Couple of (Not So) Random Thoughts

1. My friend Tolu Ogunlesi makes the point:

It sounds funny but it really isn’t. The FRC was able to list all the allegations against the CBN by going through its accounts that it bothered to prepare. Worse, it even put them on its website where anyone could have a look at them and make context-free conclusions. There’s an obvious dilemma here – this is what we want i.e. for government agencies to be transparent with public money. But revealing details of your spending in a country like Nigeria is a mug’s game. Think of all the major government revenue generating agencies – FAAN, NCC, SEC, NSE etc. It is very very hard to find out how much these agencies make in a year and how much they remit to the Federal Government. With the exception of the NSE which published very high quality audited accounts for 2012 on its website, you will struggle to find anyone that matches the CBN’s disclosure levels (400+ pages). The SEC has 2011 ‘annual reports‘ on its website but the section supposed to show its accounts is mysteriously blank (go to the very end of the document).

To be clear, if Mallam Sanusi is investigated and found wanting, he should face the music (although none of the charges personally indict him). But if you are in charge of a revenue generating agency in Nigeria and you are watching all this, it will be very hard to resist the temptation to be cynical and hide your numbers (perhaps Oscar Onyeama at the NSE is a learner and will soon stop publishing accounts?).

It is useful to understand the overall point – we have laws in Nigeria, no doubt about that. But breaking the law itself is unlikely to get you into trouble. It is offending people that’s the real problem. It is when you offend someone that the law is activated.

2. I thought the highways and freeways in China were impressive until I saw California. I have never seen a road network like that before. It is breathtaking to behold in terms of size and scope. 12 lane highways are par for the course. This in itself requires a specific driving skill that you might not have if you normally drive in another country – switching lanes. It sometimes feels like a car racing video game with everyone darting in and out of lanes. Unlike here in Blighty where I can quite possibly drive from London to say Luton without having to switch lanes more than a couple of times, this is almost impossible in California. You enter a freeway from the right and have to exit from the left in a couple of miles.

All this made me wonder how much California must be spending on maintaining its roads annually. Wikipedia tells me that Caltrans (the body responsible for roads in California) has 22k staff (more than Dangote Group) and a circa $14bn annual budget (more than Nigeria’s capital budget). To be fair, it’s a $2trn economy all by itself.

But that’s not the most interesting thing I found. I didn’t encounter a single toll road while criss crossing the state (more like the Greater LA area actually). I found this odd. It’s a reliably left leaning state and the Los Angeles area does have a well-developed transportation system (bus and rail) plus lots of congestion. So what gives? Why doesn’t the state charge for the use of some of the busiest highways? I don’t pretend to know the answer but my best guess is that tolling the roads will require the approval of the voters through one of those annoying propositions, such a measure will be dead on arrival given how voters like to vote for increased spending and lower taxes – at the same time, with a straight face.

Voters can be funny people.

3. Staying with voters being funny. Sometimes you cant really blame them – politicians are actively trying to deceive them everyday. Case in point – watch the video below.

Now there’s nothing strange about the video in question – a straightforward commissioning of a market in the FCT by Mr President. Except for the ‘market woman’ who rallied the troops around 2:49 in the video. Anyone who understands how these things work will know that she ticks all the boxes of your typical market woman – loud, ample (I dare say), utterly sendless and downright folksy.

Or is she?

I am told, very reliably, that the lady in the video is a highly educated person (up to Master’s Degree), ex civil servant of many years service and is actually very well spoken in real life. In short, she was putting it on for the audience.

Every disappointment is a blessing as they say. And the preponderance of poverty in our country has now been turned into a ‘vote farm’ by ingenious politicians. Afterall, if you cant provide useful education for people, you might as well mine them for their votes using language and imagery they can understand.

To be fair, this is not unique to Nigerian politicians – Barack Obama has been known to ‘adjust‘ his accent when speaking to black audiences and recently, George Osborne was caught dropping his ‘t’ to put on a cockney accent during a speech at a supermarket. But the point to note is that our politics is getting increasingly cynically sophisticated. It’s bad enough that politicians make promises they have no intention of fulfilling, but to then take it to the level of actively getting voters to believe in an alternative reality….this our democracy is maturing a bit too fast for me.

4. I have said before that my position on petrol subsidy has completely changed. I supported the occupy protests in January 2012 when President Jonathan attempted to remove subsidies on petrol, not because I believe in them, but because I felt it was a useful lever to use to force the government into wider reforms. I no longer hold that position and if today the President tried to remove petrol subsidies, he’d have my support, even if I don’t hit the streets for him.

The scale of the theft is unconscionable. There is a place for a government to subsidise certain products for its people but we are so corrupt in Nigeria that it is almost impossible for this to get done without the larger purpose being defeated. The better to have them done away with and the people make (painful) adjustments. Courtesy of my good man Akin Oyebode, here’s a diagram on how the even more egregious kerosene subsidy theft goes on (at least with petrol, except during a scarcity, most people still buy at the official price):

Kerosene Subsidy

He’s also written an accompanying post here fleshing out the story. What could possibly be the justification for something like this? If people were getting to buy kerosene at the official N50 per litre, we might conceivably hold our noses and abide the mess. But there is no evidence of any Nigerian anywhere buying at the official rate. At least pretend to be running a proper business. But we should not be surprised by any of this  -this is the Nigerian government – the enemies of enterprise, the purveyors of poverty, the traducers of trade, the first-born sons of satan – doing what they do best.

Because Africa is in fact in a country, here’s a variant of the same problem from Kenya:

Bridge International, a chain of local low-cost private schools, puts its cost per child in primary school at one-fifth of the $350 it estimates as the total real combined cost for parents and the state in the public system

The government has conspired to make something ‘free’ more expensive than the paid-for one. Genius.

5. Closing on a slightly ‘wonkish’ note, I found a recent report into Australia’s electricity privatisation rather interesting. Couple of caveats – the report was paid for and commissioned by the Electricity Trade Union in Australia and the economist who wrote it, John Quiggin, is very much left leaning. In that sense, the report could only have had one conclusion i.e. privatisation has been a godawful thing.

Nevertheless, it does have some interesting observations on how electricity markets tend to evolve post-privatisation. These lessons might be useful to us in Nigeria as we embark on our journey in Nigeria. The most important lesson is that the greatest cost increase comes from what we know as DISCOs in Nigeria. They don’t produce any electricity themselves and tend to spend huge sums of money, over time, on marketing and other such expenses. These costs obviously have to be passed to consumers who end up paying for things that don’t have much to do with actual electricity generation. The report suggests that the distribution part of the business should have been kept in government hands (or government as majority shareholders) while the GENCOs were privatised.

It’s too late for us to do that of course but it’s a useful bump in the road to look out for. The report itself is here. Have a read through if that’s your sort of thing but don’t let the conclusions depress you for the reasons I gave above (here’s a useful critique of this arguments).