Finally - A crumb of honesty

When I started this blog, Nigeria's banks were estimated to be carrying $10 billion in so-called toxic assets on their balance sheets. In those early months, I probably devoted more posts to the toxic asset problem than any other single issue.

I am a critic of the Nigerian banking, financial services and equity/securities industries ... but not a fanatical critic. I am proud of the way our banks have expanded in West Africa, Central Africa and East Africa. This will prove an important stepping down in the economic development of the entire continent, but only if our banks drop their current modus operandi. The banks are emblematic of the federal republic; we do just enough to give ourselves genuine reason for hope, but do far too little to ever bring our hopes to fruition.

The banks created their own troubles, and the collapse in banking share prices intensified the broader collapse in the Nigerian Stock Exchange when the self-created bubble burst. In order to inflate their balance sheets, banks lent money to investors (and to the banks' executives) for the express and specific purpose of buying the banks' own shares, to artificially raise the banks' share price. The manipulation of share prices extended beyond the banking industry, and the Nigerian Stock Exchange became a giant bubble waiting to pop, a bubble that would have popped eventually with or without the wider global credit crunch. The bubble in the banking sector was the biggest of all, and the fall in bankits demise severely hit the capitalization of the NSE, which is now worth 60% less than it had been 3 years ago

Nevertheless, we cannot allow the toxic asset problem continue to depress the banking, financial services and equity/securities sectors. And I have repeatedly said on this blog that if the full extent of the problem really is $10 billion, the federal republic can and should deal with it expeditiously.

We are not a "wealthy" country; our federal and state budgets are firmly in deficit territory, and have exhausted the Excess Crude Account, but even so our budgetary expenditures remain insufficient to fund the public goods that underpin any social contract. We have also drawn down massively on our foreign reserves to defend the Naira.

Our needs are great, and our funds are comparatively scarce, yet I believe we should muster $10 billion to get our banking, financial services and equity industries back on firm ground.

True, baling out the banks with government funds, and without any endogenous reforms in the industyr, is a recipe for the continuation of the stupid things they were doing that created the problem in the first place. However, our banks operate in an environment that hadnsomely rewards bad behaviour and too frequently punishes (or at the very least discourages) good behaviour. To paraphrase a popular colloquialism, "it is condition that makes the crayfish bend", and until we fix the overall "condition" or circumstances, it will continue to "bend the crayfish" in directions that prove problematic for societal/economic growth and development.

There is quite the tangled web of interconnected, systemic and instiutionalized problems; the core nature of our polity, economy and society reinforces dysfunction. You can't even look to the National Assembly to attach sensible conditionalities to any federal bailout of Nigerian banks. If anything, the Assembly is far more likely to weaken any reform efforts; politicians rank very high on the list of groups that exploit the gaping loopholes in our banking system. Heck, the create and exploit loopholes in every system!

I am not a fanatic critic, and I credit Professor Charles Soludo, CBN governor from 2004 to 2009, with some good things, notably the bank consolidation exercise. On the other hand, he most definitely neglected the apex bank's watchdog and oversight roles. I criticize him for this, and he deserves the criticism, but he was just a cog in a much bigger systemic mess.

Soludo was the CBN supremo in the second term of the Obasanjo II administration, when a strong nexus of mutual interests bound the ruling PDP and (separately) the Obasanjo-led federal government to Big Business. Warm, personal ties linked Obasanjo, Soludo, Nuhu Ribadu, Ndi Okereke-Onyiuke and the post-consolidation titans of banking. The plutocrats funded Obasanjo's 1999 campaign, his 2003 reelection campaign, his campaign to amend the constitution to give himself a Third Term, and his imposition of the Yar'Adua/Jonathan ticket in 2007. Some plutocrats made Obasanjo a silent partner in business projects, and Obasanjo ensured federal government policy favoured those plutocrats who supported his political machine. The mutual back-scratching peaked with the founding of Transcorp, a federal-government-created Big Corporation uniting Big Politicians with Big Businessmen to buy public (i.e. government-owned) assets with commercial potential.

The institutions constitutionally mandated to guard against conflict of interest were uninterested. There was a similar lack of interest from the Central Bank and the Securities and Exchange Commission even as the banks and the NSE build up frighteninggly large bubbles. Nothing practical was done to promote the chances of a soft-landing; I am not even sure a soft-landing was possible beyond a watershed date that no one paid attention to.

You see, there is a way things work (or don't work) in my homeland, a game being played. The game has rules and boundaries that all of us Nigerian citizens understand.

It is why we don't react when elections are rigged or when politicians are assassinated, or when communal violence results in dozens or hundreds of deaths, or when coups-de-tat overthrow governments -- these things are the normal, day-to-day workings of the system.

It is why we just dutifully pay the illegal =N=20 bribes demanded by the police at illegal checkpoints that exist to harass law-abiding citizens while kidnappers, robbers and murderers roam free (it is also why some police officers feel no compunction in shooting us if we don't pay the illegal levy; they have no sense that it is wrong, because in the Nigerian context, it is right).

In fact, it is why no one is bothered by the fact that our current President was caught trying to steal $13.5 million (=N=2,025,000,000.00) from the Bayelsa State treasury. No one cared that such a person became PDP vice-presidential candidate (or that Nuhu Ribadu abruptly stopped prosecuting him the moment it became clear Obasanjo was going to use him in Plan B of the Third Term bid -- the imposition of the Yar'Adua/Jonathan ticket). No one wants to know if Jonathan took more than the $13.5 million that was seized from him. Within the Nigerian context, nothing strange or abnormal happened; there would have been more shock and surprise if he had been honest.

It is why Soludo, the CBN and the SEC did not do their job. Actually, they did do their jobs, except their jobs were to do nothing. Sharles Soludo was never meant to hold the titans of the industry to proper standards. He was supposed to look the other way, to be a good friend of the people who were setting up the collapse of the stock market.

Like the famous former Iraqi Information Minister, Soludo kept insisting there was nothing wrong with the stock market or the banking sector, even as the bubble inevitably burst and the NSE All Share Index dropped. Even after the Eurasia Group estimated Nigerian banks were carrying $10 billion in toxic assets, Soludo insisted the number was $5.3 billion . Then he began spending our foreign reserves to defend the Naira, a process which has continued into the Sanusi Lamido Sanusi era, and which has probably consumed over $23 billion so far.

I supported former President Yar'Adua's appointment of Sanusi Lamido Sanusi, who was then Managing Director of First Bank, to replace Professor Soludo. I've read many commentaries and essay written by Lamido Sanusi over the years, and whether I agreed or disagreed with his conclusions, his writings conveyed the sort of politics of ideas that I've long wished would replace the determinedly vacuous politics we've practiced seemingly forever. In a country where the political and economic power-structure are very thin-skinned and prone to take offence at perceived slights and disrespect, Lamido Sanusi also impressed me by taking positions in his essays that had me wondering at times if he was not concerned that First Bank would sack him rather than risk political consequences from his literary utterances. Last November, Sanusi, true to form, took a contrarian position at a conference designed to celebrate and reiterate the conventional falsehoods underpinning our dysfunctional system.

