Monthly Archives: May 2014

Good luck is not enough; leadership requires preparation #Nigeria, #BringBackOurGirls

What do visionary leaders have in common? Trials. History’s greats went through travails unimaginable. Mahatma Gandhi, Martin Luther King, Jr. and Nelson Mandela quickly come to mind. They are fabled as much for their triumphs as well as their travails. Their lives and deaths were dominated by strife. It is the preparation they needed to lead. Providence forces strife and loss on the chosen precisely because a leader’s sense of empathy and responsibility is never genuinely felt otherwise. Mandela is perhaps exceptional in that he had the good fortune of both preparation and good luck. To reach his destined height in history, providence sent him to the one place he would be protected from his own weaknesses. And in that period, the memory we had of him was, as he would have liked to be thought of. He certainly wouldn’t have been able to achieve such a stature bordering on sainthood without those troubles. His greatness came at great personal costs, however. Costs that only the leader must bear; alone. That great African icon must have gone through unimaginable tribulations. One is not talking about his well-known long stay in prison. I refer to the other prison. The prison of the mind; that inner sanctum where the greatest battles are fought. For the naiveté of youth (no relation to age) to give way to the maturity that is required of leadership, the mind requires molding. That process is unbelievably difficult and lonely. A leader must contend with the lifelong loneliness that is his/her fate. The neophyte leader in error thinks company means shared responsibility. Leadership is lonely. The maturity of the leader happens when he masters his loneliness; a process that starts with first realizing it is lifelong. A leader reaches his own when he realizes his true friend and enemy is himself. To one’s mind, all of the leaders in history that have failed or triumphed know that their success or failure first happened in their minds before its eventual projection on their cause or responsibilities.

It is why people who aspire to leadership for its potential glory never achieve it; because that covetousness is precisely what makes leadership elude them. You can easily pick these types of “leaders” from a mile. They are the types who are particular about the pomp and pageantry of their offices. They are those who worry about how they are perceived on an issue not for its strategic necessity (since that is required if your leadership relies on interest groups, a voting public, etc.) but for its vanity. The kind of vanity that comes naturally to all of us. It is thus why men and women who make the ascension to leadership are those who finally happen on their purpose and go headlong with determination, passion, and wisdom towards achieving it. That triumph of self is often achieved through spirituality; but never without preparation. A leader must first define his essence before determining if and when he has the firmness of mind to achieve what providence lay in his path. A leader must first master his mind before even contemplating the thought that he may be deserving of followership. Guardians of the Abrahamic faiths when in possession of political power have always found it necessary to block the path of those covetous of leadership positions. The leaders we celebrate today, our heroes, never wanted power for its sake. Of course, they understood its utility. But they also understood its failings and what it does to a man. It is the reason guardians of institutions (kingmakers of monarchies, human resource units of corporate organisations, leadership scouts) look for leadership potential early on and then mold their potential leaders over time. Countries, kingdoms and institutions that don’t make their leaders go through this painstaking process almost always pay for it in the long run; often at great costs. Unfortunately, a lot of institutions today are mostly structured to notice what could be called “chronic perception managers”. The shallow and insecure types who know how to say the right words to the hearing of power. The types that make the strenuous effort to be liked for its sake. Of course, it is often too late before their character deficit becomes writ large; often in the most public way at great costs to the equity and reputation of their institutions.

The focus of this article is on the leader of a country, however. That President Goodluck Jonathan of Nigeria is a man of tremendous good luck is widely known. That is, if your interpretation of good fortune is the ascension to opportunities for leadership. Tribulation is as much a common experience of great leaders as it is the reason for their metamorphosis. Periods of crisis in a leader’s stewardship call on his lifelong preparation. The benefit of experience is often that you know when action is an absolute necessity no matter the consequences. The followers of such a leader become the fortunate beneficiaries of the leader’s earlier trials and tribulations. A leader’s evolution must thus first start with those earlier troubles; the costs of which are usually inconsequential during those early years. A student prefect, a local councilor, manager of a small unit, a squadron leader; all these are leadership opportunities that provide preparation for the budding leader. They provide him/her the opportunity to make mistakes; lessons from which become invaluable when the cost of a mistake could mean the difference between life and death. President Jonathan’s naiveté in the face of Boko Haram’s brazenness is a cost all of Nigeria’s 170 million people must now bear. When a people elect a leader, they must live with his failings as well as his strengths for the term of his/her mandate. That it took three weeks for President Jonathan to express a view (or show empathy) on the over two hundred girls kidnapped by Boko Haram borders on the highest level of recklessness. And now it seems the whole incident could have been prevented. Never mind how our national security and sovereignty have perhaps now been compromised. After all, a man who does not mind his house inevitably gives room for the nosy neighbor to adjudicate his affairs. Help that we could have discreetly asked for and accepted is now being symbolically and publicly offered to us; at great cost to our national pride. As a people, we cannot escape blame, however. Our culture of self is partly responsible for our current travails.

