Conversations on The Future of Nigeria and Relations with Czech Republic

In separate conversations Patrick O. Okigbo III, founder and principal partner at NEXTIER, a public policy advisory firm in Abuja and Kingsley Moghalu, a former Central Bank of Nigeria (CBN) Deputy Governor, Czech Africanist,Jan Záhořík discussed the future of Nigeria, economic challenges and prospects, and Czech-Nigerian relations. This was part of StartCom, a programme of the Ministry of Foreign Affairs of the Czech Republic by the Embassy of the Czech Republic in Nigeria. Below are excerpts from the sessions…

Záhořík: Patrick, Nigeria is supposed to be the leading economy in Africa, or at least one of the leading ones. However, over the last few decades, we have observed that inequalities still exist in the country. Thinking about economic progress or a meaningful future is easier with stability and security. So, what went wrong in Nigeria? Why is the country facing so many troubles regarding internal security or widespread insecurity?

Okigbo: The problem seems easy to define but could be complex. In Nigeria, insecurity is the result of a combination of interconnected factors. For instance, terrorism in the Northeast may initially appear to be a religious problem. At the same time, the secession agitations in the southeast could be seen as a political issue, with the Igbos seeking to secede from Nigeria. Additionally, the prevalence of cultism and gang violence in the southwest may seem to be a breakdown of law and order simply. However, at the core of these conflicts lies an economic problem. Widespread poverty and hunger are the driving forces behind the agitation, often resulting in violent conflict. With Nigeria’s GDP per capita at approximately $2,500, it is evident that a miraculous increase to $20,000 would alleviate many of the political conflicts prevalent in the country today. By addressing the economic disparities, there is potential to mitigate the root causes of these conflicts, paving the way for a more peaceful and prosperous society.

Záhořík: This may well significantly impact identity issues, right? Identity clashes are more likely to increase with miserable socio-economic situations because it can be easier to mobilise people, correct?

Okigbo: Yes, I agree. The prevalence of hunger stands as a significant challenge that we must address. How did we get to this level of hunger?  It is common for the media to attribute this issue to the current government in power. Today, we blame President Tinubu for everything. A few months ago, it was President Buhari; earlier, it was President Jonathan.  However, it is essential to recognise that the problem is multifaceted and cannot be simplistically attributed to a single cause. Our economic challenges are complex, stemming from a combination of factors. Incompetence has led us to our current economic state, as evidenced by poor policy choices and implementation. These issues are exacerbated by incompetent individuals within the bureaucratic system.

Záhořík: Often, the blame is not solely attributed to the political leaders but also to the lasting effects of colonialism, which can serve to absolve responsibility and accountability. This phenomenon is reminiscent of how some individuals in Central Europe attribute certain issues to the enduring legacy of Communism. Do you think the prevalence of incompetence can be linked to clientelism and nepotism, wherein politicians appoint individuals who are either their relatives or loyal to them, often due to their lack of education, making them easily influenced by those in power? Conversely, do you think incompetence stems from a lack of access to power for the skilled and well-educated individuals in Nigeria, thereby perpetuating an exclusive rather than inclusive system? Nigeria has a wealth of talented and educated individuals who could be the leaders of tomorrow, yet they seem to be marginalised from positions of influence. I would appreciate your perspective on this matter.

