The Political Economy of Nigeria: Challenges and Opportunities for Reform By Professor Kingsley Moghalu

Being a Public Lecture by Professor Kingsley Moghalu, OON,
Oxford Martin Visiting Fellow,
University of Oxford
Oxford Martin School
University of Oxford
November 24, 2021

INTRODUCTION
With 200 million people and an estimated Gross Domestic Product of $440 billion in 2021, Nigeria is Africa’s most populous country and the continent’s largest economy. Despite the country’s potential at its independence from Britain in 1960, when the country seemed destined to achieve qualitative economic development and even structural transformation, it is currently
experiencing deep economic distress and its internal cohesion as a nation, always troubled at best, has worsened in recent years. Insecurity from terrorism remains a big challenge to the daily lives of millions, state capacity is weak, and the very legitimacy of Nigeria itself is increasingly challenged.

While it is tempting to focus on the largely negative indicators that dominate the country’s political and economic situation, admiring the problem is not an option. There is a path forward for Nigeria to make transformational progress, we must find and walk that path. But, to solve Nigeria’s problems, we must understand what precisely those obstacles are, and take a political economy approach to confronting them.

Why a political economy approach? This approach is required because, especially for developing post-colonial states and the evolution of their economies, questions of poverty and the possibility of widespread creation of wealth for and by citizens, depends, largely on how a country’s politics and political system, laws and government frame the national economy and how productive the economy can be. There is no shortage of brilliant economists in Nigeria, but 90 million of its 200 million citizens live in extreme poverty. It is the country’s politics, which is focused on power capture by the elite and the consequent opportunities for corrupt enrichment, patronage, and rent
creation, rather than economic productivity and improving the standard of living of citizens broadly, that has framed this outcome and reality.

THE FOUNDATION
Like many sub-Saharan African states, Nigeria is an artificial creation, rather than an organically developed state. The British colonial enterprise put together several ethnic nations in one state without their real consent, in the Amalgamation of the Northern Nigeria Protectorate and the Southern Nigeria Protectorate of Lagos in 1914. Northern and Southern Nigeria had extremely
divergent backgrounds. The North was dominantly Islamic, and religion played a central role in social and political life. The South was mainly Christian, more aligned with capitalism and mostly religious and evolved to be more secular in its political culture. The Southern Protectorate was also economically more advanced than the Northern Protectorate. The most important reasons for the amalgamation of the two protectorates with two highly divergent worldviews was economic. This reflected the main impulse for colonialism – the Industrial Revolution created a need for new sources of raw materials and new markets for finished products. A research of
the historical archives makes clear that Britain merged the two Protectorates to utilize the budget surplus of the Southern Protectorate to subsidize its deficit financing of the Northern Protectorate, and to improve a network of railways between the two protectorates. And yet, British colonial officials, perhaps out of a sentimental attachment to a shared feudal culture, always had a stronger political, cultural and strategic alignment with Northern Nigeria’s political and religious elite than with the largely Christian Southern Nigeria, home to the most vociferous leaders of the movement for independence from colonial rule such as Nnamdi Azikiwe,
Obafemi Awolowo, and Anthony Enahoro.

The tripartite regional structure of Nigeria in the 1950s, combined with the parliamentary system of government instituted by Britain as colonial power, led to the development of ethnicity-based politics, even as federalism resulted in steady economic growth in the various regions of the country. One of the implications of this trajectory was that Nigeria had no single founding father around whom national identity and consciousness could cohere in the manner of say Seretse Khama of Botswana, Julius Nyerere of Tanzania, or Kwame Nkrumah of Ghana, but rather, it had three founding fathers who were regional premiers on the eve of Independence from Great
Britain – Nnamdi Azikiwe of the Eastern Region, Ahmadu Bello of the Northern Region and Obafemi Awolowo of the Western Region.

While Nnamdi Azikiwe was the primus inter pares among the three stalwarts in the context of the struggle for Nigeria’s independence in which he was clearly the leading light, this was not the same thing as being the singular, universally agreed source of national inspiration. These beginnings were to have important implications for Nigeria’s political and economic evolution. We must recognize these difficult foundations, not because we cannot make Nigeria a truly great country despite them – I believe we can – but because we must know, consciously, the roots of the obstacles we must work to overcome.
That way, we work smartly from an informed position of knowledge of both history and context.

