Saturday, January 31, 2009

Hon Dimeji Bankole, Public Servants and Ministers

Honourable Dimeji Bankole noted at 6th Annual Trust Dialogue organised by Media Trust Limited, publishers of Daily Trust, that civil servants steal the bulk of unspent funds that should have been returned to the government treasury. In fact he was quoted has saying “………we have now discovered that each year, N700 billion is lost in the hands of civil servants. The money was never remitted to government coffers”. He observed that while politicians “come and go”, civil servants are a permanent feature of government bureaucracy. And that no Permanent Secretary had been put on trial for any financial misdeed.

I’m not entirely sure about the motivation behind these statements. Is it to score cheap political goals? or create an impression that politicians are no more corrupt than civil servants? For the Speaker to say civil servants are ‘corrupt’, is like a-pot-calling-a-kettle ‘black’. It is common knowledge that the Nigerian public service is as corrupt is it can get. The Nigerian Civil Service evolved from the colonial service which was established by the British authorities as the administrative machinery for governing Nigeria. However, it is unfortunate that currently 70% of its workforce is made up of unskilled staff (only 1.7% is in the strategic thinking directorate). It is saddled with the problem of “ghost” workers, symptomatic of poor personnel records and payroll control systems. And to make matters worse, we currently have Ministries, Departments and Agencies (MDAs) with neither Mission nor Vision Statements, or clear corporate and individual schedules of duties. The Nigerian civil service is perhaps one of the most poorly paid in the world. A Permanent Secretary in the Federal Service earns an average of $1000 a month!

The creation of Bureau of Public Service Reform in 2003 by Ex-President Obasanjo was aimed at dealing with the some of the structural decay in the civil service mentioned earlier. It is however sad to say that, six years on these problems still remains. Probably, the ‘reformers’ themselves needed to be reformed. Unfortunately, the public service reform has not lumped into the President Yar’adua ‘7-point agenda’ - which is currently a waste of time.

My question to Hon. Bankole is, what has the National Assembly done to strengthen and re-vitalise the civil service? In a democracy, the Legislature should be responsible for holding the Executive and Public Service accountable. However, instead of that being the case, Nigerian legislators collude with civil servants to loot the treasury. The same National Assembly members have been guilt of sharing ‘unspent funds’ with civil servants – as seen recently in the case of Ministry of Health and Sen. Iyabo Obasanjo.

Also in the same vein, he alleged that three ex-ministers, (whose names he refused to divulge) sacrificed the opportunity of a foreign direct investment because the investors preferred to execute the projects themselves under the Build, Operate and Transfer (BOT) model and were not prepared to release the funds to the ministries related to the projects. His word I quote “There was a consortium that came to Nigeria last year. They all own banks and have already facilitated meeting with the three ministers after the meeting with the President. They were to bring $14 billion and to show the faith they were ready to block-off $1 billion for the government even before any transaction takes place between those ministries and the consortium. However, from the date of the meeting with the ministries till last week, it’s about eight months there was no movement, none whatsoever in fact, the three ministries totally discouraged us from having access to this fund, which is being offered without interest to build Nigerian infrastructure. I don’t understand that. I don’t know if you understand it. Well, I made bold to say that those ministers are no longer manning the ministries or are they in government anymore”.

It is also not surprising that our Ministers bungle foreign direct investments that would have benefitted that nation. In a situation when you have a President, who seems to care less and ‘nonentity’ as Ministers (all in the name of federal character) then you can’t expect any magic.

The democratic structure establishes a system of ‘checks and balances’. When the Executive makes mistakes, it is the role of the Legislature to ask the right questions. However, what we see is bickering about personal allowances. When you expect the National Assembly to scrutinise Ministers prior to their appointment, they simply ask them to ‘take a bow and leave’!

Despite been a former Senator and First Lady, Hilary Clinton was subjected to serious questioning at the US Senate prior to confirmation of her confirmation as Secretary of State. She was made to answer questions relating to her husband’s businesses and perceived conflicts of interest that may arise as a result of her appointment. In Nigeria, such a personality wouldn’t even be required to attend the Senate.