With that said, Lamido Sanusi is a man of the banking industry, even more so than Soludo. Such a person could either be a reformer who uses his inside information to better target reform, or such a person, after years steeped in the practices of the industry, could potentially see nothing wrong with business-as-usual and move instead to protect his fellow bankers from reform ... or sanction.

As it turns out, Sanusi hit the ground running, shaking up the industry with a number of hard-hitting measures -- the media termed his early months in office the "Sanusi Tsunami". There has been much debate over his actions (search for "Sanusi" on this blog for posts with links to articles, or do a general web search if you prefer), and I don't think we will have a final verdict until enough time has passed for us to see the output of his input.

With that said, Sanusi's Tsunami weakened to a drizzle following the incapacitation of the late President Umaru Yar'Adua. The Central Bank of Nigeria should be an independent institution, and I am perturbed by the fact that CBN Governor are dependent on the political favour of Aso Rock (the Presidential Villa) to be effective at their jobs. Charles Soludo was one of the most powerful men in Africa when his patron Olusegun Obasanjo was President; as soon as Obasanjo left, Soludo became a lame duck. Likewise Sanusi acted almost as though he was a law unto himself when Umaru Yar'Adua was alive. I remain uneasy about Sanusi's tactic of publishing the names of the banks' politically-connected delinquent debtors (powerful individuals and corporations owned by powerful individuals). In a practical sense, trying to do things "normally" in an "abnormal" environment makes failure more likely, but if you respond to this dillemma by becoming very good at "abnormality" yourself, then you become just another person promoting and sustaining our "abnormal" way of doing things. It is a chicken-and-egg scenario -- someone, somewhere, somehow must become the first person to stand up and do things "normally", and succeed (and keep doing it until he or she makes "normal" the new "normal").

Even after President Yar'Adua's death (RIP), Sanusi continued pushing for the National Assembly to pass a bill creating an Asset Management Corporation. The AMC, which has been was passed by both the Senate and the Representatives, will be the vehicle through which the federal government purchases toxic assets from Nigerian banks.

The company, when established, will have a life span of 10 years and will be owned equally by the bank and the Federal Ministry of Finance, which will both provide the =N=10 billion capital base.

It will issue government bonds and other government-backed debt instruments to buy =N=1.2 trillion ($10 billion) in "non-performing" (a.k.a. "toxic") assets from Nigerian banks. According to Sanusi:

"We do expect that some of those loans will be sold off, some ... will be restructured, and some ... will be fully provisioned on the books of banks," he said.

"But we think on the outside 1-1.2 trillion (naira) is what the AMC will have to lay out to purchase and to clean up the system and the bad loans, and we should recover about half of that over the life of the AMC," he said.

I am glad we are finally moving in the direction of cleaning up the banks' balance sheets, and remain generally supportive of the CBN governor.

But I am perturbed by the lack of honesty about what we are really doing.

I do not think we are going to recover anything of statistical importance from this bank bailout. The AMC is going to give the banks $10 billion to clean up their books, and will eventually have to write-off nearly the entire sum at the end of its decade-long life-span.

Except the AMC will be using government-backed debt instruments (as opposed to "cash") to buy the toxic assets so "write-off" really means the government will have to pay up the $10 billion plus interest the AMC will owe bond-holders and other creditors.

Essentially this is a convoluted process, designed to disguise the fact that the federal government is going to give the banks $10 billion in free money, in exchange for nothing, a gift, a subsidy, a bailout with no strings attached.

Don't misunderstand me. I support the bailout, well, everything except the no-strings-attached part. It is a lot of money, but we have to do it. It is unfortunate that in the absence of broader institutional reform we might find ourselves back in this mess sooner or later, but we can't let the "perfect" be the enemy of the "necessary". In order to be in a position to talk about how to reform, restructure and transform the banking industry (and the overall economy) we need to have a healthy banking system in the first place.

What I don't understand is why our officials seem rooted to the belief that we will not let them do the things they want to do if we really knew what they were doing. So they tell us whatever they think they need to tell us to get us to acquiesce to whatever they want to do. They think it is a successful strategy because our response to their actions is apathetic, but they don't realize that they are the reason that nobody in Nigeria trusts anything the government (or any of its agencies or leaders) says. If Nigerian citizens' lack of trust in public institutions could be boiled down to one word, the word would be "Census". We do not trust even the most basic statistics released by our government, the basic statistics on which the federal and state budgets are putatively based.

I would rather someone had the courage to explain what we were doing with regard to the bailout, rather than pretend that we are somehow going to make some of this money back.

I like Sanusi. I will freely admit it has more to do with his essays on political, social and cultural issues than any opinion formed of his time as MD of First Bank.

With that said, Sanusi Lamido Sanusi needs to study his predecessors, all of them, and ask himself what made them effective and what made them ineffective.

Professor Charles Soludo had a brilliant academic career before becoming boss of Nigeria's Central Bank. And as I have said earlier, there are things he did as CBN supremo that I am glad for, the bank consolidtion principal among them. But I stopped taking Soludo seriously when I heard his comments on the West African Monetary Zone plan for Nigeria, Ghana, Sierra Leone, Libera and Gambia to adopt a single currency in three years.

From the beginning, the WAMZ plan was unrealistic. It was so unrealistic, I couldn't believe it. In the year 2000, they declare that all five countries would adopt the single currency in 2003 ... just three years later! If you do not understand why that was an almost cartoonically silly thing to declare, then I don't know what to say, because a web-blog is no place for the long detailed expatiation of why their plan made no sense from the start.

Unsurprisingly in 2003, no such single currency emerged. The WAMZ countries merely announced that the new currency would begin in 2005, still an unrealistic target. In 2005 they pushed it to 2009. And in 2009, they pushed it to 2015, where it stands today.

Soludo was not CBN boss when this plan started. However, once he became CBN head, he never (not to my knowledge anyway) publicly pointed out that the plan didn't make sense. He never (to my knowledge) pushed for the plan to be made more realistic. If anything, all of his public statements that I am aware of were supportive of the plan; much as he would later insist there was nothing wrong with the Nigerian Stock Exchange, he insisted the WAMZ project would meet its declared deadlines, even as any sensible person knew (or should have known) that those deadlines would never be met.

I know that Soludo is a brilliant economist, and so I know that Soludo knew the WAMZ wouldn't happen. I also that he knew that the Nigerian Stock Exchange was not okay. For political reasons, he watched as the NSE bubble grew, and endorsed the "pan-African" ideal of a currency plan based on unrealistic targets and expectations.

But that is not my criticism right now. My criticism is of a CBN Governor looking me in the face (metaphorically speaking) and insisting something is true when I know it is not.

Once that line is crossed ....

Which is why I am glad someone is finally displaying a crumb of honesty. Abraham Nwankwo, Director-General of the Debt Management Office (DMO) has admitted, albeit none-too-loudly that Nigerian tax-payers will bear the brunt of bailing out the banks (I suppose "tax-payers" is his euphemism for the proceed from crude oil sales).

