Nigeria’s Reagan?

Nigeria has never had a president committed to small government, privatization and liberalization.

September 1, 2013 • Commentary
This article appeared in The Washington Times on September 1, 2013.

The media’s attention in Nigeria is focused on its attempt to subdue Boko Haram, an Islamic jihadist militant terrorist organization that operates in that country’s Muslim provinces and that has been responsible for massacring hundreds of Christians and for the burning of schools and churches. However, the contest for Nigeria’s presidency is slowly taking shape. The 2015 election is likely to be dominated by economic issues and persistent poverty as much as concerns over internal security. In the past, capitalism was a dirty word in much of Africa. Today, many African countries are liberalizing, and some outspoken leaders, such as Orji Uzor Kalu, the former governor of Nigeria’s Abia state, are happy to proclaim the virtues of the free market.

The new millennium has been good to Africa. Its economy grew at an average annual rate of 4.9 percent between 2000 and 2008. Then came the financial crisis and growth dipped to 2 percent. However, since 2009, growth has averaged 5.4 percent. Between 2001 and 2010, six out of 10 of the fastest‐​growing economies in the world were in Africa. According to McKinsey and Co., a global management consulting firm, natural resources accounted for only about a third of Africa’s newfound growth. The rest resulted from internal structural changes that included the reduction of inflation, foreign debt, budget deficits, taxes and trade barriers, and improvements in the business and legal environments.

Africa may be slowly changing, but many Africans are rightly dissatisfied with the pace of reforms. Mr. Kalu started trading palm oil while still a teenager and grew his business to an international corporation with interests in oil and gas, banking and finance, media and publishing, real estate, manufacturing, insurance and tourism. By the time he became governor of Abia state in 1999, he was a wealthy man. Most Nigerian politicians, he points out, become wealthy during their time in the governor’s mansion. Today, Mr. Kalu is busy building political alliances that in 2015 could make him Nigeria’s next president.

One of Mr. Kalu’s recent initiatives was to help establish a cross‐​party pressure group called the G37. The group’s main goal is to ensure that the next presidential election is free and fair. That would be quite an accomplishment, considering that Nigeria’s 2007 presidential election was mired by fraud, and the 2011 vote by violence. Alongside Mr. Kalu, the G37 includes such luminaries as the former anti‐​corruption czar Nuhu Ribadu and former Nigerian Foreign Minister Henry Odein Ajumogobia. No doubt, a free and fair election would help Mr. Kalu himself. An Igbo by birth, Mr. Kalu would be able to count on support from one of Nigeria’s largest, but politically underrepresented, tribes.

Nigerians like to say, “Nigerians succeed everywhere, except in Nigeria.” Indeed, few countries can boast a political system as broken and corrupt as Nigeria‘s. Would Mr. Kalu be a different kind of leader? That is impossible to predict, but judging by his rhetoric, Mr. Kalu certainly represents a break with the past. “Nigeria needs small government and a large market,” he declares. “Instead of running businesses, the government should focus on making the business environment more conducive to foreign and domestic investment.”

There is a lot of work to be done. Nigeria ranked 131st out of 185 countries surveyed by the World Bank’s Doing Business report in 2013. The country’s byzantine bureaucracy is not only slowing private‐​sector growth, it is also one of the main sources of Nigeria’s fabled corruption. “You cannot make public officials less corrupt by appealing to their virtue,” Mr. Kalu argues. “You have to eliminate the source of corruption by drastically reducing the number of permits and licenses.”

Nigerian parastatals are another major source of corruption. The Nigerian National Petroleum Corp., for example, accounts for 76 percent of the government’s revenue and 40 percent of Nigeria’s gross domestic product. In 2012, two American nongovernmental organizations, Transparency International and Revenue Watch, ranked the Nigerian National Petroleum Corp. as the least transparent oil company in the world. The government, Mr. Kalu says, should sell the majority of the company to a private bidder and use the proceeds from privatization to pay off Nigeria’s debt. The Nigerian Coal Corp. and the Power Holding Co. of Nigeria should follow suit. The minority stakes in the formerly state‐​owned companies should generate enough revenue to pay for upgrading to the country’s creaking infrastructure.

Privatization, Mr. Kalu thinks, would also remedy Nigeria’s ailing public services, such as education. As professor James Tooley of Newcastle University wrote in a Cato Institute paper titled “Private Education is Good for the Poor,” in “three local government districts of Lagos state, Nigeria, we found 540 schools, of which 34 percent were government, and the largest proportion, 43 percent, were private unregistered. An estimated 75 percent of schoolchildren were enrolled in private schools.” Put differently, some of the world’s poorest people prefer to save and send their children to private schools than to rely on the qualitatively inferior schools run by the government. “The government should get out of running schools and hospitals,” Mr. Kalu avers. “Instead, it should focus on subsidizing the cost of education and health care for the poorest Nigerians.”

Nigeria has never had an Igbo president. More importantly, it has never had a president committed to small government, privatization and liberalization. Should Mr. Kalu run and win, millions of Nigerians will expect him to be as successful in government as he was in business.

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