Nigeria’s economic growth is slowing because spirit of enterprise and entrepreneurship is not at the right state – Utomi

Patrick Okedinachi Utomi is a globally-acclaimed thought-leader. His political and economic theories have helped businesses and economies make wise investment decisions that positively impacted their bottom lines. Utomi, a Political Economist, in this no-hold-barred exclusive interview with ZEBULON AGOMUO and JOSHUA BASSEY, took a critical look at the economy and the state of the nation. Excerpts:

We are surprised to see you seated here; we thought you would be cooling off your feet somewhere based on the threat of arrest over your plan to float the shadow government. So, have you chickened out from going ahead with the shadow government that you plotted?

There was a meeting of the shadow cabinet yesterday. I was preparing a press release for yesterday’s meeting. In fact, we have had meetings every other week for the last couple of months. By the way, it’s not something we’re floating. We’ve had a shadow cabinet for years. And one of the conversations that I had on this matter takes the story back to the time of President Yar’Adua. Because back then when President Yar’Adua tried to invite me to join his cabinet, I told him that it would not be fair for me to have just started a shadow cabinet to help monitor his government and grow our democracy and then I leave and join his government.

And to be fair to him, it was very persuasive, more than two hours of conversation which he tried to say to me that I could make more impact from the inside. And I gave him the pros and cons of that. And I told him about states in post-colonial Africa where a strong voice is drawn into government, squashed, and the contributions are lost. And he tried to convince me that that would not be the case and so on and so forth. But that’s a story for another day. So now, I think the government people said they were taking the path of civility.

They’re going to go to court. So, they went to court. And we have been in the courts to discuss the matter. Indeed, the presiding judge essentially indicated that the case was without precedent. And so, he invited ‘Amicus Curiae’, six SANs from six different political zones of the country to submit to him their own views on the matter. And that has been done. And his ruling will come on the 29th of September.

“If you’re travelling to get business good; but let me tell you that the biggest way of getting business to come to any country is by word of mouth.”

Was it actually a problem or a challenge of understanding what you intended to do? Or the government was afraid you were going to destabilise the system?

I don’t know. You have to ask them.

The INEC last week came out to say that the Julius Abure tenor as the Labour Party’s national chairman has expired. At least, you have not told us you have left the Labour Party; so, we still believe you are a member of the party. What hope does that development hold for the party?

Well, I think that it was just clarifying something everybody knew a long time ago. Unfortunately, in Nigeria, politics; for some reasons – I don’t understand it: Playing games with people. Our politicians should be straightforward, transparent, seek to advance the common good rather than play games for the purposes of power. I think that the whole Labour Party thing, because I was a very critical part of making that come together, when we were pushing the idea of a third force. I hit on the fact that the Labour Congress or the Labour movement needed to be a very critical part of this organisation that would pay attention to the plight of the worker to production, because this country’s major problem is that it does not produce. If we’re going to have a party that’s going to pay attention to production; workers are critical stakeholders in the production process, and so, that party necessarily had to incorporate labour. So, I began to reach out to the then NLC president, Ayuba Waba, who held dozens of meetings in his office in Abuja, and we then decided to build a coalition of parties that would be the base for this our third force. But just in the last minute, one of the stakeholders in our conversations (Femi Falana, SAN) just said that we can literally retake the Labour Party, and he got this court ruling that required for Abure and Co. to come and sort some things out with other roles as well, until I guess, we were surprised by what happened in the elections. So, suddenly, all the small boys in Labour became big men, and people began to scramble for them, and then they behaved badly.

Prof, in the last Saturday’s by-election in 16 constituencies across 12 states; the ADC is being derided for not winning any seat. The question we want to ask you as a member of the Coalition is, kindly make us understand the place of the Coalition in that particular election?

Well, as far as I know, the Coalition is not even in place yet. There is a legacy party, the ADC, and the idea is to use the ADC as a platform for building this broad coalition. And so, it does not seem to me appropriate to begin to talk about the Coalition when it hasn’t really come alive. But more importantly, from what I hear, I mean, honestly, I didn’t pay much attention to the whole thing. From what I hear, I think those who abuse the electoral process did their utmost best to use it to show, you see, we’ve told them they’re going nowhere. I wish people could focus on governance in Nigeria instead of this permanent politics, which is corrupt and not honest. They’re killing the country.