Where Sanusi said the Asset Management Company could recover as much as half of the value of the toxic assets, Nwankwo has adjusted this downward, albeit cleverly offering an estimated range of 35%-45% recovery. This means it will likely be closer to 35% ... close from below 35%).

Abraham Nwankwo is an interesting man, who as recently as March 2009 declared Nigeria to be "under-borrowed", which is what multilateral lending agencies tell countries when they want to saddle those countries with unnecessary debt.

But I thank him for his honesty ... or his approach towards honesty anyway.

Even if the money for the bailout comes from oil revenues, we the people will be giving up use of those revenues for infrastructure, healthcare, education, electricity and other strategically vital needs. Directly or indirectly, we are paying the price.

I support the bailout, but ideally, there would have been a national debate BEFORE the National Assembly approved the Asset Management Company. Ideally, the debate would boil down to a "compromise" where the people grumble but accept the Asset Management Company, the National Assembly passes a raft of laws that constitute top-down reform of the industry, and the banking industry sanitizes itself by sloughing off the detritus of decades of uneconomic thinking.

But this is Nigeria ... which means most Nigerians are probably blissfully unaware that we are about to bailout a banking industry that created problems for itself and for the rest of the economy. How can you build up pressure to change, pressure to reform, to restructure, to transform, when people don't even understand the full extent of the problems that were create by the persistence of abnormal ways of doing things?

News Comments

KANO

As I said would happen yesterday, the EFCC has released Alhaji Takai, and has made some vague, indecipherable noises on how the investigation will be on-going. Interestingly, the article named the specific political rival who called the EFCC in, Alhaji Abdulkareem Dayyabu. What will happen next is Governor Shekarau will deploy the powers of the Governor's Office to crush Dayyabu ... or the governor will have a private chat (more like a negotiation) with President Jonathan. Basically, Shekarau wants to be free to impose Takai on Kano, without interference from Abuja, while President Jonathan wants to impose himself on Nigeria in 2011 and needs the support of the political machines controlled by the all of the governors (particularly one is so key a state as Kano). A simple quid-pro-quo will be worked out.

In better news, the Kano Metropolitan Area looks to be getting some version of rail mass transit. The Kano project is the latest on a list that includes the Lagos State rail mass transit project, and the mono-rail line planned in Calabar to link Margaret Ekpo International Airport with the Tinapa Resort, Shopping, Conference and Entertainment complex.

HEALTH AND WELFARE

I doubt any high-ranking government official reads this blog. But on the off-chance that any of them do, could they please take a look at this news report and do something about it? Haba. Why would you build a clinic, equip the clinic with everything it needs ... but fail to connect it to the electricity grid? In fact, why was the clinic opened for business if it has no electricity?

News of the day

ABUJA

Mobile Police in Abuja shot a bus conductor in the knee. The conductor's crime? He had the temerity to ask the officers to pay their bus fare. Apparently the Mobile Policemen felt they had the right to ride commercial buses for free, and the right to enforce this freedom-from paying their due bills by using gunfire on innocent blue-collar workers who are only doing their jobs.

KANO

Nuhu Ribadu has barely returned from self-imposed exile, yet the EFCC is already reverting to its Ribadu-era form.

Being that Big Men dislike subjecting their ambitions to democratic votes, the many ANPP aspirants seeking to succeed Ibrahim Shekarau as Governor of Kano State after the 2011 "elections" decided against having a democratic intra-party primary decide the All Nigeria People's Party candidate for next year's "elections". No, the ANPP powerbrokers decided to give Governor Shekarau the right to singlehandedly designate one of them as his automatic successor; since governors control their respective State "Independent" Electoral Commissions, control their respective state treasuries (with fully bought-and-paid-for rubber-stamp State Assemblies), and control their respective local government areas (appointing chairmen and councillors as though they were handmaids), being your governor's handpicked successor is as good as "winning" the election before it is held.

Each of the aspirants had spent the last 8 years kissing Shekarau's ... never mind. The point is, they each thought they were the governor's favourite, and they each thought that this undemocratic arrangement would result in the governor picking one of them and using his power to shut their rivals up.

As it turns out, the governor picked none of them. The would-be aspirants have reacted very negatively to Shekarau's selection of Alhaji Salihu Sagir Takai as his imposed replacement (sample stories here, here and in most detail here.

Some of Alhaji Takai's expanding list of opponents seem to have remembered that manipulating the outcome of "elections" was the most important role of the Economic and Financial Crimes Commission during the Obasanjo II administration.

Since almost everyone involved in politics in Nigeria is tainted with the pervasive corruption of the system, you can ALWAYS find proof of wrongdoing by any politician ... provided you are actually interested in finding it. Indeed, as much as I am no fan of Nuhu Ribadu (working to make one corrupt faction stronger at the expense of another corrupt faction does not constitue fighting corruption), or of Farida Waziri (who only has the job as a scratch-my-back-I-scratch-yours recognition of her husband's political influence in Gombe State), no one, not even a saint, could fight corruption from within the system. The system itself is so corrupt in its entirety, that "fighting corruption" would entail prosecuting almost everyone in the political system, which the political system (by definition) would never allow.

In any case, Alhaji Takai's opponents have set the EFCC on him. The ANPP does not control the EFCC, so one can see the hidden hand of the Peoples Democratic Party, and the federal government, trying to exploit divisions in the ANPP ahead of the 2011 "elections".

In Fourth Republic politics, aspirants who fail to get the nomination ticket for their current political party simply decamp to one of the other 35 registered parties from where they battle their rivals in a contest to see whose machinery will be more successful in manipulating/dictating the outcome. Specifically, one or more of Shekarau/Takai's rivals is clearly in discussions with the Peoples Democratic Party (and with President Jonathan) about decamping to the PDP ... and Alhaji Takai's arrest may be the first step in the eventual replacement of the ANPP with the PDP as the controlling faction in Kano State.

Oh, don't worry. I doubt Takai will be held for long, or charged with anything. They will hold him for a while, "question him", and then release him. Farida Waziri (like Ribadu before her) will make vague sounds about planning to prosecute him at some unspecified future date.

The PDP has made its point.

Senate passes Asset Management Company bill

Perhaps the most recurring theme on this blog has been the question of how to handle the toxic asset problem in the Nigerian banking industry. CBN Governor Sanusi Lamido Sanusi's proposed Asset Management Company crossed one hurdle yesterday.

President Umaru Yar'Adua died yesterday

Yesterday, 5th May 2010 at 9pm, the 13th President of the Federal Republic of Nigeria passed away. Reports from Daily Trust and NEXT. He will be buried today at 2pm Nigerian time.

May his soul Rest In Perfect Peace.

Goodluck Ebele Jonathan was sworn in as President this morning.

Thursday, 6th of May has been declared a national holiday, and President Jonathan has called for a week of mourning.

