In 1984 when this memo was presented to the same Muhammadu Buhari who was then the Military Head of State, the Federal Military Government wasted no time in endorsing it. This was in spite of the fact that it was the Minority Report by the author who disagreed with the position of the majority of the members of the Study Group the Federal Government set up to resolve the question of whether to privatise or not.
The economy is one of three priority areas articulated by Mister President but which model of the economy? It has been ‘silence’
Committed to making Nigeria work again but through a private sector model of the economy at a time the World Bank is reprimanding Nigeria for wrong headed economic strategy?
34 years later in the 2019 presidential election, the issue turned up as a major dividing line. For Alhaji Atiku Abubakar, the PDP presidential candidate, it would be a private sector led economy all the way. Some people would argue that the PDP strong man injured himself a lot by some of his pronouncements on that. Either out of smartness or lack of clear position, President Buhari took the option of ‘silence’.
Both presidential candidates were dealing with an issue that has refused to go away: the search for the model by which the Nigerian economy might be best managed to have something for everyone contrary to the present situation which is exclusionary on many fronts – class, generational, gender and ethno-regional. Interestingly, this is an issue with a long history, the reason for bringing up this memo. The memo not only has the most simplified history of the question in Nigerian politics, it stands on a definite position.
Written by the now late Dr Mahmud Modibbo Tukur, the National President of the Academic Staff Union of Universities, (ASUU) at the time, the memo has been extracted from the book, The Essential Mahmud Tukur: A Selection of His Writings, edited by Professor Tanimu Abubakar and published by the Ahmadu Bello University Press, Zaria. This is not the full text of the memo but a highly condensed version. Standing at 10, 282 words, it would be too long to be published in full at a time most people no longer read anything beyond headlines, graphics and text messages. It will be carried here in two installments.
This memo is republished because the question of business model is one that must be categorically resolved now or the risks could become simply insurmountable. A country such as Nigeria ought to have no difficulty in resolving the issue anymore. Not after the big shifts on the issue by even the IFIs, particularly the World Bank with its many apologies for vandalizing state interventionism in the ‘Third World’, followed by the tenure of Joseph Stiglitz at the Bank and not after the 1997 World Development Report which reversed the essential neoliberal argument that the state has no business in business. The tragedy is that it seems most members of the Nigerian elite have still not heard about the report and are still parroting the TINA cliché.
ASUU NATIONAL SECRETARIAT
Through: The Secretary to the Federal Military Government and Head of
Service, Tafawa Balewa Square, Lagos.
To: The Head of State and Commander-in-Chief of the Nigerian Armed Forces, Major General Muhammad Buhari, Dodan Barracks, Lagos.
Dear Sir,
Participation in the Study Group on Public Utilities (Problems of Commercialization, Profitability, Efficiency)
It must be interesting that a Joseph Stiglitz who has been a former Chief Economist of the World Bank is saying today almost what Tukur was saying in 1984
With reference to my appointment by you to serve on the above Study Group, an appointment of which I was informed by Cabinet Office letter Number SFMG. 43/207 of 26th September, 1984, this is to inform you that in spite of the fact that the group had already started its sittings by the time I was informed of my appointment onto it, I did join it; I did attend almost all its subsequent sittings; and I did contribute ideas in accordance with my convictions. I would also like to inform you that the exercise has been very educative to me both in terms of the raw data on the utilities that I had to examine, and in terms of learning firsthand about the working of the country’s economy from such seasoned veterans of the Nigerian system as the former Governor of the Central Bank, Mr. Ola Vincent and the current Managing Director of the Bank of the North, Alhaji Ali Al-Hakeem, the former of whom was a very alert and helpful member of the study Group, and the latter its indefatigable Chairman. Also as far as etiquette was concerned, I would like to say that the study Group did its work in an atmosphere devoid of rancor and discourtesy towards one another; and, whatever the others may think of me, I must say that I came away with high regards for their talent and capacity for hard work. Once more, this is especially so as regards the Chairman and Mr. Ola Vincent. At the personal level, I have no regrets at all for having worked with them and the other members of the group; and whatever I may subsequently say in this letter is not intended to reflect upon the integrity of any of them.
My major complaints is that my views, where these fundamentally differ from those of the others, are not reflected in any way and under whatever heading in the document that was handed to you on 28th November 1984. Hence, my decision neither to sign the letter which accompanied the report and in which the recommendations contained in the report are re-endorsed nor to go with other members of the study Group, to present the report to you. Hence also, I am writing this letter, to give you and the Federal Military Government the benefit of my views on some of the recommendations contained in that report. In writing this letter, I am assuming that we were each appointed on the study Group on our individual merits, not because it was believed that the eight of us shared common views but, I believe, precisely because it was assumed there could be fundamental differences before us and because the Federal Military Government wanted to know as many as the pros and cons of the recommendations that might be made to it.
It is for this reason that it becomes my duty to put across to the government my views on some of the recommendations contained in the report, views which I gave expression to during the deliberations of the Study Group, which were left out of the report, which report but for the indefensible omission, would have been the only document to be addressed to you.
I, therefore, go on to state that I was party to and do agree with most of the recommendations of the report but that I categorically and most emphatically reject the “privatisation” it recommends – a recommendation which, when shorn of all cant and sophistry, is an attempt to enable a tiny segment of the Nigerian population misappropriate assets that have been built up with public funds and which have up to now been owned by the whole population viz:
The Nigerian Airways:
The Nigerian National Shipping Line:
The Nigerian External Telecommunications: and
Much of the Nigerian Ports Authority’s facilities and rights.
