Police officer arraigned for murder

NEXT reports that in Abia State a police office who shot into a commercial bus because it did not stop at a checkpoint has been dismissed from the force and arraigned on murder charges.

This is news. "Man bites dog" news.

Police officers frequently shoot at, and kill civilians who have committed no crime. Taxi drivers and private drivers have been shot at, injured or killed, for not submitting to extortion at illegal checkpoints. In these instances, it is the police officers who have committed the crimes (plural) of setting up illegal checkpoints, of using the threat of violence to extort payments from motorists, of economic sabotage (blockading major highways and causing delays, inefficiency and ballooning costs for transportation, industry and commerce) .... as well as attempted murder, and murder.

But it goes beyond that, as I highlighted in this blog post about a police "stray bullet" that killed a 3-year old girl. For those that don't know, "stray bullet" is an excuse the police have used for decades to explain away unwarranted killings of civilians (partcularly student protestors in the 1980s). The idea being the police officer intended to shoot somewhere else, at something else, but the bullet went "astray".

No one believes that excuse, nor has anyone ever believed it. In the case of the 3-year old girl I highlighted, the police colleagues of the guilty officer actually detained the girl's father and beat him up, to punish him for daring to complain about a police officer murdering his child for no reason.

This is not simply a question of "bad" individual officers or even of "bad" officers as a collective. At a fundamental level the training and internal culture of the Nigerian Police Force are in need of substantive transformative reform.

I do not believe in blaming "colonialism", "slavery" or "neo-colonialism" or whatever for our woes, nor do I think being a multi-ethnic, multi-religious federal republic stops us from doing things right. Our problem lies in the complete lack of interest and apathy towards reform, restructuring and transformation.

The modern Nigerian Police Force and the Nigerian Armed Forces were born in the British colonial era. At the time, both forces were designed to defend an illegitimate institution (the British colonial government) against people who would rather rule themselves.

It was the job of the colonial police to coerce the people into complying with "orders from above" that lacked even a modicum of democratic legitimacy. The people had no power over the police, and were not meant to. The police on the other hand were given a free hand to exercise power over the people; it did not endanger the colonial government's power over the people (which was all they cared about), and it increased the intimidation factor of the police. From the perspective of the colonial government, the ideal situation would have the people so afraid of the police and/or soldiers that the mere appearance of the police or just a threat of the army's appearance, would be enough to get people to quietly obey without causing a fuss. Indeed, the earliest decades of the colonial project were based around the use of collective punishment and disproportionately violent responses to even the hint of dissent or rebellion. The essence was to make the people deathly afraid to raise a hand against a European, or against the African agent of a European.

The colonial government did not educate, train or properly equip the colonial police force; and the idea that policemen were not supposed to be as educated as possible was one that persisted beyond the colonial era. The colonial authorities did not need an educated, trained or equipped force to serve their rather limited (and utterly political) purposes. Besides, too much education and the men might start to question their orders.

Lastly, but by no means less significantly, the colonial authorities allowed the colonial police to augment their meagre salaries by accepting or extorting "gifts" from citizens in exchange for doing their jobs. The popular television programme Ichokwu satirized the colonial judicial system, where Nigerian colonial civil servants (like court messengers, clerks, police, etc) who were percieved to be intermediaries between "the white man" and the ordinary people were able to use this supposed status to collect "gifts" from people seeking to curry favour from the all-powerful "white man".

Now before you accuse me of hypocritically blaming colonialism, I am NOT. Quite the contrary. Quite the 180 degree opposite to be blunt.

You see, the Federal Republic of Nigeria has had 50 years since regaining self-rule, half a century in which to reform, restructure, reconstitute and transform the Nigerian Poice Force (and the Nigerian Armed Forces ... though, to be honest, the Armed Forces' internal culture is nowhere near as bad as the Nigerian Police Forces').

We have not done so.

Like most countries in Africa, our leadership since the Independence era has found it rather convenient to inherit the colonial system exactly as it was. They used the police forces they inherited exactly the same way the colonialists did. They treated education, training, orientation and internal culture the same way too.

In fact, the post-colonial Nigerian/African leadership has a lot to fear from effective police forces, and a lot to gain from ineffective forces that serve as the civil bodyguards of undemocratic governments. The pay is still piss-poor, and the officers and men are still expected to augment their pay by extorting funds/resources from citizens.

Fifty years later, and nothing has changed fundamentally.

Okay, let me ask a simple question: Why don't these police officers ever shoot at the tyres? Forget that the checkpoints are illegal, forget that extortion is illegal, and forget that the police have no legal justification for shooting at these vehicles in the first place, and focus on the simple question: If no one in the car/bus/vehicle has fired a gun at the police and there is NO EVIDENCE that an armed person is in the car, no sighting of a weapon, no proof that anything has happened other than a car driving past a checkpoint, why not shoot at the damn tyres first? Why are you shooting into the car itself, packed as it always is with people?

Unless someone shoots first at the police, or unless the police has a rational reason to expect they are about to be fired upon, they should not be shooting their weapons at people ... nor should tear gas be deployed for the illegal purpose of teaching "bloody civilians" that policemen are superior to civilians and should be obeyed like gods, lest there be consequences.

Nigeria's police officers and men come from the same families as the rest of us. They are the same people as the rest of us. But when they join the force, they are socialized into an internal culture that teaches them that the proper way to do policework and to relate to the civilian populace is XYZ ... except XYZ is not the proper way to do policework at all, and is in fact the opposite of everything they are meant to be doing.

In a sense, as much as we the people (myself included) criticize the police, we are all guilty of the same thing. There are over 100 million Nigerians (myself included) doing what we think are the proper things we should be doing, and thinking what we believe to be the proper thoughts we should be thinking, but which in fact add up like raindrops to produce the ocean of problems that we then complain about.

Reform is not just about outside things like infrastructure and laws. It is also an internal exercise, in our hearts and souls. It is not just acknowledging that we do not know certain things (e.g. the Nigerian Police Force's inadequate training) but proper identifying the things that we need to know and learn. Like Paul at Damascus, it behooves upon us to undergo personal conversions from the way of "wrong" to the way of "right".

EDIT 05-04-10: Daily Trust reports police officers manning an illegal checkpoint outside Abuja to extort money from commercial motorcyclists (a.k.a. okada or going) committed what would probably be defined legally as manslaughter, causing the death of a commercial motorcylists who refused to stop to pay the illegal ransom. As near as I can tell from the article, they hit him with some kind of object as he rode past, causing him to fall and die (trauma to the head most likely). It seems this is not the first time they have hit cyclists with objects as they rode past the checkpoint, so perhaps the flagrant disregard for human life displayed on a consistent basis is enough to elevate this from manslaughter to murder.

Atiku returns to PDP?

Aside from the fact that Nigerian politics as currently practiced bear no relationship whatsoever to the Nigeria's strategic, political, economic, social and cultural interests, there is the fact that our politics are cartoonic.