From a historical perspective, President Yar'Adua is the fifth Head of State/Government of the federal republic to die in office in the last half-century. Prime Minister Tafawa Balewa was assasinated (1966), as were Heads of State J.T.U. Aguiyi-Ironsi (1967) and Murtala Mohammed (1976). Mystery still surrounds the death of Sani Abacha, and certain supporters of the late Moshood Abiola would insist President Yar'Adua was the sixth.

A decent man died yesterday. It doesn't mean we must stop talking about issues that affect the lives and welfare of over 100 million of God's children, but my condolences go out to his family and to my fellow citizens.

Sanusi under attack

Last Friday was the deadline for Nigerian banks to adhere to the common year-end policy of the Central Bank of Nigeria.

With President Yar'Adua more or less in retirement, and Acting President Goodluck Jonathan in full charge of the federal executive, it appears CBN Governor Sanusi Lamido Sanusi has lost the political backing of Aso Rock. The Acting President's recently re-appointed National Security Adviser, retired Lt Gen Aliyu Gusau wasted no time in criticizing Sanusi's reforms, blaming them for damaging the economy.

It is unclear whether Gusau was speaking indirectly for Acting President Jonathan or whether he was speaking for Jonathan's godfather Obasanjo (Gusau was Obasanjo's NSA too; in fact Jonathan seems to be resurrecting the careers of a lot of Obasanjo-era powerbrokers). Gusau could also have been speaking on behalf of major vested interests in big banking, big business and big politics, believed to be upset with CBN boss Sanusi's crackdown on their mostly parasitic relationship with Nigerian banking. And Gusau could be speaking for himself (or for whatever shadowy faction of Big Men he truly represents).

Quite a few players in the banking and equity trading industries echoed the retired general's criticisms. Like Gusau, these industry insiders have blamed Sanusi for the difficult situation facing Nigerian banks and the Nigerian Stock Exchange.

The truth is, the Nigerian banking industry and the Nigerian Stock market were in trouble BEFORE Sanusi Lamido Sanusi was appointed Governor of the Central Bank. The truth is, lax/negligent regulation of the financial and equity markets by the Obasanjo II Administration (of which Gusau was part), and borderline criminal stock market manipulation by industry insiders created an asset bubble that coincidentally (but separately) blew up the same time as we were hit by the Global Credit Crunch in 2008.

Indeed, between October 2008 and May of 2009, Nigeria's external reserves dropped from $61 billion to $47 billion because the immediate past Governor of the Central Bank, Professor Charles Soludo, pumped $14 billion from the reserves into the currency markets to defend the value of the Naira.

And the decline in banking industry share prices on the Nigerian Stock Market was responsible for a 37% drop in the All-Share Index, the steepest decline of any of the 89 benchmark indexes tracked by Bloomberg media.

All of this happened BEFORE Sanusi was named Central Bank Governor, and so NONE OF THIS can be blamed on Sanusi's actions since becoming Central Bank Governor. The Central Bank, reacting to retired Gen. Gusau's criticism, made just that argument.

The CBN's self-defence is backed by Lawson A. Omokhodion, who insists in this essay that Sanusi's interventions were designed to save the Nigerian banking from a mess of its own creation. These interventions include, a massive =N=620 billion ($4.13 billion) bailout for the most distressed banks, and a proposed Asset Management Company to buy up =N=1.2 trillion ($8 billion) in toxic assets held by Nigerian banks. Given the fact that the Eurasia Group estimated "bad loans" (a.k.a. toxic assets) on the books of Nigeria's banks added up to at least $10 billion, it is perhaps not a coincidence that Sanusi's $4.13 billion quick bailout and $8 billion Asset Management Company plan add up to a $12.13 billion intervention to cure the "toxic assets" problem of Nigerian banks.

It also makes you wonder about erstwhile CBN Governor Soludo's claim (published by Bloomberg a month after the same outlet had reported the Eurasia Group's estimate), that the toxic assets problems amounted to just $5.3 billion. Was this the same sort of official procedure under which Nigerian governmental agencies release casualty figures, after incidents of communal violence or police/army reprisals, that are so much less than the real casualty figures?

To a degree, General Gusau, and his supporters within the political class, the banking industry and the stock market, are playing politics.

In most countries in the world, citizens are enraged at the fact that taxpayer's funds are being used to bail out big banks; in these citizens' opinion, it is the big banks that created their own problems (and problems for the rest of their respective economies).

In Nigeria, there has not been much public reaction to the news that $12.13 billion is being pumped directly or indirectly into the banking industry. Part of this is due to the fact that Nigerian citizens perceive government money/funds and external reserves to be "oil money" and not taxes taken from the sweat of the citizens' brows, so no one feels like money is being directly taken from them (i.e. the people) and being given to the banks. Indeed, the attitude toward "government" and (more importantly) "government property" is almost a perfect illustration of Garrett Hardin's "Tragedy of the Commons" ... but that is a different discussion to be postponed till another day.

In fact, we the people are wrong to ignore what has happened, and what is happening to correct and/or ameliorate some of what happened.

In this, the Gusau Crew (if I can call them that) are adopting first-strike politics, using propaganda to plant the idea in the minds of Nigerian citizens that all of the problems were caused by Sanusi Lamido Sanusi. Effectively, they want to coopt the citizens into their Crew by convincing the people that any pain felt by the economy or by the citizens is to be blamed not on the Crew but on Sanusi.

Within the context of Nigerian politics, it is not difficult for this brand of politics to work. There are certain people who were immediately inclined to dislike Sanusi because of the difference between his geographical region of origin (and his religion) and the same criteria for his predecessor. For some, it was the difference between those criteria for the man who appointed Sanusi, as compared to the same for the man who appointed Sanusi's predecessor. For many of those with this sort of visceral dislike of Sanusi, it didn't help that he and the president who appointed him were from the same region and same religion. Before Sanusi so much as uttered a word, or did anything, these people were already accusing him of being part of a regionalist and religionist plan to destroy the banks because (in the view of these sectionalists), the banks were dominated by people from other regions and religions. Indeed, when Sanusi forced the resignations and dismissals of certain CEOs, the ethno-religious warriors kept saying Sanusi did it because he wanted to install his kinsmen in charge of the five affected banks in place of people from other socio-cultural groups, when in fact Sanusi was exactly regulatory sanction on five banks that were collectively responsible for 40.81% of all toxic assets in the Nigerian banking industry.

General Gusau (rtd) is a ex-military strongman from the part of the country that should ostensibly be pro-Sanusi, if the ethnic/religious propaganda suffusing the Nigerian political marketplace had any credence.

The truth is Sanusi has stepped on powerful toes from all over Nigeria, regardless of region or religion. The powerful plutocrats who dominated and still dominate the commanding heights of the Nigerian economy enjoyed a cozy, mutually-lucrative, quid-pro-quo relationship with the Obasanjo II administration. Sanusi embarassed a lot of them by exposing to the public the "bad debts" they owed Nigerian banks, as a way to force them (via the court of public opinion) to make good on their debts. He also revealed how the executives at major banks dominated by a small coterie of shareholders based around a particular family, pulled a variation of the Bernard Madoff fraud, enriching themselves along the way (as Madoff did) often by directly transferring customer deposits to themselves (by spending it on themselves and their expanding personal asset portfolios). The banks not so much "lent" as "gave" money to their business and political contacts; and they gave large amounts of "margin loans" to speculators (and to themselves) for the purpose of buying their own stock, and hence pushing their stock price up.

