A couple of weeks ago, Nigeria celebrated its independence on October 1st, and it has been a republic for 49 years now. As a Nigerian, through the blood of my father, I felt that it was important to do some sort of blog about it, almost like an economic outlook.
Upon reading the Bottom Billion, I reflected on what I had read. Reform is needed and quickly. Nigeria had a finance minister, a very knowledgeable woman whom had worked for the IMF, who was very quickly ousted, despite her major improvements and economic policy making. The Nigerian economy has been shaped by a reputation of political corruption like no other, greed, and fuelled by, well the obvious, oil.
Oil is has lured Nigeria into the trap that so many other countries have had to haul themselves out of, ‘The Natural Recourse Curse’. There are many anecdotes of kidnappings and mysterious disappearances in the Niger Delta region where oil is. My father likened the appearance of Shell in his hometown like the second coming of Jesus. ‘At one point, we believed that Shell was going to save us, the next, we wanted to kill Shell and they wanted to kill us.’ A wasteland ruled by rebels who patrol the area, and attack those who intrude, solely for the liquid beneath the ground. Oil turns people into barbarians – and makes people cruder and ugly than ever. Oil wars have plagued Nigeria, and its presence is almost holy and sacred, but in a warped, twisted way.
Nigeria has also had to contend with a civil war. War and the likelihood of war are both severely important factors for foreign investors, and can slow an economy drastically. (Paul Collier addressed this problem in his book). Nigeria must diversify and stop relying on the oil it has, (oil causes many problems). Nigeria can use its agriculture as another source of income but infrastructure must be improved so that exporting produce is not another problem.
Despite its misgivings, Nigeria has done pretty well in the recession in spite of the price of commodities falling, and most Nigerian banks have been able to raise funds in the midst of this recession. There is a joke that Nigerian banks have made a bigger loss over the past 30 years from pure corruption than this recession!
There is hope, however. Many skilled workers and professionals are returning from the UK and US, if only in drips and drabs, it is a promising sign. These people are hoping for better economic conditions and their return will only boost the economy as they build new business and are employed in important jobs. Nigeria is also labelled as one of the ‘Next 11’ in the emerging markets, alongside countries such as Egypt and Mexico and the BRIC countries. Nigeria is full of potential and promise.
A wise man from the Ivory Coast once said ‘Premier gaou ne gaou, c’est le deuxieme qui niata’. In plain English, don’t make the same mistake twice. I pray that Nigeria don’t fall back into the same trap that they’ve had to make small, awkward movements getting out of.
Currently Listening To: Plans - Bloc Party