Embedded in this speculative article by Daily Trust is the rumour/suspicion that former Vice President Atiku Abubakar could return to the Peoples Democratic Party.

It wouldn't surprise me, as counter-intuitive as it might seem to anyone who expects linear rationality in the politics of the federal republic. Does anyone expect linear rationality in Nigerian politics? If you do .... seek help.

According to the rules of rotation, "the South" has had 8 years (Obasanjo) so "the North" must have 8 years. Whatever happens between now and April of 2011, current President Umaru Yar'Adua is NOT going to be a candidate in the 2011 Presidential Elections.

So that means someone else from "the North" will have to take the balance of 4 years from 2011 to 2015.

Mohammedu Buhari is popular in some parts ... but so is Ojukwu, and to be honest, I do not know why they both keep running.

Atiku Abubakar is as corrupt as .... well, Atiku is as corrupt as Obasanjo, but in Nigerian politics that does not really count for much, does it? Atiku was driven out of the PDP by Obasanjo, but lots of people who were variously driven out of the PDP have returned to the party. Significantly much of the PDP hierarchy and membership acted under compulsion between the fall of the Third Term agenda and the "election" (if you can call it that) of the Yar'Adua/Jonathan administration; a truer picture of their feelings for Obasanjo lay in the rejection of the Third Term agenda.

Atiku still has friends in the PDP, as well as friends among the sole proprietorship parties like Orji Uzor Kalu (PPA), Bola Ahmed Tinubu (AC) and Attahiru Bafarawa (DPP). This hybrid situation, with President Yar'Adua still technically the head of state, while Acting President Jonathan is dissolving cabinet as though an election had ushered in a new regime, many in the Nigerian political system would actually prefer a known entity, a stabilizing figure, someone the Big Men are comfortable with, that has enough public recognition to generate an apathetic "well, of course they would choose him" reaction from the public.

After all ... that is how Obasanjo became president in 1999, isn't it?

EDIT 31-03-10: Daily Trust reports Atiku has begun "consultations" with his "supporters" around the country. Supposedly he is seeking their opinion on whether or not to rejoin the PDP. This being Nigeria, where politicians claim they only seek office because their people asked them to, or because God asked them to, I conclude Atiku and the PDP national leadership (or factions thereof) have already concluded arrangements for Atiku to rejoin the PDP. These so-called "consultations" are a ruse for Atiku to say the only reason he is going back is because his supporters asked him to, when in fact he is going back to replace Umaru Yar'Adua on the ticket in 2011, to fulfill the second half of this eight-year period in the federal republic's regional "rotation" system.

How to legally cheat at a contract tender

So a contract is put out to tender.

Halfway decent research would show that it would take =N=1,000,000.00 to complete the project to at least minimum standards.

You know this. You know this.

Knowing this, you present a bid to the government saying you can complete the project for just =N=7,500.00

This is a ridiculous bid.

The government knows (or should know) that this is a ridiculous bid.

The media knows (or should know) that this is a ridiculous bid.

The citizenry, oddly enough, do not know, because the government, the bidders, the media and every other entity/agency/individual with access to (or the responsibility to seek access to) the real facts and research are unfortunately complicit in the environment of misinformation and disinformation in which the citizenry are compelled to live.

However, the ridiculous bidder has strong "advocates" within the government and/or the broader political class and among the moguls in the upper levels of the plutocratic business class. In some cases, these advocates in government and business have vested equity/financial interests in the consortia making the bids. In other cases, quid pro quos and other debts/obligations are in play.

The bid is accepted.

Note that one of the reasons the bid must be ridiculously low is the government cannot openly pick a higher bid (not without the complicated steps of explaining why the "core investor" or "technical partner" or whatever is unsuitable).

The project begins ....

.... and over the next several years (or decades) the winning bidder is paid far more than what it bid, because the cost of the project (even without the ancilliary inefficiencies, delays, contract inflations and kickbacks) was ALWAYS going to be higher than what they bid.

It is simply not possible to complete the project for what it was bid, and rather than penalize the contractor for their stupid/ridiculous/unprofessional/unrealistic bid by making them eat the difference between the true cost and what they bid, we just agree to keep paying them whatever it is they ask us to pay.

If we don't pay, they abandon work, and we have an uncompleted project sitting there. After a few years (and the decay of whatever work has been done), we put another contract out to tender.

Oh, just so you know:

Answering questions from newsmen shortly after inspecting the dredging work going on at the Baro end of the river Niger in Niger state, immediate past transport minister, Alhaji Ibrahim Isa Bio, said before the dredging of the river commenced, it was estimated that only about 900,000 cubic metres of sand would be evacuated during the dredging of LOT 5 which covers Baro in Niger state to Jamata bridge near Koton-Karfe in Kogi state.

Alhaji Bio said it has now been discovered after the work had started in earnest, that the volume of sand to be evacuated from that LOT is between 6 million and 7 million cubic metres. He however assured that the increase in the volume of sand to be evacuated from the river will not affect the dredging work.

Read it for yourself here.

The project to dredge the Niger from Kwara State down to Bayelsa State has been divided into lots, and the above quote references just one lot (LOT 5), not for the whole dredging project.

Heaven knows what surprises await us when we move on to the other lots.

From less than a million to 7 million, a seven-fold increase. Until something is done to raise confidence in their projections, we cannot give any credence to the Environmental Impact Assessments they did for the River Niger dredging project. I am neither a civil nor environmental engineer, but it doesn't take a rocket scientist to know that an accurate assessment of the volumes of sand you have to remove is crucial to making any kind of EIA.

The former minister did not say how much more we have to pay the contractors to move the extra sand. I do not believe for a second that they are undertaking seven times more work for the same pay ... unless their bid price was inflated to begin with.

Yes, I know this is speculation on my part, but you can't blame me. It is not like the media have done any follow-up stories to fill in the blanks left by the former minister. For some reason they have poured all their energy into stalking Turai Yar'Adua ....

PDP dominance grows

News that yet another governor will switch parties to join the PDP.

Abia State Governor Theodore Orji is apparently having the usual godfather-vs-godson wahala with Abia's ex-Governor Orji Uzor Kalu. If he goes on to make the switch, he will join Bauchi Governor Isa Yuguda (ANPP --> PDP) and Zamfara Governor Mahmud Shinkafi (ANPP --> PDP) in making the switch. All politicians who make such switches tend to be godfathers/patrons in their own right (particularly state governors who can use the state treasury to become the state's leading patronage distributor), and usually bring with them a phallanx of "supporters" (i.e. clients of their patronage); for example, Mahmud Shinkafi took Zamfara State's federal and state lawmakers with him from the ANPP to the PDP (note that each of those lawmakers is either the nexus of a separate concentric set of patron-client relationships, or serves as a proxy for one such nexus led by someone else).

Theodore Orji's putative defection from the PPA (Progressive People's Alliance, or something like that) to the PDP is probably being keenly watched by ex-Governor Bola Ahmed Tinubu of Lagos.