The National Assembly has demonstrated lack of competence and vision since its inception. Commentators who thought the election of Bankole as Speaker was breath of fresh air (considering his age and exposure), are now beginning to see that, he his just a new wine in an old bottle.. Honourable members have embarked on series of probes, inquiries etc in the 18 months, none of which has yielded any result till date.

It is time the Legislature starts fulfilling its role in holding the government accountable. It should help empower our democratic structure through an objective, open and transparent constitutional review process.

Thursday, January 22, 2009

Atiku Vs Kaka

Two important events this week puts Nigeria as a nation and its citizenry into perspective. This week saw the biggest financial offer to be made to a footballer, and the unexpected visit of the former Vice-President Abubakar Atiku to his erstwhile boss Chief Olusegun Obasanjo. Although these events are not in anyway related but I want to draw upon their commonality.

Take the case of the Brazilian footballer Kaka, Manchester City Football Club offered to pay AC Milan 150 million pounds for Kaka and put him on a weekly wage of 250,000 pounds. For goodness sake, is any player in the world worth 250,000 pounds? Anyway that’s a discussion for another day.

For any 26 year-old from Brazil, this type of offer is very tempting. I’m sure that there are only very few (and I repeat – very few) people in the world who will not be tempted by such financial inducement. However following series of speculations, the young man decided to stay put in Milan. He was quoted as saying ‘everything tells him to stay at Milan’. Which to him means everything is not all about money. He feels his future lies with Milan because he believes in the culture, mentality and ideology of the football club. People say ‘why will he want to leave a team like Milan for Manchester City - who are currently struggling just above the relegation zone’. My answer to that is - why not? At 26, he could probably have moved (subject to all types of ‘get out’ clauses), sign a three year contract, and if things don’t work out leave for another club. By doing so, he would have cashed in on the lucrative offer and make enough money to set him up for the rest of his life. The reality is, there is no guarantee that he will win more trophies in Milan shirt. What if (God forbids) he stays in Milan and his career is cut short due to injury?

On the other hand, we have an old generation of politicians in Nigeria who seem to have lost their principles and are now busy realigning and positioning themselves for next general elections in 2011. Considering what we witnessed in the last days of the Obasanjo regime, who would have thought that a day will come when Atiku will pay a visit to Obasanjo. While I don’t want to be drawn into speculations about the reasons for his visit, it is interesting to note the positive ‘spin’ been put on the visit.It is alleged that the meeting is in the nation’s interest. If the former President really had the interest of the nation in his heart, why did he choose to appoint successor who is considered to be very ill. If reports circulating in the foreign media are to be believed, President Yar’Adua is currently planning and extensive medical leave overseas. I need not to remind you of the saga that unfolded during his last ‘lesser hajj’ to Saudi Arabia. The state of the nation, which Atiku and Obasanjo now intend to correct, was as a result of their selfish and vindictive attitude.

Don’t get me wrong, I’m not saying that Atiku and Obasanjo shouldn’t reconcile, however it shouldn’t be under any false pretence of saving the nation. Which nation?. Atiku needs to decide if he wants to continue to be in the opposition or realign with his old cohorts. It beats my imagination that, a leader of an opposition party will be meeting leaders of the government in power without the knowledge of his political followers. If Atiku truly believes in the principles of the Action Congress as an opposition party, then he should please stick with it.

I must say that most of our politicians are ‘political prostitutes’, they jump from one party to the other in order to satisfy self-greed and ego. This is not surprising because none of our current political parties is has any political ideology. Has anyone ever asked the PDP or AC leaders what the parties stood for? Which social agenda are they pursuing? What are their economic principles? No wonder, 18 months into Yar’Adua administration we are still talking about seven-point agenda. The only achievements of the government so far are ‘policy reversals’. In western democracies, people affiliate with political parties based on principles and ideologies. Political parties in Nigeria are all about getting into government.

The refusal of Kaka to join Man City demonstrates a high level of ‘self principle’ and discipline we wouldn’t expect from a 26 year-old who has the world at his feet. Despite all the inducements, the young man stuck to what he believed in. Discipline and principle is however lacking among Nigerian political-class who will do anything to be in power in order to further advance their corrupt and fraudulent lifestyles. It is time we stand up against these ‘cabals’ and stop them from perpetuating themselves in power, either directly or through their proxies. Our country has to move beyond these individuals because they have failed us in every facet of life.