NIGERIA’S STRATEGIC CHALLENGES
Any poll of Nigerians will throw up a myriad of issues each believes are the country’s biggest challenges. But I believe we must narrow these challenges down to the most strategic few. These issues should be identified based on their systemic influence and consequence on the country’s security and its political and economic progress. In other words, their causative, rather than
symptomatic impact – their knock-on effects.

Based on this criterion, I identify seven critical reasons for Nigeria’s underperformance and current dysfunction. These challenges are:

1. Decline of national security and a sense of nationhood
   ii. Weak political order formation.
   iii. Decline of State Capacity and the Elite Class
   iv. The curse of oil
   v. Corruption
   vi. Uncontrolled population growth
   vii. Loss of global influence

The Decline of National Security and Nationhood
Nigeria’s territorial integrity, as well as the safety and security of the lives of millions of its citizens, is under military threat from an assortment of terrorists. The country’s Northeast zone has been under terrorist attacks from Boko Haram (and more recently in an alliance with the Islamic State West Africa Province, ISWAP) for the past 12 years. In the Northwest, terrorists
euphemistically termed “bandits” increasingly hold sway. In addition, terrorist “herdsmen” have spread out across the country, mainly in the Middle Belt and the Southwest and Southeast zones, attacking, killing and maiming civilian populations, appropriating farmlands and sacking communities from ancestral enclaves. Despite the gallant efforts of Nigeria’s Armed Forces, they have not been able to subdue and prevent continuing terrorist attacks in the manner a strong state should.

Bornu State in Nigeria’s Northeast has been most afflicted by the Boko Haram terrorist attacks, with an estimated 34,000 Nigerians killed in that area between 2011 and 2021 (Simona Varrella, 2021). Another 23,000 people are estimated to have been killed in the same period by terrorists in Zamfara, Kaduna, Adamawa, Benue, Yobe, and Plateau states. Nigeria could be dismembered by terrorists.

Beyond the immediate security threat lies a slow unraveling of nationhood. Although Nigeria satisfies two out of three elements of one perspective on Nationhood – sovereignty, self-determination, and self-sufficiency, it fails as a country to meet the key elements of another definition – shared identity, history, culture, language and priorities.

Many Nigerians today self-identify with their ethnic origin before their Nigerian citizenship – increasingly considering the latter as an imposition. Thus, the constant hearkening to a phrase once deployed by Chief Obafemi Awolowo as far back as 1947, that Nigeria is “a mere geographical expression.”

Today, the absence of nationhood reveals itself in three very important ways. The first is the rise of separatist agitations by some individuals amongst the country’s ethnic groups. These include the neo-Biafra movement in the Igbo Southeast region, the Oduduwa nation movement in the Yoruba Southwest region, and the Niger-Delta Republic Movement in the country’s oil producing Niger Delta.

Alongside these internal self -determination struggles, are several other agitations based on feelings of political “marginalization” including in the mainly Christian-minority ethnic groups in the Middle-belt of Nigeria’s Muslim majority Northern regions. While these agitations certainly do not represent a majority view among the Igbo and Yoruba of Nigeria, they have effectively challenged the very legitimacy of Nigeria’s statehood, let alone nationhood.

The second manifestation of fractured Nationhood is a combination of the Federal Government of Nigeria’s failure to end the terrorist war against the Nigerian state by Book Haram and ISWAP. Many Nigerians attribute the Nigerian Government’s failure to defeat Boko Haram and other terrorists in the Northeast and Northwest regions to a combination of clashing ethnic and
religious loyalties to the Nigerian State and to the ideologies (or, in some cases, territorial control) of the insurgents, on the one hand, and corrupt incentives from self-enrichment opportunities for some in the country’s armed forces in the long-drawn war, ongoing for the past 12 years, on the other.

Statements and actions by a few of the country’s political leaders defending the proposition that official Nigeria government actions can advance the interest of non-Nigerians with whom the officials share an ethnic heritage, have only served to weaken any sense of Nationhood amongst Nigerians. The controversial investment of Nigerian resources in the construction of railway
line to Maradi in the neighboring Republic of Niger is a case in point.