The PPA was not so much as party as it was a sole proprietorship, owned and operated by former Abia governor Orji Uzor Kalu. As of 2007, political factions allied to President Olusegun Obasanjo had taken over the PDP, driving out Vice-President Atiku Abubakar, to whom then-Governor Kalu was allied. Kalu was further affected in 2007 by constitutional term limits and the failure of "Third Term" agendas, so Kalu was faced with political (and hence patronage) irrelevance. He could not act as a godfather (i.e. thus transferring the state treasury to a chosen godson) within the now-Obasanjo-controlled PDP, so he left the PDP and created his own personal political party, the PPA. And after 8 years as a governor, using the power the state treasury to cement his status as the "owner" of the state, and garnering some measure of popularity through populism (notably pouring funds into Enyimba Football Club of Aba, powering the club to multiple national titles as well as two African Champions League titles), Orji Kalu controlled Abia so totally, it did not matter what Obasanjo, Iwu and Ribadu did. The aftermath of the 2007 elections saw Orji Kalu retain control of Abia (via new Governor Theodore Orji), and extend his power into neighbouring Imo State (via new Governor Ikedi Ohakim). Before the partition of new states' creation, Abia and Imo had been a single state, Imo State.

There are parrallels between ex-Governor Orji Uzor Kalu and ex-Governor Bola Tinubu of Lagos State. Like Kalu, Tinubu was a two-term, 8 year governor, who used his power to near-feudal control of his state. Like Kalu, Tinubu practiced a form of populism that garnered as close to genuine popularity among the people he governed as has been managed in the Fourth Republic. Long before the Obasanjo/Atiku war hurt Kalu's PDP prospects in Obasanjo's second term, Tinubu was the last-man-standing in the Alliance for Democracy after some crafty politics by President Obasanjo (and Vice-President Atiku, after all, they were still allies in 2003).

Ahead of the 2003 elections, Obasanjo used ethno-regional appeals to woo and coopt the Alliance for Democracy, who (at the time) controlled all of the southwestern states. The AD kept their end of the bargain, marshalling their political machines to work for his presidential victory. President Obasanjo reneged on his side of the deal; never known as a forgiving man, Obasanjo remembered how the AD railed against him in 1999. When the dust settled, Obasanjo's political alliances had politically annihilated the AD. A new group of governors, contemptous of the AD and loyal to Obasanjo and the PDP, took over all of the southwestern states bar one.

The lone surviving AD-held state was Lagos State, where populism had buoyed Tinubu's iron political control with a degree of genuine popularity. Where Orji Uzor Kalu later faced marginalization within what was ostensibly his party, Bola Tinubu was an "opposition" party leader to begin with (he, Buhari and eventually Atiku constituted President Obasanjo's real opposition, regardless of the composition of the National Assembly). Shedding himself of the hindrance of being junior to the senior leadership of the AD/Afenifere, Bola Ahmed Tinubu (like Orji Kalu) founded his own political party, the Action Congress, a de facto sole proprietorship owned and operated by Bola Tinubu.

After the 2007 elections, Tinubu was able to impose his chosen successor in Lagos State (Governor Babatunde Fashola), as Orji had done in Abia. Tinubu also extended his grip to a second state. Where Orji Kalu claimed Imo, Tinubu claimed Edo State through the post-election judicial victory of former trade unionist Governor Adams Oshiomhole (and Tinubu is in with a chance of claiming a third state, as Governor Olusegun Mimiko of Ondo State is flirting with leaving the Labour Party and joining the AC).

The final, and potentially crucial similarit between Bola Tinubu and Orji Kalu is the fact that the relationships of both men with their chosen/imposed successors in Lagos and Abia is currently strained. There is a perception in Lagos State that Tinubu is using third-parties to attack Fashola, presumably because he thinks Fashola is getting a little too big for his britches. Fashola continues to profess his loyalty to Tinubu, but in the light of Theodore Orji thinking about decamping to the PDP .... who knows?

By the way ....

Former PDP Deputy National Chairman (Southwest) Bode George played a key role in Obasanjo's takeover of the southwestern states in 2003, and was even more influential in Obasanjo's "do-or-die" imposition of the Yar'Adua/Jonathan tandem on Nigeria in 2007. Bode George owed Obasanjo a lot; two years prior to the 2003 Elections, in 2001, Obasanjo had appointed George the Chairman of the Board of the Nigerian Ports Authority, a position that gave Bode George plenty of opportunity for self-enrichment. Interestingly, in 2004 the then-Nuhu-Ribadu-led EFCC received "dozens of petitions", asking them to investigate Bode George's tenure as NPA chairman. Ribadu played his usual role in the extortionary politics of the day, creating an active investigation of Bode George that was then placed in stasis; George would remain a free man with no fear of prosecution, but if he crossed Obasanjo, Ribadu could have him arrested in an instant.

Two years after President Umaru Yar'Adua took office (and two years after Yar'Adua sacked Ribadu as part of his -- Yar'Adua's -- process of Fourth Republic godson rebellion), Bode George was finally brought to justice. Ribadu attempted to subtly exculpate himself and claim part of the credit, but banner headlines like "George gets 28 years in jail", were deceptive; George and his co-defendants were sentenced to 2 years for each of 7 counts, and six months for each of 28 counts ... to run concurrently.. "To run concurrently" is a fancy legal way of saying George and his compadres were sentenced to exactly 2 years in prison.

If two years seems like a slap on the wrist for the "disappearance" of =N=85 billion (Bode George and company were "acquitted" of the more serious charges) in a country where another, less-powerful criminal was sentenced to ten years for stealing the sum of =N=150 thousand, it nevertheless served its purely political purpose. By sacking Obasanjo stalwarts like Nuhu Ribadu, prosecuting (albeit lighthandedly) a few like Bode George, and threatening others like "Mr Fixer" Tony Anenih with indictments/prosecutions, the post-2007 political order was sending a message to ex-President Obasanjo to lay low and to not try to continue running the show from behind the scenes.

As Obasanjo himself knows (having turned on Atiku, the AD/Afenifere and ex-President Ibrahim Babangida), the rule in the Fourth Republic is godsons (in this case President Yar'Adua) always turn against their godfathers.

The question today is who is pulling Acting President Goodluck Jonathan's strings.

No fiscal common sense

Daily Trust reports the federal government are dipping into the Excess Crude Account to pay for the oil subsidy for fuel imports.

So we lose windfall savings money from the Excess Crude Account, lose money/GDP by importing crude rather than refining it, and lose money/GDP/potential-tax-revenue by selling petroleum products at below-market prices. Investment capital burned for nothing gained.

