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Nigeria: Stop shooting yourself in the foot!

By Alain Faujas
Posted on Friday, 31 July 2020 17:04

South Africa Nigeria
Nigerian President Muhammadu Buhari attends a press briefing in Pretoria, South Africa Thursday, Oct. 3, 2019. (AP Photo/Themba Hadebe)

Once the founding fathers of the Economic Community of West African States (ECOWAS), today they are slowing down regional integration.

Nigerians suffer from a kind of schizophrenia when it comes to ECOWAS. Even though they stand to benefit the most from this common market, they barricade themselves behind their borders over the slightest thing.

Although Nigeria has a highly dynamic business community that dreams of expanding farther afield in the sub-region, the country is afraid of competing with its neighbours, who it sees as dishonest. The giant that is Nigeria acts as if it is West Africa’s watchdog, without actually taking on the responsibilities such a role entails.

The causes of this paradoxical attitude are legion. With almost 200 million inhabitants, Nigeria has the largest population of any African country. This gives it a significant amount of economic weight since its share of ECOWAS’ gross domestic product (GDP) is 67%. The oil boom of the 1990s and 2000s and its avalanche of billions of dollars bolstered Nigerian leaders’ nationalism, and they were sometimes even criticised for their arrogance elsewhere in West Africa.

‘Outdated vision’

This behaviour can also be explained by history. “I’m always stunned by the disdain Nigerians display towards their French-speaking neighbours, who they view as lackeys of French imperialism,” says Marc-Antoine Pérouse de Montclos, research director at the French development research institute Institut de recherche pour le développement (IRD).

The fact that Paris and Abidjan took sides with Biafra secessionists in southern Nigeria (1967-1970) and the bloody war that ravaged the country likely have a lot to do with this unspoken hostility.

The short-sightedness of political leaders also plays a role. “Nigeria has a massive amount of young people and they are increasingly better educated,” says Bakary Traoré, an economist at the OECD Development Centre. “It is Africa’s largest technology hub, ahead of Kenya. Unfortunately, its leaders have a hard time understanding that the comparative advantage of their country no longer lies in the oil industry or in manufacturing. These sectors are unable to create enough employment opportunities for the age groups arriving on the job market.”

The most short-sighted leader of all seems to be President Muhammadu Buhari. “Deeply nationalistic, his vision of the country is outdated,” Pérouse de Montclos explains. “His economic programme is limited to reviving the food industry in northern Nigeria. He has never hesitated to take protectionist measures which harm his neighbours. During his first presidential term, in 1985, he deported Nigerien immigrants, which worsened the food crisis in Niger, and people there still refer to these events today as the ‘Buhari famine’.”

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Pérouse de Montclos continues: “At the beginning of 2020, the president revived the operations of state-owned enterprises which had been shut down in the 1980s as part of a structural adjustment programme. He has no understanding of how the economy works and, as the national assembly is under his heel, no one is in a position to tell him that he is shooting himself in the foot when all signs point to a 7% recession and the inevitable drop in oil production.”

All-powerful bureaucracy

Nigerian protectionism is also propped up by an all-powerful bureaucracy known for nit-picking and being overly sensitive. “Its customs officials are practically like a paramilitary force and the Standards Organisation of Nigeria [SON] exercises a very strict control over the country’s imports and exports,” says Poul Hansen, officer in charge of the Trade Facilitation Section of the United Nations Conference on Trade and Development (UNCTAD). “Their intervention is not truly necessary since Nigerian products are also inspected in the country of arrival.”

What it does do is hinder trade and drive up the cost of products imported from Nigeria. Hansen adds: “Generally, the best route for exporting products from landlocked countries like Niger and Burkina Faso is to go through the port of Lagos. The increased number of controls products have to go through to get there, insecurity, the small-time corruption practised by law enforcement officers, and the bureaucracy of the port authorities deter exporters and importers from the hinterland from shipping their products via Lagos. Instead, they prefer to use ports in Benin, Togo and Ghana.”

He concludes: “It’s detrimental to Nigeria because if the country increased the volume of its port traffic, it would lower the cost of its imports and thereby the price of goods sold to Nigerian consumers.”

Power struggle

Nigeria also poses a problem when it comes to monetary policy. In 2019, the ECOWAS heads of state decided to equip their community with a single currency, the Eco.

Outpacing everyone, Alassane Ouattara, President of Côte d’Ivoire, had his peers from the West African Economic and Monetary Union (UEMOA) back the transformation of the CFA franc into the Eco in December 2019, to the great displeasure of President Buhari, who saw the move as an abusive hijacking of the future currency.

Nigeria has enormous creative potential.

What followed was a clash between Abidjan and Abuja to impose the avatar of the CFA franc on the one hand, and the Naira on the other.

READ MORE Replacing CFA with Eco ‘challenges the sovereignty’ of Nigerian naira

“Given its sheer weight in terms of population, GDP and trade in the sub-region, Nigeria would appear to be the natural leader of any monetary zone being set up in the ECOWAS region,” says Aly Mbaye, an economics professor at Cheikh Anta Diop University in Dakar.

Mbaye adds: “At the same time, this country is confronted with significant political and economic challenges and often with [monetary] reserve shortages which more or less disqualify it from taking on such a leadership role. Implementing a foreign exchange system or a regional monetary policy in any institutional arrangement including this country would put all of the states at great risk, and not just UEMOA countries.”

Change in economic strategy

In the short run, it is hard to imagine how Nigeria’s egocentricity could be corrected and how ECOWAS, faced with such an impediment, could accelerate its progression towards integration.

However, there are some possible solutions. To begin with, Abuja would have to change its economic strategy. “Nigeria has enormous creative potential,” says Traoré. “The GAFAM companies have their eye on its market, while IBM and Facebook have made it their springboard in Africa.

The country has the resources to build on its strengths in the digital sphere thanks to its diaspora, which, in 2018, sent as much money to Nigeria as the country’s annual GDP. The country’s leaders need to understand that it’s time to turn towards the service economy and no longer make industry a priority.”

That would make it easier for Nigerian service businesses to enter its neighbours’ markets, provided that the country agrees to comply with the free circulation of these countries’ products, in accordance with ECOWAS regulations.

Perhaps a change in mindset will have to wait until President Buhari, 77, hands over power to a more modern leader. Why not turn to his vice president, Yemi Osinbajo, 63, a Christian from the south and former corporate lawyer educated at the London School of Economics?

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According to Pérouse de Montclos, “When he was acting president during Buhari’s long hospital stay in the UK in 2017, the business community was thrilled about his ability to listen and his policies.”

Even though Osinbajo seems capable of changing his country’s attitude towards its ECOWAS partners, he will first have to navigate Nigeria’s complex political landscape in order to clear a path towards the highest office of the land.