No doubt a few innocent parties were inadvertently subjected to public scorn they did not deserve, indeed, in response to the publication of the list, I said

(This) is not an ideal or optimal way of doing things. One would rather there were civil lawsuits that would produce clear rulings on whether Loan XYZ was non-performing, that could then either force the adoption of a structured payment plan or authorize the seizure of assets subsequent to legally defined default. There are corporate heavyweights on the list that might not have liquid assets to pay back their loans, but do have other assets than could be seized to defray at least a portion of the debt -- the rest may have to be written off. Maybe in some way the process could establish a distinction between businessmen and bankers who are true entrepreneurs, and businessmen and bankers who exist only by virtue of exploiting the many loopholes in the Nigerian political and economic system. In other words, I wish this were more constitutional and legalistic, with a more systemic approach toward solving the toxic asset dillemma.

It is extremely unfortunate that more sophisticated, more accurately targeted methods were not used, but in the Nigerian context there was probably no other way to pressure the mega-powerful plutocrats to make arrangements to pay up or to restructure their debts so they could eventually pay up. Those affected by Sanusi's actions, including some of the most powerful players in Nigerian business, hate his guts.

And then you have the thousands of bank workers who have been sacked since the Sanusi reforms began. Within the political context, they blame Sanusi for their lost employment, when in fact the economic factors that made them redundant existed BEFORE Sanusi came to office. As stated above, the precipitous drop in the value of Nigerian banking shares led to a 37% drop in Nigeria's All Share Index. After years of expanding their staff totals during the (at least partially artificial) boom years, Nigeria's banks from 2008 onward were clearly struggling, and were always going to have to think of cutting costs (including payroll).

Those bank workers who have lost their jobs blame Sanusi, because the effect of some of his reforms was to force the banks to make accurate public statements about their financial status. Previously, the numbers released by some banks were not reflective of the banks' true financial position. When banks were forced to face up to their true economic health, and to make provisions for their losses and bad loans, they were forced to take appropriate cost-cutting steps they would have otherwise pretended they didn't need to do.

To a large degree, driven by the lack of formal employment opportunities in the Nigerian economy, there is a philsophy among sections of those lucky enough to be formally employed that they should be kept on the job even if the corporate entity they are working for experiences a financial/commercial collapse. In the private sector (like the banking industry), this philosophy is less powerful, but in the public sector, moribund parastatals like the Railways, NITEL and the Steel Complexes nevertheless boast thousands of staff. Indeed, even as federal, state and local governments are running deficits and running up debts to meet their recurrent costs, civil services at all three tiers remain over-staffed.

Regardless, you can't blame Sanusi Lamido Sanusi for the job losses.

These are testing times for the CBN governor, and he does appear to have lost the support of Aso Rock. Will he concede ground to his powerful enemies, and step back from the necessary reforms and sanitization of the banking industry?

Time will tell.

The Acting President and the $13.5 million seizure

Four years ago, the Economic and Financial Crimes Commissions separately seized =N=104 million first and US$13.5 million later from then-Governor Goodluck Jonathan of Bayelsa. Jonathan had only recently replaced ex-Governor Diepriye Alamieyeseigha, who had been jailed, charged and impeached and stripped of office for basically the same act -- theft of public funds and money laundering.

The media and the EFCC made it out to be a case against Patience Jonathan, wife of then-Governor Jonathan, but lets not get bogged down by money laundering semantics; the only place she could have got that money is her husband. It would not be the first time Nigerian politicians have run their schemes through their wives and girlfriends; Nnamdi "Andy" Uba famously used accounts opened in the name of his American mistress Loretta Mabinton.

The case of the mysterious US$13.5 million disappeared from the media and the public consciousness rather quickly.

After the defeat of his Third Term Agenda, then-President Olusegun Obasanjo had seized control of the Peoples Democratic Party, using Ribadu and the EFCC as part of a carrot-and-stick process to extort support from the Big Men and godfathers of the PDP. Play ball with me, and enjoy your ill-gotten loot in peace, defy me and watch me jail you.

Obasanjo imposed then-Governor Umaru Yar'Adua as his chosen successor, believing the erstwhile Katsina governor to be weak enough to be manipulable. Obasanjo also selected then-Governor Goodluck Jonathan to be Yar'Adua's running mate ... at which point, Ribadu forgot case against Goodluck Jonathan.

In a world where political godsons routinely turn on their godfathers, it was important to have some kind of tool for keeping godsons in line. Famously, Chris Uba (Andy's kid brother) made Chris Ngige, then a candidate for Governor of Anambra, swear fealty to Uba before a juju shrine; Nigerians, mostly adherents of two global religions, nevertheless take oaths to shrines a lot more seriously than they take oaths made on any other basis. Even then Ngige and Uba fell out.

Obasanjo did not rely on oaths. What he did was have Ribadu open an investigation against someone (say, for example, Bode George), then have Ribadu suspend the investigation once that person became a dutiful godson to Obasanjo. Should that godson step out of line, and/or annoy pater familias Obasanjo, he could then have Ribadu reopen the investigation as a means of punishing the errant godson. As such, men like Bode George were very loyal, while other men, like Sani Ahmed Yerima, were very afraid; either way, they did what Obasanjo needed them to do, and the abysmal, shameful spectacle that was the 2007 Elections came to pass.

The $13.5 million seized from Goodluck Jonathan was not the first step towards a prosecution; it was instead the collateral or surety for the political investment that made Goodluck Jonathan the next Vice-President. The one thing Obasanjo never counted on was Umaru Yar'Adua sacking Nuhu Ribadu. Alas, all godsons turn on their godfathers (as Obasanjo had turned on his, Atiku Abubakar).

Yar'Adua's move was meant to build for himself an independent power base among the Big Men, offering them freedom from Ribadu's Revenge if they stopped their unwilling support of Obasanjo's efforts to continue pulling the strings behind the scenes. They duly broke with Obasanjo, ending his control of the PDP, rendering him just another ex-President.

The thing is ... once the anti-democratic, pro-corruption, mafia-style extortion leverage of Ribadu's fake corruption war was gone, Yar'Adua lacked a hammer of his own to keep the Big Men in line. Thus came the sense of drift.

Don't get me wrong. I am not advocating the Obasanjo/Ribadu model. For one thing, the eight years from 1999 to 2007 will probably be remembered as the single most corrupt "decade" (you know what I mean) in the federal republic's history -- not just post-colonial history, but entire history going back to the Stone Age. The rot reached all the way to the top, with both President Obasanjo and Vice-President Atiku sharing in a $74 million bribe from Halliburton, among other things (I wish the federal republic was blessed with the sort of investigative writers and/or documentary film-makers who could tell the full tale of Transcorp, and Obasanjo's other attempts to transfer public property to his private ownership). There was so much hype about Obasanjo/Ribadu's attempts to keep Atiku off the ballot because "he was corrupt", not to mention impeaching Alamieyeseigha because "he was corrupt", only to sweep a US$13.5 million investigation under the carpet to impose Goodluck Jonathan as Vice-President and now Acting President.