Now, some people think that the most challenging part of the Coalition will be or will come when it’s time for the selection of the presidential candidates. You are an insider and not just a member. Do you see anything that suggests that there will be a crisis in time of choosing the flag bearer?

I don’t see why there will be a crisis if the policies are clear, transparent, the processes are followed, outcomes will be self-evident. So, I don’t see why there will be a crisis because of a process of choice. That’s what political parties are about.

Well, as rightly said, it’s a coalition that is still forming. The legacy party, the ADC, is there and some of the arrowheads of the coalition are still in their parties, like the former presidential candidate of Labour Party, Peter Obi. And recently, Peter Obi promised and pledged that if he was given the opportunity to run on any party and if elected, he would do only four years of one term, which many people have doubted so much. Could you please provide us any background or the reasons why you think that there has been this preponderance of doubt?

Yeah, I was going to say, first of all, it shows how little attention people pay to details of matters. I was actually not surprised at all to hear Peter Obi say that because for years before the last election, Peter Obi’s mantra as one of the first things he would try to do if he was elected in 2023 is to ensure that we go to a one-term rotational presidency. That was his mantra. In 2002, 2001, he talked about this, that if he was elected, what he would do is move quickly to one five-year term, rotating across the geopolitical zones. So, why would anybody begin now to say, oh, they doubt. He said it long before this scenario came up. So, you will see that people are mischief-makers. By the way, I don’t know why this obsession with two terms. ICAN has a one-term, this thing rotates, everybody seems to be happy, it’s going on. Why is this obsession with spending eight years doing nothing? Because most of them do nothing, just destroy a country in eight years. I personally would actually vote for a mandatory one-term. Not my idea, but it’s Peter’s idea, and I would support it, not because it’s his idea, but because it doesn’t make sense in the face of this obsession with two terms. Non-performing people, wasting the lives of other people for eight years; I think after four or five years, you should move on, let some new thinking try their bit.

It would seem that politicking came too early in this dispensation. It started even one year after the inauguration. So, what danger does this pose to us as a nation?

I will liken it to how we used to deal with the problem of the budget cycle in Nigeria back in those pre-SAP years. Most companies that run in Nigeria actually had a window of less than six months to operate, because first of all, they will announce the budget January 1 or whatever day or year they did that. Then for three months, the Customs will be trying to determine, is that what they said in the budget? So, companies won’t be able to take any action. They are still wanting to see what Customs and Co are like; three months will pass. Then they move. Then the projections start about the next budget, three months to the end of the year. So, companies had only six months to actually do anything. And, imagine what that did to competitiveness in Nigeria compared to, say, Ghana or somewhere else. We’ve brought it to politics now. We campaign, campaign, then this charade that we typically call elections takes place. Then we’ll spend the next one year going to court. Then as soon as we finish the last court selection, we immediately go into the next election. Look at Nigeria, poorly governed, and people are paying the price, but they don’t seem to realise it.

There is this sing-song going on, particularly from the North East. Some groups are calling on the former president, Goodluck Jonathan, to accept to run again. It’s also an offshoot of the unbelief or doubt of what Peter Obi is saying, if he will be able to live up to it. They said, okay, we are more comfortable with someone who had done one term before. Let him come, and this clamour is gaining ground. What is really happening from your reading?

Well, there are all kinds of perspectives. There will always be perspectives. There is a very prominent northern historian who has actually said that there will be legal issues with Jonathan running because he’s been sworn in twice, and the constitution basically allows you to be sworn in only twice. So, putting that legal matter aside, I think Goodluck Jonathan should be man enough to make his own decision whether he wants to do that or not. But I read a piece that advised him to be careful with the “Ides of March”, so to speak, because they can drag him out and mess him up totally. Right now, he’s built a reputation that can power him as a global statesman and all of that, and live off of it. But when he comes back, he could just ruin everything and go into history a cripple.

