O’Neill: Nigerian Leaders Have to Start Taking Things Seriously

O’Neill: Nigerian Leaders Have to Start Taking Things Seriously

With so much investor attention now focused on the frontier markets, renowned economist and former Chairman of the Asset Management Division of Goldman Sachs Group, Mr. Jim O’Neill, who coined the term BRIC, an acronym that stands for Brazil, Russia, India and China, has identified new emerging economic powerhouses, comprising Mexico, Indonesia, Nigeria and Turkey, better known as the MINTs. In this interview with Obinna Chima, O’Neill marvelled at the entrepreneurial spirit of Nigerians, especially those in Lagos, as he spoke about the country’s economic potential and other factors that influenced the inclusion of Nigeria as one of the countries to watch in the 21st century. Excerpts:
Why are you in Nigeria?

I am here with the BBC as part of a radio documentary series. I am traveling round what I call the MINTs – Mexico, Indonesia, Nigeria and Turkey. After the BRICs – Brazil, Russia, India, China – comes the MINTs. We are trying to explore how genuine the opportunities are and what the degree of challenges surrounding the known problems about the future of each of Mexico, Indonesia, Nigeria and Turkey. As I am sure that you know that in 2004, I came up with the term Next-11 to describe the endless enquiries about why just the four BRIC countries, why not Turkey, why not Mexico, why not Africa and those four MINT countries are four of the Next-11, countries with the largest population after the BRICs. So fairly, if they explore the productivity potentials that their large population gives them, then they have huge potentials. I thought instead of including South Africa as part of this group, I decided to focus on countries with already more than one per cent of global GDP and kind of developed. So I said why not kick it (South Africa) out and bring Nigeria in, which actually gave rise to MINT. Besides, Nigeria seems pretty exciting to me, so that is why we are here. I have travelled to the four countries but I am pretty excited about the opportunities Nigeria has to offer.

So what is your impression of Nigeria?

On each of the four places I travelled, I tried to test my mind and I tried to get the BBC producer to think as well. Coming from a financial background, part of the way I often think about life is not just what it seems, it is how it seems compared to your previous expectations or compared to the consensus expectations. The single biggest thing in my head which is particularly prevalent in Lagos is the scale of creativity and ingenuity of people and that really gives Nigeria an edge. I don’t think a lot of other largely populated emerging countries have that and frankly, not all developed countries have that. One of the things that really distinguish the United States from everywhere else in the world is that you have all these free thinkers who are not scared of getting things wrong and want to carry on with innovation. This country (Nigeria) has that and it is even deeper than I realised in the one week I spent here. We actually interviewed some of the people that are doing things around that space and when you move around and see people doing things, you realise it is an important part of Nigeria’s fabric and if that could be harnessed properly for everybody’s collective interest and for the country, that will be a huge advantage. Certainly, I did not experience that in the other three MINT countries and frankly in anywhere in Europe or Japan. It is something the United States has and the United Kingdom has a bit as well; that would be the biggest positive. The other thing is you’ve got a power failure almost every hour, but they have reached an agreement to try and do something to dramatically change the power situation which to me is going to have a positive impact. In my opinion from a macro perspective, dealing with that power thing is probably the biggest obvious challenge.
In terms of other challenges, I cannot understand why the leadership itself doesn’t try to work to a more orderly daily schedule. Of course, it is the characteristics of every Nigerian. People kind of turn up for meetings vaguely as on the same day the day meeting was arranged. To me, that’s a really bad thing for how a country can live, if it wants to advance. But the leadership lives by the same standard. But I don’t think if you want to compete and participate with the best in the world that is good enough. If I were President Goodluck Jonathan, I would say from next week, every single member of my cabinet, myself included; whatever our daily schedule is, we are going to stick to it. That is, every meeting goes on time and finishes on time and if it doesn’t start on time, there is going to be a penalty.  That will make everybody in the country know that, that is the standard they expect from people because that really is quite disappointing. I had to speak at a big conference here and it was kind of random where anybody would stand and start speaking. I am used to attending conferences all over the world and I don’t know any country in the world that does things like that. There are obviously all other issues like crime, security, theft, and I am worried about those things.

So apart from our shoddy scheduling and the issue of the quality of leadership, what more do you think Nigeria must do to actually become one of the biggest economies in 10 to 20 years from now?

