Nigeria’s Unfulfilled Promise

Nigeria has fallen far behind peer countries such as Indonesia and South Korea when it comes to gross national income, GDP per capita, and industrial production.

Supporters of the People’s Democratic Party attend a campaign rally in Lafia, Nigeria, January 2019Afolabi Sotunde / Reuters

How Fear and Caution Hinder Africa’s Giant

By Amaka Anku

Next February, Nigeria will hold its seventh election since transitioning to democracy in 1999. Nearly 100 million Nigerians are registered to vote, most of them under 25. By 2050, according to UN projections, Nigeria will be the third most populous country in the world after China and India. But despite having the world’s ninth- and tenth-largest natural gas and crude oil reserves, respectively; one of the world’s largest swaths of arable land; and a young and entrepreneurial population, Nigeria has fallen far behind peer countries such as Indonesia and South Korea when it comes to gross national income, GDP per capita, and industrial production. On measures of adult literacy and access to electricity, Africa’s largest economy even lags behind other countries on the continent, including Kenya and Ghana.

This disappointing state of affairs is due in part to Nigerian leaders’ lack of ambition. Ever since the brutal civil war that was fought from 1967 to 1970, soon after independence, Nigeria’s political and business elite have been mostly content to simply avoid another major conflict. Unable to reach a consensus about how to industrialize the economy, Nigeria’s leaders resorted to divvying up the country’s natural resources to keep the peace. During Nigeria’s years of military dictatorships, from the late 1960s to the 1990s, the state grew progressively weaker: the civil service was systematically undermined, and the failure to diversity the economy away from extractive economic activity eroded the government’s ability to fund public investments. Now that Nigeria is a competitive, multiparty democracy, those weak institutional foundations mean the state is unable to stimulate broad-based economic growth.

The coming election season offers Nigerians a chance to demand more from their leaders. Sixty-two years after independence, the country must finally aspire to more than simply holding itself together. Nigeria needs a shared vision for economic transformation that unites political elites—across regional and ethnic lines—and enables them to do the difficult work of replacing patronage networks with productive ones. And it needs a government that is empowered to sustain reform efforts even when it encounters inevitable resistance.

THE SPOILS OF PEACE

Since independence, Nigerian politics have been shaped by the fear of ethnic conflict. During the colonial period, the British carved the country into two territories, instituting different administrative methods in the north and south depending on pre-existing elite structures. This strategy created regional disparities and bred suspicion, laying the foundation for strained ethnic relations following independence in 1960. In 1966, a group of military officers, mostly from the Igbo ethnic group, overthrew Nigeria’s first democratic government and killed the leading military and political figures from the north and the west of the country. For reasons that are still disputed, the coup plotters failed to kill the top political figure in the eastern and predominantly Igbo region. That omission stoked fears among northerners that the coup was intended to eliminate northern leaders and impose Igbo hegemony, igniting anti-Igbo pogroms and eventually triggering a bloody three-year civil war.

In the wake of that conflict, which claimed more than a million lives, successive military governments exploited a lingering fear of ethnic conflict to justify their rule. Abundant oil revenues meant these administrations did not need to prioritize government efficiency or create the conditions for diversified economic growth. Instead, they pursued a much narrower goal: maintaining political stability.

Paradoxically, this emphasis on national stability often came at the expense of individual security. For example, fear that regional governors might use local police to promote their own ethnic or regional interests led the military rulers to perpetuate an impractical centralized federal policing system that undercut local intelligence gathering and made it harder to keep citizens safe. And even this ineffectual police force was kept severely underresourced so that it would never grow strong enough to challenge the military. As Nigeria’s military governments grew more preoccupied with self-preservation, they made fewer and fewer efforts to provide essential public services such as water, roads, and electricity. State governors were judged not by the quality of the infrastructure in their regions or the availability of education or health care but by their ability to manage ethnic-based networks of elites who helped keep the peace.

Nigeria must finally aspire to more than simply holding itself together.

Nigeria transitioned to democracy in 1999, but many of the patterns established under military rule endured. Although they were now preoccupied with elections, political elites still focused on sharing in the spoils of central government while appeasing regional leaders of ethnic groups. To be fair, this singular focus on unity has been successful on its own narrow terms. Twenty-three years after Nigeria’s transition to democratic rule, a military coup is unthinkable and there is no real risk that the country will fracture. But the primary source of rents—which sustained this simple political consensus—is dwindling. Since 1999, oil production has fallen by over 50 percent while Nigeria’s population has doubled to over 200 million. As oil revenues have shrunk, the glue that held together the old political arrangement—peace in exchange for spoils—has dried and grown brittle. Only a new political arrangement that unlocks Nigeria’s economic potential can ultimately deliver real political stability.