Okigbo: In the 1970s, Professor Richard Joseph introduced the term “Prebendalism” to describe a political patronage system in which public officials utilise their positions to access and distribute state resources for personal, ethnic, or group benefit. Furthermore, Professor Peter Ekeh’s “Two-Publics” theory elucidates the dual structure of public morality and social organisation in post-colonial African societies. According to this theory, public officials in the Civic Public feel no moral obligation to the state and perceive the public treasury as available for plunder. However, within their Primordial Public, they adhere to the norms of their kinship groups and uphold moral obligations. This implies that the same public servant who may misappropriate public funds will exercise care in managing the resources of his Town Union.Despite the analyses, Nigerian politicians are similar to politicians in other countries. The main difference lies in the political economy in which they work. Therefore, we need to go back to the beginning to understand how we arrived at our policy choices and how the current leaders in Nigeria came into power.The answer to this question depends on where one decides to start. Many people will begin with Nigeria’s independence in 1960. However, there were forces that shaped the options available at independence. Therefore, one could go back to 1914 when the British colonialists amalgamated Northern and Southern Nigeria. One may even go back to the arrival of the colonialists and how the political structure they brought distorted the societies they encountered.  However, I am concerned about looking so far back to finding the root of our problems. If we attribute everything happening in Nigeria today to the 80 years of colonial rule, we must also acknowledge that we have had another 64 years of independence since then. The colonial period should not have hindered our ability to create a society that is less exploitative and more inclusive.However, after gaining independence in 1960, Nigeria experienced a series of military regimes that disrupted the emerging political process. The country missed establishing a solid democratic foundation before the military intervened in 1966. It’s important to note that the military might not have felt the need to step in if the civilian government had been effective. Nigeria continued to be under military rule until 1999 when the country transitioned to an unbroken 25 years of democratic governance.  There was a short civilian administration from 1979 to 1983.  Unfortunately, the prolonged military exposure meant the politicians who took over in 1999 were primarily former military personnel who had become civilian politicians after shedding their uniforms. Furthermore, the prolonged military rule from 1966 to 1999 led to civilian politicians adopting military traits.

Záhořík: This sounds more like a civilian-military rule because democracy has perhaps not taken root in Nigeria. And I remember meeting many people here who wished the military would return to power and bring order. However, there is also a danger that Nigeria’s system of governance is based on personal connections rather than merit.

Okigbo: You are right.  It has also moved beyond politics to impact on our bureaucracy and civil service. Promotions are based more on personal connections and financial influence than merit and achievement. This has led to individuals being promoted to directorship positions based on who they know and their ability to pay for the position rather than their qualifications. As a result, some individuals in these positions may need more skills and competencies for their roles. Furthermore, obtaining positions through financial means can lead to a focus on recouping the investment rather than ensuring the system’s effective functioning. This has contributed to a political economy prioritising personal gain over our institutions’ effective operation.

Záhořík: The perception of Nigeria as a major oil producer often brings to mind the country’s significant role in the oil industry. However, based on my interactions and experiences with Nigerian individuals, many citizens do not perceive any direct benefits from oil production. It appears that the current system primarily serves the interests of the wealthy, while most people, with monthly incomes of around 45,000 Naira, feel disconnected from the supposed benefits of being the largest oil producer in Africa. To drive actual industrialisation and address the challenges faced by Nigeria, the country needs to reconsider its approach to oil production and explore how it can be leveraged to promote broader societal and economic development.

Okigbo: Nigeria is commonly perceived as an oil-rich state due to its significant crude oil and gas deposits and status as a major producer and exporter in Africa. However, a closer analysis reveals that Nigeria can’t be accurately described as oil-rich compared to countries such as Venezuela. When considering oil production per capita, Nigeria’s output is relatively low, resulting in minimal earnings per capita. Despite Nigeria’s OPEC quota of 2.5 million barrels a day, actual production estimates vary and are significantly lower, especially compared to the country’s large population. Our production could be about one million barrels per day, a small amount for a country of 220 million people.

Záhořík: It appears that, instead of oil, remittances play a significant role in improving the lives of ordinary people, as is the case in many other African countries. Is this understanding accurate?

Okigbo: The amount of money Nigerians received in remittances last year was higher than the amount the government received from selling crude oil. Indeed, if we focused on exporting more Nigerians, we could earn more from that venture than we currently do from oil. Sometimes, I joke that Nigeria should rebrand as a people-exporting country instead of an oil-exporting one.However, when we examine why we are unable to meet our OPEC quota of 2.5 million barrels a day, the standard explanation is the violence in the Niger Delta, which leads to oil theft. However, there’s more to it. The root cause lies in the same political economy favouring well-connected individuals over merit. This same system prevents us from addressing the insecurity in the Niger Delta, as it benefits a select group of people.  It is understood that security agents posted to the region may get involved in the illicit sale of petroleum products for their financial gains.  Hence, it is insinuated that some officers take our bank loan to bribe for a posting to the Niger Delta, knowing that they can pay off the loans in no time. Hence, the incentive system is not structured to encourage a resolution of the insecurity in the region because the veneer of violence is good for business.Forget the oil theft now. Why is it that Nigeria is unable to produce the 2.5 million barrels per day quota?  The lack of clear regulations for the oil sector for decades and the delay in passing the Petroleum Industry Bill caused international oil companies to divert their investments to other African countries, resulting in those countries surpassing Nigeria in oil production.  Hence, the same political economy made it difficult for the government to invest in crude oil production capacity. Nigeria needs to invest in discovering new fields. It is also not developing new fields.In addition, the government set up the Nigeria Extractive Industries Transparency Initiative to promote transparency and accountability in crude oil production and managing sales processes. Despite consistently publishing reports on transparency challenges in the sector, the government must still address the fundamental inefficiencies. This failure benefits certain individuals, enabling them to exploit the system for their own gain.  So, the real challenge in the sector is neither oil theft nor violence. It is more beneficial for some people in the industry when there is little clarity on how much crude oil Nigeria produces.

