For the past six months I have served as a member of Nigerian President Obasanjo's Honorary International Investor Council (pro bono) and have had the opportunity during two meetings, one in London and most recently during two full days in Abuja, the capital, to spend a concentrated period of time with virtually all of the country's ministers, of which there are over 20 and who are similar to our cabinet secretaries.
I serve on this council with 8-10 other business leaders from the UK, South Africa, The Netherlands and Nigeria discussing in a frank informal setting the problems, challenges, disappointments and frustration as well as many successes that Nigeria has experienced since President Obasanjo was elected in 1999. He talked openly about the difficulties in turning a country around from fiscal crisis, deep-seated corruption, bureaucracy and obstacles faced daily in providing security, transportation, and sanitations for locals as well as visitors, and how to realize the vast potential of a country with 150 million people, the 10th largest in the world, and Lagos, its former capital, with 17 million -- the 10th largest city in the world. Every time they seem to take a step forward they are faced with a setback. Granted the price of oil, going to $70 a barrel, is helping them currently, but unlike the past their budget is based on $40 p/bl oil for 2006 and was based on $35 p/bl in 2005 with the rest used to rebuild the country's financial reserves which at year end was $30 bill (vs. $3.7 bill six years ago.)
The Government is tackling reform on a broad front. A much more prudent approach to economic management has resulted in macro-economic stability. The banking system has been overhauled. A Banking Act forced the consolidation of the banks to provide a critical mass of financial capability. As a result a 'wild west' of over eighty banks has been consolidated to less than twenty-five, operating to internationally recognized standards. And all banks are required to set aside 10% of their profits to provide equity for small- and medium-sized businesses.
As part of a civil-service reform program to streamline the bureaucracy, over 5,000 civil servants have been removed since the new administration came into power -- but new ones sprout up. In an effort to deal with power outages, a program is underway to double power capacity by the end of 2007 and triple it by 2010 -- but it will still not satisfy demand. An Economic and Financial Crimes Commission (EFCC) has been established to hunt down the corrupt, with even some States' Governors now under indictment -- but still others avoid convictions. We are all aware of the unsolicited fraudulent letters from Nigeria, the so-called '419' scams. Thousands of these illegal letters, faxes or Internet messages promising a share of a financial bonanza, which have been sent to unwary individuals around the world, have now been shut down, the money returned in many cases and the perpetrators sentenced -- but more still rise up.
The President, unlike other leaders, is open to criticism and faces his challenges and adversaries every day. Based on my observations he is a truly honest man who wants to improve the lot of his people. His task is enormous. The lack of managerial capacity, the lack of jobs, a large unemployed and undereducated work force which is restless and a tribal system with its chiefs which still prevail alongside a federal system all make it especially difficult to govern. Many of his ministers are highly educated and very impressive. They are implementing new technologies and new systems to change the culture of corruption, where one must pass through "multiple toll booths" to get goods across borders, much less through the country. Open bidding on all government contracts has been introduced, which is the equivalent of our sheet which opens all purchase to RFPs so no one can complain of underhanded contract awards. A policy of publishing each month in the newspapers exactly how much oil money has been sent to each mayor or governor has made local officials far more accountable for how they spend their money.
The country's natural resources are enormous. In addition to oil and gas, resources include solid minerals such as gold, lead, bitumen and on and on. Until now few of these vast unexplored solid mineral sites have been commercially developed.
In short, the reality of what Nigeria has accomplished and is accomplishing every day in the face of great odds is actually not bad. The recent $35 billion debt relief pushed ahead by the UK but accompanied by a payment of interest on the remaining outstanding loans will relieve a major pressure on the country resources and free up resources for badly needed health and education efforts. The recent BB ratings given by Fitch and Standard & Poors puts Nigeria on a par with countries such as Brazil, Venezuela, Ukraine, Vietnam and the Philippines
The perception of Nigeria, however -- which in the end is what counts in the court of world opinion -- has been dreadful, and it cannot be changed overnight. After all, it took over 10 years for New York City to overcome its negative perception and reality, but today it has the image of a place to visit and a place to do business. The key to New York's change was leadership, i.e., "tone at the top" and a sound fiscal policy. Thanks to the work of the Obasanjo government there are the beginnings of a change in international opinion towards Nigeria. In Transparency International's recent anti-corruption index, the country rose a full five places in one year, albeit from a low base. Nevertheless, until security is improved, political conflicts resolved and religious clashes curtailed, it will be hard to permanently change the outside perception of the country.
One of its greatest challenges, which remained unanswered until the recent Senate vote, was whether President Obasanjo would democratically step aside after his legal two terms in office, risking a serious setback to his many accomplishments, or whether he would support a change to the constitution to allow him another term to accomplish his programs, in effect undermining the democratic processes he has so diligently tried to instill in the country. It cannot have been an easy decision facing him -- and one which could have set the country back once again. The vote has been taken and as the President himself has said, the democratic process has been followed, the legislature has given its verdict and he accepts it. Whether it was ever his intention to take a third term -- and he never indicated his personal position on this -- he has been able to use the vote as an example of democracy in action -- and in doing do make a telling point to other African leaders. Keep tuned in. Nigeria is a powerhouse with enormous opportunities for progress and profits. It is Africa's largest country and the potential engine for capitalizing on the continent's inherent potential. In particular with its large national resources, Nigeria could be one of the giants of the next decade -- if it gets its act together.