Corruption in Nigeria: Is it Curable? Part Four

Posted: April 7, 2012 in Corruption, Government, Institutions, Markets, Special Interest Groups
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The Evolution of Banditry in Nigeria: Markets: Independence, Oil Boom and Settlement Years

The two most obvious periods of steep rises in corruption in independent Nigeria were the oil boom years of General Yakubu Gowon and the settlement years of General Ibrahim Babangida, two military heads of state; the former associated more with waste and rent-seeking, latter more with rapacity and patronage. The high levels of corruption in the governments of Shehu Shagari and General Sani Abacha can be considered the terminal evolutions or manifestations of the corruption Gowon and Babangida regimes, respectively. The question that arises is, were these two men very corrupt in themselves or was the corruption of their regimes a reaction to the conditions of the time? IR012 (2010) makes it clear that conditions of governance of the times of both the regimes played a staggeringly greater role in corruption witnessed than by the cupidity or venality of the men themselves.

Chang’s (2009) argument that markets create corruption appears to have significant relevance in the corruption of the Gowon and Babangida regimes. It is also the case that corruption has been exported to developing nations from developed nation via markets (Hawley 2000); wikileaks reports on corporate corruption in Nigeria embellish this fact. Firstly, Gowon had the responsibility reuniting and reconstructing Nigeria after the Biafran Civil War (1967-70) (Dudley 1973). One of the main tasks Gowon had to undertake was to dismantle regional stationary bandit networks (in the Eastern, Western, and Northern regions) that aggressively promoted secession and replaced them with principals / interests that diligently supported the “One Nigeria” doctrine i.e. consensus of a united Nigeria devoid of secessionist tendencies, as a unification strategy (Nane 2007). It was critically significant that Gowon strictly bequeath rents (stocks, shares, licenses, contracts, projects, appointments, seals of approvals for associations etc.) to these “One Nigeria” principals / interests. It appears that Gowon in redistributing wealth and rents broadly amongst supporters of One Nigeria, inadvertently created a class of roving bandits (rentiers) that escalated the incidence of corruption in the country (Nane 2007; IR012 2010). Furthermore, Gowon’s policy of indigenisation (nationalisation) of companies and markets was not his brainchild, it was an anti-colonial phenomenon happening all over the decolonised world (see Rozaliyev 1963; Rood 1976; Philip 1982; Sachs 1989; Mahon 1992). However, indigenisation meant, quite rapidly, markets were taken over from foreign concerns or created by indigenous principals. Indigenisation was deemed a post-colonial necessity in order to (a) break the long monopoly of foreign concerns in Nigerian markets, (b) maximise the local retention of profits from local markets and (c) raise the level of intermediate capital and the production of goods (Ogbuagu 1983). Gowon’s other policies such as the creation of more states and federalism dispersed and somehow extended scope of corruption with jurisdictional incompatibilities between state and federal governments (see Oko 2005). In addition, the indigenous control of markets so suddenly, instead easing the socio-economic expectations of the people actually heightened it; Nigeria became a dumping ground for unnecessary myriad of luxury goods (Achebe 1984). Just as the demand for goods and services exploded so did pressures of market principals on the government. The arrival of the oil boom on the back of poor economic planning made it easy for the government to spend vast sums of money on unproductive economic activity. In order to manage the markets and increasing consumer demand the government decided on policies that were tantamount to direct redistribution of wealth amongst the citizenry (see Panter-Brick 1978). The Nigerian economy rapidly evolved into a monopsony of sorts i.e. the government became the sole buyer of products produced, imported (mostly) or supplied by the corporate sector (Nane 2009). The new roving bandit class largely sat on the boards of the indigenised corporation and increasingly put pressures on the government to expand its monopsonic role through exclusive import licensing subsidies, price-control and other instruments. The import-export nexus and the monopsony disbursement nexus is where most of the corruption and waste of this era took place (IR012 2010).  Under Gowon’s regime vast amounts of money were borrowed to finance power sector developments and the Nigerian power sector became both a source and arena for major public sector corruption (IR00 2009; IR00 2009). It is important to note that while the nationalisation of markets did create major sources and arenas of corruption in Nigeria as a function of expanding markets, much of the literature on corruption does not capture this observation. Rather, the nationalisation factor in Nigerian corruption is conveniently explained away under the paradigm of neo-patrimonial state (see Ikpe 2000).

Secondly, when Babangida opted to take on the duty of reversing / replacing Gowon’s indigenisation program with it antithesis, the structural adjustment program (SAP); it became another very uncertain market development problem. Structural adjustment was immediately perceived by the Nigerian public as a disabling economic straightjacket that would bring upon them untold economic hardship, taking into consideration the provisions of the Washington Consensus (see Arrighi 2002). The sale of public assets through liberalisation, privatisation, deregulation or commercialisation met with severe resistance from the public (Diamond 1991; Osaghae 1995; Engler 2008) and a number of failed coup d’état attempts were staged against Babangida for his adoption SAP policies (Ihonvbere 1990; Amuwo 1995). It is obvious that Babangida resorted to repressive measures in order to put SAP in place in Nigeria (Lewis 1996; Ibhawoh 1999). However, fears of national disintegration and the possible failure of SAP itself led him to adopt the “settlement approach” i.e. broad-based bribery of groups. The following counterfactual quotation is supported somewhat by numerous authors (Cutter 2001; Stiglitz 2002; Tabb 2003; Robertson 2006; Baker 2008);

If there was no introduction of SAP, the strategy of settlement would not have been necessary. Babangida’s association with “settlement” as a dominant strategy is purely an externality of global market policy, not of his own making” (IR012 2010).