Záhořík: Patrick, I share your realistic evaluation of the situation. My last question concerns the historical relations between the Czech Republic and Africa. In today’s changing and multi-polarized world, it seems increasingly difficult for smaller countries like the Czech Republic, Poland, and Hungary to maintain or enhance their relations with African countries and their economies, especially with the rise of the so-called Global South, as well as countries like Turkey, India, China, and others. Is there potential for meaningful Czech-Nigerian relations, especially considering Nigeria’s good relations with the Western world?

Okigbo: The way I look at geopolitics is that everyone’s got something they’re looking to get out of the relationship. Hence, it is for the Czech government to define what it wants out of this relationship. Is it the opportunity for more trade, or is it a philosophical relationship?  For the latter, the Czech Republic may have a worldview and want more friends to support it.  Once the Foreign Ministry and its Embassies have clearly defined the objectives, they can determine the best way to achieve them.  The Government of Nigeria has its interests.  Both parties will find common ground from which to operate.However, what I know is that Nigerians are a very pragmatic people. We are hardly doctrinarian on a particular philosophical position. Hardly would you find a Nigerian who is hardcore conservative or hardcore liberal. Instead, we are practical people. We look at situations and ask what tool would work best for the tasks.  Hence, you will find Nigerians open to the West and the rest.  We align with Kwame Nkrumah, Ghana’s first president, who admonished that, as Africans, we should face neither East nor West; instead, we should face forward. This is probably the overall sentiment you will get from most Nigerians.However, there are opportunities for good Nigerian-Czech relationship. My hope lies more in the people than in the government. An approach that seeks to deepen the relationship with Nigerians could increase opportunities for closer understanding and trade.  Both the East and the West employed that strategy back in the Cold War days and to a lesser degree today.  China is building such cultural and business bonds today.  The Czech Republic can invest in such cultural, educational, and business programmes to deepen the bond between both countries.  However, Nigerians are pragmatic.  They will welcome the opportunities but ultimately decide on the philosophies that make the most sense to them.  What is the tool to catch the rat? You know, that’s what we’re going to choose.

Záhořík: Thank you, Patrick, for an amazing discussion!

…And the Session with Kingsley Moghalu

Záhořík: Professor Kingsley, thank you for your time and I would like to first start this interview with a deeper insight into the Nigerian economy, because when one says Nigeria, almost automatically what comes to one’s mind is oil, as if there is nothing else, but I suppose that’s not the whole truth. There must be something else. So, if you can tell me a bit about the structure of the Nigerian economy and possibly why Nigeria isn’t, in the eyes of many, that giant of Africa. What are the obstacles or pitfalls and potholes on this trajectory to become a true giant of Africa?