The third evidence of an increasing absence of Nationhood lies in the fractious controversies over the rotation of presidential power between the North and South of the country. While many will argue that this practice, which has come to be widely accepted, in an essential unwritten compact to foster political stability, the very fact of its existence points to the fragility of Nigeria’s nationhood.

Without fixing the fundamental challenge of the decline of nationhood, it will be difficult for Nigeria to make real progress on any other front including security. The reality is that           perceptions of symbolisms, gestures, fairness and others, including in the distribution of important political and security appointments, often matter highly in nationbuilding.

Distorted Democratic Development
Our democracy, restored in 1999, has overall not served the purpose of the formation of a stable truly democratic order characterized by state-building with strong institutions, respect for the rule of law, and truly accountable governance. It also has not led to economic development and structural economic transformation, although we experienced relatively strong economic growth rates in the 2000s and the early years of this decade, which coincided with the commodity super cycle.

What we have had is civilian rule, a semi-democracy at best. Politics has been a contestation for personalized unaccountable power by factions of  a political elite for the purpose of corrupt self-enrichment, control of patronage and the creation of economic rents with instruments of state authority. There exist no real political ideologies, no real capacity for leadership, that can transform Nigeria’s increasingly impoverished society, and little evidence of good governance as a vehicle for the expression of such leadership. Elections have been all too frequently rigged.

Nigerian’s citizens feel powerless against the traditional political elite because the citizens are mostly poor, lack political education, and have been psychologically subjugated by corrupt politicians into preferring the fleeting high of identifying with likely “election winners” who turn out to be unable to govern – bandwagons to nowhere – instead of candidates with substance, but
who often lack the financial resources available to the dominant political parties that have access to public funds.
The whole idea of democracy – the power of the people to decide who governs them – is thus turned upside down. Worse, unlike the 1950s and 60s, when intellectuals and the professional class were dominant in Nigerian politics, post 1999 politics has bred a political class that is distinctively anti-intellectual and appears averse to ideas as a force for societal change and progress.

Of course, while it can be said that the evolution of political order in several parts of the world, in particular in the Western world – the process of “getting to Denmark” achieved by countries such as Denmark, Sweden and the United Kingdom with strong modern states, rule of law, and accountable government – often has taken hundreds of years, this is not an excuse for a delayed
achievement of real democracy and economic turnaround in Nigeria.

We have seen from examples in Asia, that societies can make quantum leaps in development within a timespan of 50 years – even if not necessarily copying Western traditions in every respect. Nigeria owes it to itself and its citizens to pursue foundational reforms in its democratic process that can foster political order formation. Thankfully, as we will discuss later in this paper, some encouraging early seeds in this direction are sprouting.

The Decline of State Capacity and the Elite Class
State capacity in Nigeria has steadily declined over the past 40 years. Development and political economy literature, including works by Shiti Khemani, Mark Dincecco and others, tell us that state capacity is the ability to achieve policy goals. It is measured mainly in three broad ways:

(1) The ability of a state to defend its territory and provide internal security for its citizens.
(2) The ability to extract taxation efficiently and effectively for fiscal governance in the context of a social contract between the state and its citizens.
(3) The ability to deliver administrative services and public goods such as health and education effectively. When a state’s capacity is weak in these contexts, that state is a fragile one, or in extreme cases, a failed state.

While Nigeria in the 1950s and 60s, and well into the 1970s, had a civil service that was efficient and effective, the state bureaucracy today has markedly declined, and is today stagnant, inefficient, bloated, and unproductive. This situation is a product of lack of investment in training, reduced professionalism and, perhaps most importantly, a progressive loss of
independence and politicization of the civil service.

The public education sector has also suffered a steep decline, as a result of low prioritization of education in government spending, the politicization of decisions about numbers and the locations of educational institutions tertiary institutions. This has led to a flight toward privately-owned educational institutions.

