June 20, 2009

Why govt policies implementations fail – Adedipe

By Moses Nosike
Dr. Biodun Adedipe is the Chief Consultant of B. Adedipe Associates Ltd. which specialises in management and financial consultations, environmental scanning and calibration, training, feasibility studies, recruitments, strategic planning and advisory services.



As a financial management consultant what does your association contribute to the economy?
Basically we help businesses to design and implement their business strategies which enables them to compete effectively anywhere they go in the world. Secondly, we help them to train their staff and we also engage in what I call policy advocacy, research and analysis in terms of not just helping companies but advising  governments without being invited. We do these  things regularly to help the economy grow.

To what would you attribute the causes of economic crisis in Nigeria?
I will start by saying there is not much to do especially with  lack of  ideas and political will to implement the ideas because if you go back  to the time of  independence, we have had one development plan or the other. There was Vision 2010 and now Vision 2020 . We have had  well articulated plans on many occasions on how to make the economy grow  but the problem has always been in the area of  implementation.

On   some of these occasions we have had  good policies  and  government  starts to implement  them, something would  happen  along the line and  government  would derail. So it is like every successful government comes to power and starts all over again. There is also this thing in Nigeria which is the fact that if  a President leaves office today and somebody else comes in, he does not see the need to continue   with the programmes  already initiated. He wants to initiate his own. So it’s like we are always starting over and  over again.

Now that doesn’t help any nation grow. We  have moved  on from there and we are talking about vision but have we really articulated the vision that all Nigerians will buy into? I’m not talking about Nigerians by nationality but stakeholders.  People are doing businesses  abroad but they don’t have connection with Nigeria. All of us are stakeholders and until all of these stakeholders buy into the vision, it will be difficult for leadership to get us to follow them to implement their  vision. Now, another  thing  that has hindered growth and development  in Nigeria is  that  any time we come up with a policy,  we don’t  sell it  to the people.

If  it is a matter of implementation, the policy maker doesn’t realise that he only makes policy but that the actual implementation of  the  policy lies with the stakeholders. For instance, when you import some goods and you are going to pay custom duty of some amount, that policy will only be successful to the extent that the two major stakeholders involved in that process, that is the custom department and the importer actually run according to that policy because they are the ones that will implement it being the giver and the collector.

If for any reason they couldn’t implement it, that policy will fail, which means some goods will come in at a less than an official tariff  . And alternatively ,some goods will be smuggled in without even paying any tariff at all. That will affect government revenue and also the market because now, whoever is able to bribe his way through to get  his goods  in  will be selling at a price less than what that policy was designed to make it to be.

When you increase tariff for some products for example, the idea is to make them expensive   and this is designed to discourage that  importer. When the man doesn’t pay tariff and that particular product gets into Nigeria, what the policy was designed to achieve will not be  achieved.

Invariably, the fact remains that I must recognise that when I design a policy as a policy maker, I must look at how it affects and impacts on the stakeholders and how are they likely to react. I will now take into account their  reactions. A way  of  doing it is getting them involved in the policy design process whereby before I make any pronouncement, I shout it  out on them to get their own opinions and views, so that by the time the policy comes out, they see it as their own policy, not the policy of people in government. That’s where policy implementation failure actually starts in Nigeria and that has been the bane of this economy.

In  recent times , when we started talking about reforms, you would discover that reforms  as a package to transform any economy is desirable  because it’s vital to  the world. And people are  made to  generally believe  in recent decades  that the way to go is free enterprise which is called capitalism where resources in terms Labour, Capital and every other resource freely move depending on where you mostly find them of worthy returns. Given such environment therefore, reforms simply means  that we want to encourage free enterprise  where people can freely decide where  to invest their resources, the kind of business they want to do.

It  is  prospective where even the job seeker decides which industry is going to seek for job depending on what his career objectives are. For instance if in Nigeria his career objective is to make much money, definitely  he has to look for job in the Bank, Oil sector, Telecoms. etc. because they pay well. But if he is talking about building a career because he wants to set a manufacturing outfit, he goes to the manufacturing industry despite the problem there, despite that they don’t pay as much as the ones mentioned above.

Giving such an environment, you relate it to what is happening in Nigeria. We started our reforms with so many paraphrases, Privatisation, Recapitalisation, Monetisation, deregulation, all of those policies are conceptually they are good, but the problem in Nigeria is that of implementation. Did we implement it the way it was supposed to have been implemented? No. Because for most of those policies when we started implementing them they were more towards the direction of what we call cronyism, cronyism means I’m making changes in the environment, but who are my friends and associates, let me those changes in such a way that it will benefit them.

There is well documented follow up of reform all over the world which is recognised by the world bank and every other multi-national agents that has been involved in reforms all over the world. And there is always that warning sounding for countries embarking on reforms that they must be care least you create an opportunity for cronyism. Now what that also does is that when you want to privatise say ok you have a public monopoly, on state own enterprise, if you’re carefully you eventually convert those state own enterprises to private owned.

But if they have monopoly status what you’re simply mean is converting a public monopoly into private monopoly which of course defeats the entire purpose of the reforms which is not what liberalisation stands for. Liberalisation says defined the rules and let anybody that can meet those conditions go into that business. But where you did it in such a way that it favours some people that is where you don’t get the full results and benefits of reforms.

This is what has happened in Nigeria. We started reforms quite alright, but we didn’t implement the weight to augment it. Invariably the reforms we did led to economic growth, but did not result in economic development.

Now the basic difference between them is this; when you talk about growth, you talk about the size of an economy, the economy has grown in size, right now over $200b gross domestic products. That is a fact factor where we were before reforms in 2004, that is goodness on its own. If you look around and see some industries like Telecoms it’s totally a different ball game today from what it was before the current 10 year democracy that we’re celebrating today.