Yes we can!

Saturday, January 17, 2009

Lagos CCTV Project

It was interesting to read about the plans by the Lagos State Government to commence a full operation of 24-hour surveillance cameras in Lagos. The cameras are aimed at monitoring daily situation across the metropolis through a network of security and command centres. The multi-million naira initiative which is to be executed under the Safe City Project is being financed through the Security Trust Fund of the state government.

It may be recalled that Governor Babatunde Fashola of Lagos State, at the commemoration of his 400 days in office disclosed plans to install Close Circuit Television (CCTV) across the state as part of efforts to particularly reduce crime rate.

There is no doubt that most of us have either been or know someone who has been a victim of crime. The importance of CCTV cameras in solving complex criminal investigations cannot be overemphasised. CCTV cameras proved to be a useful tool during the July 2005 London and more recent Mumbai terrorist attacks investigations. While Lagos has not been under any form of terrorist threat, CCTV cameras will not doubt prove useful in tracking down criminal elements within our society. Having said all that, this project might end up to be a waste of time and hard earned resources considering the current state of the Nigeria Police Force.

What is point of having a multi-million naira ‘state-of-the-art’ crime monitoring systems but an inept and dysfunctional law enforcement agency? Unfortunately, the Nigeria Police Force has suffered years of neglect and currently lacks the skills and expertise to combat modern day crime. I don’t even think the organisation has a Forensic department. In modern day crime investigation, the matching of DNA has provided clues to solving complex crime. How many forensic science experts do we have in the NPF? More so, it has become quite embarrassing in recent times when crime investigators have had to be flown in from overseas to help the Nigerian police. The unsolved murder investigations of the Late Chief Bola Ige and Funsho Williams are typical examples. A network of CCTV cameras is only one part of the equation in modern day criminal investigation. While it might give you a lead, you still need an efficient and capable police organisation to undertake further investigation.

I appreciate the fact that the state of the Nigerian Police is the fault of the Governor and that he has no control on the structure of the Police Force, what it does or how it functions. Therefore without such control, the Governor faces a huge challenge in galvanising all the law enforcement agencies together – which is the only the proposed security monitoring and control centre can function effectively. This leads to the second issue about the current structure of the NPF itself.

I fully support those who have been clamouring for the creation of State Police in the spirit of true Federalism, and not for self interest. In parts of the world where true Federalism is actually been practised, the States are total in control of their ‘destiny’. Each state of the federation is allowed to have its own Police Force. A Federal Police is however responsible for serious crime such as drug trafficking, fraud, terrorism and so on. Until such framework is put in place and enshrined in our constitution, projects such as this will either not see the light of the day or stand the test of time. It will either be jettisoned by lack of support from the Federal Government or not be effective.

It might be worthwhile for our legislators to use the proposed review of nation’s constitution as an opportunity to clamour for true Federalism, instead than jostling for state creation – which to me in reality means additional bite of the ‘national cake’. There is no sense having a Governor as the ‘Chief Security Officer’ of his state but the State Police Commissioner takes orders from the Inspector-General, who reports directly to the President. We have seen cases in the last political dispensation were the Police have been used to intimidate State Governors, when they ran into problems with their Godfathers in Aso Rock under the guise of ‘anti-corruption’ crusade.

It might better if the money raised from the private sector for this project is used towards creation of a traffic control centre, which can then gradually be transformed into a joint traffic and security control centre. As both require similar technology, I believe this will serve more useful purpose in the interim until the NPF sorts out its acts.

Thursday, January 15, 2009

A Nation's Cash Cow

A ‘cash cow’ is a product or a business unit that generates unusually high profit margins: so high that it is responsible for a large amount of a company's operating profit. This profit far exceeds the amount necessary to maintain the cash cow business, and the excess is used by the business for other purposes.

Risks of a ‘cash cow’ include complacency, with management ignoring the need for change as market forces erode value; and ongoing turf wars between the management in charge of the ‘cash cow’ and other managers trying to garner support for other products.