War on Corruption? Rubbish!

And the "drift" that characterized the Yar'Adua administration is no different from the "drift" (save cellphone deregulation) that characterized the Obasanjo Administration's first five or six years (out of eight), and much of the activity that followed revolved around attempts to revise the constitution for a Third Term and efforts to maximize the transfer of public property to the private pockets of a coterie of business moguls who surrounded Obasanjo (and who cut him into their deals).

So it is not like we achieved any great reforms to any vital federal institution. The political machine created by Olusegun Obasanjo in his second term was good at what it was designed to do -- keep the machine in power directly before 2007 and (it hoped) indirectly afterward. It had no ambitions beyond that, touted no reforms and no restructuring, made no war on waste or graft.

In its own way, it was like everything that came before it, and everything (Yar'Adua and Jonathan alike) that came after it. Our governments lack substance and legitimacy, and even if they desired otherwise, they are generally unable to achieve much beyond just hanging onto power. Even now, this final year of what was to be Yar'Adua's first term is dominated by nothing beyond questions of whether Jonathan will be able to hang on to the Presidency after 2011, and if he doesn't, who is best placed to replace him.

Sadly, whoever "wins" the (sure-to-be-rigged) elections next year, we will be back to square one. If someone from north of the Niger-Benue wins, their will be an instant shift in focus to the question of whether the South-East or South-South should come next in the "rotation system", and maneuvering by various Big Men to put themselves in the frame. Conversely, if Jonathan retains, certain Big Men will argue that the next term (2015-2019) should go back to the North-West because they only had one while the South-West had two, or whether it should go to the South-East because they haven't had anyone since Ironsi and they can't wait just because the South-South jumped their turn.

Long story short ....

....substantive reform, restructuring and transformation are not on the agenda!

But still ... what happened to the $13.5 million investigation of the Jonathan family?

Social Welfare Improves With Economic Growth

The federal character "zoning" formula, and the fragmented multiplicity of states, guarantee a bloated federal cabinet. There must be one minister or minister-of-state from each of the 36 states and from the FCT, as well as one minister or minister-of-state from each of the six so-called "geo-political zones". So the cabinet must have 43 ministers. They say they do it so we the people can have proper representation at the high table, but in fact these 43 "federal character" delegates are chosen to represent powerful factions within the political class; in a sense they are providing for "federal character" (i.e. the absence of ethno-regional advantage)within the context of the political factions' ever-shifting balance-of-power arrangements, but do not in any way, shape or form constitute representation for the actual people in whose name they ostensibly claim a place at the table. If federal character is supposed to ensure we all have a voice, then it should include the voices of the 99% of Nigerians who are currently unheard around the federal cabinet table.

In any case, if a minister resigns from cabinet or is dropped in a cabinet reshuffle, a replacement minister from that person's home state or "geo-political zone" will be added to the cabinet.

In 2006, a year before the (rigged) 2007 "elections", the designated minister from Gombe State was the Minister of Commerce, Ambassador Adamu Waziri. He is married to Mrs Farida Waziri, who is currently the head of the Economic and Financial Crimes Commission, and who has served both the Yar'Adua and Jonathan administrations in that role. This too is a characteristic of the Fourth Republic, this practice of appointing to high office the daughters, sons, wives, husbands and in-laws of crucial Big Men and Big Women. The Fourth Republic is also noteworthy for the political wars between godfathers and godsons; I suppose picking a family-member to be your designated proxy in the federal cabinet government is a more secure proposition than anointing one of your godsons who may turn on you as soon as he feels secure enough in his new position to allow his ambition to be a godfather in his own right to run free.

Adamu Waziri resigned from the Obasanjo II cabinet in 2006 as part of an administration policy that any ministers seeking electoral office in the 2007 polls step down from their cabinet positions and focus on their electoral race. President Obasanjo chose Mrs Amina Ibrahim to replace Waziri in Gombe State's spot on the federal cabinet, but Mrs Ibrahim asked to have her name withdrawn. Obasanjo obliged her.

I had never heard of a Nigerian turning down a chance to be a federal minister, so the "man bites dog" nature of the news brought Mrs. Amina Ibrahim to my attention. Interestingly, and I don't know entirely know why, she asked that the media and the public stop referring to her as Mrs Amina Ibrahim. She is now known, at her own request, as Hajia Amina Az Zubair. This doesn't make too much of a practical difference, except if you are going to do research to find out more about her, understand that half of the internet-accessible material about her come under the name "Amina Ibrahim" and the other half are under the name "Amina Az Zubair".

Hajiya Amina Az Zubair is a fixture of the Fourth Republic, having served the Obasanjo II, Yar'Adua and Jonathan Administrations in a succession of social welfare positions. She entered government as the National Coordinator of Education for All (EFA) at the Federal Ministry of Education, having been one of the leaders of "civil society" efforts to get the Obasanjo II administration to set up an EFA programme. Sh then became successively the Presidential Adviser, Special Assistant and Senior Special Assistant for Education, Poverty Alleviation and the Millennium Development Goals. In the mid-1990s, as founder of a firm called Afri-Projects, she was involved in setting up the Petroleum Trust Fund. Before that, she worked for 11 years with a private sector engineering firm.

Hajia Az Zubair seems to belong to a specific part of the so-called "progressive" tendency in Nigerian politics.

First some clarification, for any non-Nigerian reader of this blog. The word "progressive" in the context of Nigerian politics means something very different from whatever it means in your country or your part of the world.

If taken at her word, and in full consideration of her actions, Hajia Az Zubair seems to be of that part of the so-called "progressive" tendency who believe in working within the system to implement their "progressive" ideas. They tend to have deep connections with the powerful political factions, tend to serve in governments dominated by the interests of those factions, and tend to present a "human face" and positive, moral rhetoric to the public (even as the governments they serve continue "business as usual"). Ultimately, they do not achieve the lofty goals they promised from their alliance with the powerful political factions. Some leave government with their reputations and popularity intent, while others metamorphose and become denizens of those factions themselves, acting as the "intellectual" wing of the inter-locking machines that maintains the status quo.

Hajiya Az Zubair sounds like she genuinely believes in what she says. On the other hand, she has been a loyal part of three Fourth Republic administrations that have not prioritized those important things she says she believes in. She has defended and still defends all three administrations' records and achievements in terms of those social welfare/development goals that are ostensibly her brief.

