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A view of the trading floor at the Nigerian Stock Exchange (NSE) at the end of trading hours in Lagos April 24, 2012. (Akintunde Akinleye/Courtesy Reuters)
This is a guest post by Jim Sanders, a career, now retired, West Africa watcher for various federal agencies. The views expressed below are his personal views and do not reflect those of his former employers.
Just as Richard Drew’s photograph of a man falling from the World Trade Center on 9/11 became an iconic image of what writer Tom Junod has called the “almost vertiginous sensation of the ground giving way beneath our feet, along with just about everything else,” a metaphor for American exceptionalism and entitlement falling back to earth, so, too, have Boko Haram’s seemingly unstoppable attacks appeared to have diminished Nigeria’s sense of exceptionalism and confidence. Yet multinationals, focusing on Nigeria’s large population and robust growth rate, rather than its poverty and internal stresses, see the country as an investment opportunity.
Chris Kay and Maram Mazen write in their article, “Strife-Torn Nigeria is an Investment Magnet,” that multinationals such as Nestle, Standard Chartered bank, Siemens, and SABMiller, as well as some local Nigerian investors, “seem unfazed by Boko Haram’s violence.” The authors quote an emerging market analyst with Global Evolution as saying, “from an economic perspective they [Boko Haram's terror attacks] are negligible, since they are still isolated to the northern part of Nigeria.” Whereas, according to the Nigeria office of investment adviser Monitor Group, “all the sectors that are growing fastest are in the south.” The managing director of DaMina Advisors, specializing in frontier investments, says that “someday” the split between the north and the south in terms of development may cause trouble, but, “for now, it’s just one more business risk.”
Financial Times editor Lionel Barber recently visited Nigeria and Ghana. During his trip, a Shell Oil Company official in Port Harcourt stated that “Shell is probably losing more oil now than during the Delta insurgency.” After being asked if he was more optimistic about Nigeria now than four years ago, the Shell official explained that, “In terms of effort, yes. In terms of results on the ground, no. The scale of the problems–education, health, infrastructure–are overwhelming.” “The elites of this country,” he added, “need to think about posterity and not just sending their children to Harvard. They need to think about how they can contribute to this country. What we are doing now is a drop in the ocean.”
Taking this warning further, former head of state and presidential candidate of the Congress for Progressive Change in the April 2011 elections, Muhammadu Buhari, said on April 21 that “there would be a revolution in Nigeria if the ruling People’s Democratic Party failed to address the social injustice ravaging the country.”
A few points.
1. Fear driven “Western analysts” like John Campbell actively discouraged investment in the Nigerian Telecoms sector. The South Africans and Indians were more hungry for business and till today, Vodafone regrets its risk aversion – it missed a golden opportunity to invest in Africa’s most lucrative Telecoms market.
Western businesses – ranging from GE to BP are determined not to ignore the Nigerian market.
2. Nigeria does not have a security problem as much as it has an unemployment problem. There can be no resolution of our security problems without investment. No investment means no jobs, no jobs means no security.
3. Northern Nigeria hasn’t been a viable economic entity since 1914. As long as the violence does not spread South, the impact on the Southern economy will be negligible.
(The North and South protectorates were amalgamated because the North was in deficit).
4. There will be no revolution in Nigeria. However, there could be a revolution in Northern Nigeria. The possibility of the Nigerian people uniting behind a single common cause is extremely remote.
Buhari might be the most upright former leader, but he is less of an opposition leader than leader of a massive personality cult, limited to the dozen “Sharia compliant states” in Northern Nigeria.
The round the clock media coverage of the anti-subsidy riots last January might fool foreign observers into believing that the removal of fuel subsidies and economic hardship are the major issues confronting Nigeria’s teeming population. What was not covered was that there were virtually no “anti-subsidy protests” in the South East and Niger Delta.
An increasing number of Nigerians believe that Northern Muslim leaders like Buhari are either complicit or sympathetic to Boko Haram. This is extremely dangerous – and General Azazi’s words contribute to that perception.
5. A “two-speed” Nigeria will be an unstable Nigeria. The problem is that increasing numbers of Southerners and “Middle-Belters” are losing faith in a united Nigeria. We have a flurry of regional economic summits with the implicit aim of “planning for life after Nigeria”.
For example, the economy of Lagos State is already larger than the economy of Ghana and about equal in size to the Kenyan economy. If the South-Western states can achieve full integration and emulate the success of Lagos (IGR is 75% of revenue), then the politics will have to follow the economics.
6. Boko Haram cannot destabilise Nigeria. It may destabilise Northern Nigeria, but not the rest of Nigeria. We are yet to witness a backlash against Boko Haram by Christians and other Northern minorities – and we pray it doesn’t get to that point.
In truth Nigeria is an investment magnet but the reality on the ground paints a very different picture.
The return on investments can only make sense if the Leadership of the country becomes credible and takles corruption sincerely and tenaciously. Else a struggle between the few rich and many poor might tear the Nation apart.