The oil subsidy disproportionately benefits wealthier Nigerians over poor citizens, but even so, I understand the political motivations that drive citizens to fight for it (and to dodge taxes). It is not just the usual issue of people believing that transferring more money to the government (directly or indirectly) will just mean more for them to waste or steal. It is not just a question of cars and cooking. When it comes to items like electricity and potable water, a majority of Nigerians either provide their own services (generators powered by fuel for electricity, and boreholes powered by generators for wter) or do without. Beyond products and services directly related to fuel, the people of Nigeria are each operating with personal incomes of X, which has to cover all of their expenses, and the higher the proportion of X each citizen spends on fuel and petroleum products, the lower the proportion and absolute amount they have left to spend on food, school fees, healtchare, rent and everything else. For most Nigerians, X is already too small to meet all their expenses, so people get apprehensive when you tell them you are going to do something that will result in an increase in all prices across the board (fuel price increases raise the prices of everything), without a concommittant increase in their wages/salary. Unionized workers, particularly public sector workers, are usually able to fight for a wage increase (which actually destroys any fiscal benefits accruing from raising fuel prices), but the majority of Nigerian workers are neither unionized, nor work in the public sector.

Nigerian citizens know that below-market pricing leads to fuel scarcity, low levels of investment in electricity-generation, etc, etc. At the same time, Nigerian citizens do not trust the government or the private sector, and fear that raising the price of fuel will deny them even the possibility (when there is no fuel scarcity) of funding their own electricity/water, without replacing this supply with affordable public-sector or private-sector supply. Asking citizens to pay more for fuel or taxes registers in their minds as if you asked them to give up a bird in hand, in exchange for the promise of two birds in the bush ... after you have repeatedly made such promises in the past and never delivered on them.

Conversely, inasmuch as every Nigerian government since the end of the Oil Boom 1970s has dreamt of ending the subsidy, I understand the political reasons why they don't. There are governments all over the world with real democratic legitimacy that are cowardly scared of touching senisitve political and economic issues, much less the succession of Nigerian governments that have never had anything approaching democratic legitimacy. You would think that because Nigerian governments are not really dependent on citizen voting to retain power, that they would be bolder, but the opposite is true; substantively elected governments can rely on citizens and (more importantly) institutions of state to guarantee their electoral terms of office, whereas widespread anger among the people of Nigeria has always been a useful excuse for anyone seeking to ovethrow governments -- and if they smile a lot and overturn the unpopular measures, citizens who are generally apathetic to the comings and goings of unelected leadership will warm up to them, at least for a short while.

At some level, governments around the world would rather pursue fiscally stupid policies even if they raise debt levels to the brink of bankruptcy, rather than face their citizens and tell them they have to pay more for anything (or in the case of welfare states, that they have to give up benefits of any kind). practice the "bread and circuses" method, even if it drives public debt levels to the brink of bankruptcy.

We can't afford that sort of governance in Nigeria. Indeed, our inability to fiscally adjust to the end of the Oil Boom is what eventually led to our $35 billion debt crisis, not to mention contributing to the economic stagnation of the 1980s and 1990s. We built up no reserves after the 1970s, and had made no GDP-boosting capital investments; we could have revolutionized electricity-generation, built an easy-access dualized highway system or even overhauled, expanded and developed the railroad system, but we opted instead to ... well, what did we do in the 1970s anyway?

The fiscal gains of the mini-boom of the 2000s are dissipating, even as the Excess Crude Account and the External Reserves have dropped precipitously.

The sad thing is none of these issues factors into our political debate. We are not debating and discussing what to do about this. Between the farcical federal executive, the violence in Jos and a renewal of terrorism in the Niger-Delta , we are still stuck in the same chains of self-defeat that have tied us down since the 1950s.

Above all, we are not going to be able to move to a new era of fiscal common sense until the citizens feel in their hearts that they have ultimate control of the fiscal decision-making (through substantively democratic elections), the constitutional right to choose the person (and the plan) for spending the extra scarce personal finances.

We have apparently spent something like =N= 1 trillion (approximately $6.7 billion) in the last three years on the oil subsidy. Wow!

(EDIT 19-03-10: The federal government has decided to increase the size of the 2010 budget. The year's budget deficit, already at 4.79% will rise. This will be financed by borrowing. We paid $12 billion in potential investment capital to secure $18 billion of debt cancellation, in order to save $1 billion a year in debt servicing. Whatever you have heard about $3 billion a year, the truth is the actual increase in annual spending made possible by the debt cancellation deal was $1 billion. At a certain point (if we have not reached that point already) debt servicing for new debts will reach $1 billion a year, in which case we would have paid $12 billion money that could have gone to electricity or rail transportation in order to save ... nothing.)

CBN reverses Soludo policies

The Central Bank of Nigeria intends to reverse some of the core aspects of Professor Charles Soludo's banking reforms.

The banner achievement of Soludo's tenure as CBN supremo were the reforms colloquially known as the "bank consolidation" exercise. The Central Bank raised capital requirements for banks from =N=5 billion to =N=25 billion, compelling banks to recapitalize and/or consolidate. In and of itself, it was a good thing; the federal republic had fewer, bigger, stronger banks that were better able to serve the country and to accelerate the positive trend of expansion into the West African, Central African and East African markets.

On the other hand, Soludo was too deeply connected to Nigerian politics to be an effective regulator. The management of the Nigerian Stock Exchange, personalified by Mrs. Ndi Okereke Onyiuke, was just as soaked in the federal republic's dirty politics.

In most countries of the world, it is impossible to separate business and politics, but in Nigeria during the recently ended Obasanjo administration, the connections between Nigerian apex-politics, Nigerian mega-business, and the "technocrats" (like Soludo and Nuhu Ribadu) who were supposedly in charge of enforcing the law and regulating both groups (politicians and businessmen) was downright familial. None of them was ever going to hurt a "family" member for any reason, even if that "brother" or "sister" was criminally wrong; indeed, the security of position of each of them (be it political position, economic position, administrative position, etc) was dependent on the rest of the family's support. Had Obasanjo's Third Term bid succeeded, Transnational Corporation of Nigeria (Transcorp) might have been even bigger than it is today (and would own more previously government-owned assets).

Add to that Soludo's personal interest in seeing his pet project succeed. The managers and directors of Nigeria's banks have been accused of presenting false data designed to make their banks look financially stronger than they actually were; the banks have also been accused of lending money to "investors" (more like lazy speculators) for the purpose of buying the shares of the bank that loaned the money, in order to artificially drive share prices up. It is easy to explain why rational self-interest (or greed) would motivate bank leaders to engage in these and other unethical or illegal activities. What is often not talked about is the fact that Soludo also has a rational self-interest in seeing his project succeed. The banks were not the only entities made to look good by artificially and falsely inflated numbers -- Soludo looked good too, his bank consolidation exercise looking like a stroke of genius. It is not a "Soludo" problem so much as it is a human problem; when people hear what they want to hear, and are told what they want to be told, I do not think they feel motivated to look deeper to see if they are being told the truth or not.

With all that said, the consolidation of the Nigerian banking sector into 25 so-called "mega-banks" was a positive. Indeed, I have changed my mind on one aspect of the reform I had previously considered negative.

