect that education becomes very key. There is also what is called moral suasion, where government mounts a vigorous campaign to push an agenda that it believes would produce the desired predetermined results in the economy. It is also the educated or exposed investor that would be able to understand the relationship between what is lacking in the economy and investment.
Having spoken about infrastructural gap, a discerning local player should be thinking of deploying the capital available to him towards closing the gap. In doing that, he makes more money, addresses the productivity problems with his output, creates jobs, improves economic activity and pays tax to government. Even food, for over 200 million people or fractions thereof, is a veritable area where an investor cannot go wrong. Of course, in between there are a lot of needs that can be resolved by local investors. At the top of the pyramid is the more sophisticated area of science and technology. With improved solutions deploying artificial intelligence, robotics, big data and 3D printing, investors that are versatile and well exposed have limitless opportunities. Herein lies the difference between the Aliko Dangotes and the rest of us!
Credit: Alex Otti, Thisday