“Leaders” are products of their followership. At any time there is a major negative event, the average Nigerian picks up the phone to call his/her family members and that is it. Once we find our family members are fine, we go about our businesses as if nothing happened. We forget how randomness is a crucial factor in the governance of God’s earth. Anyone of us (or our family members) could be a victim of these attacks. When our sisters and daughters are finally rescued, Nigerians must go beyond #BringBackOurGirls and begin to require leadership of our public officials. We should speak up when our elected leaders take on stupendous allowances. We should refuse to renew mandates of those of them we believe have failed us. It is hard to say what prevented President Jonathan from demonstrating leadership in regard of our kidnapped sisters; for he was certainly quick to visit the Nyanya bombing site near Abuja. It is perhaps because of this that a lot of us are beginning to believe the President and his officials considered this matter too trifling. Make no mistake about it, the contemplations of those of us who have not lost loved ones before or haven’t had our dear ones kidnapped before pale in comparison to the anguish of those whose daughters are perhaps going through unimaginable traumas at this time. Their troubles are the culmination of our failings as a people. Our taciturnity in the face of the brazen recklessness and insensitivity of our leaders is finally costing us in the most painful way. #BringBackOurGirls must therefore be the beginning of the regeneration of the soul of our nation. It must mark the beginning of a realization by all of us that our individual actions and inactions inevitably bear upon our commonwealth. President Jonathan may have failed as a leader in this instance; but his failing is also a reflection of our own failing as a people. We, all, are bearing the costs of our passivity in the face of the corruption (in character and in office) and sense of impunity of our elected officials. If after our sisters are rescued (and they will, God-Willing), we all go back to our passive ways; we would have no one to blame but ourselves when our leaders fail us again.

Why Africa’s rise has not been inclusive; or has it? Part 2 #Africa, #Nigeria, #WEF, #MDGs, #PovertyAlleviation

A dimension to this debate that is not enjoying, as much attention is the possibility that perhaps there has been more economic growth inclusion in Sub-Saharan Africa (SSA) than the data suggests. Perhaps, it is not only the GDP data that hitherto weren’t reflective of the actual size of some SSA economies. Poverty statistics may very well be inaccurate on the upside as well. Of course, more could be done to accelerate poverty alleviation. But if the data doesn’t reflect more accurately the true state of affairs, some winning strategies may be unknowingly jettisoned as a result. Thus, as mundane as it may seem, getting the data right is a crucial step towards increasing economic and financial inclusion on the sub-continent. The IMF/World Bank and the Bill & Melinda Gates Foundation have been working with some of SSA’s statistical bodies to improve the accuracy and promptness of data coming out of the sub-continent.

 

A case in point is Nigeria (a discussion on Africa inevitably leads back to its largest and most intriguing economy). According to the Nigerian Bureau of Statistics, 72.3% of the country’s households buy mobile phone recharge cards every month. The only other non-food items that enjoyed such a priority in household expenditure were kerosene (72.7%) and soap & washing powder (90.9%). With more than 50% of Nigeria’s populationreported to be below the poverty line, it begs the question of where more than 70% of its households find the money to buy that much recharge cards or even find it in their budgets to purchase them in the first place. Much more revealing is how much they spend.