I used to be concerned that Soludo's reforms left no room for specialist banks. In a new, geographically-restructured, six-state federal republic, there could be utility in having banks that are narrowly focused on the region-specific needs of one (or two) of the states. And while planning for mega-banks in a mega-economy, I though it necessary Soludo not forget we live in the real, actual economy of today, with a sea of Naira outside the formal banking system, and a significant proportion of Nigerian individuals and micro-businesses with micro-banking needs. There is utility in having community-based (per the Grameen model) micro-saving/micro-lending agencies that need not be "mega" sized.

As a citizen, I face one main problem with a lot of policy, policy announcements and policy implementation in the federal republic, which is the quality and quantity of information avaialable. The government, a private commercial bank, a regulatory agency, or a political/business/cultural leaders announces "XYZ" will happen and either nothing will happen, or something will happen but not XYZ, or XYZ will happen but with the usual add-on criminal/unethical money-draining activities, or it will happen and not achieve what they said it was going to (though they lie and insist it achieved everything), or it starts, looks good for a while and then is abandoned ....

Long story short, you never really know what will happen until it has already happened. With somewhat more information emerging about our banking industry in the Sanusi era, I am in a position to say I am less worried about specialist banks post-Soludo-reform. The =N=25 billion base is not a huge amount in dollar terms. If a few of the 25 current banks rebranded themselves as regional banks or as host bank to a network of independent micro-saving/micro-lending agencies, we could have our cake and eat it too.

As such, I support the Sanusi reform of the Soludo reform ... to an extent.

The new, Sanusi Lamido Sanusi-led CBN is reversing Soludo's reforms ... also to an extent. I cannot say for sure yet what exactly the Sanusi-CBN plans to do (we are back in the era of waiting to see what actually happens before we know what they have really done), but it seems their central idea is to create different tiers of capital requirement for different kinds of banks and financial service institutions.

What this means in effect is the one-size-fits all =N= 25 billion capital requirement set by Soludo for ALL BANKS will be weakened, and will presumably apply only to SOME banks.

Once more, the question of whether this is a good or bad thing depends heavily on what they actually do, and what it actually means for the industry when implemented.

It should be noted that BOTH Sanusi Lamido Sanusi AND Charles Soludo are in favour of further consolidation in the industry; I don't have the links, but I've read both men mention banks with capital bases of =N=70 billion to =N=75 billion. The difference being Soludo intended to compel more consolidation "by force" so to speak (his intention was to have Nigerian banks that could rival South Africa's Big Four banks in size), while Sanusi (who said Nigeria might end up with 15 banks rather than 24) appears to prefer the banks naturally merging of their own volition without CBN compulsion (presumably because eight or nine of them are weak in the aftermath of the 2008/2009 crisis).

So I don't think Sanusi is trying to reverse "consolidation" per se. It might even be the case (after our banks adjust for toxic assets and begin to report ACCURATE numbers) that some of the existing 24 will be revealed to have fallen below the =N= 25 billion threshold anyway, and perhaps the Sanusi move is to keep them legal and avoid panic among depositors, while stronger banks move to take them over.

I don't know. I am guessing.

In any case the Sanusi CBN does seem rather keen on opening up space for smaller, regional and specialist financial institutions. This is a good thing in and of itself (much as consolidation was).

I will say that I am not too fond of the Central Bank of Nigeria radically reversing itself every few years.

In one of my earlier blog posts, I cricitized Soludo for abruptly changing the rules for foreign corporations seeking to invest in Nigerian banks based on nothing more than his personal reaction (and the reaction of certain special interests) to a South African bank's takeover bid for a Nigerian bank.

I am likewise concerned that Sanusi's abrogation of the =N=25 billion capital base requirement is just as random and out-of-the-blue (though nowhere near as random as the Supreme Court's and Appeal Court's rulings on the Rotimi Amaechi issue).

Time will tell.

I hope Sanusi keeps up the emphasis on improving transparency, governance and decision-making in the sector, while spearheading reforms in the broader economy to unleash our full potential. Rather than aiming for "paper" growth in bank assets, we should have aimed for real growth in the Nigerian economy, growth that could consistently and sustainably continue until we could one day talk about 25 banks (or maybe 8 or 10) that are each the size of the South African Big Four, banks that would have attained that size by being deeply involved in tripling or quadrupling the size of Nigeria's GDP.

EDIT 26/03/10: CBN Governor Sanusi Lamido Sanusi is looking to set up a special regulatory agency for micro-credit banks. Sometimes I like the way he thinks; sometimes I have doubts. Come to think about it, this is exactly how I felt about Charles Soludo ....

Toxic Asset Management

While the quality, quantity and credibility of information released to the public continues to be an issue, it is already clear that many of the things we thought we knew about the Soludo era at the Central Bank were at the very least exaggerated if not entirely false. A better understanding of the Soludo era is necessary if we are to have any kind of basis for analyzing whether the Sanusi-led Central Bank's fixes are appropriate in the effort to reform, resuscitate and restore the banking and financial services industry. At this point, 50 years into restored self-government, I have to say that we will probably only know the facts about the Sanusi Lamido Sanusi era after he leaves too.

I believe Sanusi's appointment was President Yar'Adua's best decision, but there needs to be some sort of credible and independent source of raw data and analysis. We don't really get that from the polemical media, nor do our universities really produce any "new" knowledge. The media is a prime source of much bad analysis (media commentators have got much of Nigeria believing Nuhu Ribadu was fighting corruption, when he really wasn't), and any paper produced by one of our business or economics faculties will probably be dependent on data from the CBN (or the IMF or World Bank) rather than produce independent data we can use to guage the accuracy of what appear to be guesstimates used by the CBN, IMF, World Bank and other agencies.

One tires of reading/hearing/seeing facts and figures that don't seem to reflect reality. I mean, seriously, where do they get the HIV/AIDS incidence rates they report for different African countries? Most of the countries have no accurate census, no accurate records of births and deaths, no data on the informal economic sector, no information of most things of substantive value .... but somehow they deduce a blunt percentage and present it as the HIV/AIDS incidence rate? Haba.

Sanusi is certainly spending A LOT OF MONEY, pouring more than =N=620 billion (about $4.13 billion) into the Nigerian banking industry, and setting up a =N=500 billion (about $3.33 billion) investment facility for electricity-related projects.

I hope someone (or more properly some agency or academic institution) is keeping track of what is being spent, making sure each Naira is going where it is meant to go, and then checking on the outcomes so we can accurately decide whether the programmes were cost-effective or even just effective. The electricity investment facility, for example, is going to be managed by the Nigerian government-backed Bank of Industry, who are supposed to lend the funds to the commercial banking sector in support of electricity projects; someone had better be tracking each Nigeria.

I do like the idea that the electricity funding is going to specific industrial clusters that are engines for growth. On the other hand, I get very nervous about issues of budget and debt, particularly about debt. Our "grand projects" are usually touted as being capable of generating enough funds to pay off the debts incurred in their creation, but they rarely do; we end up squeezing the already-too-small-for-a-country-with-our-population fiscal budget and reserve savings to pay off the debts of projects launched with much fanfare.

