Towards Economic Development of the North

Sa’ad A. Jijji

In July 2007, I published an article titled ‘Poverty in the North’ wherein I attempted to draw the attention of policy makers, politicians and members of the public to the alarming poverty situation in the North. Citing statistics from various sources, I attempted to amplify the obvious – that there is huge economic disparity between the Northern and Southern parts of Nigeria and that such disparity constitutes a drag on the progress of the nation. In the aftermath of the publication of that and other articles, a series of conferences were organized. Leadership Newspapers organised a conference on ‘De-Industrialisation of Northern Nigeria’ in March 2008 while the Conference of Northern States Chamber of Commerce organised a ‘Northern Nigeria Economic and Investment Summit’ in October, 2008. These two events provided me with a sense of what our leaders think of the current situation and what, if anything, is currently been done on the situation. I shall start by clarifying certain misconceptions I picked.

First, some Northerners (including some prominent ones) do not seem to fully appreciate the level of abject poverty in the North. They argue that the Northern economy is very informal as such levels of bank deposits is not a good measure of our level of economic activity. The argument is that the Northern economy is largely a cash-based. However, according to CBN 2008 Annual report, only 9.7% of Nigeria’s ‘Broad Money Supply’ – M2 (Economists jargon for total currency notes, coins and bank deposits in an economy) is outside the banking system. This reality is what made some bank executives conclude that overall bank deposit growth has peaked in Nigeria. The 23 million bank accounts currently in Nigeria simply account for the bulk of Nigeria’s money. It is not difficult to see this when you appreciate the amounts of money daily being pooled by the GSM companies. In today’s modern economy, physical cash cannot be a sign of strength. Furthermore, in 2007, an Economic Consultancy firm ‘Economic Associates’ published the first state by state decomposition of Nigeria’s Gross Domestic Product (GDP).  In that analysis, crop and livestock production, the major economic activities in the North, contribute only 31% of Nigeria’s GDP. The entire 19 states of the North (with 78% of Nigeria’s Landmass and 53% of the population) account for only 23% Nigeria’s GDP. According to that report, Kano state, which predictably led other northern states, constitute only 3.3% of Nigeria’s GDP. Taraba State led the rear with 0.25%. In contrast, 3 states in the South (Delta, Rivers and Lagos) constitute 36% of Nigeria’s GDP. On a per capita basis, the associated Annual Gross State Product of each indigene of Adamawa (N12,625), Plateau (N45,615) and Kaduna (N60,001) pales in comparison to the corresponding figure for Lagos (N188,716), Rivers (N409,997) and Bayelsa (N833,647). If you are thinking that crude oil production is skewing these numbers, then let’s look at revenue sharing. Using Federation Allocation Accounts Committee figures for June 2009 (shared in July) as released by the Federal Ministry of Finance, lets follow the flow of Nigeria’s wealth. June 2009 is useful because ‘Excess Crude Savings’ was also shared during the month. Let’s look at the allocation to states and local governments. In July, the entire 19 states of the North (with 53% of the population) collected a total of N44.6 billion or 39% of the allocation due to states. However, four states in the South (Rivers, Delta, Akwa Ibom and Lagos), with 16% of Nigeria’s population, collected approximately N33.4 billion or 30% of the federal allocation to states. The old Rivers State (now Rivers and Bayelsa states) collected 12% of the total allocation, same as the collection of the entire 6 states of the North East region. Akwa Ibom, same population as Niger, collected N9.8 billion which is approximately the same as the combined amount collected by Niger, Kano, Taraba and Benue states.  What this figures translate to is that while Governor Shekarau, in July 2009, collected on behalf of each indigene of Kano state the sum of N323, Governor Sylva, collected N2,613 for each Bayelsa indigene. You have to add up 5 indigenes of Kastina (N469) to get one indigene of Delta (N2,187). Even when you add up the share of local governments to that of the states, Kano State (N7.7b), with 44 LGAs and the largest population in the country is still 5th in share behind Akwa Ibom (N12.1b), Rivers (N12.1b), Delta (N10.5b) and Lagos (N10.1b). The LGA with the highest revenue share in the North (Nassarawa – Kano state) collected N188.9mill. which is roughly half of the N378.1mill. collected by Alimosho LGA in Lagos. Also useful to put in perspective that, Niger Delta Development Commission’s 2009 budget of N128.4 bill. is more than Kano state’s N108.7 bill. So when the former CBN Gov, Prof. Soludo, said that the entire 19 Northern states have less bank deposit than the South-South region alone, you may begin to appreciate the source of that disparity.