It will be difficult for Nigeria to achieve its development goals without a strong, effective bureaucracy and public sector educational system. This is a critical reason why policies by Nigerian governments suffer from weak implementation – the bureaucratic structure to implement policy effectively is weak.
The Nigerian elite – the middle class – is in retreat. First, it is economically emaciated, and more and more Nigerians fall on hard times economically.
Secondly, it is absent from the national discourse, as members concentrate on earning their daily bread, or align with the elite for relevance and advancement. Most important, the elite class has abdicated its role in mediating between the political class and the poor through guidance and influence as role models, leaving the political space as one solely occupied by
ravenous politicians and the hungry poor whose votes can be easily bought.

The Curse of the Petro State
Nigeria is a prime example of the resources curse, in which many countries with abundant natural resources end up badly governed and economically backward. Oil contributed only 9% of Nigeria’s GDP in 2020 but retains and outsized importance in Nigeria’s political economy because crude oil sales account for 70% of total government revenues and, even more significantly, 90% of all export earnings. The county has earned $700billion from oil sales in
the past 20 years.

The most important consequences of the rise of the oil economy from the early 1970s include its negative impact on federalism, the constitutional structure  on which Nigeria was founded, but which was shuttled down by successive military governments that gave the federal government ownership of mineral resources. Under the current revenue sharing formula, the Federal
Government of Nigeria gets 52.68%, 26.72% to states governments, and 20.60% to local governments (in reality, revenues meant for local governments are commandeered by state governments).

The dominance of the oil sector as a revenue earner has exposed the Nigerian economy to oil price shocks that have destabilized fiscal management, prevented the diversification of the economy (Nigeria was well on its way to industrialization in the 1960s), and resulted in a current foreign debt burden of $35billon, with 90% of government revenues going to debt servicing. All of this damage does not include the pervasive rent-creation and rent-seeking incentives created by an oil-dependent economy, environmental degradation, ethnic conflicts and poverty created by oil dependence.

The central economic challenge that confronts Nigeria is how to move beyond oil and gas and create a diversified economy that can lift its 90 million citizens that live in extreme poverty out of their unfortunate conditions. That challenge also cannot be met successfully in the silo of economics, because it is one of political economy, and this requires constitutional changes that will create a more enabling environment for diversification.

Corruption
Corruption is a systemic challenge for Nigeria, although it is a universal phenomenon in many countries to varying extents. What concerns us here is its impact on Nigeria’s development. That impact is heavy. Nigeria is estimated to have lost $600 billon to corruption in the public sector since independence.

I believe this estimate is a conservative one, and that a more accurate figure would be close to $1 trillion. While the resource curse vastly increased the scale of corruption in Nigeria, the impact of inflation over the years has also driven a massive increase in the scale of corruption. With the progressive depreciation of the purchasing power of the naira, corrupt public officers have
felt a need to increase the private gains they acquire through corrupt enrichment. This phenomenon has also led to the “dollarisation” of corruption,  in particular in the natural resources sector in which international transactions are done in foreign currency and in the political sphere (political corruption).

A study by the professional services firm, Pricewaterhouse Coopers (PWC) in Nigeria, published in February 2016 showed that corruption would cost Nigeria up to 37% of the country’s GDP by 2030 if not drastically curtailed. The cost of corruption in Nigeria – and for Nigerians – is a matter of systemic urgency.

Corruption has a direct impact on investment in human capital, as public funds misappropriated reduce the amounts available for investment in healthcare and education. It reduces the availability of infrastructure, as demonstrated by repeated awards of contracts for the same infrastructure works abandoned by contractors after collecting inflated payments in collusion with public officials.

Corruption has also adversely affected Nigeria’s business environment and thus the ability of the private sector to create economic opportunities, owing to foregone foreign direct investment that stays away from the country as a result of perceived corruption risk.

Finally, corruption in Nigeria has distorted the governance and political environment by shifting the focus away from good governance to corrupt enrichment in a country with little social safety nets.

Population Growth
Nigeria faces a systemic challenge from population growth, with implications that will stretch far into the future if not well managed. According to United Nations, our population of 206 million today will double to 400 million in 2050, overtaking the United States as the third most populous country in the world.

