Private Sector Development in Nigeria: Getting the Basics Right

The Nigerian President has vowed to create an enabling environment for private sector development in Nigeria [http://www.thisdaylive.com/articles/jonathan-hard-economic-decisions-on-the-way/94057/]. The President has also promised to protect local industries from foreign competition. While this sounds like a good way to help the growth of local industries in Nigeria (if well implemented), it is also not a magic bullet for private sector development. Protectionism is not new in Nigeria. Nigeria’s trade policy to some extent is focused on trade protectionism through import bans to protect its local industries against competition from foreign firms. This has not boosted local industries in Nigeria, rather only few industries have benefited from it. On the contrary, the main success story of Nigeria’s private sector has been largely driven by foreign direct investment in the telecommunication sector from companies like MTN which has created employment opportunities and small businesses for many Nigerians. The Nigerian government should focus on keeping to its promise of  reducing the over all cost of doing business in Nigeria which would involve addressing the power crisis, maintaining roads  and improving security in order to boost private sector development. This would be beneficial to both local industries as well as attract foreign direct investment to Nigeria.

How did Nigeria perform in the 2011 Failed States Index?

The Failed States Index is produced by the Fund for Peace; an independent Washington based non-profit research and educational organisation. The index highlights key issues affecting weak and failing states as well as normal pressures that all states experience. The index scores are interpreted as the lower the score the better. High scores show greater instability.

Nigeria ranked 14th position out of the 177 countries in the 2011 Failed States Index. It retained the same position as 2010 with a score of 99.9 (maximum and worst score being 120) which was a 'slight improvement'  from the score of 100.2 in 2010.

[http://www.foreignpolicy.com/articles/2011/06/17/2011_failed_states_index_interactive_map_and_rankings]

There are 12 indicators (Social, Economic and Political/Military) on a scale of 1-10 with 10 being the least stable/most at risk of collapse & violence and 1 being the most stable. Nigeria scored badly under the following;

• Group grievance (9.6): When tension and violence exists between groups, it undermines the state’s ability to provide security. When security is not guaranteed, violence and fear may ensue;
• Uneven development (9.0); When there are ethnic, religious, or regional disparities, the governed tend to be uneven in their commitment to the social contract;
• Legitimacy of the state(9.0); Corruption and a lack of representativeness in the government directly undermine the social contract;
• Public services (9.0): Progressive deterioration of public services, the provision of health, education, and sanitation services are a key aspect of the social contract; 
• Security apparatus (9.1);  The security apparatus should have a monopoly on the use of legitimate force. When the security apparatus is fractured or when competing or parallel groups exist, this weakens the social contract and;
• Factionalised elites (9.5): When local and national leaders engage in deadlock and brinksmanship for political gain, this undermines the social contract.

Nigeria’s performed best in the massive movement of refugees indicator with a score of 6 (which is still on the high side). Not surprisingly, Nigeria was ranked the second worst performer under the group grievance indicator as a result of the violence in the Niger Delta and the North. In the Western and Central Africa Region, Ghana had the best regional score (67.7) while Guinea had the worst score (102.5).

The Nigerian government should aim to be among the best performers in the Western and Central Africa region by tackling the weak areas identified in the index.  It should focus on achieving poverty reducing growth which would involve tackling corruption and improving security in the country. Nigeria needs to create an enabling environment for private sector development that would generate jobs for its people and boost the economy. The government should reduce the cost of governance and focus more on effectively delivering public services to the people. This would improve the lives of Nigerians and help to address issues such as group grievances and deteriorating public services mentioned in the index.

http://www.fundforpeace.org/global/library/cr-11-14-fs-failedstatesindex2011-1106p.pdf (The report of the 2011 Failed States Index)

Will increasing revenues to state governments improve development at the state level?

Professor Itse Sagay, a constitutional lawyer and Senior Advocate of Nigeria has called for an increase in the revenue allocation given to the states. Under the current revenue allocation formula, the Federal Government receives 52 per cent while the state and local governments receive 26.72 percent and 20.6 per cent respectively. He is proposing that Federal Government receives 20 per cent while the remaining 80 per cent should go to the states.[http://www.guardiannewsngr.com/index.php?option=com_content&view=article&id=51642:-sagay-seeks-new-revenue-formula-decries-graft-&catid=1:national&Itemid=559#comments].

Increasing funding to state governments will not automatically allow states to achieve development.  The majority of the states in Nigeria are yet to show results and impacts made from the ‘little’ allocation they receive. While I agree that there has been wastage of resources at the federal level, the states are also not immune from this. There have been many cases of corruption involving governors in the past. The focus should be more on ensuring more transparency and accountability in the management of public funds both at the federal and state levels. It would be necessary to see some results achieved first at the state level and identify areas that need funding for further improvement before making a proposal to increase funding to the states.

The rising cost of governance in Nigeria

An interesting analysis on the cost of governance in Nigeria. [http://www.thisdaylive.com/articles/the-cost-of-governance-i-/93539/]. 

