Resource wealth has tragically reduced your nation- my nation- to a mere parable of prodigality. Nothing undignifies nations and their citizens like self-inflicted failure.

The wealth and poverty of a nation – Who will restore the dignity of Nigeria?

Being a speech by Dr. Oby Ezekwesiliat the 42nd Convocation Lecture of the University of Nigeria, Nsukka.

 

Protocols

I am hugely delighted to return to my alma mater the great and only University of Nigeria to speak at your 42nd convocation. Twenty eight years ago I sat just like you those of you who are part of the graduating Class of 2013; excited by my graduation. It was 1985 and I was very privileged to be one of the then only 3% of our own youthful population that had the opportunity of a university education. Today, you are still fortunate to be one of the yet paltry 4.3% of your own youthful generation with an opportunity for university education. For Nigeria that percentage does not compare favorably with 37.5% for Chile 33.7% for Singapore 28.2% for Malaysia, 16.5% for Brazil and 14.6%.  Our lag in tertiary education enrollment is quite revealing and could be interpreted as the basis of the competitiveness gap between the same set of countries and Nigeria. The reason is that “…. tertiary enrollment rate which is the percentage of total enrollment, regardless of age, in post-secondary institutions to the population of people within five years of the age at which students normally graduate high school…….plays an essential role in society, creating new knowledge, transferring knowledge to students and fostering innovation”. The countries with the most highly educated citizens are also some of the wealthiest in the world in a study by the OECD published by the Wall Street Journal last year. The United States, Japan, Canada, South Korea, Finland, Norway, Israel, United Kingdom, New Zealand and Australia also have among the largest Gross Domestic Products. All these countries aggressively invest in education.

The same cannot be said of Nigeria. The crawling progress in tertiary education enrollment since my graduation more than two and a half decades ago is therefore one key reason former peer nations left us behind at the lower rungs of global economic rankings. Economic growth rate and ultimate development of nations are determined by a number of factors that range from sound policies, effective and efficient public and private investments and strong institutions. Economic evidence throughout numerous researches proves that one key variable that determines how fast nations outgrow others is the speed of accumulation of human capital especially through science and technology education.  No wonder for these same countries by 2011-  South Korea of fifty million people has a GDP of $1.12trillion, Brazil of one hundred and ninety six million has $2.48 trillion; Malaysia of twenty eight million people has $278.6Billion; Chile of seventeen million people has $248.59Billion; Singapore of five million people has $318.7 Billion.  Meanwhile with our population of 165 million people we make boasts with a GDP of $235.92 Billion- completely way off the mark that we could have produced if we made a better set of development choices.

More dramatic is that this wide gap between these nations and Nigeria was not always the case as some relevant data at the time of our independence reveal.  In 1960 the GDP per capita of all these countries were not starkly different from that of Nigeria- two were below $200, two were a little above $300 and one was slightly above $500 while that of Nigeria was just about $100. For citizens, these differentials are not mere economic data. Meanwhile by 2011, the range for all five grew exponentially with Singapore at nearly $50,000, South Korea at $22,000, Malaysia at $10,000, Brazil at $13,000 and Chile at $14,000. Our own paltry $1500 income per capita helps drive home the point that we have been left behind many times over by every one of these other countries. How did these nations steer and stir their people to achieve such outstanding economic performance over the last five decades? There is hardly a basis for comparing the larger population of our citizens clustered within the poverty bracket with the majority citizens of Singapore fortunate to have upper middle income standard of living.

Again, how did this happen? What happened to Nigeria? Why did we get left behind? How did these nations become productively wealthy over the last fifty years while Nigeria stagnated? How did majority of the citizens of these nations join the upper middle class while more Nigerians retrogressed into poverty? There are usually as many different answers to these sets of questions as there are respondents on the reasons we fell terribly behind. Some say, it is our tropical geography, yet economic research shows it has not prevented other countries with similar conditions from breaking through. Others say it is size, but China and India are bigger, yet in the last thirty and twenty years have grown double digit and continue to out- grow the rest of the world at this time of global economic crisis. Furthermore, being small has not necessarily conferred any special advantages to so many other countries with small population yet similarly battling with the development process like we are. Some others say it is our culture but like a political economist posited “European countries with different sorts of cultures, Protestant and Catholic alike that have grown rich. Secondly, different countries within the same broad cultures have performed very differently in economic terms, such as the two Koreas in the post-war era. Moreover, individual countries have changed their economic trajectories even though “their cultures didn’t miraculously change.” How about those who plead our multiethnic nationalities as the constraint but fail to see that the United States of America happens to be one nation with even more disparate ethnic nationalities than Nigeria and yet it leads the global economy! As for those who say it is the adverse impact of colonialism, were Singapore, Malaysia and even China not similarly conquered and dominated by colonialists?