Related: NewsRescue- Poverty in the North – A “Mayday” Call

Second, some Northerners are convinced that the government of former President Obasanjo and the Banking consolidation program under the former CBN governor somehow accounts for the poverty in North. This is a rather simplistic argument. Poverty in the North predates Obasanjo’s and will outlive Yar’adua’s government. The problem is far more fundamental. Alhaji Falalu Bello in his excellent paper at the Leadership Conference believes the Northern economy ‘’… a consequence of various reforms introduced has been totally grounded…’. It may be true that President Obasanjo’s government has benefited more Southern elites than their Northern counterparts but looking at the fortunes of the average Nigerian, you are unlikely to tell the difference. It is fair to say that President Obasanjo’s government did not help the Northern poor, but then who has? Implicit in this blame game is the false assumption that if a Northerner is in power, the fortunes of the average Northerner will improve. Nothing in our history to support this. If political leadership leads to economic success, the North would have been the richest region in the country. Infact, Kastina state, with its enviable political, civil service and military fortunes, should have been the richest state. To illustrate the fallacy of this argument, let’s take one federal position that has been dominated by Northerners. Since the creation of the FCT in 1976, with the exception of the first Minister for Special Duties (Abuja), Late Ajose Adeogun, the leadership of the FCT Abuja has been monopolised by Northerners from John Kadiya to Adamu Aleiro. Yet as at February 2007, indigenes of the 5 South Eastern states of Nigeria own 73% of the allocated land in Abuja. As reported by This Day Newspaper on May 21, 2007, Nasir El-Rufai, the former FCT minister, gave these figures even as he emphasised that at the point of allocation, 68% of the land was allocated to indigenes of the 19 Northern states. We all know what happened in between.

There are many negatives to be said about Prof. Soludo’s consolidation program but it is simplistic to say he killed banking in the North. Even before consolidation, the so called ‘Northern Banks’ had the bulk of their private sector credit business in the South even as the chase FAAC and State/LGA joint accounts in the North. It is elementary economics that banking is not about who owns the bank or has the largest deposit but who gets the largest credit. Paucity of private capital, and the unproductive use of the little available, is one of the major causes of our under-development in the North. Notwithstanding the fact that you need only N20 million capital to start a Micro Finance Bank (MFB) in Nigeria, of the 899 MFBs licensed by CBN, Lagos has 211, Anambra – 84, Osun – 36 while Katsina has 5, Nassarawa – 4 and Yobe – 1. The North needs more MFBs than big Banks to build private capital. The present CBN Governor, Sanusi Lamido Sanusi, is unlikely to change, in any sustainable way, the banking fortunes of North just as the longest serving CBN governor (late Abdulkadir Ahmed) did not. That task can only be done by Northerners our selves. It is very important for Northerners to moderate their expectations of political leadership.

What the Federal Government can do

In my previous article, I focused mainly on what states government can do to alleviate poverty in the North. I deliberately left the federal government because I felt, President Ya’adua was himself a former governor and that his government was new and needed to get its bearing. Two years after it is time to look back.

In analysing the economic situation of the North, there are two important things to consider. First, Northern Nigeria, taken as a nation, is a landlocked nation. With no access to international coastline, the North faces a peculiar challenge. The disadvantage of the hinterland compared to the coast is obvious even in today’s egalitarian China. To spur economic development in the North, the Federal government must open up the region. It is in this regard that the recent flagging of the dredging of the River Niger from Warri to Baro  is an important milestone. However, the effect of this will be limited as the effect of the Lagos coastline has been on Nigeria – namely Niger state will benefit more from the dredging than Zamfara state. What will really open up the North is an efficient railway system. When the former government of President Obasanjo initiated the $8.3 billion rail modernisation process, I was excited by the prospects it has for the region. However, I am alarmed by the fact that more than two years in to this administration all we have achieved is the cancellation of that contract and talk about a ‘Patch-Patch’ arrangement similar to the one done under General Abacha. The award of the Chinese railway contract may have been badly handled but to jettison the modernisation project for the current project is to lose a golden moment for the North. If Nigeria is unable to undertake a railway modernisation when crude oil is selling for $70/barrel, pray when Nigeria will ever to this. More than anything else, the greatest thing than this government can do to impact the lives of the average Northerner is the modernisation of the railway system. The fact that every imported item in Nigeria, from petrol to sugar is cheaper in the richer part of Nigeria (south) than the poorer part of Nigeria (North) means that the North’s disadvantage is been further compounded. It does not make sense for any manufacturer to site his factory in Kastina or Yobe if he cannot easily move his goods to markets in the south or for export. President Yar’adua’s administration must learn from the mistakes of the Abacha administration and as a matter of urgency discard those palliative measures and adopt a wholesale modernization of the railway. What the current minister of Transport should realise is that no private sector participant will be interested in investing in a 35km/hour railway grid that was designed by our colonial masters to transport groundnut from Kano and hide from Maiduguri. Government should stay away from buying engines and rolling stock and just concentrate on the rail network.