Moghalu: Thank you very much. Nigeria is a country with a lot of economic potential, most of which is currently unrealized. And if you look at the history of the country, you can then place this in context. The country found oil around 1956 in commercial quantities in Oloibiri, which is now in Bayelsa state. And that oil did not play a significant role in the Nigerian economy until at least a decade later. We had oil giants like Shell, we had oil giants like Elf at the time, and a few other multinationals that were exploiting those natural resources in collaboration with the Nigerian government and exporting it. But Nigeria became independent from the United Kingdom in 1960. Most of Nigeria’s economy was still dependent on agriculture. And they had a lot of agricultural exports, cocoa from the western part of Nigeria, Lagos and the rest of the south-west, groundnuts in the northern part of the country, and a combination of various cash crops, especially palm oil from the eastern region at the time. At that time in the 60s, the country had three regions. Later on, there was a fourth region created — the Midwest region. And so basically agricultural commodities were the mainstay of the Nigerian economy in the 50s and in the 1960s. The civil war came in 1967 after there was a political crisis, and this led to a heightened realisation of the importance of the oil sector, because the oil sector was in the eastern region, and the eastern region was attempting to secede from Nigeria because of a political crisis and some misunderstandings following the military coups of 1966. And so, the oil majors and the western powers and of course the federal government of Nigeria in Lagos at the time, did not want the oil resources that had been recently discovered some years prior to the conflict to belong to the Republic of Biafra.

Záhořík: And this war had huge international dimensions because the strategy of the West (with the main exception of France) as well as the Soviet Union was to support the federal government except for France. 

Moghalu: This was a civil war of two and a half years, starting in July 1967, and ending in January 1970. The post-war economy in the 1970s led to the rise of oil. Industrialization, which started in the 1960s, began to decline as the price of oil and the money that it was bringing in became so much in value. And the Nigerian state and Nigeria’s political economy now began to revolve around oil dependency. This is the root of Nigeria’s economic problems. Because oil “booms”, like most commodities, are cyclical. Sometimes there is a boom, sometimes there’s a bust. Some oil-rich countries created risk measures such as sovereign wealth funds to save a certain benchmark of oil revenues. Some of them developed very powerful refineries and exported the refined petroleum to other countries, and this would also give them foreign exchange. But Nigeria did not create a sovereign wealth fund until about 2012 or 2013, when the party was almost over. They had established a few refineries, but they allowed those refineries to go into decline.  For the past 50 years, about 90 percent of Nigeria’s foreign exchange earnings have come from oil. And about 70 percent of its total revenues have also been oil-based. Agriculture has also remained important. But it is mostly subsistence agriculture and, until recently, there has not been an emphasis on agribusiness. There wasn’t an emphasis on manufactured agricultural products being turned into an economic strategy. This only began to happen in recent years. So that’s the context of Nigeria’s oil dependency, which has led to fiscal crises.

Záhořík: What has happened in the last 25 years since Obasanjo’s years when Nigeria transformed from military to civilian rule?

Moghalu: The economy grew very fast in the 2000s, when Nigeria was returned to democracy in 1999. And the president, Olusegun Obasanjo, had a keen sense and an ambition for economic transformation and economic growth. He brought in several skilled technocrats to be his economic team and to advise him of the economy. And the first thing they did was to negotiate a massive debt relief deal with the Paris Club and multinational creditors and other creditors that wiped out about $30 billion of Nigeria’s foreign debt, because it was felt that this was suffocating Nigeria, having to pay these debts. Now, unfortunately, in the years after Obasanjo left in 2007, the governments that came after him started borrowing heavily again. And so Nigeria today is back in debt crisis. So right now, they have about $50 billion foreign debt. That is huge. Repaying these debts takes about 70% to 80% of all the revenues Nigeria’s government generates. So, this is the reason Nigeria is in an economic crisis. And poverty has been rising, because even in the 2000s up to 2015, when the economy was growing at a rapid pace of about 5% to 7% every year, it was not inclusive growth. It was not broad-based growth across sectors. There was always a problem of unemployment, which has continued to rise. And today, you have almost 50% of Nigerian youth unemployed. And you have 40% unemployment generally in the whole country. So, this is the context.

Záhořík: I have witnessed quite some shifts in the exchange rate of the USD in Nigeria. This also seems to affect everyday lives of ordinary civilians in Nigeria, right?