The same thing applicable to the banking system. There has been reforms, consolidation where the number of few banks are bigger enough to take more transactions because of their size and capitalization, many entities and companies are willing now to do business with the Nigerian banks, good news.

Even the oil sector has grown in size and volume, given the favourable oil prices over the years until July 2008, and of course looking at the volume we’re producing not only did Nigeria increase in her prime reserve of borrowing over this period of 10 years, equally we’ve expanded the capacity to produce more. As we’re talking today Nigeria has the capacity of over 3 million barrel of crude oil per day. I understand we have capacity of 3.2m barrel of oil per day that we can produce, but how much are we producing and why? Now if you put all of these together, these are just a few evidences. You can pick several others in the area of macro economic statistics, external reserves hit close $58 billion before it started going down to where we are today about $45 billion.

Now you look at the exchange rate management system we made some improvement there until the latest crash. Now put all of these together, they tell you plainly Nigerian economy has grown quite aright. But the growth has not translated into development, which is the economic contemporary will call “trickle down effect of growth”. The idea is for economy to grow and then trickle down to create development, especially at the level of most vulnerable in the society, those that we refer to as the acting poor.

The acting poor are those who are working quite alright, earning income quite alright, but still the income they earn places them below poverty line. We call them the poor that are active. Some of them also are in business engaged in petty trade. Yes they are engaged, they are working, what economics called “ discharge on employment” they are working but what do they making out of it.

That is what we say that the economy has grown quite alright, but has not developed. But the question that should follow that is, why are we not developing? That’s why I inserted at the initial stage, that it’s because we have not been able to implement faithfully, the various plans, visions, documents for development over the years for self-fish interest. And because of this Nigerian malice that every leader that comes to office wants to initiate his own scheme. And we have an example even in some small African countries where they will have a succession plan whereby the man in office today knows quite well that he is carrying on the agenda of a man who was in the office 3, 10 tenure before his own and of course the person will take office years to come is already part of the system, is already being groomed.

So invariably that nation will natural develop because nobody is coming to impose his own personal vision. Rather it’s the vision of the nation which everybody buys into and queues into, and they are all work harder together to implement it. No wonder everybody including the world bank points to Botswana, something good is happening there why is it so? There’s nothing out of this world that the fact that as small as that economy is, having intently some peculiarities with Nigeria but it’s growing because there is a vision that belongs to the national and to the individual that everybody is committed to.

Many are losing jobs this days because business environment in Nigeria are weakening and forcing industries out of business, instead of expansion what do advise leadership of Nigeria?

It brings us back to the fundamental of any economy. There is no economy in this world that can grow by doing two things that Nigeria is doing. Nigeria has thrown her doors open and in the spirit of what is called the World Chain of Organisation (WCO), at least let there be borderless nations. Borderless nations means, any goods can be produced anywhere and be sold anywhere, which is thrown your border open let anything come in, which means there is no definition at what will be allowed to come in and what will be allowed to go out.

There is no nation in the world that has ever developed by keeping their borders open.  We can check the economic history of all the advanced nations, even the current emerging economies that are being celebrated all over the world today, the Greece, Russia, Brazil and China.

None of them became a force to reckon with by keeping her border open. One can set example with India. India when they started their development process, came up with a policy that was very clear. When it comes to clothing, if Indians want to wear clothes made in other countries, It is either you produce them in India and if you cannot  forget them. Whatever we can produce, we wear them, that is India. That’s how they started their textile industry. But today India is a formidable force when it comes to textile. The same thing they did with automobile.

They said from this point on, India will not import cars any longer, if it’s bicycle we can manufacture, let’s start riding bicycle. But today what’s happening, here in Nigerian roads, Tata cars.

Tata started as military vehicles moved on to passenger vehicle and they are doing very well. How about China, the same pattern, today China manufactures cars that are worthy and they are now competing with the rest of the world.  That’s the pattern that every nation develops. But our own you will hear the argument of Nigerians, it’s my money, I should have the freedom to spend my money anywhere and any how I like and that’s where the failure of leadership starts, because leadership itself must live by example. I can’t be encouraged to buy Nigerian made goods if government officials in Nigeria don’t buy Nigerian made goods.

If my leaders go on the Internet to order vehicles they will use as official cars, what will compel me as a Nigerian who has his own money not to do a similar thing. That’s where the whole thing starts. You’ve not defined clearly your national economic policy that says this the direction we’re going, we’re going to only use what we can produce especially in this particular area, if we have the capacity to produce this, that’s what everybody within the border is going to use.

Again, the other side of it is this, there is no nation that grows its real sector without the solid infrastructure base. But over the years, if look at government patternism in Nigeria, we’ve devoted more of government resources into a current expenditure rather than capital projects. Now with the commitment of resources to capital project is what keeps the infrastructure. Now we can pick so many examples without looking at the advanced countries. We can pick the example of Malaysia and South Korea to illustrate. Malaysia came to Nigeria in the early 60s, they took the palm fruit, but today Nigeria not only import palm oil from them, but surprisingly Nigeria import oil from Ghana next door here, which never was.

You take a look at South Korea, now we have trees here that we don’t even value which those guys copied. From the information I have, the Ajeokuta Steal Complex that we’ve constructed for many years. In short in 1988 I was involved in a study that looked at the Nigerian sub-sector and the stupid politics of G25 that made government take a decision that we’re going to scrap Ajeokuta because the technology is out modern. The same Ajeokuta we said we’re going to scrap in 1988 that is 21 years ago, South Korea came and took the exact replica design of Ajeokuta and built it, but South Korea not only produces ……….. we ride their cars here. What they copied here is what they put in their country and developed further.

Moses Nosike
In charge of Saturday Business Vanguard