Let’s look at the area of economy now. The President, Bola Ahmed Tinubu, said he’s targeting a $1 trillion economy by 2030. From where we are today and how we are growing, what is your projection? And what must be done to achieve that lofty dream?

I don’t want to give myself another un-requiring headache on numbers. I want to focus on the quality of life for Nigerians. That’s what economic growth really means. And you know what leads to quality of life and what leads to economic growth. It’s production. Nigeria has one of the lowest productivity in the world on all dimensions. You can just go and check. How do we raise that? How do we create jobs? Because it’s when people are employed as a result of production that they have income that lifts the quality of their life. How many jobs have we created? Real jobs. What are the impediments to production? I have a number of problems, both with the fundamental and theoretical on these matters. Look, unless the spirit of enterprise, unless entrepreneurship is at a certain state, you don’t really get economic growth. And I can tell you about my engagement with this problem through the years, from the base in terms of knowledge and capacity, the assessment of theory, maybe even the assessment of theory, to the travel to policy and implementation of these things.

If you look at the theories of development and the challenge of growth in Africa, you will go back to modernization; traditional modern dichotomy, where at the time of independence for many people modernisation was being more like America, for example, being more industrialised, being more this or more that. And there were varieties. One of my old professors was Bill Siffin, and his colleagues were quite famous for what was called the Bazaar-Canteen model, that is, a stage in the modernization process. You know, there’s a mixture of the bazaar and the canteen and all of that. Now, I have taken time, part of my new book is looking at all these models and why they did not really lead to major growth in Africa. And I came to the conclusion that they have not paid enough attention to the place of entrepreneurship and markets. How do you create markets and make markets work? I began to engage with this when the Lagos Business School was being founded. I said to my colleagues, okay, our general strategy is to build a school that would train ethical, socially-responsible managers for Africa. However, we can’t grow an economy by just producing managers for the UAC and some multinational banks. We grow an economy by producing entrepreneurs. It was a very troubled conversation because, understandably, that was the strategy of general management. But I pressured and pressured enough that my colleagues gave way and we created the Centre for Entrepreneurship Studies (CES), which is now the Enterprise Development Centre (EDC). And we know the impact that EDC has had. And so, that gives me some relief that I became the first teacher of Entrepreneurship at the Lagos Business School, just because of the passion that I had for recognizing that that’s the way to grow an economy.

Then you look at the system. How can the system then support entrepreneurs? You find that the system, that was part of a failure of the World Bank’s Social Adjustment Programme. It wanted banks to make the entry barriers into banking to be open so that banks will pool savings and lend for investment and production. Fantastic. In principle, that’s what is supposed to happen. But the banks find easy ways of making money without actually leading to production. They argue about these things till today. I mean, banking is not supposed to be a fancy young man wearing fancy shirts and ties and snuffing and scoffing at people. And yet, he has done nothing to actually grow the economy. They just round-roll money, buy, sell, do this, do that.

But the truth is, if we don’t do the right thing, the economy is going nowhere. Eventually, everybody will die. If that source of the recycled money, oil, doesn’t come. So, what do we do to make sure that before that happens, we’re actually in real growth mode? I haven’t, as a person, tried to take it on. I say, okay, let me find groups of young entrepreneurs. Many of whom are coming out of my programmes, MBA classes and all of that. Find ways of supporting them. I can’t say what I’ve lost in trying to do that. But I actually wrote a book, ‘Business Angel as a Missionary’, to showcase some of those companies, real case studies of those companies that were founded in my living room. And a couple of them, I had to provide bank guarantees, do this, that. I paid off tens of millions of Naira in loans of the ones that failed. Because businesses will always fail; sometimes caused by the government. Some of them did business, the government just never paid them. And the bank said, you must provide a guarantee. And I scrambled. I’ll tell you a very funny story.