Africa needs stronger governments

An interesting interview with the former British Prime Minister Tony Blair on Owen Barder’s development drums. He talks about his African Governance Initiative and stresses the need for Africa to have stronger governments in order to achieve development.
[http://developmentdrums.org/]

Does the Nigeria Freedom of Information Act protect whistleblowers?

One interesting part of the Nigeria Freedom of Information (FOI) Act is that it will protect public officers who disclose information to the public (Section 27).

What kind of protection would be given? The FOI Act bans any legal action (criminal or civil proceedings) against any public officer who shows information to the public despite the consequences it might have on the organisation. Also, it bans any public officer from facing any legal action for giving out information without permission as long as the officer believes that the information shows;

·  violation of any law;

·  mismanagement, gross waste of funds, fraud and abuse of authority or;

·  a substantial and specific danger to public health or safety.

Is this protection sufficient for whistleblowers? The answer is NO. While the FOI Act to some extent protects whistleblowers in the public sector by removing legal obstacles that affect public disclosure of information, it is still not enough.

Why? It only protects employees in the public sector from facing legal actions when they give out information. It does not protect them from issues such as dismissals, suspensions or demotions as a result of making a public disclosure. It would be necessary to have a comprehensive whistleblower law that protects whistleblowers from dismissals or suspensions. It would also be necessary to broaden the range of protection to include the private sector.

Witness Protection Programme in Nigeria; a necessity?

Tackling corruption in Nigeria requires a holistic approach which would involve efforts from Nigerian citizens as well as the government. Citizens need to be encouraged to take part in the fight against corruption. The Freedom of Information Act if well implemented will improve the fight against corruption as citizens will be empowered with the necessary information needed to expose corruption. However, the absence of a witness protection program reduces the incentive for people to come forward with information that would be helpful during investigations or to testify in cases of corruption. This is due to fear of reprisals or threats which whistleblowers and witnesses encounter. An example can be cited from the recent death threats sent to four witnesses in the ongoing trial for the N4.7 billion ($30.2million) pension scam. The witnesses were told to refrain from testifying in court or else they would die.

[http://www.thenationonlineng.net/2011/index.php/news/8507-n4.7b-pension-scam%3A-efcc%E2%80%99s-star-witnesses-get-death-threats.html]

This demonstrates the need for Nigeria to introduce a witness protection program. People need to know that they can be protected if they are witnesses in cases of corruption or crime. There is a witness protection programme bill in the National Assembly which is yet to be passed into law. It would be good to pass this into law as it will provide protection to witnesses during investigations and trials in cases of corruption or crime. This would encourage people to come forward and would help in the fight against corruption.

Former Speaker of the Nigeria House of Representatives arrested over allegations of fraud

An example of how public funds are being mismanaged while millions of Nigerians live in poverty [http://allafrica.com/stories/201106061547.html].

Nigeria Freedom of Information law: what does this mean for Nigeria?

The Nigeria Freedom of Information (FOI) law will usher in a new era. If well implemented, it will change the way government conducts its business. Some key provisions in the law would mean the following:

• Anyone has the right to access public records. This would empower all Nigerian citizens to effectively track government activities. It would enable Nigerians to hold government accountable when necessary particularly in the event of misappropriation of public funds or failure to deliver public services.

• Government agencies are required to keep records and publish all information regarding its activities, operations and business. They are also mandated to widely disseminate this information through various means including print, electronic and online sources. This would compel government agencies to publish and widely disseminate information such as its accounts (budgetary allocations and expenditures) thereby making government agencies to be more accountable to the people. It would also ensure more transparency in the management of oil revenues such as the Sovereign Wealth Fund;

• Anyone has the right to challenge any government agency that refuses to grant access to information and have it reviewed by the court. More interesting is the punishable offence given to any public officer or public institution that wrongfully denies an applicant access to information. Such an officer or public institution would be liable to pay a fine of N500, 000 (about $3,200 USD) if convicted; and

• Prohibits any public officer or public institution to purposely destroy or falsify public records. It is a criminal offence and if convicted by the court, would be subject to a minimum of 1 year imprisonment.

The time limit for granting access to information was missing from the Act obtained from the National Assembly website [http://www.nassnig.org/nass/acts.php?pageNum_bill=9&totalRows_bill=151]. Hopefully this is a mistake and the provisions should not have changed much from the earlier harmonised version of the bill. The harmonised version of the bill states that information should be made available to applicants within 7 days of making the application. If this is the same as the signed copy or if a definite time limit is present in the signed copy of the Act, then the FOI law would be a very strong law. 

Nigeria gets Freedom of Information law

President Goodluck Jonathan vowed to transform Nigeria during his inauguration. He has started keeping to his promise by signing the Freedom of Information bill into law [http://allafrica.com/stories/201106010269.html]. This is a welcome development and shows commitment from the new government to improve governance in Nigeria. The Freedom of Information law would enable Nigerian citizens to have easy access to public records. This would make it easier to effectively scrutinise government activities particularly in the management of public funds. Congratulations to the Media Rights Agenda and other civil society organisations who have worked very hard in the last 10 years to get the Freedom of Information Bill passed into law.