There are two aspects of your question I would like to touch on because it emerged during this MINT trip. It is quite an interesting opportunistic moment for Nigeria. Just as the BRIC group became a political club some years after, I knew particularly from Mexico, that for the other three that are part of the G-20, they are already having discussions about whether they can explore things together. That is, the MIT in MINTs – Mexico, Indonesia and Turkey. Interestingly, each of the three countries share very complex but diverse trade ties and so they are quite similar countries in that sense, and of course, Mexico and Turkey have similar levels of wealth. But the interesting part for Nigeria is that voluntarily, a Mexican, I don’t think I should mention who he is, said he thought Nigeria is the only country that should be in the G-20, which is a very interesting thing. Nigeria has, in my judgment, just as much justification, if not more than South Africa, to be in the G-20. Nigeria is 20 per cent of the continent’s population, it is in the middle of sub-Saharan Africa and of course, even with the GDP revision that is coming, it is already going to be the same size with South Africa. Also, Nigeria is potentially bigger.

Are you talking about Nigeria representing Africa in the G-20?

No, to represent itself as a systematically important economic country in the world, that is what being in the G-20 means and not to represent anybody else. But the reason I raised that in this context is that if you are going to be part of this type of club, you have to start behaving by that kind of standards. Which means if the country wants to be a member of the G-20 and stand at that standard, the leadership has to start taking some of those things more seriously, which is what I said about trying to conduct themselves more orderly.

But what role does the civil society and the electorate have to play in all this?

Don’t forget that I am a big fan of the Chinese economy and so that is a complex question. Many people are surprised to hear me say this, but I do believe that at some stage in economic development, it is not that obvious to me that democracy necessarily delivers the wealth that people want. If you compare China with India, since I cam about the BRIC acronym, China has gone from $1.5 trillion to $9 trillion and India has gone from about $500 billion to less than $2 trillion. I think it has been a lot easier for China to deliver lots of the important things that cause rise in development by not being a democracy. What is important for so many developing countries including Nigeria is infrastructure. If they want to have a proper road system, they have to put it in. It very much impinges on peoples’ democratic rights and it is a complex argument. So with that caveat, if you turn to Nigeria, there is no simple answer because there is this vicious relationship between your people and the elected leaders.

The difference is that in China, they have a communist system, but here, the alternative to democracy is military rule which actually led to our decline. So do you think the military is a better alternative, because I don’t think so.

Of course not! You have encouraged me to raise something that was at the back of my mind. You have to remember that Nigeria has a relatively young democracy and it is easy for so many of those developed countries to talk about the standards of governance and structure of institutions, but you can’t do that overnight. So in Nigeria, we have to respect that you need time and we want people in Nigeria to obviously understand that when they are making voting decisions, elected officials that will make a better stance on bringing development should be considered. Don’t get me wrong, I am not saying that by admiring China you can’t have democracy in emerging countries. I am just saying that you (Nigeria) have to think simply and big to get these things done quickly, which is partly why I said why does President Jonathan not just symbolically send that kind of message. A second thing in my head is to deal with the oil theft and the idiotic cost for the nation of the personal security of wealthy and business people. Why not undertake some kind of national advertising campaign to make all 170 million Nigerians realise that the price for those two dreadful acts of crime is higher consumer goods for everybody and no power supply. I spent a day in Port Harcourt and flew over where the oil theft is taking place and I thought if Nigeria didn’t have such kind of thing going on, it would have been a bit easier to generate power. But most Nigerians don’t think there is a link between the two. In Nigeria, family seems to be a big thing, so why can’t mothers and fathers make sure their kids don’t go on the wrong path and make them realise that if they get involved in hijacking of cars and affect the workers of a company, it is going to result in that company paying huge amount of money for security. If it is a consumer goods company, that probably would end up costing you more in the shop.

Jim O Neil, Former Chairman Of The Asset Management Division of Goldman Sachs Group

Jim O Neil, Former Chairman Of The Asset Management Division of Goldman Sachs Group

The Nigerian government recently set up a Sovereign Wealth Fund (SWF), do you think that can influence our status as a MINT?

I don’t think the existence of a SWF is particularly relevant for your position within the MINTs. The SWF in itself, I think is a good idea. Another way of looking at Nigeria is that it is commodity producer and it has all the issues every commodity producing country faces, which frankly, for most of them usually end in disaster. But the reason why the SWF is interesting is because one of the wealthiest countries in the world, Norway, probably has the best SWF in terms of its structure and governance and they are genuinely raising returns for every citizen of the country. That means when oil runs out in Norway, it won’t matter. So to have a SWF, if it is doing well, it is a fantastic idea for an oil producing country. It is really a good idea. But I don’t think it means anything with respect to Nigeria’s membership of the MINTs as such.

