By
1999 when the Obasanjo administration assumed office, corruption had become
pervasive and had eaten deep into the entirefabric of the Nigerian society.
Indeed, there are many unresolved problemsin Nigeria, but the issue of the
upsurge of corruption is troubling. And the damages it has done to the polity
are astronomical. Surveys of nations by Transparency International,
aBerlin-based non-profit organization, rank Nigeria among the most corrupt countries
in the world. In 1999, Nigeria was ranked the second most corrupt country in
the world.
In 2000, it was ranked the most corrupt country in the world. In
2001, 2002 and 2003, Nigeria was ranked the second most corrupt country out of
the surveyed countries. From 2005 to 2007, Nigeria ranked the eight,
twentysecond, and thirty second most corrupt among the surveyed countries. By
2008, Nigeria’s rating had significantly improved her rating since the 2007
index Nigeria ranked 121 out of 180 countries.
The
Nigerian system, the product of more than forty years of mismanagement, ethnic
strife, military misrule, and political instability, provided a conducive
setting for corruption to flourish. Control mechanisms were ineffective, and
prospects of detection and prosecution were weak. The government’s control and
near domination of the economic sphere provided limitless opportunities for
Nigerians who operate without any sense of accountability to seek rents with
impunity (Oko, 2002). Corruption flourished in Nigeria mainly because no
government credibly and honestly committed itself to fighting it. Neither
civilian nor military regimes could stop corruption because each
administration, in differing ways and to varying degrees, exemplified the
pervading culture of public service: an amoral obsession with using public
office for private gain. After several decades of military rule, Nigeria’s
democratic institutions had become weak and ineffective.
A major challenge that
faced the Obasanjo Administration was how best to ensure genuine restoration of
democracy and good governance in Nigeria and eradication of corruption. Weak
and battered institutions, poor culture of accountability and transparency,
abuse of human rights and the neglect of the majority of the population created
an environment in which reforms had been difficult. Faced with the tragic
consequences of underdevelopment, which was propelled and sustained by
dictatorial regimes and inept civilian governments, the country was challenged
to induce qualitative transformation of the Nigerian economy and society. On
his second coming in 2003, President Obasanjo embarked on a comprehensive
programme of reforms in the economic, political and administrative sectors of
the Nigerian polity. The reform agenda of the Obasanjo administration was well
articulated in the National Economic Empowerment and Development Strategy
(NEEDS). NEEDS is often touted as Nigeria’s own alternative to the Structural
Adjustment Programme of the World Bank/IMF and focuses on Medium Term Economic
Development and Poverty Reduction Strategy.
In
articulating the need for reforms in Nigeria, the NEEDS document identified a
number of reasons in this regard: Nigeria has the potential to become Africa’s
largest economy and a major player in the global economy by virtue of its rich
human and material resource endowment. But much of its potentials have remained
untapped, and if previous trends continue,Nigeria runs the risk of not meeting
the internationally agreed Millennium Development Goals (MDGs) by 2015 and the
development challenges remain largely daunting. Macro policy was highly
circumscribed by the soaring inept but highly volatile and unsustainable public
sector spending, and a typically high volatility of major macroeconomic
aggregates.
Fiscal decentralization proved an enduring challenge to effective
macroeconomic stabilization and efficient public finance management in Nigeria.
There was also the lack of policy coherence between the states and the federal
government, and even among the various agencies of the federal government. The
traditional instruments of economicmanagement, the National Plan and Budgeting
processes had been rendered ineffective. Poverty in Nigeria was deep and
pervasive with an estimated 70 percent of the population living in poverty. The
prevalence of poverty had great regional, sectoral and gender disparities.
Other social indicators were under pressure: income inequality in Nigeria was
quite high; unemployment was threatening social cohesion, security and
democracy; and the imminent HIV/AIDS epidemic was a potent time bomb waiting to
explode and with potential dire consequences for productivity in the economy.
Furthermore, therewere persisting cases of social exclusion and discrimination
against women which hampered their ability to fully contribute their potentials
to the development of the economy. Despite efforts to promote private
sector-led, competitive market economy framework, there was still the
fundamental challenge of transition from statism and rent-seeking in an economy
dominated by the public sector. The deep vested interests which profit from the
system proved resilient. The perception of an over-bloated and inefficient
public service became one of the key problems; another was the evidence of weak
institutions and persistent implementation failures.
The
above features were legacies of decades of corruption and mismanagement,
especially during the military administrations. In the context of an oil
producing economy (with rents from oil as easy source of government revenue), a
culture of rent-seeking developed. Government readily became an instrument for
instant acquisition of wealth and therefore distorted the incentive to work and
to create wealth in the private sector. With government as the major source of
patronage and rent-seeking, the fight forpublic office became a matter of life
and death. All these created an incentive framework that did not reward private
enterprise, transparency and accountability.
In
summary, inappropriate development frameworks, poor and frequently changing
policies and programmes, lack of clear development vision and commitment to the
Nigerian project (as well as a citizenry that acquiesced to the patronage
culture) were the major causes of Nigeria’s failed past. The foregoing analysis
of the Nigerian economy is indicative of enormous challenges facing the
Nigerian state and the urgency of fundamental stepsneeded to redress the
legacies of the past. Among the many requirements for rejuvenating the economy
was rapid and broad based growth which required Nigeriato do things in
fundamentally different ways than in the past in order to break away from the
low growth and poverty traps and the strangulating impact of corruption. T
he
envisioned way out which the Obasanjo administration articulated in the
government’s National Economic Empowerment and Development Strategy, (NEEDS)
was to put in place various policies and projects aimed at turning around the
fortunes of the country away from stagnation to that of a prosperous society.