But our population growth rate, 2.5% in 2020, is outpacing economic growth, which since 2015 has been less than 2% on average (2.65% in 2015, 1.62% in 2016, 0.81% in 2017, 1.92% in 2018, 2.21% in 2019, -1.79% in 2020).

While Nigeria is not overpopulated to the extent that its labor force is inadequate and vastly underperforming in its economic output relative to the country’s resources – and while our large population guarantees Nigeria significant influence in international relations, we must worry about – and take action in – the quality of the mass of our population. Do they have basic
literacy? Nigeria’s literacy rate is 62% and the country has more than 10 million children of school age, more than any other country in the world. More than 90 million Nigerians live in extreme poverty, giving us a poverty rate of 45%. And millions of young people with tertiary education lack skills relevant to the needs of the labor market. Unemployment is at 33% and youth unemployment and underemployment are at 54%.

Nigeria’s population could be turned into an opportunity to become a truly mega economy like China. But even China had to implement a population policy to control its population growth and has skilled its population for productivity.

The implication for Nigeria is that, unless we invest in our population, turning it into a real asset of human capital, we will have in the future larger numbers of poor, unskilled men and women, most of them young. Such a scenario is one that will be a ripe for social unrest.

Nigeria in the World

Nigeria matters in the world. Of this there can be no question. This reality is recognized by the world’s great powers and assured to some extent by the country’s population and economic size in the African continent. In recent years, as well, Nigeria has been able to get its nationals elected to the leadership of important multilateral organizations such as the World Trade Organization and the African Development Bank. Talented Nigerians perform great feats in the
world.

But, upon a somewhat deeper examination, we will find that our country remains far from achieving its potential as the beacon of the black race in world politics, as China has become for Asia. We have indeed declined from where we once were. Unlike in the early 1960s after independence, or in the 1970s under military rule, foreign policy is today almost completely absent from domestic Nigerian politics.

Secondly, the effectiveness of external projection of power and interest depends largely on a country’s domestic positioning. If security and the economy are weak, as is indisputably the case in Nigeria today, and the country has become heavily reliant on foreign debt for fiscal sustenance, this is not a scenario favorable for, at the least, medium power status in world politics and economics. Despite officially being Africa’s largest economy by GDP, Nigeria is
not a member of the BRICS (which would have made it BRINCS) or the G-20 clubs of medium global economic powers. South Africa is a member of both the BRICS and the G-20. This is largely because its economy is much more industrialized, and its GDP per capita at $7,000 is more significantly higher than Nigeria at $2,000.

Third, Nigeria’s Foreign Service suffers from underinvestment, leaving its operations financially stretched.

Fourth, Nigeria appears increasingly unable to protect its citizens who suffer ill treatment abroad, causing increasing frustrations for those at home. Several incidents in recent years, including the
very recent death of Ms. Itunu Babalola in a prison in Cote d’Ivoire is a case in point. Most of these incidents stem from a broad negative profiling of Nigerians by immigration or other officials of foreign countries.

PATH TO RESOLUTION: HOW TO MAKE NIGERIA GREAT

I have treated the systemic challenges that are working against Nigeria’s cohesion, stability and prosperity in a moderately exhaustive manner because a proper diagnosis is always essential to any strategic turnaround – which is what Nigeria needs. The path to resolving Nigeria’s crisis runs mostly through the character of the country’s politics, the quality of its political processes and institutions, and its constitutional, political and purely economic reforms.

The seven paths to resolution that I propose are: 1. Electoral reforms. 2. Citizen political education and participation. 3. The Emergence of transformational Leadership. 4. Elite consensus. 5. A Third Force as the vehicle for transformational leadership. 6. Constitutional reform. 7. Economic philosophy.

Electoral Framework Reform
Nigeria’s democratic development has been distorted between an electoral and legal framework that has enabled political corruption and vote-rigging (by allowing loopholes for the subversion of the votes of citizens) and empowered political party mafias instead of the ordinary citizens who are members or political parties.

Electoral Framework reform is essential because Nigeria since 1999 has legally and formally been a constitutional democracy. How the chances of the country being well governed, achieving a stable political order and economic progress, therefore depends greatly on the effectiveness and integrity of the electoral process itself and its institutional operator – the Independent
National Electoral Commission (INEC). Incumbent political overlords of the traditional political elite, notably those of the party in power today, have for years resisted electoral reforms that in their view would deprive them of the ability to manipulate the electoral system.