All things considered, she seems to be more of a diplomat than an administrator, travelling the globe to attend international conferences on various aspects of socio-economic development and public welfare, representing Nigeria and making wonderful speeches about what the world should do, and what Nigeria (she claims) is doing. She is a member of several international fora, like the Program Advisory Panel of the Global Development Program of the Bill and Melinda Gates FoundationGates Foundation, and the Board of the International Development Research Centre.
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To the extent that the federal republic is trying to "rebrand" itself, in terms of international perceptions of Nigeria,, I wonder if Hajia Az Zubair wouldn't have been more effective as the rebranding efforts lead spokesperson than she has been at making social welfare a central to government policy at all three tiers. I daresay diplomacy and relations with external partners are a better fit for her, because the way she talks about all three Fourth Republic administrations in her interviews, you wouldn't think things like this or this or (more importantly) this were the "normal" everyday consequences of ineffectual governance, and an aversion to reform, restructuring and transformation across all three tiers of the federal republic.

Like I said earlier, she seems to believe what she says. Maybe she really does. Or maybe I too am affected by the same qualities that I suspect would make her an excellent diplomat.

Take this interview with Economic Confidential, where she talks about her work on the MDG project (and very briefly speaks on the minsterial offer she turned down) is a case in point. Very deftly, she says many things without saying anything. It is almost like she (politician and diplomat to fore) set out to praise all of the political stakeholders, to give the reporter (and we the readers) the best possible image of the MDG project, and to (importantly) stoke hope and optimism in the heart of anyone who truly loves Nigeria. If she said anything else, she would lose her job.

In other contexts however, Hajia Az Zubair indirectly admits to economic and political reasons that success in social welfare promotion will elude her. In this December, 2009 interview with This Day, she said Nigeria needed =N=25.557 trillion (or US$170.38 billion) to fully achieve the Millenium Development Goals over a period of six years (2009 to 2015). That is something like =4.259 trillion (or US$28.4 billion) annually.

We don't have that kind of money.

Besides, much of the spending at all three tiers of government is tied up in recurrent expenses (mainly salaries for bloated civil service payrolls), and on payments to banks for ballooning loans that were borrowed (at all three tiers) and spent with little or no oversight, planning or empirical projections. What little is left in the budgets after this is tied up in grand prestige projects (that provide plenty of scope for waste, rentier activity, patron-client redistribution, graft and outright theft).

Hajia Az Zubair's core budget is supposed to be $1 billion a year, which is meant to reflect the amount of annual debt service payments we saved by paying a $12 billion lump sum on a $30 billion debt in exchange for our creditors writing off the $18 billion balance.

For one thing, as she essentially admitted in the This Day interview, $1 billion/annum is nothing in the context of a country with over 100 million people, a high poverty rate, insufficient infrastructure and questionable governance. For another, much of (if not all of) the $1 billion a year in debt service savings on the old, now-cancelled debt has been eroded by new debt service commitments on new debts. All three tiers of government have been borrowing assiduously and issuing bonds.

The size of our external debts was never the problem. The richest countries in the world all have public debts bigger than ours was before "debt cancellation". Their debts are bigger in absolute magnitude, as a proporition of national GDP and in per capita terms.

The real problem of the Nigerian federal republic was and remains the size of our economy. Like every other country in the world, our government absorbs and then spends a percentage of our GDP. If the government's percentage of the Nigerian GDP remained the same, but the Nigerian GDP doubled, the government's revenue would double. This, simplistic as it may sound, is the true route towards not only social welfare improvement. It would not only cause the general improvement that comes with rising incomes across the economy, but would also specifically empower the government (since it would have so much more in funds to redistribute) to have more of an effect on fighting poverty and achieving the Millennium Development Goals. Crucially, a bigger budget would also allow the government to pay its debt service obligations, which were hardly among the most onerous in the world if looked at only as an absolute numbers, detached from considerations of our then-and-now insufficient federal budget.

Our debt was not too big. It was (and is) our economy that was (and is) too small.

Now some people would admit that an extra $1 billion/annum in freed spending in the budget is not much, considering our massive population, but would then insist that it is better to have that drop in the bucket spent on Nigerian social welfare programmes than having that drop in the bucket leave the country in interest payments. They would also point out that our debt service payments were meant to be around $3 billion, but since we could only afford to pay $1 billion, something like $2 billion/annum (probably less) was being capitalized, which is why the debt kept growing.

In the absence of a substantively democratic system, a properly adversarial structure of policy debate, and rigorous academic critique, there are a few things no one mentions.

We paid $12 billion, all at once, in a lump sum, to achieve this "cancellation". The opportunity cost of using these resources as investment capital to drive economic growth exceeds the utility of using these funds to buy debt forgiveness. Our economy is hobbled by a lack of electricity, a lack of a functional pan-federal network of railroads, by a lack of so much infrastructure. Compare what you could do to fight these deficiences by leveraging $12 billion as a foundation to attract billions more in investment, in a sort of Big Bang expansion of infrastructure federation-wide, against what you could do with a mere $1 billion/annum which is (quite rightly) being used for recurrent expenditure on social welfare because it sure as heck cannot be used as a fund for infrastructure development.

We can always generate $1 billion a year to make payments as we were doing before cancellation, and the key to taking care of our domestic and international debts always lay in expanding the GDP as rapidly and steeply as possible, which would require massive improvements in electricity, rail, education and other infrastructure. But in the light of impact on the Nigerian economy of local and global events in 2008-2010, our governments at all three tiers are running deficits, drawing down the Excess Crude Account, and the Soludo-led Central Bank depleted the external reserve from $61 billion to $47 billion in a matter of months to defen the Naira. We are in no position to generate $12 billion in surpluses for infrastructure or anything else. The moment was lost, and we are left to praise ourselves for being able to spend $1 billion/annum recurrently, with even this being cancelled out by new debt service payments on new debts. It is also painful to realize we lost $23.7 billion in 9 months to attacks and theft by "militants" in the Niger-Delta.

Note also that in 2005-2006, we were told that the debt cancellation deal would save us $20 billion over 20 years. In actuality, the $12 billion lump sum we paid out in 2005-2006 had a future value (if invested in relatively modest instruments, and allowed to earn compounded interest) of $20 billion over 20 years. So we paid in one lump sum, the same amount we would have paid out over 20 years. Initially when Dr. Ngozi Okonjo-Iweala had pleaded for full debt cancellation, the creditors had refused; when she returned after a couple of years with the $12 billion payment for $18 billion cancelled offer, I am not surprised they accepted the offer.

Successive Nigerian governments have had a vested interest in keeping Nigerians misinformed about revenues and expenses, and the Paris Club understands the public relations difficulties inherent in de facto promotion of capital flight from poverty-striken nations; the exact numbers are clouded by some degree of fog, but figures I read a long time ago suggest the cumulative principal borrowed by Nigeria was $19 billion, the cumulative payments made by Nigeria were $42 billion, yet we ended up owing about $33 billion! This was due to penalties for missed payments and capitalization of the balance after under-payment. Nevertheless, if (a) you have already received twice as much as you lent; (b) you are now being offered a present-value lump sum of what you would expect to receive in future value over the next 20 years; and (c) you stand to gain tremendous goodwill and positive publicity from announcing you have charitably cancelled the debts of a poor African country ...

... why wouldn't you take the deal?