The above definitions succinctly describe the economic situation in Nigeria with particular regards to crude oil, which has become the nation’s ‘cash cow’ over the last few decades.
It is common knowledge that Nigeria has earned phenomenal revenue from crude oil sales, which culminated in the creation of the Excess Crude Account by the Obasanjo administration in 2004. Funds were drawn from the Excess Crude Account in the past to pay for special projects and debt servicing. During Obasanjo’s administration, about $12.4bn was withdrawn from the account to offset Nigeria’s debt to the Paris Club; $17milllion for two additional days for the 2006 National Population Census; and more than $2.3billion for Niger Delta Power Plants. Whilst it’s not the reason for my comments, it is worth noting that the so-called ‘Power Projects’ is still a dog’s breakfast!

It is not surprising that Nigeria has now become so complacent, even though market forces (ie the current global economic downturn) has eroded the value of crude oil from its peak of $147 to $40 per barrel. Whilst other countries (United Arab Emirates as an example) has looking at ways of generating revenue and reduce their dependence on crude oil, economic managers in Nigeria cannot see beyond their nose. Dubai is arguably the current largest construction site in the world, with the Monarch working extremely hard to turn the City into one of the world’s favourite tourist destination. The decision to diversify was based on the advice received on the depletion of its oil reserves and hence, the need to explore alternative ways of raising revenues. Dubai is now famous for its shopping malls and upmarket fashion label shops.

A report recently released on world commodities, did show that over the last decade, Cocoa has remained the most stable commodity. In fact, the price of Cocoa is trading at its highest for 37 years. I remember vividly been taught about ‘cash crops’ (Cocoa, Rubber etc) during my primary education. I don’t think at that point I knew the meaning of ‘crude oil’. The infrastructure built in the Old Western Region by the Late Obafemi Awolowo was mainly financed through Cocoa export. Instead of our leaders think outside the box, and use the current global economic crisis to retrace their steps, they are still busy speculating on future oil prices.
The 2009 budget is based on $45, which is higher than the current oil trading price. Which means the 2009 budget might be in deficit from the word ‘go’. Members of the Senate Committee on Budget Appropriation jumped for joy last week when oil price rose from $40 - $48 as a result of the Israeli-Palestinian crisis. The Senate Committee Chairman was quoted as saying the “benchmark for the 2009 budget should be been raised higher, and he went as far as speculating that oil will be trading at $50 and rise to $100 within the next two months”. When did honourable members of the Senate become ‘oil trading experts’?

Governance in the states of the federation (probably with the exception of Lagos) goes to sleep for 29 days everyone month, only for State executives to turn up in Abuja at the end of the month to collect their share of nation ‘booty’ from the Excess Crude Account.

It is my understanding that the Federal, State and Local Government shared N106billion in December alone from the account. The highest recipients were the oil-producing states, River (N15.5billion) Akwa Ibom (N4.5billion), Delta (N3billion), Bayelsa (N1.8billion). What has been the development in these states over the last eight years apart from allegation and counter allegation of corruption and fraud. It will be interesting to see how the states’ budget stacks up against the guaranteed monthly return from the Excess Crude Account. I’m sure their budget is 100% based on future oil revenue allocation. When a State receives N15.5billion monthly, why will the Governor be interested in ‘internal generated revenue’?

Anyway, as the Yoruba says ‘igba kan ko ni lo bi orere’ meaning ‘nothing last forever’, except for the Grace of the Almighty God. However in the meantime, it is business as usual – we keep milking the ‘cash cow’.

Lagos Rail Mass Transit Project

Lagos with an estimated population of 17million or 9million (whichever you believe!) is one of the so-called ‘megacities’ without a mass transit system. The population of state has grown significantly over the last few decades mainly due to urban migration. The high concentration of manufacturing, commercial and financial industries has continued to fuel the growth and traffic congestion in the city.

The Lagos Metropolitan Area Transport Authority as part of its effort to tackle congestion recently developed a Rail Master Plan, which proposes an extensive network of rail lines connecting most parts of Lagos metropolitan area. The urban rail system is proposed to be implemented through a Public Private Partnership scheme (PPP).

