The recent corruption case against Eni and Shell in a controversial oil deal that led to Nigeria losing an estimated $6bn is symptomatic of the headlines Nigeria attracts.
However, in August 2018 UK during her visit to Africa Theresa May adopted a more positive approach to UK-Nigeria relations, “Already the finance and business links between Lagos and London are bringing enormous benefits to businesses and people in the UK and in Nigeria”.
While many so-called experts see Africa’s largest economy as an unsecure destination for foreign investment, Prime Minister May affirmed her will to enhance Britain’s collaboration with Nigeria, and the whole continent: “as the UK leaves the European Union, it will play an even greater role in financing the fastest-growing economies across Africa and the world.”
UK-Nigeria trade is already worth £4.2 billion, and many leading British companies including GSK, Shell and Unilever are already operating in this vast country. We can ask ourselves: what can explain Theresa May’s enthusiasm? Part of the answer is that in the past years, Nigeria has made encouraging efforts to fight endemic corruption, a real plague for this oil-rich country, and improve the business environment.
The essential fight against corruption
When he came to power in 2015, President Muhammadu Buhari vowed to eradicate systemic corruption, the nation’s main impediment to economic progress. Two institutions inherited this task: the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC).
As corrupt practices were particularly common in Nigeria’s public administrations, something had to be done to scrap so-called “grand corruption”. To do so, the Federal Government implemented the Presidential Initiative on Continuous Audit, to clean up the federal payroll and pension systems in the administrations. This policy has today saved the country no less than N200Bn, by eliminating “ghost workers”, a widespread phenomenon in the country.
In parallel, the administration put in place measures such as the whistle-blower policy, introduced in December 2016 to deal with the problem of mismanagement of public funds. This original policy provides the whistle-blower with part of the money recovered, an incentive that has proven to be successful.
The Treasury Single Account (TSA) was baptised in August 2015, with the aim of promoting accountability and transparency in public finance management. Initiated by President Goodluck Jonathan and delivered under President Buhari, the policy requires that all public sector revenues go through the Central Bank of Nigeria, to prevent leakages. In early 2018, there was N8.9trn in the TSA. This secured and tracked money is now available for social and public investments.
There are still undeniable and systemic challenges, and the deep-routed nature of the problem means that it will take time. However President Buhari has sowed the seeds for a cleaner country. The Corruption Perception Index (CPI), ranging from 0 to 100, where 100 represents the cleanest score, is now at 27%, while previously having sat at 16% under the presidency of Olusegun Obasanjo. Obasanjo’s former Vice-President, Atiku Abubakar is running against President Buhari at the February 2019 elections.
Reviving Nigeria’s economy
Nigeria is in the process of recovering from its deepest recession in 25 years. The economy did poorly in 2016, following the collapse in global oil prices, on which Nigeria’s national income is reliant.
The outlook now is brighter, with the Nigerian economy expected to grow by 1.9% this year and 2.3% next year. Many of the current administration’s detractors say that it is not enough. Nonetheless, one should remind them that for a state to improve the standard of living of its people (i.e. the GDP per capita), an economy must have a GDP growth higher than population growth. Nigeria’s demography is exploding, growing at a rate of 2.7%, which renders the task difficult.
What must be applauded, and highlighted, is the will that Buhari and his Vice-President Yemi Osinbajo have shown to ease the hurdles of doing business in Nigeria. An ambitious policy, launched in October 2016, is paving the way for the reviving of Nigerian local economy. PBEC, a presidential council set up by the administration, was implemented with one goal: improve Nigeria’s World Bank ranking by 20 places – it has succeeded. The latest Doing Business Report shows that Nigeria now ranks 145th out of 190 countries, climbing 24 places. Reforms have notably tackled the problems linked to starting and registering a company and access to credits. Once again, there's much more to be done, but this is a start.
Nigeria is on its way to recovery, under the presidency of a man committed to eradicating corruption. Granted, Nigeria still needs to address difficult security challenges and the significant demographic challenge. But there’s hope ahead of upcoming elections. Whether or not Buhari succeeds in winning a second term, the foundations of his presidency must be built on.
Charles Eze is the COO of Arise Nigeria.