Reading through much of what Hajia Az Zubair has said in interviews, I get the impression the $1 billion is not even a discrete, distinct amount specifically handed over to her agency to be spent. I get the impression the three tiers of government just budget funds in the normal way, and a portion of what they normally spend in the budget for healthcare, education, etc is designated as the portion they are spending for Millennium Development Goals. Hajia Az Zubair has also said that so-called "constituency projects" are also counted as part of what has been spent for MDGs. "Constituency projects" are a fiscally wasteful concept through which federal, state and local budgets allocate funds legislators at all three tiers for use (at the legislator's discretion) in community development projects in the legislators' constiuency. It boils down to legislators' raiding the public treasury to buy themselves support ahead of the next election, a way to be seen to have brought Abuja money to your constituency, a way to be praised as the man (or woman) who can dribble a few crumbs to poverty-stricken constituency residents. No one can seriously think "constituency projects" have a lasting effect on poverty-reduction, can they?

All things considered, as controversial as this may sound to some of you, I do not think Nigeria should fight poverty by "fighting poverty". We should fight poverty by focusing on rapid, sustainable, broad and deep economic growth. Everything we do should be driven by the desire for economic growth.

We should stop getting bogged down in semantics. Because "debt" is bad, we put all of our attention on defeating "debt", even if defeating it did nothing for economic growth. Seriously, everybody owes debt. Debt is ubiquitous. There will never come a time that we do not owe debt, so why focus so much on defeating "debt" that we forget our greater need for growth?

In like fashion, I tire of these "Wars on Corruption" that do not address the fundamental fact that the very structure of the political system makes corruption inevitable. If you have no interest in substantively reforming, restructuring and transforming politics, the economy and society, don't waste our time singing the praises of a "War" you are not serious about -- a war that frankly does not exist and never existed.

As for Hajia Az Zubair's "Millenium Development Goals" ... there is a reason I am frustrated with so-called progressives in government. They never admit to themselves, much less anyone else, that they can never achieve their "progressive" goals by working within the system. It is impossible to know if Hajia Az Zubair truly believes in the potential of the system to change Nigeria. Take the "constituency projects" for example; even if she knew they were a waste of scarce budget funds, there is no way she could stop the National Assembly from budgeting money for them. Perhaps she has decided that if she cannot beat them, she can at least influence how they spend their unjust budget allocations. I guess a drop of water is better than nothing, but it betrays a serious lack of ambition if all we do is try to lick the morning dew off the leaves, when a substantial investment in irrigation could do so much more for us.

Ajaokuta Steel Complex

An interesting report by Sunday Trust on the eponymous moribund industrial complex. We have spent billions of dollars on the project .... billions.

We've got to make Ajaokuta work. Not as a political or patriotic statement, but as a sustainable commercial and industrial powerhouse.

At this point I suppose the Complex will probably never repay the billions (in US dollars) of government funds already spent in its genesis. Indeed, as the article notes, the Complex has billions (in Naira) of additional loans to repay to private-sector banks (which would or should have priority over the federal government in any repayment plan).

Nevertheless, at this point it would just be a depressing waste (in every conceivable way) if we don't get the Complex up and running as originally planned.

There is certainly a market, or should I say potential market for it. Nigeria, West Africa, Central Africa and the Rest Of Africa all suffer SEVERELY from the lack of basic infrastructure, which will require prodigious amounts of iron and steel to remedy.

Then again, the issues that have contributed to the continuing lack of infrastructure as late as the 21st century have also contributed to keeping Ajaokuta Steel Complex moribund.

It is sad.

Rule of Law and the power of video

A Borno State High Court has awarded =N=100 million (about US$670 thousand) in damages to the survivors of the late Alhaji Baba Fugu Mohammed, a 72-year-old citizen extra-judicially killed by the certain specific officers of the police because he was the father-in-law of the leader of Boko Haram.

The 72-year-old Alhaji Fugu Mohammed had voluntarily surrendered himself to the police after being told by his family that he was wanted by the police. Sometime afterward, while in police custody, Alhaji Mohammed was killed, his body dumped in a mass grave along with other extra-judicially executed suspects.

No charges were proffered against him. There was no arraignment, no trial. Nothing.

Apparently, he had given his son-in-law a house which was subsequently used as the headquarters of Boko Haram. For whatever reason, certain specific officers of the police thought this was reason enough to kill him.

Alhaji Mohammed's family told the Borno Hgh Court that their father and grandfather had given the house to his daughter's husband long before the formation of Boko Haram. Far from making a contribution to the group, the late Alhaji Mohammed just provided a home for his grandchildren and helped support a son-in-law whose poverty was probably a contributing factor to his later radicalization.

If the police had any information to the contrary, they should not have killed him. They should have kept him alive, taken him to court and presented whatever evidence they felt they had so all of us could rationally come to a conclusion as to what really happened. Only a court of law is constitutionally empowered to determine guilt or innocence.

I don't understand why our country is plagued by so much violence. It is not just the police killing people, but also people killing the police. I am critical of the police for their many extra-judicial killings, but I am just as opposed to the murder of police officers.

So much violence. So many families left in so much unnecessary pain.

The police have a thankless, low-paid job that brings them criticism, disdain and fear, and very little in the way of respect, financial security or protection from unchecked violence. But they can't keep randomly killing citizens who have NOT been convicted of any crime. It is too much and no one is safe.

For the sake of =N=20 at checkpoints, a three-year-old girl, as well as the drivers and passengers of commercial vehicles have been killed.

There are many reasons why the relatives of suspects don't come forward to help put their kinsmen in jail, or to help the security agencies preemptively stop their relatives from acts of violence. Among these reasons is the relatives' fear of what would happen to their relatives in police custody should they help the police catch them. Indeed, different district police commands have been known to detain the innocent relatives of suspects indefinitely, effectively holding them ransom until their relative turns himself or herself in, which rarely happens. Why would you want to go to the station to put yourself at risk of that?

A police force cannot be effective without the cooperation of the citizenry. In our particular case, the police can't really criticize people for essentially covering up for their relatives when the police are themselves frequently guilty of covering up (or attempting to cover up) the criminal actions of policemen. They denied that there were any extra-judicial killings in Maiduguri until exposed by pictures, video and the army's refusal to participate in the coverup.

This isn't helping.

The late Alhaji Mohammed's survivors have been awarded =N=100 million in damages. They owe the verdict to the power of video and the internet in the 21st Century.

A similar thing happened with the Miss Uzoma Okere case. Without the power of tiny phones to capture video and upload them to the web, she would have been just another Nigerian citizen brutalized by enlisted soldiers acting on the orders of a commissioned officer. But with the video having gone worldwide, there was nowhere for the Navy (or the judicial system) to hide. Miss Okere was awarded a judgment against the Navy, and =N=100 million in damages. The Navy is appealing the Uzoma Okere judgment, insisting the =N=100 million award is excessive.

There is far too much violence in Nigeria. Violence against uniformed officials of state, and violence by uniformed officials of state. We have so much to do before we can say we live in a safe, secure, stable environment. Reform, restructuring and transformation can't wait another day. Alas, I fear we will have to endure much more violence ahead. It makes me sad.