NEEDS’ ultimate goals are poverty reduction, wealthcreation, employment
generation and value orientation, anchored on a tripod: creating an enabling
environment for private sector growth; empowering the people to take advantage
of new opportunities; and ensuring value for money in public service delivery.
NEEDS is to be supplemented by SEEDS at the state level and LEEDS at the Local
Government level. The first leg of the tripod was geared towards promoting
private enterprise as the engine of growth of the economy. This was to be
achieved by reducing the size of government, diversifying and deregulating the
economy, intensifying infrastructural development, and promoting local
resources and technology-based small and medium scale industrial base. The
second leg of the tripod was empowering the people.
To do this, the government
intended to invest in the people through education and better health services,
and rural development in national development. The third leg preached a new
orientation to the conduct of government business in the country.
Institutionalizing value for money in public service delivery presupposes
smaller, stronger, better skilled and more efficient workforce. This
underscored the need to operate transparent and accountable governance with the
aim of taming the menace of corruption. This was to be achieved through
intensification of privatization efforts; institutionalizing best practices in
procurement process; making anti-corruption campaigns more proactive and making
anti-corruption institutions more pragmatic and effective; reforming the public
service and promoting budget discipline and disclosure.
NEEDS
was promoted as a home grown poverty reduction strategy aimed at wealth
creation, employment generation, poverty reduction, corruption elimination, and
general value re-orientation. Thiswould lead to the social and economic
transformation of the country into sustainable, modern, competitive and prosperous
economy. NEEDS was also supposed to be an instrument for making Nigeria the
largest and strongest African economy, and a key player in the world economy.
NEEDS was projected to be financed through the mobilization of domestic savings
and Foreign Direct Investment (FDI) as well as Overseas Development Assistance
(ODA). For its implementation, NEEDS would rely on public-private sector
partnerships, including inputs from the donor community. The specific core
reforms embarked upon by the Obasanjo administration can be categorized into
five categories, as follows: Public Expenditure and Public Service Reforms;
Accelerated Privatization and Liberalization; Fighting Corruption, Improving
Transparency and Accountability; Macroeconomic Stability; Implementing a social
charter; and Governance and Institutional Strengthening. Indeed, the government
made efforts to cover a broad spectrum of national life in the general
provisions of the NEEDS document (See Okonjo-Iweala, 2005; Soludo, 2007).
The
effective implementation of all these reforms was expected to impact positively
on the macro-economy. With adequate enhancement of macroeconomic stability and
the reduction in the level of corruption, capital was expected to be retained
within the domestic economy with positive implications for investments locally.
Generally, the arguments put forward by government in support of the reforms
appeared logical. A nation that is so greatly endowed with human and material
resources like Nigeria had no business ranking among the poor nations of the
world, if leadership is focused in properly managing the economy’s affairs.
There is no doubt that the Obasanjo administration tried to steer the Nigerian
economy and its governance along what it regarded as a dynamic path. However,
an appraisal of the broad groups of reforms indicates that the Obasanjo
administration’s reform agenda, as earlier observed, imbibed by the neo-liberal
and market economic development policies propagatedby the World Bank, the IMF
and their subsidiary agencies, meant that since a majority of the impositions
of these development policies such as currency deregulation, privatization,
trade liberalization, market determined economic policies, anddependence on the
free flow of direct foreign investment are perceived to be harmful to
developing countries, the reforms could not automatically engender the transformation
of the Nigerian state.
Privatization
in particular has become controversial in many parts of the world and has been
rejected on account of its anti-people economic consequences. Given the history
of failures of public enterprises in Nigeria, the programme on privatization
was viewed with skepticism. There hasalways been the fear of lack of
transparency in the disposal of government assets. In many cases, it was
believed that proper asset valuation was not usually done and the eventual
purchasers of the government enterprises and assets are deemed to be
predetermined. Also, the use of the core-investor mode in the reform agenda
appeared not to adequately spread the ownership of the privatized enterprise.
Gross imbalances appeared evident, across the geo-political zones, on the
ultimate origin of the core-investor.
These issues were not addressed by the
administration and have resulted in imbalances in the ownership of businesses
and property in the country. This has implications for income distribution,
national harmony and mutual peaceful co-existence of the various nationalities
in the country. (See Aluko, 2007). A key feature of globalization is that it
has increased the vulnerability of national economies to competition. Take the
case of trade. Trade theory predicts that lowering barriers and opening up to
trade leads to improvements in economic efficiency even though there may be
distributional consequences. But for poor countries, these efficiency gains can
often be purchased at the price of greater job insecurity, greater risk, and
vulnerability to contagions. For instance, the textile industry in Nigeria,
like that elsewhere in the globe, has been decimated by competition from China.
Vast quantities of cheap textiles
imported or dumped from China and South Korea have made it impossible for most
Nigerian textile manufacturers to compete. Factories have closed down and jobs
have been lost in the last few years.