That Nigeria is a paradox of the kind of wealth that breeds penury is as widely known as the fact that the world considers us a poster nation for poor governance wealth from natural resources. The trend of Nigeria’s population in poverty since 1980 to 2010 for example suggests that the more we earned from oil, the larger the population of poor citizens : 17.1 million 1980, 34.5million in 1985, 39.2million in 1992, 67.1million in 1996, 68.7million in 2004 and 112.47 million in 2010! This sadly means that you are children of a nation blessed with abundance of ironies.

Resource wealth has tragically reduced your nation- my nation- to a mere parable of prodigality. Nothing undignifies nations and their citizens like self-inflicted failure. Our abundance of oil, people and geography should have worked favorably and placed us on the top echelons of the global economic ladder by now. After all, basic economic evidence shows that abundance of natural resources can by itself increase the income levels of citizens even if it does not increase their productivity. For example, as Professor Collier a renowned economist who has focused on the sector stated in a recent academic work countries that have enormously valuable natural resources are likely to have high living standards on a sustainable basis by simply replacing some of the extracted resources with financial assets held abroad. Disappointedly, even that choice eluded our governing class who through the decades has spent more time quarreling over their share of the oil “national cake” than they have spent thinking of how to make it benefit the entire populace.

There are perhaps three broad classes of resource rich countries. The first are those which like Norway which have built up all other types of domestic investment from which revenue is generated and can therefore save their huge revenue from gas in foreign assets. The second are those mostly of the Middle East countries like Kuwait which also have saved huge revenue in foreign asset and generate sufficient revenue from the asset to be better off than other countries without resources.  However, for Kuwait this may be only because they live well from resource rents rather than becoming productive. The third category of which our country is a classic example are countries which though resource rich have neither been able to build up foreign asset for citizens to live well off of nor evolved new and alternative sectors of productivity.

The appropriate response to the revenue extracted from our oil over the period 1959 to date would have been to use it in accumulating productive investment in the form of globally competitive human capital and physical asset of all types of infrastructure and institutions. Such translation from one form of nonrenewable asset to renewable capital would have been   the right replacement strategy for a wasting asset like oil. Unfortunately unbridled profligacy has made us spend and continue to spend the free money from oil like a tragic Rentier state that we are called in development circles. We spend most of what we generate on mere consumption with no tangible productive asset to show for our so called “wealth”.

Due to profligacy we have dismal human development indicators which are inconsistent with the scale of our earnings. For example using life expectancy as a proxy measuring how we score on human development, 51.4years for Nigerians falls far short of the 80years for citizens of Singapore and South Korea, 78years for citizens of Chile, 73 years for citizens of Malaysia and 72years for citizens of Brazil. We may in fact be the world record holder in the rank of natural resources rich countries that tend to have worse human development scores when compared to countries without endowments. As our human development scores have lagged, we continued with our binge on oil revenue and became trapped in cyclical decline of national competitiveness.  It explains why every other economic sector in Nigeria has suffered the effect of the oil enclave economy. Oil has unleashed shocks and volatility of revenues on our economy due to exposure to global commodity market swing, proliferated “weak, ineffectual, unstable and systemically corrupt institutions and bureaucracies” that have helped misappropriate or plunder public resources.  Nations with abundance of natural resources especially in Africa, Latin America and part of South Asia have experienced the fueling of official corruption and “violent competition for the resource by the citizens of the nation”.

While there may not be concurrence on the causes of Nigeria’s colossal underperformance, most of our citizens however agree that poor governance and the more visible symptom of corruption have had virulent impact in arresting the development of Nigeria. The poor in our land have paid the highest possible price for being born into the world’s best example of a paradox. The common wonderment of these poor citizens – whether east, west, north and south- is “why would more than half the population of a country that earned nearly one trillion dollars in oil revenue since the Oloibori discovery of crude oil; continue to wallow in poverty?” Well, economic evidence shows that the answer which we must all ponder deeply is that oil wealth entrenched corruption and mismanagement of resources in government and warped the incentive for value added work, creativity and innovation in our public, private sectors and wider society. This being the case, the larger population of our people is deprived of the opportunity to overcome poverty and this is what economists call the “resource curse”.  The oil revenue induced choices made by our ruling elite over the five decades of political independence cursed several of our citizens to intergenerational poverty!

