A considerable number of hypotheses have tried to explain Nigeria’s tenth-rate development performance which is evident in low human development indicators, unemployment crisis, industrialization deficit, infrastructural gap and rising poverty. However, little attention is paid to the factor of institutional extractiveness. Such institutional extractiveness was a hypothesis primarily advanced by Acemoglu and Robinson, in their book, ‘Why Nations Fail’. As such, this piece tries to contextualize the tenets of this hypothesis to Nigeria. This hypothesis has two scopes - the political institutional extractiveness and the economic institutional extractiveness. For the former, power has been concentrated in the hands of a few political elite who leverage on political patronage and resource extraction to maintain power. While for the latter, economic institutions have been historically structured by a generational set of elite to extract resources from the rest of the society for private gains, wealth consolidation and economic expansion. In actuality, the extractive economic institutions have been somewhat dependent on the extractive political institutions for their survival.
Albeit the details of the extractive economic and political institutions hypothesis vary under different circumstances. As Nigeria’s case shows, they are at the root of the country’s development challenges. First, the extractive facets of Nigerian economic institutions which have failed to invest in people and mobilize the talents and skills of a large number of citizens, have made wealth creation and technological innovation difficult. Education in the country has been facing immense challenges at the basic and secondary levels leading to the powerlessness of teenagers from the large section of the society to acquire the needed skills with which they can contribute to economic productivity and prosperity. This is the same in higher education institutions whereby tens of thousands of graduates, of which a majority of them possess limited skills due to acquired poor education are left jobless with inadequate provisions on how they can fit into the society economically. As such, new talents are not mobilized. Nigeria has many potential Zuckerbergs and Bill Gates who now roam the streets engaging in less productive economic activities.
The political and economical elite instead of investigating means to fix the educational system are rather maximizing the sector’s failure because they have little incentives to build, finance, and support schools/learners. They either send their wards to schools outside the country in Europe and the United States or flag-off private educational institutions themselves to further acquire wealth. In both instances, the public and civil servants and part of this elite, in most cases have to acquire the finances for such through corrupt means and patronage which are all under resource extraction. Upon the return of their wards from education overseas, they systematically fix them for employment in the lucrative government agencies and institutions or strategically in private investment.
These elites also extend such practice to the health sector, through frequent overseas trips always traveling to for health diagnosis and treatments, further creating a financial drain in the shambled health sector. The incentives to fix the both sectors have remained lacking since they can easily extract resources from the country and attend to their own needs in these areas. This has prevented the creation of a level playing ground for all citizens to aspire and contribute to economic prosperity, while discouraging the participation of a great mass of the population in more productive economic activities that make use of their talents and skills. Without leaving out the preponderating effect of crony capitalism; privatization under the Structural Adjustment Programme was marred by the government conceding state investments to close allies and cronies, turning state owned monopolies into privately owned monopolies, instead of increasing competition. Such crony capitalism was predominant during the military era, and has relatively continued under the democratic dispensation. In many cases, one must be closer to the political powers in order to have nationally impacting business(es) or expand investments through all manner of concessions. Even to the level of obtaining foreign exchange at cheaper means against a wider section of growing businesses in the country.
Furthermore, licenses to operate in certain economic sectors are only available to those closer to political offices, from oil exploration to the most recent exemplification of such - the power sector privatization saga of the last administration. The poor business climate has discouraged the entrance of new businesses with new technologies. Despite all manner of technological breakthroughs of young Nigerians, with which in a number of cases the Minister of Science and Technology unashamedly uses for advertorials while playing to the gallery, ways to tap into such have remained lacking. Such young businesses have to battle with acquiring capital, passing through backbreaking registration processes with relevant authorities and infrastructural gaps.
Secondarily, Nigeria’s constitutional democracy still retains extractive political institutions in a certain way. Power has remained in the hands of a few political elite who were myrmidons of past military governments or were able to tap into the military-civilian transition quite early. Also playing a huge role in the political institutional extractiveness is a political patronage trend driven by oil rents. Political intents are majorly toward extracting state resources through oil rents for private gains. Sub-national governments have remained extractive, less innovative, creative, and rather depend on oil rents (monthly allocations from Abuja) with which they have largely remained unaccountable for. State national assemblies are controlled by governors. At the national level, such political patronage games are being played to retain allies at all levels of government through contracts, political appointments etc. This has been intelligently transferred to electioneering, which has become heavily monetized, whereby the political class siphon public funds in preparation for electoral cycles, and keep the electorate in check through the contents of ‘stomach infrastructure’. This is the most terrible as it has constrained the possibility of electing office holders with a strong sense of national interest. Many of those with such interest have failed to ascend through the political structure and the few with such political pedigree are in bed with impedimenta such as - Godfathers to satisfy, loans to repay and several quarters to appeal, with a cabinet makeup of mediocre personalities. In furtherance, the political elite wielding power have set up economic activities to enrich themselves and augment their power at the expense of society.
Thirdly, of more surprising is the transferability element of this extraction. And in recent times, this could be showcased through the 2015 power exchange. The All Progressives Congress (APC) led administration made it to power, relegating the Peoples Democratic Party (PDP) that has been in power since the country’s third republic in 1999. They had the so called ‘change mantra’ and the citizenry expected a radical transposition in the manner things are done. However, the new administration had incentives to maintain the extractive political setting. This started with the constitution of a cabinet, while many expected a new breed of technocrats with less political baggages, President Buhari constituted his cabinet with political allies. Eradicating corruption, a mantra of his government has been poorly executed. Under his watch, political corruption has thrived while he selectionarily addressed the menace. Board appointments followed the same way - pleasing politicians, to the extent that even dead persons were named members. A new level of incompetence that even such a list was not properly examined before the appointments were finally made. Calls for President Buhari to rejig his cabinet has fell on deaf ears because of the fear of losing allies as the next electoral window approaches. The present administration has not done anything different from the previous PDP regimes it criticized. Rather, it has widened the net of resource extraction through hardcore sectionalism and nepotism.
Nigeria will find it difficult to economically prosper and develop under these institutional circumstances. A solution to this is a political upheaval which could translate to inclusive political institutions where entry level into politics is less monetized for the right minds to get elected and challenge the institutional extractiveness, reverse patronage politics and political corruption. Such can then result to inclusive economic institutions which will create a level playing field and invest in citizens to develop the right skills for economic prosperity than its extractive side that are structured to extract resources from the many by the few.
Chambers Umezulike is a Development Governance Expert, Researcher and Writer. He can be reached through email@example.com and on Twitter via @Prof_Umezulike