It looks like CBN Governor Sanusi Lamido Sanusi will get his proposed Asset Management Company (AMC). The AMC will be co-owned by the Central Bank and the Federal Ministry of Finance, and is supposed to buy up about =N=1.2 trillion (about US$8 billion) in "toxic assets" from the eight ailing banks that received a =N=600 billion (about US$4 billion) in bailout funds from the Central Bank. The AMC will also be able to buy equity in distressed banks to assist them in recapitalizing. As reported here by NEXT, Mr Sanusi told CNBC Africa he expects the AMC to have bought up these toxic assets by the end of the second quarter of 2010, which would then allow the eight banks to repay the bailout funds to the Central Bank by the end of the same quarter. Sanusi's ultimate goal is to make these banks attractive to investors, who could either buy up the banks as individual units (this would be by foreign and/or local interests) or consolidate the banks into the other 17 sound banks (this would be by one or more of the sound banks).

As I understand it, the plan boils down to the Asset Management Company paying US$8 billion to the banks in exchange for toxic assets .... and the banks immediately handing back US$4 billion (half of the AMC payment) to the Central Bank as repayment for the bailout funds they received.

This is an unnecessary magic trick.

What the Central Bank and Ministry of Finance are effectively doing is writing-off the US$4 billion they gave the 8 banks and then paying out an additional US$4 billion to take ownership of toxic assets worth US$8 billion on paper.

I rather wish they were direct about this, and told the people openly what they were doing.

I don't have time right now to go back and provide links to every last post I made on this subject (maybe I will do so later by means of future edits), but back when I started this blog, this was the issue I talked about the most frequently. At the time, the magnitude of the toxic asset problem was estimated at US$10 billion.

I criticized the banks and the Charles Soludo-led Central Bank for their complicity in the problem. I criticized "investors" (more like "speculators") for their role. In fact I was critical of everyone involved, large and small.

But when I was done criticizing, I said we had to fix this problem. It was (and is) vitally important that we do so. And I said that instead of piecemeal maneuvres, we should just come out and concretely squash the problem once and for all.

I said that as much as it was unjust, unfair, unethical and unfortunate .... at the end of the day we (the Federal Republic of Nigeria) could afford to pay US$10 billion in citizens' funds to end the problem and restore strength to the banking sector. In simpler language, if fixing the toxic asset problem meant having the federal government pay out US$10 billion to clear the toxic assets off the banks' balance sheets, then I would recommend we do so.

Now, if we ignore the magic trick the CBN and Ministry of Finance feel obliged to do, what they are really doing is paying US$8 billion to clear toxic assets off the banks' balance sheets, the first US$4 billion as "bailout" funds, the second US$4 billion through the Asset Management Company's purchase of toxic assets that are worth US$8 billion on paper.

We are paying US$8 billion to clear the toxic assets from the banks' balance sheets. This is US$2 billion less than the original estimate.

And I say we can afford to do this, and should do this .... NOT because the federal republic is rich, but because it is necessary that we do this.

The CBN and the Ministry of Finance should say this openly!

The operating theory is that the Asset Management Company will exist for ten years, and will make every effort to "protect, enhance and realize value" from the assets it acquires. It will sell those assets it can, and seize and liquidate collateral pledged for the non-performing loans.

The Asset Management Company will use government bond to buy the assets. The CBN and the Ministry of Finance will jointly provide the =N=10 billion (about US$67 million) to start the AMC operations.

Whichever way you look at it, the Central Bank of Nigeria and the Federal Government (represented by the Ministry of Finance) will lose money on these transactions. Forget profit, if there was any likelihood of simply earning back our US$8 billion investment on these assets, the assets would not have been designated "toxic" in the first place and the banks would not be so willing to sell them.

We are going to lose money on this, and someone in the Central Bank and/or the Ministry of Finance needs to be upfront with the citizens about this ... and upfront with us about why it is vitally necessary that we do this, even if we lose money.

I don't know why governmental and quasi-governmental institutions prefer being as opaque, vague and uninformative as possible. Indeed, the private sector is no better than the public sector in this regard, as the banking industry has shown. Nigerians would have been so much more sympathetic toward the Yar'Adua family if the President's kitchen cabinet had not spent so much time trying to misdirect everyone. And Sanusi Lamido Sanusi, who is coming under increasing criticism (some of which has to do with bank employees being sacked, and some of which is motivated by ridiculous ethnic/religious/regional accusations) would benefit from being honest with the citizens about why we have to fix the mess he inherited at the end of the Charles Soludo tenure. The weird thing is a lot of Nigerians are blaming Sanusi (and Yar'Adua) for the rot in the banking sector, while lavishing praise on architects of the problem like ex-President Obasanjo, Professor Soludo, Nuhu Ribadu and others. I really want someone to define what exactly is an "Economic and Financial Crime", because there was a lot of that going on at the Nigerian Stock Exchange and in the Nigerian banking and financial services industry. And seriously, when I read people blame Sanusi because banks are sacking staff, I wonder if they understand how businesses work. The banks are facing financial problems that were created ... by the banks! They are sacking workers because they are not in a financial position to keep them on! If the Asset Management Company plan works as well as it is intended to, it will put the banks in a better financial position ... and they might hire back some staff!

Haba! Not everything must be interpreted as an ethnic plot ... and people need to take off the rose-tinted glasses with which they gaze lovingly on people who caused the problems in the first place.

With that said, if the people of Nigeria are going to pay US$8 billion (about =N=1.2 trillion) to save the banks from a crisis the banks themselves created, then we must demand serious changes to way banks are run. We must demand that regulators do their jobs and regulate!

Sanusi has forced changes to the upper management structure of some of the banks, but (thanks to the qualitatively and quantitatively weak information available to the public) I am in no position to judge whether his moves were appropriate or inappropriate. Indeed, we will not know how well the CBN has handled affairs under Sanusi until he leaves.

Much is also expected of Mrs Arumma Oteh, the Chairperson of the Securities and Exchange Commission, from Mrs Farida Waziri at the Economic and Financial Crimes Commission, and from whoever replaces Ndi Okereke-Onyiuke as boss at the Nigerian Stock Exchange.

Okereke-Onyiuke is a holdover from the Obasanjo years; frankly she should have resigned or been forced out before now. Nigerian officials never take responsibility and resign.

Interestingly, the courts have voided the election of dollar billionaire Aliko Dangote to the office of President of the Nigerian Stock Exchange. This is good news; Dangote and his rival, billionaire Femi Otedola, should NEVER be allowed to occupy any office of responsibility at the Nigerian Stock Exchange. If you don't know why, then you've got a lot of reading to do!

Above all, we the people demand better, more honest, more credible information so we can keep track of what is going on. It seems Sanusi is keen on forcing them to do just that.

That is only the start of a process of necessary reforms.

EDIT 07-04-10: The Central Bank of Nigeria and the Securities and Exchange Commission announce plans to "fine-tune" the regulations governing margin loans.