 

Endowment of oil resulted in an indulgent elite class – the generations of your great grandparents, grandparents and parents in leadership- who have made disastrous choices that have trapped the destiny of Nigeria in oil wells. It is the reason our economic structure has remained unchanged for more than fifty years. Fact is that our political elite suffers from delusion of greatness simply because we sell barrels of crude oil to finance 80% of our national budget, cover 95% of our foreign exchange and petroleum sectors represents a larger portion of industry’s contribution to our GDP.  Little wonder that manufacturing is a mere 18% of our Gross Domestic Products compared to that of all those other nations with which we set off on the development race. Manufacturing which has its major driver as education enabled those nations develop a huge base of human capital with skills and competencies to drive new ideas, creativity and innovation. They embraced their comparative advantage, mimicked nations that were ahead of them, perfected some aspects of manufacturing and became extremely competitive.

While these countries moved up the manufacturing and economic development ladder in my fifty years of existence all I can say for Nigeria is that during the same period I have known at least five cycles of commodity booms that offered us rare opportunities to use revenues generated from oil to transform our economy.  Sadly, each cycle ended up sliding us farther down the productivity ladder. The present cycle of boom of the 2010s is however much more vexing than the other four that happened in the 70s, 80s, 90s and 2000s. This is because we are still caught up in it even as I speak today and it is more egregious than the other periods in revealing that we learned absolutely nothing from the previous massive failures. Furthermore, it is happening back to back with the squandering of the significant sum of $45 Billion in foreign reserve account and another $22Billion in the Excess Crude Account being direct savings from increased earnings from oil that the Obasanjo administration handed over to the successor government in 2007. Six years after the administration I served handed over such humongous national wealth to another one; most Nigerians but especially the poor continue to suffer the effects of failing public health and education systems as well as decrepit infrastructure and battered institutions.   One cannot but ask, what exactly does Nigeria seek to symbolize and convey with this level of brazen misappropriation of public resources? Where did all that money go? Where is the accountability for the use of both these resources plus the additional several billions of dollars realized from oil sale by the two administrations that have governed our nation in the last six years? How were these resources applied or more appropriately, misapplied? Tragic choices! Yes. Our national dignity continues to be degraded by cycles of stagnation because of the terrible choices my generation and those before repeatedly make as a result of free oil money. The wealth and poverty of a nation never found a better Symbol!

There is no better example of the cost of the imprudent choices than what has happened to Education. The failures and limitations of the education you have received during your time here leading to your graduation today will become clearer to you should you ever seek to do what was very easy for me to do –that is, gain admission to one of the best schools in the world for my graduate studies simply on the strength of my University of Nigeria education. Countries invest in the human skills that can help their citizens use modern technology and eventually rise to the stage where those same citizens can develop their countries’ own technology. A country’s educational system is the key to its long-run development. According to economic study of the role of education in economic development, “Less than half of the rise in living standards since 1960 in industrial countries has been due to savings and investments from its citizens. The rest of the increase – more than 50% has been due to rising educational levels and to improvements in technology that raise factor productivity across the board”. I had known this as a Minister of Education in this country a few years ago. That knowledge inspired and fueled my zeal to bring education to the front burners of our national development at that time. The result of the diagnostics that we produced on the state of our education system and sector was so heart wrenching that I was filled with angst at how low we had sunk educationally. Deciding to channel the angst positively, we built a strong team that articulated some three hundred and sixty eight ‘root and branch’ reforms measures across the six levels and aspects of education- early childhood, basic, secondary, tertiary, special needs and adult/informal education. The response of resistance by some of the key political elite to the absolutely necessary reforms when we laid them out before the nation to generate consensus and implement is made clearer by what one today knows of the incentives that drive the choices of extractive elites. I will return to this as I get closer to the conclusion of my speech.

I read an article by David Wraight in which he posits that there is a globalized generation of youth – often referred to as the Millennial Generation. “They believe that they can change the world for the better, but they are unsure what they should change the world to; so they search for an ideology or system of belief to use as a foundation for the change they seek. They are actually searching for something worth living for and dying for.” They are optimistic and idealistic with a deep desire to make their mark in the world. They dream of what can be, and follow their dreams with passion and perseverance. They are no longer prepared to be spectators watching the world go by, but want to be ‘players’, to get their hands dirty, to make a difference. They are knowledgeable about the affairs of the world and very mobile, travelling as much as resources and opportunity allow.”

As globalization and modern technology continue to shrink our world people are connecting worldwide as never before – particularly young people – and overcoming cultural, geographical, language and ethnic barriers with ease. For the first time in human history we are seeing the emergence of a global youth culture with common values, dreams and desires. You are actually not different from your generational peers in Tunisia, Egypt, the United States and many other countries that have have questioned and overturned the status quo and established new norms in the governance of their nations. When it becomes an imperative for your generation to save Nigeria from its cycles of disastrous and destructive choices promoted by the older generations then you can rightly be called the Turning Point Generation. The turning point is when there begins to emerge a New Nigeria that is radically different from all that we have known of failure. The turning point is the point of restoration of Dignity. Yes. That quality or state of being worthy of esteem or respect; of being regarded as nobility and having worth!

