Re: Reforms As Blinkers

10.09.2004

Reform as blinkersIt is the measure of our hope and faith in our nation that invites rigorous discourses and commentaries on major issues and policies of national growth and development. Dr. Ike Anya’s piece, “Reforms As Blinkers”was a good read.

Managing reforms is almost universally acclaimed to be a messy process perhaps because it bites harder on an increasingly impatient people. The complexity of the reform process is also made worse by the fact that there is usually a lot that needs to be done. In this regard, John Williamson, a Senior Fellow at the Institute for International Economics, thought he had got it all right in 1989 when he listed ten ‘needed’ policy reforms that was later referred to as The Washington Consensus’ – possibly to reflect the desires of the White House and the Bretton Woods institutions, all based in Washington. The ten reforms in the list are: fiscal discipline; reordering pubic expenditure; tax reform; liberalization of interest rates; a competitive exchange rate; trade liberalization; liberalization of inward foreign direct investment; privatization; deregulation; and property rights. A few years after implementation in Latin America, Moisés Naím, Editor of Foreign Policy magazine, echoed the chorus of many others when he proclaimed that the Washington Consensus is a ‘damaged brand name’. Apposite as the contents of the list is, the Washington Consensus apparently did not reckon with the role of institutions in the reform process to sustain growth and withstand shocks. To this end, we now add labour markets, central bank independence, effective regulation, competition and anti-trust legislations, social safety nets, anticorruption measures, improved corporate governance, and targeted poverty reduction, among others. Intertwined in all these are judicial reforms, security reforms, political reforms, electoral reforms, etc. All said, reforms are characterised by a cocktail of complexities and difficulties.

It is from this prism that I believe in the ongoing reform process in Nigeria which is managed by a brain trust that understands what needs to be done in the respective areas of their core competences and there are encouraging results already that bear this out. The Minister of Finance, Dr. (Mrs.) Ngozi Okonjo- Iweala, has brought some measure of sanity and transparency in managing Nigeria’s finances. We now know what the federal, state and local governments receive every month from the Federation Account. This was not so in the past. She has also initiated a Fiscal Responsibility Bill that, when passed into law, will hold our public officers accountable for the use of our resources. She has also kept a tight lid on the use of excess oil revenues, as was not the case during the first oil windfall. Together with the Director General of Budget, Mr. Bode Augusto, they have also streamlined the budget process. Against all past trends, the budget for 2005 was actually presented to the National Assembly in September 2004. The result is that the legislature will most likely pass it into law before the end of the year and its implementation should begin, as it should, on January 1, 2005, which is good for macroeconomic stability. Also, sometime in July, I made an enquiry from the Budget Office via email regarding the 2004 budget and I got reply from the DG, Budget himself. This is unusual in our clime.

In the area of public procurement and fiscal expenditure, Mrs. Oby Ezekwesili has used the due process mechanism to restore the commonsensicality of doing things right. The other day, I was with a friend who was flipping through the pages of a newspaper and he pointed out that the myriad of government procurement adverts in the newspaper clearly indicates the quantum of such procurements that were previously negotiated and awarded ‘under the table’. I agreed with him. Yet another friend told me that a company owned by his neighbour won a government contract in the Federal Ministry of Education without lobbying anybody. The Federal Capital Territory is now assuming a semblance of order and sanity thanks to Mallam Nasir El-Rufai. The changes are coming by the day. Those of us that have been part of this city since 1993 can attest to this. There is a gradual evisceration of the fraud, corruption and irresponsibility in land allocation. Prof. Charles Soludo’s initiatives from the Central Bank of Nigeria will, at the very least, give us strong banks. The easiest way to torpedo economic growth and development is through a financial crisis characterised by weak banks. The National Identity card (I have received mine) and monetization programmes are ongoing on the side of reforms.

Reforms should be sustainable to last and we all worry about the fate of the process if some of our human success stories leave the scene. For this we need institutions but building as well as rebuilding them is always a task for everyone. We need all hands deck. At least, I know that Dr. (Mrs.) Kema Chikwe’s reforms at our airports have outlived her and this is encouraging. Sustainability also benefits from positive contagion. The Governor of Kwara State, Dr. Bukola Saraki has recently requested assistance from the Budget Monitoring & Price Intelligence Unit to set up the Due Process system in his state. I visited one state capital, as I often do, but this time I realised that the new boss at the state’s Environmental Protection Agency had handed out new rules among them, parking rules. I wondered to myself that someone was trying to be El-Rufai.