Moghalu: To solve these problems, President Buhari’s government took a statist approach. Because Nigeria is an import-dependent economy largely, the pressure, the demand pressure for foreign exchange is very significant. They took the approach of fixing, in effect, the exchange rate. This kept foreign currencies artificially affordable for people who needed it to import parts for manufacturing, to pay school fees for their kids studying abroad, or just whatever it was. This approach lasted for about eight or 10 years, but it backfired because it created a lot of arbitrages whereby people who are politically connected would access the foreign exchange at very low rates but would just round-trip it on the foreign market to make huge profits. And this became another business empire. So, the government was also paying subsidies on the price of imported petrol. And the citizens of Nigeria have felt for a long time that this is the only benefit they get, that the price of petrol is low compared to what it is even in the neighbouring countries of West Africa, which are not as big or even as economically buoyant as Nigeria. And yet their citizens pay far more for fuel than the citizens of Nigeria. The government of President Bola Tinubu now decided to implement some economic reforms. First, to remove the subsidy on petrol, and to remove the subsidy on foreign exchange. And that has created a huge cost of living crisis for Nigerians and led recently to protests this year. And life is just harder for the average Nigerian today. The problem is not the reforms. I think they were and are necessary. The problem is how they were executed. They were announced without proper planning. They were announced without a plan to buffer the impact on the average Nigerian. For example, if you were going to remove the subsidy on petrol, you could have a transport subsidy for the poor people that would ameliorate the impact. These things were not done. And then these reforms were just announced suddenly, and so on. And today, it has created not just an economic crisis, but also some sort of political crisis in the country.

Záhořík: So, one would think that this is going to last for a long time, given the socio-economic inequalities. What’s the longer-term trajectory?

Moghalu: It depends on the leadership that Nigerians select. It depends on whether Nigeria can make some fundamental political adjustments. For example, people are demanding a new constitution that is more federal and devolves power to sub-national units, rather than just a concentration of power in the central federal government, which has exclusive authority over 68 items on the list of powers of the various governments. That’s just too much. By decentralising the economy, they can diversify the economy, because different regions have different advantages that they can use to achieve their own economic sustainability based on their own strategic advantages.

Záhořík: And we can also say that the question of nationhood is very contested in Nigeria.

Moghalu: Nigeria has not yet arrived at a very strong and unified understanding of what Nigeria means to every Nigerian. We have the kind of situation you had in the Czech Republic and in other advanced countries. The Czech Republic was part of Czechoslovakia. But these issues of nationhood and compatibility led to the split of Czechoslovakia into Czech Republic and Slovakia. Now, there is an unwillingness in Nigeria to face these realities and have a mature, peaceful discussion about how the country could possibly be reconfigured for its own progress, because there are those that feel that Nigeria needs to remain the way it is, believing that this gives them a political advantage in terms of power. This is the political context of oil dependency and diversification of the economy. The economy is gradually being diversified. For example, telecommunications have become a very important part of the Nigerian economy, and now generates about 50 percent of GDP. Whereas agriculture generates about 30 percent. Oil generates about 10 percent of GDP. So, the telecommunications industry has risen in importance over the past 30 years. This is an aspect of diversification. But the aspect of diversification that has not yet taken place is foreign exchange diversification. What Nigeria earns from its exports. And that is what determines the value of the currency, how strong or how diversified its sources of foreign exchange income are. It remains mostly oil. So there has been some type of diversification, but it has not extended to a strong export-driven economy based on value-added products being exported out of the country and earning dollars and euros and pounds. That’s the challenge that faces Nigeria.

Záhořík: And let me now ask a question, because having said everything that you just said, one may have the impression that Nigeria is not such a giant as it should be. At the same time, at least in ECOWAS, the GDP of Nigeria is bigger than the rest of the ECOWAS countries, if I’m not mistaken. But still, with my experience from many other African countries, when one says Nigeria, many people are a bit scared of things like corruption and lack of trust in Nigeria. What should Nigeria do to really become this giant of Africa and to, let’s say, improve its reputation?