I’m making the point that the banking system basically failed economic growth and some of us who, because of passion and heart, have paid a price while working for it. But that’s how the economy grows. Look, institutions are at the heart of development. If you look at the work institutions have allowed in America, as an example, reforms of land tenure systems, what Hernando de Soto talks about, ‘The Mystery of Capital’, you will understand why I’m angry when I talk about the National Assembly. Those laws came out of legislatures. Okay, how do you ensure that young people who have ideas can have access to capital? Smart legislators sit and begin to think, okay, so he loses money because something went wrong. Is he now dead forever? EFCC locking him up and all of that? No. So you have bankruptcy laws. You can file Chapter 11, because you still have a good head, there was a mistake, there was an error of judgment, and you lost that money. You are not dead. You can begin again. Even judges, and that’s why I feel sad. I can tell you that I have had a situation of not operating my account, any account in Nigeria for more than eight months, because I gave a young entrepreneur a guarantee of a small amount of money that can be sorted out. Not just that he is blocked, but even me, I’m blocked from doing business at all. All my accounts, through my BVN. I have to say to myself, this can never happen in America, which is why America grows. And if you read ‘Saving Capitalism from the Capitalists’ by Rajan and Zingales, that is precisely part of the point that they make in that book, and they give credit to one Supreme Court judge called Louis Brandeis for the set of laws that makes it easier for a young person without capital to start in America than anywhere else in the world.

There are these funds, they have all kinds of names, and they’re called a Vulture Fund that you can go to and borrow money to look for a dying company to revive. There are funds like a search fund, where a young man, because he went to a great business school like Walter, Harvard, or Kellogg, and walks up to, no collateral, nothing, and that fund gets a collection of doctors, 100 or so doctors. There’s this smart young man who went to, you know, he’s looking to search for a business he can build, and he can borrow $100,000 without any security, just to use to search. He doesn’t have a business yet. Then he searches, then he finds one, and he writes a business plan and comes back, and he funds security to these doctors who now put up $20,000 each, gets a couple of million dollars, buys a factory. Three, four years later, they may lose it all, or they may each walk away with two, three million dollars in return on that $20,000 investment. I can give you several examples that have come from that. This is why all kinds of things, including venture capital, all those are breezing in America, and have made that country rich, but here the judiciary doesn’t even understand business and tries to kill anybody who tries to do business. The legislature is worse, then the executive branch, it’s as if it was set up to prevent business from making progress. My 1998 book, ‘Managing Uncertainty: The Model of Business Strategy’ is also called the 3E Framework that shows that the biggest challenge to business in Nigeria is regulatory risk. The model has what we call predatory acts of government and public officials as something that institutions need to hold away from the entrepreneur, for business to thrive.

Not understanding these things have kept us from growing. And so, when you see the government obsesses itself with stabilisation policies, you know that, it’s good to listen to the Brenton Wood institutions, but they have their reason for being. Their reason for being is not necessarily your prosperity.

Their reason for being is to ensure stability in the global economic systems. And so, if you exercise some of the stabilisation policies that allow their money to come in and leave as they like, you think, yes, they will clap for you and say, hey, now when we were in Nigeria, you see, Naira is stable, it is.

But your people are not growing. Nothing is happening to your country. Their system is maintained. We’ve got to understand these things because these same Bretton Wood guys were in the same classes with us in America and they were not half as smart as many of our people. So, really, having love for your country and caring for your people make all the difference. And having understanding because some people may have love in their heart, care for their people, but don’t understand these games, which is why I always go back to Mahathir Mohamad, Malaysia, because I was there during the financial crisis. I remember flying from Hong Kong during and after the World Bank meeting in 1997 to Kuala Lumpur, spending a little time in Bank Negara, Malaysia, which is a central bank, then going on to Jakarta, Indonesia from that, comparing how Mahathir responded to the IMF and the World Bank and the friction created between him and his deputy prime minister, Anwar Ibrahim, who was finance minister, who he had to force out of government in the manner of speaking at that time, even though they later went to collaborate again. But the point remains that years after, even the IMF agreed that Mahathir made the better choice than they were recommending.