Thankfully, the beginnings of real reforms in the electoral process are now in evidence. The two major indicators of reforms are contained in the country’s Electoral Act Amendment Bill 2021, which contains amendments that allow INEC to use electronic transmission of collated election results, as well as a provision mandating direct primaries in the selection of political party
candidates for elective offices.

Both amendments will improve the electoral process significantly. Electronic transmission of results will increase transparency of election results and reduce rigging of ballot counts. Direct primaries, in which all members of a party can vote, instead of handpicked delegates, will improve the internal democracy inside Nigeria’s political parties.

But further and deeper electoral reform is needed. Political corruption, spearheaded by the role of money in the political process, needs to be curbed.

Performance in Nigerian elections, just as in even several developed countries such as the United States or the United Kingdom, depends mainly on how deep the pockets of the candidates are. This creates an uneven playing field for candidates and parties, and an incentive for financial corruption such the laundering of public funds by parties with already elected state governors for
the parties’ important electoral campaigns as is frequently the case in Nigeria, or the phenomenon of “dark money” and influence peddling via the leverage of donations in the U.S. and the UK.

I recommend that private money should be banned in Nigeria’s electoral democracy, and that the federal government should provide adequate and reasonable funding for political parties. This was the case in Nigeria during the military presidency of Gen. Ibrahim Babangida, and the experiment was largely successful. We must return to this paradigm, much like in Germany and some other European countries, to ensure a democracy that more genuinely throws
up the will of the people.

Citizens Education and Participation
A virile democracy requires an informed citizenry. Citizens must understand the major political and economic issues that should be the basis for electoral competition and be able to assess candidates based on the positions and plans on these subjects. Today, most voters in the rural areas are not literate or politically sophisticated enough to make informed voting choices. They vote instead largely because of ethnic and religious affinity, vote buying, or the
individual influence of political and community leaders.

More broadly, Nigerians have been under the sway of incompetent and corrupt politicians, unable to make failed leaders accountable at the ballot box in most cases, because of blind allegiance to parties without assessing individual candidates. All of these systemic characteristics of Nigerian democracy call for a massive investment in voter and citizen political education. This is primarily a function of INEC, but it has so far been weakly executed. Several civil society groups have attempted to fill the gap, with varying degrees of success. The INEC must prioritize voter education if our democracy is to be truly a government of the people, for the people and by the people.

Voter education, along with recent reforms in the electoral law, should also address the core problem of voter apathy that has manifested in progressively low voter turnout in Nigerian elections. This apathy stems mainly from a belief amongst citizens that my “vote does not really count”. This has become a psychological resignation to election rigging or violence at polling stations. But it is in reality a failure of democracy, and every effort must be made to bring it
to an end in the country’s 2023 election cycle. Voter turnout in the 2019
presidential election was approximately 37%, the lowest since the return of
democratic rule in 1999.

The Emergence of Transformational Leadership
Nigeria’s problems of national cohesion, and its political and economic stasis, are so severe that nothing short of the emergence of a visionary and technocratically competent leader can begin to move the needle. Such a leader would need to be competent in economics, in the tradition of say, Italy, which often taps technocrats to lead it in times of economic or other national crisis. (In February 2021, the Italian President selected Mano Draghi, former
Governor of the Bank of Italy and later President of the European Central Bank,
as the current Prime Minister.)

Such a leader in our country’s unique circumstance would need to be from a new generation or leaders, ideally untainted by the political sleaze and other failures of the past, in order to command the confidence of the country’s youth who are nearly 70% of Nigeria’s population.

These young men and women therefore “own” the future that needs to be embraced with purpose and capacity to lead and govern, but they have largely been shut of influence in leadership selection.

The challenge is how to square this framework with the democratic legitimacy of the electoral process. Given the factors and forces that currently dominate Nigerian politics, achieving this political outcome, so necessary to give our country a new beginning, will not be easy. It is possible however, that circumstances, and other developments in the polity could create such a unique outcome.

