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As significant a development as it was, the return of relative political stability did not bring about the automatic cessation of internal divides and hostilities that one might have wished for. Nigeria's volatile economic and political unity continues to be a threat to its security and stability. The existence of potentially destabilising forces within its boundaries has long been obvious to the international community. Radical separatist groups, some demanding devolution and others autonomy, have sprung up across both northern and southern territories. Although more of a recent phenomenon, growing Islamic extremism is emerging as another point of grave concern for Abuja. The cumulative socio-economic impact of these activities has been tremendous.
More than half of the 148 million Nigerians are officially docketed as poor, while an estimated 35% of the population lives in extreme poverty. Human development indicators are abysmal across the board and many see this condition, existing despite considerable national wealth, as the primary reason behind its emerging as a prominent centre of international criminal activity. This brings up the second important aspect of Nigeria's internal security: crime and the rule of law.
The spectrum of criminal activity in Africa's second largest economy and its most populous nation is understandably extensive and diverse. The country's strategic location makes it a key transit point for a host of illegal networks, including major international drug routes. Administrative inefficiency and malpractices fed by the billions in annual petrodollar profits have also made it a centre of massive economic corruption and fraud. In fact, the country was listed by the inter-governmental Financial Action Task Force as a non-cooperative country until 2006, when it finally issued formal commitments to fight economic crime. Nigerian scams called 419s are known for ingenious ways of targeting foreigners across the globe and causing both monetary loss as well as personal harm. The condition is much more unsettling at the street level, where armed assault, burglary, kidnappings and extortion, involving both individuals and gangs, are everyday occurrences across the country. The US state department reports 44 abductions of foreign oil workers from Nigeria since 2008.
There are several reasons behind the lawless disrepair in Nigeria's state of affairs:
o Economic disparities that grew out of non-inclusive policies and the exclusive dependence on oil, which destroyed indigenous economies and livelihoods, spawned critical levels of inflation and unemployment, and left millions reeling in poverty.
o Political misrule, corruption and neglect of social development projects that over the years alienated the vast majority of Nigerians, amplified urban-rural divides and deepened fractures along religious and ethnic lines.
o Flaws in the judicial and law enforcement process, largely due to the existence of multiple criminal justice systems based on often contradicting but separately applicable penal codes, Islamic edicts and customary laws.
o Legislative emasculation brought on by decades of military rule. This severely curtails the government's ability to enforce relevant policies and gain sufficient supervision and oversight of core development programmes.
While this by no means exhausts the list of challenges facing Nigeria, the return of civilian rule sparked a triumphant renewal of national ambitions. Abuja embarked on a process of radical reforms and restructuring to correct decades of misdirected economic policy and reinforce its standing as a significant regional and global economic power. The Vision 2020 and Millennium Development goals have forced the government to sharpen its focus on rapid SME development as a means of driving accelerated economic growth. Nigeria's long-term objectives are critically dependent on achieving rapid enterprise development across sectors to sufficiently diversify and consolidate the non-oil economy. Considering the enormous imbalances that continue to plague the system, what the country effectively needs is a sustained enterprise revolution that channels its vast economic potential in one determined push. Reinforcing the security situation is one of the first hurdles on the way.
The Nigerian federal government suffered an estimated $20 billion in oil production and export shortfall losses in 2008 due to militant violence in the Niger Delta region. While this is a considerable amount, it pales in comparison with the billions more it loses annually to aborted contracts, production delays and business closures because of security issues. Even more significant are the repercussions on latent economic sectors like tourism.
The Nigerian government admits the possibility of earning more revenue from tourism than it does from oil, and has been involved of late in developing a tourism profile to attract international travellers. Between 2000 and 2004, international air arrivals jumped from 12,000 to 190,000, while the hotel and restaurant sector's contribution to GDP grew from N4.9 billion to N6 billion. Going by such indicators, the Nigerian Tourism Development Corporation is understandably confident of developing the country as a world-class circuit of important monuments, landmarks, nature retreats and heritage sites. Yet, tourism, as a profitable economic activity, is virtually nonexistent in this corner of sub-Saharan Africa; hardly surprising considering the long list of nations that have stern advisories against travelling to Nigeria unless absolutely essential.
A similar dictum seems to guide investments flowing into the country. Foreign direct investment (FDI) in Nigeria was over $62 billion in 2007, well under desirable levels considering that most of the funds were concentrated on the oil industry. The security situation is largely to blame for a very small fraction of FDI reaching other sectors, as it is for keeping away expatriate Nigerians from investing in their country of origin. The spectre of violence and lawlessness has proved a strong deterrent against business ventures by the Nigerian diaspora, a critical failing that keeps away billions of dollars in potential investment. Where countries like India and China have reaped huge benefits from expatriate investment, Nigeria has been far less fortunate because the risks involved in doing business in the country are too large.
The following are some of the broad and specific measures the government needs to be looking at in order to convincingly resolve the situation:
o Correcting the deficit in administrative legitimacy by addressing core issues that feed violence and organised crime. Genuine grievances and concerns must be effectively addressed to soothe popular discontent.
o Using economic growth and prosperity at ground levels as a weapon to isolate extremist and criminal elements, effectively denying them the public support and collaboration their operations rely on.
o Enhancing effectiveness of security operations in sensitive areas through better strategy, increased vigilance along industrial clusters and improved cooperation between state and federal law enforcement agencies.
o Re-evaluation of centralised policing in favour of devolved powers for control and deployment of police forces. Nigeria's federal structure and complex state laws make a strong argument in favour of a decentralised police force.
o Maintaining the authority of democratic institutions and the rule of law by increasing transparency in governance; initiating effective measures against corruption and bureaucratic red tape.
Economic expansion in Nigeria is critically linked to internal security and the effective rule of law. The country's high crime rate, frequent communal violence and deep-rooted ethnic divides are severely detrimental to both business development and sustainable growth. Nigeria must be able to reposition itself firmly as a safe destination, for tourists and investment alike, if it is to achieve these goals.
By Peter Osalor FCCA, CTA Partner Peter Osalor and Co Chartered Certified Accountants and President Success in your business.com
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