 

The mean expenditure on phone recharge cards by more than 70% (about the same percentage of its population supposedly living below the poverty line) of Nigeria’s households is 20,874 Nigerian Naira (140 US dollars). Isn’t the much-touted poverty line 1.25 US dollars a day and thus 37.5 US dollars a month? So if we summed up those non-food items that more than 70% of the country’s households spend money on (soap & washing powder, kerosene, and recharge cards), one gets a sense of the typical expenditure of the average Nigerian. The NBS reports monthly mean expenditure of Nigeria’s households on those items as follows: kerosene (6,660 naira (US$44)), soap & washing powder (5,510 naira (US$37)), and as earlier highlighted, US$140 on recharge cards. Thus, Nigerians spend more than 200 US dollars (US$221) on non-food items every month. That is approximately 6 times the poverty line. And one is not aware that they’ve gone hungry as a result.

 

A consumables, services (or in fact aspirational goods) multinational company thus looking to invest in the country (or sub-continent) before the above data was available would have come to the most erroneous decision that there was not enough consumer spending power to warrant a major capital allocation. This is why some of the international corporates already invested on the sub-continent do their own consumer research; earning bountiful profits as a result of course. And who in their right minds would make it widely known that there was such bountiful harvest to be had in what one widely read magazine once dubbed “the hopeless continent”. Well, the cat is out of the bag as they say. The world now knows of the opportunities that abound in Africa. The narratives (or questions) therefore these days about SSA opportunities are not so much if? But where? When? How long? Is it sustainable? How do I manage risks? So if the world is genuinely determined to reduce inequality and increase economic and financial inclusion on the continent, simple! Invest more. Increased investment in the various sectors of the continent’s economies is definitely one way to increase the inclusivity of its continuing high growth.

 

A point to note, however, is how the Africa’s economic evolution has been counterintuitive. Typically an economy should evolve from a primary extractive industry base to manufacturing & construction (secondary industry) and eventually services (tertiary industry). In Africa, the extractive industry remains dominant. In countries where some progress has been made, it has largely been in the services sector (with relatively fewer jobs created). The development of a manufacturing-led economy thus remains a continuing struggle for most countries on the continent. It is a significant factor in one’s view for why SSA’s high growth has not been as inclusive as it could (or should) be. So, another measure to addressing the inclusion question is for African governments and their partners to implement policies aimed at building a strong industrial base. The one policy area that has the most potential of achieving this would be a disproportionate focus on ramping up the continent’s power production capacity. No amount of investments in the continent’s power sector is too much. Of course, it needs to be pointed out that it is the labour-intensive type of manufacturing that is pertinent for Africa at this time.

Why Africa’s rise has not been inclusive; or has it? Part I #Africa, #Nigeria, #WEF, #MDGs, #PovertyAlleviation

The World Bank reports 7 of the 10 most unequal countries in the world are in Sub-Saharan Africa (SSA). Why, some ask, has Africa’s high GDP growth of at least 5% over the past decade not taken as many people as should be the case out of poverty? The question is increasingly being raised as it is now almost certain that poverty would not have been halved by 2015 as envisaged by the United Nations’ Millennium Development Goals (MDGs). Data from the World Bank shows poverty incidence on the sub-continent in 1990 of 56.5% only reduced by 8 percentage points to 48.5% in 2010. The troubling paradox comes against the backdrop of the increasing number of US dollar billionaires on the continent. According to Forbes magazine, the wealth of Africa’s richest man, Aliko Dangote, increased more than 8 times to USD25 billion in 2014 (36% of which was acquired over the past year) from USD3.3 billion in 2008 when he debuted on Forbes’ billionaires list. Yet during that period (2008-10), poverty incidence in Sub-Saharan Africa only reduced by 0.7ppts to 48.5 in 2010 from 49.2 in 2008. Ventures Africa magazine actually reckons Africa’s billionaires have at least USD143 billion in total wealth. That is at least 11% of SSA’s 2013 GDP of USD1.3 trillion.