Elite Consensus/Youth Participation
Ahead of the 2023 elections, an elite consensus needs to emerge on how to resolve Nigeria’s current crisis. Nigeria’s elite have hitherto been fractured or just apathetic, in Nigeria’s electoral politics. But our Professional class, the private sector (currently and unfortunately intimidated by the reigning politicians in a rentier economy where government patronage determines business opportunities), as well as elder statesmen and women, need to forge a consensus on Nigeria’s leadership from 2023.

I recommend a process of “selection before election”, based on clear criteria, inside political parties, by the youth and the elite, and by the voting public. For the presidency, for example, the criteria should weigh in addition to character the knowledge, experience and track record of candidate in what are indisputably (or should be) the four main roles of the President of Nigeria: (a) Nation-building; (b) National Security; (c) Economy; and (d) International Relations and Diplomacy.

I have suggested that the consensus should be to support the emergence of a mature, experienced but youth-facile leader who will serve as a bridge between the old and the new, and essentially lead a generational transition that prepares and equips Nigeria’s young people to ultimately take charge of their own future with the benefit of prior exposure to governance and statecraft.

The Third Force
The best vehicle to accomplish this transition, with the benefit of a combination of youth support and an elite consensus, is a Third Force. Such a Third Way political party is necessary because our country’s two leading parties have failed, and citizens have grown increasingly tired of politics without governance, is presently being negotiated by a combination of smaller political
parties with an intent to merge into a larger, stronger political force that will
challenge the political status quo in the 2023 elections. The leaders of the Third Force – in formation – are mainly politicians with an intellectual, ideological disposition that is sorely absent in the politics of today’s status quo.

Three things will be necessary for the electoral success of the Third Force. The first
will be financial resources to establish grassroots structures and run a campaign vibrant enough to drain the support of the APC and PDP. In other words, the Third Force must not focus only on the elite.

To achieve this, given that such a party would not and should not abuse public funds for partisan political purposes, crowdfunding by the citizens of Nigeria must be a major fundraising option.

The second is the support of the country’s youth population, a majority of who yearn for a real change but must overcome their apathy towards politics and voting and vote to birth such change.

Third is the brokering of an elite consensus, if the elite can muster the collective strength and unity to back a deviation from the norm in 2023.

Constitutional Reform
Without constitutional reform, in particular a return to a constitution and political structure of federalism, it will be difficult, if not impossible, for Nigeria to achieve political stability and economic transformation. A return to a purer federation will foster economic diversification and wealth creation as the country’s component states and regions look inward to their competitive
advantages, rather than outward to oil rents, as natural resources ownership
must return to the “host” states or region, with an agreed percentage of such
revenues accruing to the central government.

There should be, however, a transition period of seven years, to give non-oil producing states time to adjust and prepare for a different (and ultimately, better) economic future.

Constitutional reform will also aid political stability. It will address the concerns in some regions of the country about their suffocation – and “marginalization” — by the excessively strong powers of Nigeria’s central government. These are the same reasons for which a federal constitution was
negotiated by Nigeria’s pre-independence leaders in 1953. The arrangement resulted in strong economic performance and a clear path to industrialization that was thwarted by the military coups of 1966 and the consequent political crisis and civil war.

I would recommend, however, against a return to the parliamentary system, which turned out to be an unstable framework for Nigeria’s federation in the 1960s. Bearing in mind well founded critiques of the presidential system of government introduced in 1979 as wasteful, it is still a more stable form of government, one more appropriate for a country such as ours. I believe that it is still best for nation-building for the President of Nigeria to be elected in nationwide elections, rather than a Prime Minister that is elected only by his
or her narrow constituency.

But Constitutional reform is not, by itself, the magic wand. While federalism will bring governance closer to the people – and with it, hopefully accountability – we still must squarely address the challenge of leadership selection and leadership culture in our country. To begin to do so, political parties need to subject members seeking elective office to mandatory
leadership training. This investment should be covered by the government funding of political parties as proposed earlier.