Read also: Pat Utomi defends shadow govt, says initiative not rebellion but “act of duty”

Let’s take you on the seeming mismatch between numbers and the reality on ground in terms of how those numbers affect the lives of ordinary citizens of Nigeria. Like NBS will always release GDP, inflation rates trending down and all that. But when you look at how they affect the ordinary Nigerian citizen, you seem not to agree with such numbers. You are an economist of repute; may we really understand what you think about some of these numbers that we see in light of the rebased GDP?

Yeah, these numbers are helpful for you to track. You will go back to the famous American adage or whatever, that there are lies, there are damn lies, there are statistics. You can use statistics to say anything that you want to say. So, I would look more at things like HDIs, Human Development Index.

I would look more at those kinds of trends that track quality of life in society, because it’s about people. So, I don’t begrudge anybody playing with statistics, but I hope that people are intelligent enough to explain that those statistics are only as useful as this, in this circumstance.

It would be easier to say that as an opposition member, you may not see anything good happening in the current government. But if you look around since May 23, 2023, can we say that all is gloom?

Well, first of all, I have to remind you that most of the time from May 29, 1999 till a few weeks ago, I’ve actually been living outside of the country and just coming to visit. But that doesn’t mean I don’t keep on top of what’s going on here. Of course, you can never have everything gloomy in any situation. But the goal of not just opposition, of the intellectual, of a good social observer is, could it be better? Could it be different? Could it be optimal? And then you see how society is moving into a class order. To give you a very important example that is going on, you can say that education in Nigeria has collapsed. I mean, everybody can talk about how bad it is, and it is very bad. But you can come up and say, hey, look at this young boy coming out of Babcock, how they built companies that have become unicorns, and so on and so forth.

So, how can you say the education system has collapsed? But you are all telling the truth. And this is what must guide us. Today, there is a crisis of admission into Nigerian University.

If you are looking at the elite private universities- I happen to be associated with one of them. I teach in it. And the pressure, people are calling you, every big man is calling you, because everybody is now trying to get their kid into the classroom.

Why don’t they want their children to go to the university, the university that we went to? I went to university in Nigeria 50 years ago, graduates of Nigerian universities were so hot around the world. Why is it different today? What was responsible for it coming from that time to this time? And I will tell you a small story about that. One day in an education conference that was taking place at the LBS, I was telling the story of the quality of higher education in Nigeria, and I quoted the Ashby Commission, Eric Ashby, the British educator, who chaired the commission for review of higher education in Nigeria, saying that the quality of higher education in Nigeria was as good as the very best in the world.

And one of the young ladies in the class, said you people have come again. It was always so good in the 60s, and if it was so good, how come those of you who had that education made such a mess of the country? I thought, okay, nice young woman, you’re probably right. But do you know, do your arithmetic, check properly, how many of those people who got that education have actually run Nigeria? The truth was that by the time they were coming out with that education, Nigeria was in the hands of a group of soldiers who didn’t know what they were doing, really.

And they frustrated those people enough that one by one, they began to leave the country. And then, inspired by that encounter, I wrote an op-ed piece in The Guardian that was titled, ‘The Generation That Left Town.’ And really, truly, that generation that got the education left Nigeria, majorly.

You just have some who just got tired, and just say, okay, we’ll suffer in this university until we retire. And so, they stayed in their campus, but most left town. I recall one of the doctors who was lamenting that his class from UCH had a reunion in the U.S., and it turned out not one single member of that graduating class still lived in Nigeria. Not one. And a young friend of mine who left his medical school class from UNN in 1980-something, they had a reunion. And these were the women from their class, and I don’t remember the number again he gave now. Only three of them are still in Nigeria. But somehow, Nigeria honestly makes light of this. It should not be made light of. My friend, Chris Ngige, very unthoughtfully, in my view, said once that, ah, they can leave; we will groom more doctors, and all of that. Look, Mexico is just across the border from the United States. Mexico trains some very fine doctors. They are paid far less than the doctors in America. But very few Mexican doctors cross into America. It’s easier for them.
They may not be as well paid as American doctors, but they are well paid enough not to want the trouble of living in America. They’re very happy to live in their country. With India, we have seen those doctors return and create a new economy, and we are all now going there.