Incidentally, most of these estimates are quite conservative since they don’t include undocumented (or hidden) and informal wealth acquired or stolen by former dictators and corrupt government functionaries. For instance, the Tana High Level Forum on African Security estimates that at least USD1.8 trillion was illegally acquired and removed from Africa between 1970 and 2009. That is twice (2 times) SSA’s 2009 GDP of USD897 million. Another report jointly authored by the African Development Bank (AfDB) and Global Financial Integrity puts cumulative illicit flows out of Africa between 1980 and 2009 at USD1.2 trillion to USD1.4 trillion. These estimates are not inflation and opportunity cost adjusted by the way. In other words, if the inflation rate during the period were to be considered, the figure could be much more staggering. Never mind the other immeasurable and exponential benefits that could have accrued from spending on education, infrastructure and social grants during this period. In fact, if we assumed that USD1 trillion to USD2 trillion was the wealth accumulated between 1980 and 2009 and further assumed that USD33 billion to USD67 billion was the amount of wealth created each year, the future value using SSA’s average inflation rate of 18% for the same period amounts to USD26 trillion to USD53 trillion. That is 20 to 40 times SSA’s 2013 GDP (and 35% to 70% of the World’s 2013 GDP)! If you think these figures border on exaggeration, let us look at another example. Africa’s largest economy, Nigeria (39% of SSA GDP), earned at least USD643 billion (1.3 times its rebased 2013 GDP) between 1980 and 2009 from crude oil. That is 32-64% of the assumed USD1 trillion to USD2 trillion accumulated wealth in the sub-continent during the period. And Nigeria is just one of 45 countries in Sub-Saharan Africa. Clearly, the inequality gap in Africa has not been for a dearth of resources.

The staggering inequality gap in SSA is certainly a source of worry for its richest. A week before the 2014 WEF on Africa that the continent’s richest man is also co-chairing, Aliko Dangote announced an endowment of USD1.2 billion (c. 5% of his wealth) to his “Dangote Foundation” (founded in 1994) to support education, health and youth empowerment in Nigeria. The foundation’s model is largely based on a concept that is increasingly gaining attention in development circles; cash transfer programmes – according to Forbes, the Dangote Foundation disburses 50-80 US dollars in cash to Nigeria’s poor rural women and youths to start small businesses. Initiatives such as this, if emulated by the many formal (and even more informal or shadow economy) billionaires in Africa would go a long way in accelerating poverty reduction in Africa.

In its upcoming planned two-part 2015 Report on Africa, the World Bank would assess the state of poverty and inequality in Africa and also provide suggestions on how to accelerate poverty reduction on the continent. At a briefing during the Centre for the Study of African Economies (CSAE) Conference of the University of Oxford in March 2014, its officials highlighted their preliminary thoughts on how they reckon Africa’s high growth could be more broadly shared. They include the maintenance of strong macroeconomic discipline, building better human and physical capital, promoting growth in places and sectors where the poor are and the creation of social protection and promotion systems that enable them to be shared. That part about social protection and promotion systems is increasingly gaining resonance amongst officials of the bank and other development experts. Another highly regarded economist at the conference wondered if it was not an attempt at a “latin-americanization” of Africa; a not-so-veiled reference to the likely motivation of the esteemed economists for wanting to experiment with conditional cash transfers (CCTs) in Sub-Saharan Africa because of the relative success of a similar programme in Latin America (Brazil in particular). Its research showed families systematically invested part of the CCTs they received in human and physical capital and even saved as well. It is thus likely the Bretton Woods institution is now convinced the same policy could be adapted for Africa. Simply put, the World Bank reckons CCTs are a real policy option; in addition to sustained economic growth and increased agricultural productivity of course. A significant caveat though is that the potential success of such a policy would be contingent on good governance. Incidentally, that caveat may actually be the key to accelerating poverty reduction in Africa. Most (if not all) of past poverty reduction interventions in Africa have failed principally because of poor governance and corruption.

Cash transfers wouldn’t necessarily constitute an innovation in Africa, however. South Africa devotes a significant portion of its yearly budget to social assistance programmes. Its success with these programmes remain mixed with some critics arguing it has created a culture of dependence and remains a significant point of difference between the country’s ruling and opposition parties. According to South Africa’s Economic Policy Research Institute, social grants helped reduce the poverty rate in the country – for its lowest poverty line set at 131.27 South African Rand (ZAR131.27) in 1993 and ZAR497.45 (approximately 50 US dollars) in 2013 – to 38 percent in 2013 from 45 percent in 1993. So, there is evidence that supports the case for CT/CCT interventions. However, in the same period, South Africa’s unemployment rate increased to 25 percent in 2013 from 20 percent in 1994. A balanced view therefore would likely be that it should be one of a bouquet of policy interventions aimed at accelerating poverty reduction on the continent. To one’s mind, however, the focus should be on good governance. It is the foundation that all policy interventions must build on if they are to succeed.