Moghalu: Well, Nigeria, being a giant of Africa, is only a demographic reality. In terms of population, the country is significant. One in every five Africans is a Nigerian. So that gives it influence. Now, in the 60s and the 70s, and even up until into the 80s and 90s, Nigeria had a lot of influence on the African continent. That’s because a lot of its leaders were very attuned to international diplomacy and statecraft. ECOWAS was created by Nigeria’s initiative. That was when General Yakubu Gowon was the military Head of State of Nigeria. ECOWAS was created in 1975. Nigeria played a driving role in the creation of ECOWAS. And like you rightly say, Nigeria’s GDP is about one-third of the GDP of ECOWAS, because of the size of the country in terms of its population and economic activities. Most of the countries that surround Nigeria and West Africa are small countries, and so therefore their economies are small. But in recent times, Nigeria’s influence in the continent has waned a bit because of an internal economic and political crisis. And after Obasanjo, who is a very highly respected international statesman, we have not had leaders that commanded the level of influence that people like Obasanjo have, or people like Murtala Muhammed, or even Yakubu Gowon in his own era. And that’s because of the contradictions the country faces at home, in terms of the absence of nationhood, in terms of an economy that is resource dependent, and therefore fluctuates between cycles of boom and bust, and a lot of emigration of young Nigerians to other countries. The political elite has shown a strong tendency towards corruption, and this has destroyed the trust between the people and the leaders. And, a lot of the scandals that have come out of this corruption, exposed a lot of times by the press, Nigeria does have a free, robust press, and that’s a good thing for the country. You don’t have that in many African countries. Nigeria has a lot of independent media that are not controlled by the government, and so they shine a spotlight on the weaknesses of governance and leadership, and those weaknesses tend to symbolise or crystallize in a lot of corruption. So, there is a problem in terms of ethics, in leadership, and that again goes back to the absence of nationhood. Where there is no world view that is commonly shared by both the leaders and the led about where the country is going, and how the country will get there, many politicians see political office as an opportunity for self-enrichment. And this is what has given the country a very problematic reputation internationally.

Záhořík: I think that every society, every state must grow to a certain sort of level that makes it possible for the politicians to be held accountable for their deeds and everything. And this leads me to the last question, which should be related to Czech-Nigerian relations, but I would ask maybe in a different way, because the history of Czechoslovak-African relations is quite known, you know.  They have been massive but in the changing world order, the rise of the Global South and the enlargement of BRICS community, do you think that there is still space for keeping and maintaining and growing relations between a country like Nigeria, which seems to be trying to maintain good relations both with all relevant powers and a small country like the Czech Republic, which has no colonial history and long history of, let’s say, soft power collaboration with many African countries? Do you still think that these two countries can learn something from each other?

Moghalu: I see a lot of potential for the Nigerian-Czech relationship, regardless of what you identify as the rise of the Global South, the rise of the BRICS, India, Russia, China, South Africa, and so on. Nigeria is looking more in that direction of becoming, you know, maybe there could be BRINCS if you include Nigeria or other formations. But nevertheless, Czechoslovakia has a unique history, and its relationships with Nigeria can be improved in a few ways. One of the things I would recommend that Czechoslovakia and Nigeria relations look at is what lessons can Nigeria learn from the history of Czechoslovakia in the construction of nationhood and identity. What led to the split of Czechoslovakia to become Czech Republic and Slovakia, and how was that split managed? The reason is because there are a lot of tensions in Nigeria today, even about whether the country should remain one country. And there are a lot of separatist forces in Nigeria. How can this be managed in a constructive manner so that an agreement can be reached to keep the country together, but perhaps based on a new constitution that is driven by the people themselves? Or, you know, other alternatives. I think this is one thing Nigerians would be interested to learn more about from the Czech Republic which, of course, has a lot of economic strength. There may be specific areas of trade in which it could import value-added products from Nigeria, so they would be truly contributing to the economic rise of Nigeria by prioritising Nigeria over other potential partners in terms of imports of specific goods that they may need. It could be apparel; it could be agricultural products. Things like that, which would support Nigeria’s economic diversification. I think that would be a very concrete means of collaboration and partnership. So, these are the sort of two-way possibilities, and there’s a lot of tourism in the Czech Republic and there’s also a lot of potential tourism in Nigeria. There could be Czech companies that could help Nigeria develop its tourist potential in some areas. Some areas of the country still face security challenges, but other areas have possibilities, you know, for tourism that is quite significant. There is no question in my mind that Nigeria-Czech relations have room to improve. It just needs a sharper focus on those possibilities that exist.  You know, it’s not a zero-sum game. The fact that Nigeria may be interested in relationships with China or other rising powers does not mean that they cannot have increased relationships with the Czech Republic.

Záhořík: Absolutely. I totally agree, and this is probably the best end of this interview. So, thank you very much for your time.