Unfortunately, we don’t have the appropriate incentives to do the same thing with our country. Today, 70 percent of all the black doctors in America are Nigerians. It’s a nice thing to note that many of them are pharmacists, I mean, not far from where I lived the last two years in the United States, around Maryland, many of all the pharmacists in the state of Maryland are Nigerians, not just black, all Nigerian pharmacists.

Now, how does a nation develop without its human capital in this age where knowledge is everything? If you look at China, what happened to China after Deng since 1978 principle of knowledge drives the world. Look at what is going on in China. Look at Vietnam, where they are going, and all of that.

But we have failed to make the appropriate investment in education. I mean, look at the parity between what politicians make and what teachers or lecturers make. Look at the parity.

Again, I repeat all the time, Professor Elebute used to remind us that he became professor of medicine at the University of Lagos back in 1963. His salary was higher than that of the prime minister of Nigeria. What happened? Where did we miss the road? How did we get here? Because incentives is what economics is about.

If the incentives are upside down, you get the result that you get. So, you get more politicians hanging around. You get more people who want to be businessmen through politics. They become politicians. But those who are professionals, who are well-trained, who are doctors, find that we can’t manage in that society. So, they head out.

President Bola Tinubu has been accused of travelling too often. Some people say that it would be nice if he stays at home to address the challenges at home. But there are some others who will say, in fact, he’s not even travelling enough; that the image of the country is so bad out there that he needs to travel and do the marketing; and he’s going there to attract investors; and that given the stories that they hear outside there, that it may be difficult for those investors to come on their own volition. On which of these divides are you?

Yeah, I don’t really care about how many numbers you travel or don’t travel. What matters is, what are you travelling for? Look, one of the reasons I say that, and I’m just about to turn 70, in spite of what that means for me personally, whatever ambition I may also have nursed, nobody over age 70 should ever be elected or allowed to be President of a country like Nigeria.

These guys are travelling half the time to see their doctors. So, this is an excuse. So, of course, aides will rationalise it and say anything that makes people think that something is happening. So, I really don’t buy it. If you’re travelling to get business good; but let me tell you that the biggest way of getting business to come to any country is by word of mouth. From those who are in the country, businessmen, they go, and say to others, ah, see that’s the way. But when they’re leaving, and we know they’re leaving, you can go check, all the big multinationals, they are leaving. Whereas even in oil and gas where we have these extraordinary hydrocarbons, possibilities. If they’re not leaving Nigeria, they’re leaving onshore prospecting.

I mean, the one that really honestly shocked me, all the strategy analysis that I used to suggest that even if everybody left Nigeria or Africa, excuse me, one company that would not leave was Procter & Gamble. Why did I say so? Look, as a market for soap, diapers, and stuff, the U.S. is saturated. Everybody who can use soap has already used soap in America.

And diapers, the population is not evolving, growing, and all that. So naturally, it’s in two or three countries like Nigeria with a growing population, that’s where Procter & Gamble helps. This was before Procter & Gamble came to Nigeria. That’s when I used to do this analysis. And then they came to hear that they are leaving; tells you, as it is said in my village ‘it is not ordinary eye’. It means that the things are so bad that whatever they make here amounts to nothing compared to their effort. So, it’s better for them to leave.

What is your major concern as we draw closer to another round of general election in 2027?

My major concern is the possibilities that democracy may be losing its legitimating attributes through elections. Everybody in Nigeria I speak to today, thinks that the electoral process does not work, thinks that elections are all rigged. He doesn’t want to bother to vote at the next election. For many politicians, whether people vote or not they do not bother. They say, if I just get 50 of my people, we’ll vote ourselves. When the people begin to realise that they are slaves, one small thing, anarchy will descend. So, politicians need to be wiser than they are right now.

You know, because I do think that they may be grossly underestimating. You saw what happened during the #EndSARS and all of that. People are angry in Nigeria, and history teaches us that when people are as angry as they are in Nigeria, anything can happen. We just pray to God that it does not blow back so that we can have the stability to rebuild and grow Nigeria; if we don’t manage it, sorry, bye-bye.