But for a country with a huge infrastructure deficit, when we compare it with Norway, you find out that Norway doesn’t have the kind of problem. So do you think it makes economic sense to be saving so much money with the huge infrastructure deficit that we have?

Most countries that are dependent on oil commodities waste the money because it results in a lot of corruption. So if it is done properly and the people behind it are sincere, it may well be better for the country than having it in something that is supposedly going into infrastructure, but may just get lost to illegal payments to people in public offices. As part of my trip, I was taken to Abuja to see roads that were supposed to have been finished a decade ago. So there is more money for infrastructure in principle, but enough of it would be squandered on a few privileged public officials who would benefit from it. But the concept of a SWF is a really good thing for a commodity producing country.

Back to the MINTs, how many other countries have you been to?

This (Nigeria) is like a celebration day; this is my last day in the fourth country.

So if you are to compare and contrast the four MINT countries, what would be your assessment?

The whole experience was fantastic and because of the nature of what we do. I think in each of the four, I got to understand the countries a lot more than when I was at Goldman Sachs. So it was fantastic. Of course by nature, I am always comparing experiences because I have moved around for almost seven weeks, which is part of why I am so tired. But there are several levels to compare and contrast and one of my favorite ones was Lagos, which I have done with a number of people. Which city do you think has the most traffic congestion among Istanbul, Mexico City, Jakarta and Lagos? If you do a random survey of 100 of your readers, you may have a big majority say Lagos. But from my sophisticated experience of travelling to these countries; moving around the capitals, Jakarta was the worst. Traffic in Jakarta is absolutely terrible and the traffic situation in Lagos is probably better than Mexico City. Lagos doesn’t seem as bad as the image projected out there. But the traffic in Port Harcourt is horrible, while Abuja seems like Washington DC to me, because even during the peak of rush hour on a Monday, there was not much traffic. So that is my observation. The big thing I will say going back to the positives is that among the four countries, there is nothing like the entrepreneurial spirit here. So one of the things I am thinking of doing in my post-Goldman Sachs life and when I finish with this project are more visits and perhaps investing in each of these countries or in the emerging world. I mean here, you can get active in it really easily just as the other three, but I wouldn’t dream of doing that in Russia. I would be worried about the business laws and others.

And in terms of returns on investment, do you think it will be much higher here?

Well, I hope that is true because normally higher returns require more risk. But the opportunities, when I think of the role that technology is playing in the global society and some of the challenges that Nigeria faces, the potential returns from technology enhancing investments here is absolutely generous. So I am very interested in personally looking at some of these things. But it seems to me a lot more obvious that one can invest in those things here now than you can probably do in Indonesia, Turkey or Mexico. So that is one big thing in my head. On the negative side, you know I have travelled around the world for business for 30 years, when I used to travel to Mexico 20 years ago, I used to have strong security and vehicles to move around, but I don’t think you need that in Mexico anymore.

Did you use that here in Nigeria?

Yes, it was the only country of the four countries where I used security. I have been interacting with the BBC and it is quite interesting to know that the rigour that was applied ahead of the trip was with much more level of diligence here. But the Mexico thing shows Nigeria can get out of its security challenges. It seems to be sort of generally accepted here, but it doesn’t have to be. I personally believe there must be some symbolic things that the government and leadership can do to make people realise the consequence.

Finally, why did you decide to narrow your focus to the MINTs instead of the Next-11? After all, countries like Pakistan and Iran have a lot of similarities with Nigeria.

I can imagine I am going to get the same answer I got post-BRICs and post-MINTs. The year after the BRIC thing started to become big, that was exactly what the Mexicans asked. So I can imagine in January, when they get some of the BBC coverage, I am going to hear a lot of people in Pakistan saying why not them, a lot of people Philippine saying why not them. Truthfully, one part of the answer is because I can only go to a few countries. I couldn’t go to all the Next-11 for practical reasons. The second reason, which is more serious, is that three of the countries already account for more than one per cent of global GDP and Nigeria is the only one that does not account for one per cent of global GDP, and none of the rest of the Next-11 are close, except South Korea, which in my opinion should be regarded as a developed country. So Nigeria is the odd one out among the MINTs because it probably accounts for less than half per cent of global GDP. Global GDP is about $70 trillion.

But when we rebase our GDP, will that not take Nigeria’s GDP to one per cent of global GDP?

No. I understand the rebasing would take you (Nigeria) to about $350 billion and that will still be half per cent of global GDP. So that was why I never regarded South Africa being among the BRICs.

Source: http://www.thisdaylive.com/articles/o-neill-nigerian-leaders-have-to-start-taking-things-seriously/165685/

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