I know that in the final analysis, reforms must translate to food on the table and that many Nigerians still live in abject poverty. In my study of reforms around the world, I have come across a lot of literature that proclaim that the best-case scenario of 7% – 10% consistent economic growth, will show visible results to the citizenry in 10 years. There is a direct relationship between reforms and the effluxion of time. Cross-country analysis is usually very helpful not the least because pessimists always use them to stoke the fire of their cynicism. I can start from Europe and America to make the case but let us just take a look at our poster children of economic growth and development, most especially, Malaysia, Singapore, South Korea, Mexico, Indonesia, China, Botswana and South Africa. Lee Kuan Yew and his People’s Action Party (PAP) ruled Singapore for 25 years. The PAP remains in power till this day. Malaysia’s Mahathir bin Mohammed ruled for 22 years from 1981, his party the National Front since 1974. Mexico’s Institutional Revolutionary Party ruled for 71 years, the Botswana Democratic Party (BDP) has held power in Botswana since independence in 1966 and South Africa’s National Party for 82 years. In Indonesia, Suharto ruled from 1966 to 1998. During the period of South Korea’s economic growth between the mid 1960s and early 1990s, power rotated within a junta. In China, the Chinese Communist Party has been in power since 1949.

In most of these regimes, economic reforms was instituted at the grave expense of the basic freedoms of life from political, press and expression to the worst forms of injustice as was the case in apartheid South Africa. Just imagine this: China reforming side by side with communism and South Africa growing her economy side by side with apartheid! In Singapore, Lee Kuan Yew’s son recently took over as Prime Minister from Goh Chok Tong (virtually on the orders of the elder Lee) but it is also noteworthy that the new Prime Minister’s wife, Ho Ching, runs the government’s main industrial-holding company which owns stakes in everything from airlines to banks to the country’s telecoms firm (which is run by Lee’s brother, Lee Hsien Yang). In Malaysia, Mahathir simply detested freedom of speech and annulled the independence of the judiciary. Another point: reforms can be in shades of grey and not necessarily black or white. So if a man perceives that there are hoodlums on the road, he can still get to Lagos from Abuja through Kano – by air!

However, I believe that Nigeria can and ought to be different, which is why Prof. Soludo once said that Nigeria is a miracle waiting to happen. I also draw inspiration from Turkey under Prime Minister Recep Erdogan. He inherited what Newsweek International magazine’s Owen Matthews described as a dysfunctional police state and an economic basket case. Erdogan has only been in power for just 20 months but has led Turkey to turn the corner such that the country is now considered to be a very good candidate for entry into the European Union. So I will be the first to admit that there are still shortcomings on the side of government for which we need leadership but the most difficult work of reforms is done by everybody regardless of contradictions and distractions. And it is possible to stay the course and support needed reforms against easy attacks if good people admit that work is in progress and build a coalition and consensus for reforms, even if it is unsolicited. And, indeed, work is in progress. It is akin to a medical doctor operating on a patient to remove a tumour. The patient and his relatives may not see or feel the effect of recovery during, and even immediately after the successful operation but the doctor knows that all will be well. So I believe that some complaints may simply be due to a lack of understanding of the evolution of a reforms process not necessarily a natural consequence of reforms.

Fortunately, there is increasing confidence to invest in Nigeria. Nestle is going to invest 30 million Swiss francs in Nigeria, a Nigerian businessman in Diaspora plans to invest US$20 million in solid minerals and another has already built a HIV/AIDS drugs factory in Lagos. Increasingly, other Nigerians in Diaspora are seeking to bring some of their money to Nigeria for investments. It is not yet uhuru but we may well do better by building on our strengths, working on our weaknesses, taking advantage of our opportunities and warding off threats to our growth and development.

There is no rulebook on managing and implementing reforms and it cannot be practiced as from a cookery book, one ingredient before the other. It is always difficult, and almost impossible, to get things right as expected, especially at the onset, but if we look around there are critical positive movements in our reforms process that are not just ‘pockets’ but needs to be encouraged to be built upon.

 This article was written as a reply to Dr. Ike Anya’s “Reforms As Blinkers”.

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