STATE OF STRENGTH

No nation has industrialized without good public infrastructure, relatively secure property rights, and efficient market regulation to prevent fraud and ensure a level economic playing field. Scholars with diverse ideological leanings—including Daron Acemoglu, Dani Rodrik, and Jared Diamond—have acknowledged that often only a strong central government can provide the degree of coordination and mobilization required to deliver these services at scale. But although the role of a strong state in stimulating the economic transformation of newly industrializing countries such as China, Singapore, and South Korea is relatively well understood, ideological blinkers have prevented many Western scholars and policymakers from acknowledging that a strong central government played a similar role in the United States’ own economic takeoff.

Nigeria needs a shared vision for economic transformation.

During the Cold War, American anti-Soviet rhetoric encouraged a simplistic dichotomy between state and market forces, bolstering the myth that U.S. economic dynamism stemmed from unbridled market forces. In reality, the U.S. federal government played a pivotal role in fueling economic transformation during the twentieth century. Among the most important federal interventions—but by no means the only ones—were extensive subsidies for national transport infrastructure, strategic investments in emerging technologies, and strong support for fair labor and other redistributive policies that ensured a level playing field and improved worker productivity. In other words, the United States’ vast network of interstate highways, booming defense and technology industries, and highly educated labor force are all byproducts of a strong state.

But in the 1970s and 1980s, free-market economists such as Milton Friedman and George Stigler cast doubt on the ability of governments to play a stimulative role in the economy. Their work gained influence not just in Washington but also in the capitals of many developing countries in Africa and Latin America that were bound by conditional IMF and World Bank programs and whose elites studied in U.S. universities. Unlike the United States, these countries had not yet had the chance to build strong, capable states of the kind Friedman and Stigler saw as too big. As a result, the free-market medicine was often worse than the disease, stunting economic prospects.

PEACE IS NOT ENOUGH

In Nigeria, economic theories that de-emphasized the role of the state in driving economic transformation suited a military and political elite that was looking to escape responsibility for the country’s poor economic outcomes. So Nigeria’s military and intellectual class embraced these pro-market concepts to perpetuate their own rule. In practice, a weak state only compounded the country’s ethnoregional disparities and aggravated existing ethnoregional distrust. The result was a vicious cycle that continues today: a frail central government invites competition from regional and ethnic power brokers, who in turn resist efforts to strengthen the central government lest it be captured by one of their rivals.

This dilemma has thwarted efforts to forge a national vision for economic transformation and made it difficult for the government to marshal resources to build much-needed infrastructure. Nigeria’s federal revenue and spending average just about six percent of GDP—comparable only to the share in failed states such as Somalia and Afghanistan. (U.S. federal expenditure, by comparison, is nearly 30 percent of economic output.) Contrary to the predictions of free-market fundamentalists, Nigeria’s private sector has not filled the void. Without an effective regulatory framework, private capital has delivered little in the way of health care, education, and infrastructure. Perhaps as a result, the view that a strong and capable state is required to create the conditions for economic transformation is slowly gaining ground. A recent spate of violent attacks by criminal and secessionist groups across the country has centered public attention on the need for a better resourced national police body. And while the main opposition candidate for president, former Vice President Atiku Abubakar, has promised to devolve policing and other services to state governments, he has also pledged to lead a “strong federal government” that can “guarantee national unity.”

Nigeria’s leaders must restore public trust in the country’s institutions.

But Nigeria must aspire to much more than simply ensuring national unity. That unambitious goal has already been met for the last 52 years. The next administration must go further. It must forge a common national vision, with buy-in from all regions and major ethnic groups, for how to strengthen the federal government so that it can secure property rights, deliver public infrastructure to the entire country, and provide efficient regulation to ensure a level playing field among market participants. By creating a stronger and more decentralized policing structure, for instance, Nigeria could foster the peace and security needed to improve agricultural output, which would in turn boost economic growth. A better resourced civil service, meanwhile, would make it easier to attract talent and help transform an inefficient bureaucracy into one that can stimulate and effectively regulate local industry. And a stronger and more reliable judiciary—one that protects the rights of minority groups—would encourage mobility and investment across the country. Together, these strengthened federal bodies could provide—and enforce—minimum standards, while subnational units advance regional developmental priorities and ensure coordination between economic actors.

To implement such a vision for reform, however, Nigeria’s leaders will need to restore public trust in the country’s institutions. One way to do so is to improve communication with ordinary Nigerians. The next president should frequently communicate clear policy goals, enabling the public to hold him or her accountable if those goals are not met. Putting an end to the culture of impunity in government and among elites is another important step. A zero-tolerance approach to corruption or other forms of wrongdoing, especially among political appointees, is necessary to restore public trust in government.

In the past, Nigeria’s political stability depended on the ability of its leaders to strategically distribute oil revenues. But as the country’s oil reserves dwindle and its population expands, stability will increasingly depend on something much more difficult: broad-based growth that improves the lives of average Nigerians. To achieve that, Nigeria will need a new and more ambitious political consensus—one that transcends the trauma of a civil war that ended more than 50 years ago and that prepares the country for the next half century.

• AMAKA ANKU is Africa Practice Head and a Director at the Eurasia Group.

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