It is heartening to see for the first time – since the civilian administration of Alhaji Lateef Kayode Jakande – we will see a State Administrator with a vision of how to deal with the menace of traffic congestion in Lagos State. Much commendation should also be given to the Ex-Governor Asiwaju Bola Tinubu for setting up the necessary institutional framework that is currently driving the state's transport agenda.

Whilst I fully support the principle of delivering of transport infrastructure through Public –Private Partnerships, however if not properly negotiated it can leave the government out of pocket and not serve any public good.

PPP describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. PPP has been used as a mechanism to deliver major transport infrastructure (toll roads, light rail etc) in most parts of the western world. It is based on the principle of transferring investment risk to the private sector, and also on the notion that delivery and operation of infrastructure and services can be undertaken 'cheaper and smarter' by the private sector, thus providing cost savings to the Government coffers. However, this is not always the case, as there are examples of 'how not to undertake a PPP'.

With specific regards to the Lagos rail project, the private sector is expected to Design and Build the infrastructure which will be financed by the State government. The operation of the system is also expected to undertaken by the private sector (under a 25 year concession). In return, the private sector operator will be expected to provide rolling stock, maintenance depot, and control systems.

One major concern with the Lagos Rail Mass Transit PPP is the liberty that will be given to the private sector operator to set fares and collect revenue. If the private operator is given absolute control over pricing, this could impact on passengers negatively and consequently affect patronage. It is plausible to assume that the private sector will be keen to recover its operating cost, repay bank loans and also make a return on their investment. It is common knowledge that construction of rail system is an expensive expenditure and the maintenance cost (rolling stock, staff, etc) can be significant. This is the fundamental difference between investment in road and rail infrastructure. If the private sector operator is allowed to charge passengers the real cost of operating the service plus their profit margin, it is very likely that the fares will be set at a cost that will be prohibitive to commuters. This begs the question of - ' who will use the service'. I'm sure it's not the government's agenda to provide high-quality public transport system only for the 'middle class'. There is no where in the world where passenger rail service operates at a profit – that is cover its real cost. Even in a densely populated city like Hong Kong with a populaton of 7 million and an efficient mass rapid transit system - which carries about 3 million passengers a day. The Hong Kong transport authority makes more money from leasing air rights over train station than it collects from the fare box. Also as an example, the cost recovery on public transport in the state of Queensland, Australia is just 30%.

Public transport is a social utility that is needed to provide access to services, jobs etc and help encourage social inclusion. There are social equity issues that need to be considered in planning of transport systems. Provision of public transport cannot be allowed to operate in a totally deregulated environment. This is the reason why Government around the world subsidize public transport provision. While one could argue that public transport subsidy defeats the purpose of a PPP, I tend to believe that it is in the best interest of the Government to subsidise the rail service when it becomes operational. The subsidies should however be linked to service level agreement and minimum service standards that will be expected from the operator.
On the other hand, if the fare levels are set too low without Govt top-up, the operator will be running the services at a loss. This could result in the private operator going into administration. If this happens, Govt will either have to 'bail-out' the company or take over the operation of the service. This could come at a significant cost to the State.

The delivery and operation of the proposed urban rail network can result in a situation, where different companies will be operating rail services on different parts of the network (that is, Blue Line – operator A, Red Line – operator B). This then brings me to the second issue of 'integrated ticketing' across the rail network. I will note that this also has an implication of fare pricing. The principle of having an integrated ticketing system is great, as this provides seamless travel journey. In fact, the integration should not be limited to rail; LAMATA should be looking at integrating the BRT Lite service as well. Having said that, giving operators total control on fare pricing and expecting integrated service across the network flies in the face of reality, and can result in price fixing by train operating companies. For passengers to enjoy the benefit of having an integrated ticketing system, LAMATA will need to have some control pricing structure.
Lastly, the issue of track maintenance seems unclear from the project briefing documents. Considering that part of the new rail line will be utilising the existing Nigeria Railways Corporation rail corridor, then one will assume that the NRC will be responsible for maintaining its own tracks. However, will the private operator be responsible for maintaining the new tracks or will it be the Govt through NRC?

Anyway, I believe the authorities involved in the negotiation of PPP contract will be brave enough to make sure that the Govt is getting 'value for money' from the PPP. Also, the social, economic, and safety interest of commuters should be central to the contract negotiations.