A Philosophical framework for Nigeria’s Economy
If the most fundamental problem facing Nigeria is the country’s politics that has failed to produce transformational leadership (including in the area of economic transformation), the major problem of economic management in our country is its lack of philosophical foundation. This is a critical element of Nigeria’s path out of mass poverty and weak macroeconomy that challenges the country’s prospects. It must be addressed. The current political climate, however, does not favor the depth of thought and intellectual capacity that this task requires. I believe it will require the emergence of a broadly transformative leadership instead of today’s transactional political culture. But it is a task that still must be done for Nigeria to create the wealth of nations.

Nigeria today considers itself a middle-income, mixed economy. In practice, this has meant that government is heavily involved in the marketplace, distorting and limiting wealth creation and instead creating an unproductive rentier economy in the first place. Although Nigeria would appear to be a market-driven economy, the government frequently seeks to regulate the
prices of “strategic” products such as petrol, electricity, and the exchange rate growth, the national currency. The government of the day also has welfarist impulses, in response to, presumably, rising poverty and unemployment.

Part of the consequences of the absence of a clear economic philosophy, or a troubling lack of depth in economic thinking, is a faddish focus on GDP growth as the measure of how well the economy is doing, while giving insufficient attention to both the more fundamental challenges of poverty and the absence of a diversified economy in export terms. It can also be seen in a failure to appreciate that capitalism itself is a philosophy, and that for this system to create wealth for the poor, instead of rent-seeking corporate executives, certain conditions must be met.

Dealing with these challenges requires a clear-eyed understanding of the concepts of human development, economic growth, and structural economic transformation.

Why is economic philosophy so essential for Nigeria? Because, for a country with such huge economic potential, such an approach will bring clarity to national economic ambition and how to achieve it, and consistency in economic policy and management. Again, there is a difference between economic planning and plans such as have been attempted by the government of the day, and economic philosophy. A plan is an architecture for action, a philosophy is a belief system. Our plans must be based on some belief system, one with empirical poof of its validity.

I agree that Nigeria’s economic philosophy must be capitalism, because the evidence worldwide is that, despite its imperfections, it is the greatest wealth creation system the world has known (ask politically Communist but economically Capitalist China!). The question is what type of capitalism.

I believe Nigeria should practice strategic capitalism – a concept that is market driven but framed by the state, which will only regulate the market, promote inclusive growth that creates economic opportunity for millions of Nigerians in extreme poverty instead of distorting the marketplace with subsidies for consumption (but more for production) and price controls, and then get out of
the way. This approach also culturally suits the dynamism and innovative spirit
of Nigerians.

We must therefore consider the four main types of capitalism – entrepreneurial capitalism, as is mainly the case in the United States, welfare capitalism as we have in most of Europe, crony capitalism as we have in Russia, South Korea and in a more unstructured form in Nigeria and the rather oxymoronic practice of “state capitalism” in China. Some degree of welfarism exists, however in every developed economy. But first, wealth must be efficiently created before it can be redistributed or deployed to support extremely poor and vulnerable members of any society.
Nigeria’s strategic or developmental capitalism, therefore, should be anchored in the philosophy created by entrepreneurial capitalism. The wealth created by such a system, including through an efficient tax system, can then be utilized for social security for the aged population and support for other vulnerable populations.

This requires that Nigeria’s economy must be re-organized to prioritize the three fundamental conditions of capitalist wealth creation as identified by the political economist Hernando de Soto – 1. Property rights. 2. Innovation, and 3.
Capital.

Conclusion
While many Nigerians are somewhat gloomy about our country’s prospects for its long-delayed emergence as a stable and economically robust county, I see opportunities even as we must confront the challenges we face. On both the political and economic fronts, Nigeria’s difficulties have been magnified in the past few years for a combination of reasons.

But I believe that this phase will pass. Most pertinent is the concern about the country’s nationhood. Colonialism birthed a country troubled from birth. But the international law doctrine of uti possedetis is a reality. We must make Nigeria work for its 200 million people, as soon as possible.

The matter of the emergence of a visionary and transformational leadership is the key to progress. Can we utilize democratic leadership to birth a transformation? This depends not so much on the politicians we can predict will seek to defend their vested interests, but rather on the youth and the women in our country. The elections scheduled for 2023 will provide us with
an opportunity to look beyond our prejudices, and vote for our hopes and not our fears.