Nigeria’s Election (Part II): Overcoming Terror to Ensure Growth

Unlike before, Nigeria’s elections are overshadowed by violent terrorism. It reflects an economic, ethnic and religious divide. It can be overcome – not by further violence, but by policies that will eliminate its raison d’être.

When Jim O’Neill and his colleagues at Goldman Sachs developed the basic BRICs criteria for rapidly-growing large emerging economies, they concluded that a set of core factors – macroeconomic stability, institutional capacity, openness and education – can set the stage for growth.

These criteria are necessary, but not sufficient preconditions for growth. There can be no wealth creation without stability. And there can be no stability without security. Nigeria is no exception.

Terrorism as anti-growth

Economic development and Boko Haram are seldom tackled in the same sentence, but they should. As its name – “Western education is forbidden” – suggests, it connotes a violent protest against economic modernity and gender rights.

Like most terrorism, Boko Haram will thrive in poverty and despair; but it will die in prosperity and hope.

Recently, instability in Nigeria has entered a new stage. Amid increasing concerns for post-election violence, international media, such as Reuters, have reported that Nigeria’s leaders must now “reassure voters that Africa’s most populous nation will remain in one piece.”

Whether these reports are exaggerating is beside the point. What matters is that they reflect wide concern about Nigeria’s future as a singular, cohesive nation; a concern that is evident in capital outflows, adding to security risk premium, and alienating international investors.

With reports that an average of 27 Nigerians have died daily from violence linked to Boko Haram, it is no longer impossible to ignore the jihadist violence as marginal, especially as it has reportedly forced 1.5 million people to flee from their homes and left almost 2 million in Boko Haram’s self-declared caliphate.

After April 2014, when Boko Haram kidnapped almost 280 female students in Chibok, protests swept across the international community. In cooperation with other nations, the government was able to free some 50 girls through negotiations. However, most girls remain missing. Last October, a Human Rights Watch report claimed that “the relative ease with which Boko Haram carried out the Chibok abductions seems to have emboldened it to step up abductions elsewhere.”

Since 2001, U.S. wars in the Middle East and South Asia have resulted in collateral damage and added security risks in sub-Saharan Africa, while French military interventions have had a parallel effect in West Africa.

Moreover, double standards abound. In May 2014, the First Lady, Michelle Obama, joined the campaign to have the Chibok girls released. And yet, only a month later, Washington blocked Israel from selling to Nigeria U.S.-made Cobra attack helicopters amid “continuing worries about Nigeria’s protection of civilians when conducting military operations,” as the New York Times reported.

Meanwhile, research by SIPRI suggested that U.S. arms exports were suffering from competition by Russia, China, Israel and other nations.

Whatever the causes for Boko Haram or the reasons for failures to contain it, any growth dream will remain subdued as long as terror prevails in Nigeria.

Hard terror, soft state

Wealth creation relies on macroeconomic stability. But you cannot create prosperity without security, which underlies all stability. Nevertheless, traditional BRICs criteria tell us little about effective policies to counter terror. That’s because these criteria reflect advanced-economy bias.

Unlike high- or even middle-income nations, aspiring emerging economies, such as Nigeria, must often cope with violence. Of course, advanced economies have suffered from similar instabilities. But since those periods occurred a long time ago, they are typically ignored in the BRIC reports – starting with the British Industrial Revolution, which was preceded by centuries of religious wars, the Hundred Years’ War, and the Glorious Revolution.

Like other large emerging economies, Nigeria shares the legacy of imperialist subjugation, decolonization and political independence, exploitation of energy resources by foreign powers, corrupt leaders and concurrent conflicts over the control of energy resources. Unless these conflicts can be contained, inclusive growth will not materialize.

In the absence of appropriately tough responses by the government, Boko Haram has grown more destructive. Recently, international media zoomed on the Charlie Hebdo murders in France, even as Amnesty International reported that Boko Haram slaughtered 2,000 people in Baga.

The lesson is that Nigeria cannot neutralize hard terror as long as it suffers from a “soft state.” The latter, as Nobel laureate Gunnar Myrdal saw so well, is the result of colonial powers’ destruction of many of the traditional centers of power and failure to create viable alternatives.

Successful industrializers evolve into strong modern states that can impose right development policies, fight corruption and unite the nation. Failing industrializers reflect soft states that are weak, cannot execute viable policies, remain haunted by corruption and may fragment national unity.

What has made soft states even softer in the past three decades is misguided free-market fundamentalism, which has often sought to weaken institutions, as a condition for development, aid and cooperation.

The last thing that Nigeria needs are political leaders who are quick to resort to the whips, but do not know how to effectively use the carrots. They will contribute to the terror; they cannot overcome it.

Nigeria needs leaders who can strengthen the state, reinforce its institutions, are not afraid to implement appropriate policies, support zero-patience with corruption and truly want to unite the nation.

New policies for new Nigeria

Due to the track-record of struggling economic policies and high-profile corruption scandals, divisive politics, and Boko Haram’s deadly terror, President Jonathan seems today vulnerable to his critics and incompetent to his opposition.

A year ago, even Olusegun Obasanjo, the former president and party leader, joined the critics of his protégé. Despite a tradition of the presidency rotating between southern Christians and northern Muslims, President Jonathan had put ethnic and personal interests above those of the nation, Obasanjo claimed.

General Buhari has contested PDP’s candidates in presidential elections since 2003. Currently, his tough anti-corruption and law-and-order rhetoric has a rising constituency. However, critics point to his role in the counter-coup of 1966, missing oil funds during a tenure as Minister for Petroleum in the 1970s, the 1983-85 military coup d’état which banned strikes, introduced repressive laws and jailed critics (including the popular Fela Kuti), and expelled 700,000 foreigners and migrant workers. Nigeria’s Nobel Prize winner, Wole Soyinka, called it an era of abuses.

So both President Jonathan and General Buhari come with some baggage. But in politics, that comes with the territory. What really matters is that the next president shall push inclusive growth.

After elections, Nigeria’s new leadership must begin to prepare the nation for the demise of oil-fueled growth, and must be willing to execute structural reforms even at the cost of temporary pain. Nigeria cannot overcome its challenges without inclusive economic growth.

The government must be more successful in promoting targeted and core infrastructure (in power, integrated transport network, aviation). It must be able to reduce business environment costs and encourage high value-chain sectors. It must be able to create far more jobs. In particular, it must promote employment of youth and female populations, and advance human capital development – greater investment in health and education.

The new Nigeria must be built on industrialization, urbanization and modernization – not on oil and gas, but on the ingenuity of Nigerian people and creativity of its enterprises.

Bridging divides at home and abroad

The new government must take a hardline on violence and terrorism but it must also initiate effective policies to finally bridge the economic, political, ethnic, and security divide between two Nigerias.

Internationally, it requires greater connectedness and integration with Africa, as well as foreign economic relations that will skillfully balance the roles of China and the United States in Nigeria.

These policies require a strong, modern state which can unite Nigeria; not the weak, soft state that has served the forces of disintegration.

As Africa’s largest economy, Nigeria is a pivotal state. It is moving to regional leadership. And it is too promising to fail.

Originally published as Dan Steinbock, “The 2015 elections (Part II) – Overcoming terror to ensure growth,’ BusinessDay, Feb 9, 2015.