One of America’s legendary leaders; President J. F. Kennedy called it the “source of national purpose” when he said “I believe in human dignity as the source of national purpose, human liberty as the source of national action, the human heart as the source of national compassion, and in the human mind as the source of our invention and our ideas”. Like individuals, nations have or lack dignity depending on how well they practice these famous words of John D. Rockefeller – “I believe in the dignity of labor, whether with head or hand; that the world owes no man a living but that it owes every man an opportunity to make a living”. Dignity of honest toil and the sweet triumph that results from such strenuous effort is after all what confers deserving honor on people and societies. Booker T. Washington expressed this Truth powerfully when he wrote that “no race can prosper till it learns that there is as much dignity in tilling a field as in writing a poem”. We must take way a lasting message from the profound thoughts of these historical figures that helped build the still greatest nation in the world- the United States of America.

The clear message is that Dignity is conferred on a life of effort and hard work and not on a life of ignoble ease for the latter can easily become dulled by contemptible wealth.  To be born into inheritance like our nature endowed oil wealth does not of itself confer any deserving honor on us and our nation. Our oil rich nation merely makes us a Rentier state. Even worse, the oil wealth has created not the right kind of Elite class across the length and breadth of our nation but rather an Extractive Elite class. These political and business elite have been comfortable with living on rent from oil revenue without seeing the desperate need to redirect the focus of this nation to sources of economic growth that are more lasting than the depleting riches of natural commodities. They fail to realize that a Rentier economy like Nigeria sows the seed of its implosion if it does not advance into a productive economy. Had we been of a lesser population, we may perhaps have been able to all comfortably live off the income from oil as the revenue will make Nigeria sufficiently rich to be able to provide all of us high incomes on a sustainable basis like my friend Paul Collier so scholarly wrote drawing a parallel between individual bequeathed and inheritance and a nation blessed with natural resources. Collier wrote “just as a billionaire can ensure that his descendants need never work. But, just as many billionaires realize that it is good to earn a living, so all societies sensibly aspire to be productive. Resource extraction should make a society more productive”. My dear young friends, all Nigerians but especially our very prebendalist leadership class must realize that it is good for both individuals and nations to earn their living!

So I ask you as representatives of your generation, “Who will restore the Dignity of Nigeria?”  As my big brother, former President of South Africa -Thabo Mbeki- once asked along the same vein “When will the day come that our dignity will be fully restored, when the purpose of our lives will no longer be merely to survive until the sun rises tomorrow”! Your word of response to my difficult question will not persuade anyone. It is the follow on action that stands the chance of being persuasive. The reason is simple. Word is cheap.  As was profoundly observed by Marti Jose, “other famous men, those of much talk and few deeds, soon evaporate. Action is the dignity of greatness”. So I ask you again, “Who will WALK AND WORK to restore the Dignity of Nigeria?”  Through my probing question, I abide with the challenge of Shriver Sargent who believed that every new generation must be taught the dignity of work- “Do we talk about the dignity of work? Do we give our students any reason for believing it is worthwhile to sacrifice for their work because such sacrifices improve the psychological and mental health of the person who makes them?” Do you know that your embrace of a new mindset – an entrepreneurial mindset that takes pride in problem solving can change the course of our history and place us on a new economic development trajectory? Do you know that in order to herald a New Nigeria we must accept the words of Michelle Obama on learning about dignity and decency – “that how hard you work matters much more than how much you make…..that helping others means much more than just getting ahead yourself” is what we need to herald a New Nigeria?

A New Nigeria would be one where the citizens and leaders alike converge on a common vision for our nation. That vision need not be complex. It is in fact extremely important that because everyone who reads it must desire to run with its ideals that the Vision must be simple. For me a simple Vision will read- “we believe in Dignity”.  Although it sounds so ordinary but it profoundly conveys that we believe in the Dignity that lays within ourselves and not the fleeting sense of wealth that oil money creates. WE are our best endowment. Our capabilities- nurtured and nourished by a just society- and not our oil, not our gas not even our thirty four classes of minerals scattered across the country represent the lasting and renewable asset of our nation.  Whereas as a Madagasy proverb says, oil induced “poverty won’t allow us lift our heads; dignity which is the fruit of hard work won’t allow us bow them down.

 

OBIAGELI KATRYN EZEKWESILI

CLASS OF 1985, UNIVERSITY OF NIGERIA

SENIOR ECONOMIC ADVISER, AFRICA ECONOMIC POLICY DEVELOPMENT INITIATIVE

OPEN SOCIETY FOUNDATION.

 

- The second part of this speech, “The wealth and poverty of a nation – Who will restore the dignity of Nigeria?” shall be published tomorrow, January 28, 2013. Look out for it!