Fiscal Waste

Going back to the start of this blog, I have at various intervals repeated my belief that the Federal Republic needs geographical consolidation of its second-tir and third-tier administrative divisions. We should:

(a) have 6 states (instead of 36+1), 72 local administrative districts (rather than 774 LGAs), and 6 Land Use Commissions (in place of 36 state assemblies);
(c) downsize the FCT to the boundaries of the Abuja Metropolitan Area Council;
(d) amend the constitution do cahnge from an American-style bicameral legislature to a system that is both cheaper and more fitting to Nigeria's circumstances;
(e) replace the 360-member "House of Representatives" with a 360-member "Federal Assembly". Vest in this Assembly 100% of the constitution's legislative function;
(f) replace the 109-member "Senate" with a downsized 8-member (President, 6 Governors, Chairperson of Federal Assembly) "Council of State";
(g) abolish the National Defence Council and National Security Council and transfer their responsibilities to the Council of State, which will be permitted to invite the relevant security officials to sessions closed to the public/media;

And this is only the start. To truly address the issue of restructuring and reform would take more space than "Blogger" allows, but know that with other reforms and much restructuring, we can consolidate governance, improve planning coordination, and (crucially) cut the cost of government. Done right, we can reduce the number of political offices by sixty-two percent (62%), inclusive of "elected" positions in the various executives and legislatures, as well as first-line appointed positions like ministers and commissioners.

Since each of these positions is itself at the centre of a web of other positions (like assistants, special assistants, senior assistants and senior special assistants), of patronage-clientelist disbursements (legal and illegal), and of atomized and inefficient spending decisions (legal and illegal), we would have the chance of cutting spending by even more than is implied by the 62% figure above. Mind you, this is only "a chance"; it is quite possible that consolidating government would only give the men/women occupying political office greater "power" and scope for patronage-clientelist spending. However, it is better to have "a chance" in a more efficient administrative system, than it is to maintain the current system that guarantees wasteful spending regardless of the intent of the spenders.

We could save billions a year in fiscal waste, and improve our ability to plan and implement sustainable economic development policies.

Okay, now that I have offered a constructive solution, the point of this blog post is to alert you to the fact that Kebbi State is creating new local government areas.

You will note the official word from Kebbi is that they are creating local "development" areas, not local "government" areas. This is the same gimmick used by the Lagos State government to add 17 LGAs to their initial 20.

Under the 1999 constitution, creating new local "government" areas requires the approval of the people of the relevant LGA, the approval of the relevant State Assembly, and the approval of both Houses of the National Assembly. The state governors control the states' LGAs and assemblies the way sole proprietors control their one-man shops, so the main stumbling block is the National Assembly. The federal legislators are rightly concerned about the impact on the allocation of funds from the Federation Account to the LGAs (well, really to the states, who use their control of LGA funds to reduce LGAs to rubber-stamp irrelevance), and the concomittant pressure on every state to inflate its local government count to keep up with the Joneses. Mind you, the National Assembly is not looking at it from a sensible, pro-Nigerian point of view; they are more worried that their share from the trough will diminish if more mouths are allowed to suckle at the trough.

Lagos State and Kebbi State (now) seem to have concluded that the constitutional requirement for local government area creation does not apply to local development area creation, even if the two entities occupy coterminous borders. This essay circuitously makes the argument, the author recognizing the Supreme Court decision that the constitutional process of LGA creation had not been completed in Lagos, then arguing his belief that the consitution really asks the National Assembly to merely "recognize" facts that are to be created by the State Assembly, before concluding that the ruling didn't apply anyway because these are in fact LCDAs ("D" for "development") and not LGAs.

The article on Kebbi State says the state is adding 21 LGAs to the existing 27, for 48 total, but this should be taken with a grain of salt. Our media, unfortunately, seem to get mixed up sometimes with their numbers. Recently I had a heck of a time trying to decipher a media report on our federal government's debt portfolio. And in this particular instance, one can almost understand their numeric confusion.

When Lagos State created new LCDAs, certain news outlets reported Lagos was adding 37 new LGAs to the existing 20, for a total of 57 LGAs. Other news outlets reported Lagos was adding 17 new LGAs to the existing 20 for 37 in total. What I believe really happened is this: (a) Lagos created 37 LCDAs; (b) Lagos did not abolish the 20 LGAs because Lagos has no constitutional power to do so; (c) Lagos used it de facto control of the LGA system to make them "virtual" rather than "real", something which all 36 governors have done anyway; (d) Lagos now interacts with its 37 LCDAs the way it is meant to interact with LGAs, albeit controlling them in the same total fashion. So, depending on how you look at it, Lagos State either has 57 total local governments (20 of which are only "virtual", and lack any reality beyond de jure documentation), or Lagos State has 37 LGAs, oops, I meant constitutionally vague LCDAs.

Maybe this is what Kebbi is doing, maybe not. As always we will find out the truth only after we see what actually happens. Either way, this is fiscal waste, and as I continue to reiterate on this blog, technically "legal" forms of waste are more damaging to the fiscus of the federal republic than criminal behaviour like "corruption". We are starving ourselves of funds for public services, public infrastructure and public investment, because we use too much of our fiscal resources for "legal" albeit unproductive purposes.

These new LGA and LCDA exist only to create new political positions for state governors (and their godfathers) to award to patrons and clients in the political system. It pays off past support, or pays for future support. Indeed, each of the new positions becomes in and of itself the centre of its own web of patron-client relationships.

Actually, while I am not a political scientist by training or profession, I do recall reading research that suggests that countries with our kind of politics tend to have to keep creating new political jobs in order to absorb ever-growing numbers of political and pseudo-political personages they have to keep happy to stay in office.

But it isn't just expansion of jobs for the political class. Lagos and Kebbi are also creating new bureaucracies to absorb some of the unemployed, thus earning the gratitude of said unemployed and their families, and genuine-if-misinformed goodwill from the populace for their "pro-people" policies. They can then rig elections in peace, while various voices say it is okay because they are "delivering" for the people.

Ironically (and sadly) one of the biggest reasons so many people are unemployed is the absence of the sort of infrastructure (hardware and software) that supports economic development and job growth. It is not just a question of hardware like roads and electricity, but "software" too ... an enabling environment that includes rule of law, constitutionalism, predictability of policy, stability of substantive democracy, etc.

The nature of our political system compels our political leaders to maintain the very "software" that has stunted our growth over the decades. Things like ethnic distrust, violence, weak policing and law enforcement, weak judiciary, low accountability, etc, etc are vital for the continuation of the system, so nobody lifts a finger to bring these problems to an end.

The citizens suffer for this state of affairs in many ways, one of which is the larger-than-necessary unemployment rate ... yet we are then grateful for the crumbs of bureaucratic jobs that consist of a small and irregular pay cheque in exchange for no substantive purpose, function or role. Having been unemployed myself, I know that a pay cheque of any kind is better than none, but you have done nothing to free yourself from the vulnerability you were trying to escape. In fact, the opposite occurs, and you are so exposed and so vulnerable that you become an enemy of yourself, constantly fighting against things that would improve your life, for fear of losing the tiny crumb you can barely grasp as it is. The Big Men and Big Women want you to be dependent on them for your daily bread; it gives them power over you. And the funny thing is a simple shift in the price of crude oil would be enough to start another round of "retrenchments" and you find yourself out in the cold again, having spurned the chance to fight for a more secure economic foundation when you had the chance.