Thirdly by extension, there is another period of massive corruption fuelled by market developments that was precursory to the two periods mentioned above. In 1957, Nigeria moved closer to self-rule and Britain granted elected indigenous politicians of regional governments the rights to raise revenues and manage the budgets for the first time (Coleman 1971; Osaghae 1998). Hitherto, the role of indigenous elected regional governments and legislatures were purely advisory without any fiscal allocation or budgetary powers (Coleman 1971; Adebayo 1993). A major tension that developed out of the new powers of the nationalist politicians was to challenge the business turf of the comprador businessmen. The comprador business were pro-British and anti-nationalist in return for exclusive business privileges and rights from the British (SR02 2007). Now, the regional premiers brought markets not just under government control but under government ownership with the deliberate intension to undermine the colonial and neo-colonial aspirations of the colonialists with comprador businessmen seen as saboteurs (SR02 2007).

The regional leaders were Nnamdi Azikiwe, Obafemi Awolowo and Ahmadu Bello in the Eastern, Western and Northern regions, respectively (Ekeh 1989; Sklar 2004). These premiers were charged with the transitional economic and social development of Nigeria in the last years of colonisation in preparation for independence (see Falola & Oyebade 2002; Sklar 2004). Their remit included the establishment and management of Nigeria’s first indigenously owned or governed public sector and some private sector institutions, facilities and services. These included ministries, schools, universities, hospitals, clinics, housing estates, manufacturing industries, industrial plants, banks, corporations, agricultural produce offices, ports (air, river and sea), plantations, licensing offices, tax offices, health management boards, water boards, electricity boards, police offices, post office and telecommunications, infrastructure development / management services etc. In short, the premiers had become the masters of the economic and social development in the nation (Tadaferua 2006).

In effect, the premiers who were already great nationalist heroes in the eyes of their regional populations and the entire nation, had their powers astronomically augmented by the power to offer rents to supporters (regional rent-seekers). Nevertheless, it became clear to the premiers that the level of political power or influence they wielded amongst their constituents depended on the amount rents they had to offer (see Rowley 2000). The regional governments particularly in the Eastern and Western regions had set up well-funded multi-dimensional investment corporations that had undue advantage in their competition with the compradors. Permits, licenses, tax requirements, government funding etc. were withheld from or made difficult for most members of the comprador class with the effect of inducing them to partake in politics. These pressures of supplying ever-increasing rent offerings with the expansion and control of markets soon necessitated the premiers to be become stationary bandits in their regions fighting off political competition and securing long-term time horizons (Nane 2007). Monarchical thinking was common amongst nationalist patrons. This form of banditry was possible because of regionalism entrenched in the polity by the British and the failure of nationalist politicians negotiate fair policies and enable federal or national conditions for independence with Westminster (Coleman 1971).

The rent-seekers demands for increasingly more rents from the premiers stemmed from the fact that they had inadvertently become “opinion leaders” (Akande 2003). Opinion leaders became strategic instruments for the premiers in that they were used to inform or misinform the clans, ethnic groups 0r regions they represented concerning the prevailing needs of the polity of the day; and as it pleased the premiers (Nane 2007c, 2011a). However, disaffected rent-seekers had an easy time in presenting the realities or conflicting information, contrary to the politics and interests of the premiers and found easy alliance with disenfranchised comprador businessmen (SR02 2007). The result was that tensions between opinion leaders developed and escalated causing overwhelming pressures on the premiers who were forced to review the inclusions / exclusions in their rent offering preferences almost continually. Thus, the patronage networks built around the premiers became increasingly turbulent and required ever-higher levels of maintenance (Akande 2003). The endpoint was the military coup of 1966, the Civil War (1967-1970) and the legacy of military rule in Nigeria (1966-1979 & 1983-1999). Once again, increasing markets appear responsible for corruption.

The nationalist political leaders of the one and half decades preceding independence had very strong legitimacy in the land but the comprador businessmen had little. Many comprador businessmen sought legitimacy or were willing to give up their anti-Independence stance and join politics to gain legitimacy (SR02 2007). When the comprador businessmen gained access to the state apparatus by way of elections and political appointments they knew they were no match for the leading nationalist politicians and sought work on the non-transparent mechanisms of institutions.

No excuse whatsoever is being made for the corruption by those who engaged in major forms of it under reigns of Gowon, Babangida, Azikiwe, Awolowo or Bello; the fact remains that the circumstances created by the introduction of markets provided huge inducements for interested parties to engage in corruption. Independence, indigenisation and structural adjustment created in a Huntingdoninan sense (social and economic institutions evolved faster that political forms) grounds for poor governance. However, at the interface of the political economy and organisations (public or private) it is the logic of relevance (i.e. dependence of groups and individual on institutional benefits moderated by the state using social relevance as a key to access) that provides a more robust explanation.  Furthermore, (Khan 2002; Sindzingre 2002) argue that post-colonial nations rent-seeking can be augmenting (market improving) or destructive (market stagnating) depending on the legitimacy of market players. It is evident that Nigeria in the post-independence period has never had legitimate market players (Dowling 2005; Frynas 2007; Olukoshi 2010).

Grimot Nane

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