Agriculture provides the major source of employment for the vast majority of Northerners and presents the quickest way of reducing poverty in the region. The Yar’adua administration has been taking some encouraging steps. The government’s renewed emphasis on commercial agriculture, the ongoing review of the land tenure system, the ‘Buyer of last resort’ program, Silos expansion projects, massive importation of fertilizer in 2008 and the N200 billion agricultural credit scheme are all steps in the right direction.

Cotton farmers {guardianUK}

However, there is still room for improvement. Listening to the Kwara State’s ‘Zimbabwean farmers’ and Governor Murtala Nyako, during the break-out session on Agriculture at the Northern Nigeria Economic Summit, you get a sense that the major issues facing commercial agriculture are basically access to low cost finance, land tenure system and low productivity. Infact, Governor Nyako listed fertilizer and tractors, the usual suspects, as number 13 and 14 amongst the issues facing agriculture in Nigeria. Tackling the major issues affecting agriculture requires more than just money. It requires fresh thinking and innovative solutions. With regards to finance, the federal government’s recent N200 billion intervention is commendable. However, as with most government policies, the devil in the details. The guidelines for the Commercial Agriculture Credit Scheme (CACS) as released by the CBN and Federal Ministry of Agriculture requires that for a farm to access part of the loan (from UBA / First Bank), it is required to have assets of not less than N200 million. Clearly, this is targeted at existing large scale farmers and not at younger and more promising farmers. Although the interest rate is designed to be less than 9%, the reality is that only few farmers in the whole North can qualify for this loan. The government needs to realise that commercial agriculture in its infancy stage in the North. More than just finance, we need to find a way to encourage young people to go into commercial agriculture through a more comprehensive incentive scheme. For instance, I will expect the federal government to outline a policy that target’s young graduates or mid career workers with a whole package of easy land acquisition, access to fertilizer and mentorship program with domestic and foreign commercial farmers. I have spent 2 months in a commercial ranch in Northern Kenya and I know more than money, there are many other things required to make commercial agriculture a success. The sad reality is that the incentive structure provided by Kwara state government to the ‘Zimbabwean Farmers’ under the ‘Shonga Project’ is simply not available to ordinary Nigerians in their own country. We need to move commercial agriculture from being the hobby of retired people to an enduring profession that is attractive to young people to make it sustainable.

The land tenure reform is already part of the government’s 7 point agenda but sadly more than half way in to the tenure of this admistration; this laudable reform is nothing more than a proposed bill gathering dust in the National assembly. I hope the National assembly will realise the importance of this reform and work on the bill. Lastly, Governor Nyako listed low productivity as the number one factor affecting farming in Nigeria. Now, Governor Nyako should know because he probably has one of the best managed farms in Nigeria.

Chief Audu Ogbe, at the Leadership conference, gave the example that ‘…a Ugandan widow with one cow earns more than a Fulani man with 10 cows…’.But productivity is ‘catch-all-phrase’ that encompasses several factors including quality of seedling (or embryo), mechanisation, farming methods and a host of other factors. This is again one of the reasons why young people should be encouraged to take up commercial farming. Young people are more likely to employ new farming methods and techniques that can boost productivity. The mentorship scheme I mentioned above will also expose promising commercial farmers to some of the latest farming methods from our research institutes and commercial farmers. The fact that young Zimbabwean farmers are achieving 3 times productivity per hectare in cassava production compared to their neighbouring local farmers in Kwara shows how important younger and modern farmers are to commercial farming.

The efforts of the Small and Medium Enterprise Development Agency (SMEDAN) are commendable but needs to be steeped up and possibly a venture capital outfit be set up to provide equity participation. The Federal Government’s intervention in the textile sector should go beyond money. The federal government should realise that the Nigerian Custom Service has an important role to play in reviving this industry. We hope the Federal Minister of Finance will use his good office to ensure that atleast a government agency enforces government directives. I need not discuss about the power situation in Northern Nigeria. We all await for December 2009.

The federal government also needs to help in mitigating the destructive effect of politics in the North. Politics is badly affecting our incentive structure. Politics has become the most lucrative profession in the North, luring away our some of our best (and worst) brains from other productive ventures. The young man in the South will likely find career role models in many professional bankers, businessmen or workers in the oil industry. To the young person in the North, the ultimate ambition will be to join politics. The Federal government must through real and symbolic gestures recognize and encourage young men to take up ‘productive’ ventures while political office holders should realise the destructive effects of their flagrant display of wealth and power.

Finally, every northerner should realise that the economic prosperity of a community is the direct result of individual initiatives and effort. Our fatalistic attitude to life is nothing more than an abdication of individual responsibility. In the long run, no amount of privilege or patronage can take the place of initiative, hard work and perseverance. Nobody will, or should, improve a society that deliberately decides to undermine itself.

Sa’adu A. Jijji, a Postgraduate Student at University of Oxford, wrote in from the UK.

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