We are hurting ourselves by allowing our federal, state and local governments to go deeper into debt every year just to meet the recurrent costs of their bloated bureaucracies. Every Olu, Eze and Aliyu in government is pumping money (usually borrowed) into a variety of flashy, eye-catching schemes, with no apparent research by anyone as to whether any of it is the most effective or efficient way forward. Some of the projects duplicate each other, with politicians preferring the "we must have our own of everything, and I must be able to take sole credit" approach over thinking about mutually-beneficial complementarities between the states and regions.

All in all, creating new states and new local government areas is an exercise in WASTE.

I have often said that it is not enough for Nigeria to be substantively democratic (which we are not), but that for substantive democracy to have any beneficial effects we must improve the quality and quantity of our analysis and discourse.

In terms of "quality", the truth is, as much as "new state" and "new LGA" creation is the opposite of our real strategic federal interests, if you it to a referendum anywhere in Nigeria, the affected people would probably approve it.

We have educated ourselves to believe that the path toward development lies in your village becoming its own state.

It doesn't help that our governments are not funded by taxes, but by oil revenues. If people knew they would have to pay more taxes to fund an unnecessary new political unit, they would be less likely to support its creation. Indeed, we would have 6 states and 72 districts today if people knew they were directly paying for the bloat. Unfortunately, no one has made the case to the population that even with oil revenues, the effect of creating new states and new LGAs is the same as if we had had a dramatic increase in taxation; there is only so much oil money, even in periods of boom, and the higher the proportion of it that is wasted on bloat, the lower the proportion that is available for things the people desperately desire like better hospitals, better schools, better roads, etc. We the people complain about the absence of these things every day of our lives, but nevertheless support one of the key reasons we never have enough money to pay for the things we want.

It is a paradox.

Fiscal Priorities

I have always believed wasteful spending that is nonetheless technically legal consumes (i.e. wastes) more of our money that "corruption" (i.e. direct theft, extortion, rent-seeking, rent-extraction, etc).

Bauchi governor Isa Yuguda is spending millions in state government revenue to fund his political machine ahead of the 2011 general elections. Technically speaking, he is legally entitled to put all these non-productive functionaries on the state payroll. They will spend the next year on duties that have nothing to do with governing the state (i.e. working to "deliver" an election victory for Yuguda).

Borno is part of the great a beautiful Northeast, the region of the country that has the worst social and economic indicators. Ali Modu Sheriff, the state's imperial governor, has decided his priority is to create new emirates and chiefdoms, which will suck additional state government resources and funding. Sheriff wants to reward his allies with their own little kingdoms to rule, and might also wants to create a kingdom specifically for his father to be emir of.

In Lagos, the popular Babatunde Fashola has been accused of fiscal impropriety by a previously unknown group. It is hard to know how to react in the absence of a credible academic, researcher, media outlet, think-tank or other entity capable of analyzing the accusations and pronoucing believably on their truth or falsehood.

It is public knowledge that Fashola awarded the contract for collecting at least a portion of Lagos State's internal generated revenue (i.e. taxes) to a tax-collection firm owned by his godfather, Bola Ahmed Tinubu, also Fashola's predecessor as governor. Awarding tax-collection contracts to your godfather(s), and allowing him(them) to keep an unnatural percentage of the money they collect ostensibly on the state's behalf is a technically "legal" way of funneling state revenue to your godfathers. It is the sort of arrangement Chris Uba wished to set up under the Chris Ngige administration in Anambra, before their relationship went sour.

With that said, Babatunde Fashola is one of the more popular governors in Nigeria because he is seen to have plowed public funds (and encouraged private investement) in a vast array of infrastructure projects that are beginning to give Lagosians hope that the "mega-city" could come closer to achieving some of its full potential. As one acquaintance (and Lagos resident) said to me, "People are now happy to pay their taxes, where before they would dodge their taxes, because they can see their money going into positive improvements."

But Lagos is a city-state with enormous needs, and as much as Fashola does, he will need so much more resources to meet the city-state's vast challenges and opportunities. So if a too-large proportion of the state's revenues are going into corruption, patronage, rent-seeking, rent-extracting, conflict-of-interest, self-enrichment, and (the most important of all) waste, then it is appropriate to put a stop to it so all resources are properly focused on this most important Nigerian city.

Still, what to believe? The rumour is these accusations emanate from Bola Ahmed Tinubu's political machine, and are a way to remind Fashola (who is now more popular than Tinubu ever was) that he could be broken just as easily as he was created. I am not sure what Tinubu could be afraid of; Fashola has no political machine of his own, and Lagos State is as much Tinubu's "private property" as Kwara State is to the Saraki family.

In Kano State, children as young as 10 are working to earn money to buy themselves a plate of rice a day. And inasmuch as I championed the cause of forthrightly dealing with the issue of toxic assets in the Nigerian banking industry (posts on this topic dominate the early days of this blog), it does seem a little humbling (if not depressing) when you think about the difficult lives of these children and contrast it with the =N=620 billion (about $4.13 billion) the Central Bank of Nigeria has spent to recapitalize troubled banks.


On a positive note, the federal government will spend =N=19 billion (about $127 million) to for land reclamation and shore protection in the Niger-Delta. The islands that make up the Delta have been losing land to the Atlantic Ocean for as long as I can remember. I am not sure the sum released will be sufficient; the Eko Atlantic City project in Lagos costs much more, and it will take more than that level of investment to restore land eroded by the ocean and to protect the new reclaimed land.

I have long believed that the "oil derivation" money that goes to Niger-Delta states should not be paid into the states' general fund accounts, but should instead be set aside to deal with the issue of reclaiming and protecting land ... particularly since the world's oceans are set to rise over the course of this century. To be honest, I have more faith in using 21st century technology to enhand and protect the Niger-Delta island shorelines than I do in these pointless international conferences about climate change. I don't think anything will happen, or that anybody will do anything, to stop the oceans rising. We have to prepare ourselves and our coastline for the inevitable, or we are looking at serious problems a few decades down the road.

Giving "oil derivation" money to state governors is like begging, pleading and asking for the money to be wasted (if not stolen). If Nigeria had a functioning democracy (we don't), I would have opted for putting a referendum to the people of the Niger-Delta as to whether they want to earmark a portion of the derivation money for environmental recovery (including reclamation and protection, as well as cleaning up areas damaged by the oil industry) -- and to mandate a portion of that earmark to pay a trusted auditing firm that can monitor how the money is spent (to see if it is being used efficiently/effectively or being wasted), without said firm fearing that its contract will be cancelled if it does not doctor its reports to match what the governments wants to hear.