Raped to death
What is left of the then flying elephant
Sir, here are some of the grounds for my rejecting the “privatisation” of these or any of the other public utilities:
(1) Either these enterprises are actually/potentially profitable or they are not: if they are profitable, it would be foolish and irresponsible for the FGN to part with them. If they are not profitable, there will be no buyers unless, in the first place, the FGN sinks more money to make them profitable before selling them at giveaway prices. That would be all the more foolish and the more irresponsible for the FGN to do, apart from it being profoundly unethical, business and ethical issues which, alas, my colleagues seem to have decided to brush aside, brave gentlemen that they are.
(2). As can be seen from the report itself, all these ventures can be made profitable within the context of government ownership and should, therefore, be so made within the context of that ownership. In this regard I would like to emphasize, and in so doing, I do not fear being contradicted by any other member of the study Group, that the recommendations which we, together, made on the assumption that they were each going to remain Government property and not on the assumptions that they had to be ‘privatized’ before the adjustments could be made. This is why among the recommendations we made with respect to every single one of them are (i) that government should appoint competent and reliable people to the board of directors; (ii) that Government should appoint knowledgeable people to the management and (iii) that, on the one hand, Government should refrain from unnecessary interference in the work of boards and managements and, on the other hand, board chairmen should avoid interfering in the day-to- day management of the ventures. Indeed, the report even go as far as suggesting the institutions from which government should select board members as well as specifying amounts that managements could spend without reference to boards, amount which boards could spend without reference to supervisory ministries, amounts which supervisory ministries could authorize to be spent without reference of the Federal Executive Council, and amounts the spending of which by each of the 8 utilities had to be cleared by the Federal Executive Council. None of the above recommendations was or even could have been predicted on “privatization”!
(3). As of now, the enterprises being recommended for sale to the private sector belong to the Federal Government which has already invested such colossal sum of money into them, viz: (i) N191,825,333.00 for Airways by 1982; (11) N 111, 244, 492. 00 for NET by 1982; (iii) N205 million for the shipping line by 1982; and (iv) N 782,388,000.00 for the ports Authority by 1981. The weighty ethical issues involved in the sale apart, Government ownership is the current position, the status-quo, and the burden of proof for any alleged need to change this status lies with those advocating the change. The report submitted to you on 28/11/84 simply does not establish such a need, but merely grafted the recommendation for sale on to better argued and more pertinent recommendations on how Government can make these public properties profitable.
(4).To the extent that the sale of these assets is being recommended as a panacea for the Government’s current financial problems or as a part of such a panacea, then it is a panic recommendation, for sale will bring Government only a short- lived reprieve, if any, from its present difficulties which, soon enough, will return with a vengeance, intensified several times over after the meager amounts realized from the sales shall have been spent, or worse, childishly squandered, on adult equivalents of “chocolate’’ and “ice-cream’. Thus the FGN would end up with no money, no assets and no capacity to borrow, internally or externally. Besides, given that the FGN’s main problem – largely created by the private sector – is with foreign exchange, and given that these assets would be sold in the local currency, – while a good part of them, (e.g. NET’s equipment, Airways’ aeroplanes and NNSL’s ships) were bought in hard, foreign currency – it is impossible to see how selling them would bring the FGN even a temporary relief.
(5). In fact, Sir, no valid, irrefutable, grounds have been advanced by the other members of the study Group to justify the sale (“privatization”) of the utilities which they are recommending. At most, there are only two grounds for making such a recommendation and they very preposterous indeed. These are (i) that the private sector is more efficient than the public sector and (ii) that the role of government in the economy is to start enterprises, nurture them to the point where they are about to start yielding profits and then sell them to the private sector – i.e. a few individuals who, I dare say, are more likely to be in collusion with foreign interests than not. I shall later on expose the baselessness of both of these grounds. But I would like to observe here and now that it is for this second reason that the study Group has targeted only those enterprises which are potentially very lucrative for ”privatization” while leaving for the rest of us, that is 99% of the Nigerian population, the ones that for sometimes to come are likely to remain more of liabilities than assets. I would also like to observe that the four enterprises that have not “qualified” for privatization” namely, the National Electric Power Authority, (NEPA); The Post and Telecommunications; the Nigerian Railway Corporation, and the Nigerian Airports Authority, are among the “normal” conduits through which invisible, unacknowledged Government subsidies are passed on to the private sector, subsidies which are not ‘chicken feed’ as can be judged from the followings:
- N576,207,311 for the Nigerian Airport Authority by the end of 1979;
- N1,041,116,000 for the Nigerian Airports Authority by the end of 1980;
- N2,891, 974,037 for post telecommunications by the end of 1981;and
- N 2,946,145,000 for the National Electric Power Authority by 1981;
In response on it to privatise, the Ethiopian State told the pressure bearers: Sorry, we cannot privatise because we were never colonised. They meant that it is foolishness to talk of private sector without cultural considerations
This is what the giant of Africa ended up with. It turned out to be exactly as Dr Tukur predicted in 1984, (see point number 9 below)
Staggering sums of money which has already been eaten deep into by “losses” – i.e flagrant transfers to the private sector. Thus, for example, of the N576, 207, 311 that was invested by Government in the NRC by the end of 1979, as much as N269, 461,560 had already, i.e. by the end of 1979, been wiped out by “accumulated losses”. Hence my colleagues are recommending them neither for “privatization” nor for liquidation but for retention by Government – as conduits through which Government should continue pumping invisible and incredible subsides to the private sector!
(6). Except with bank loans which – given 60% ownership of even commercial banks by the Federal Government, are therefore loans from Government itself – there will be no Nigerian buyers: for, the same consideration which in the first place made Nigerian tycoons to send most of their money abroad – namely, that it is mainly stolen money whose sources the owners hate to have to disclose – will also stop them from returning it to invest in the country. In the alternative, these vital enterprises – every one of them concerned with communication – will have to be sold to foreigners, directly. These foreigners will, in turn, demand guarantees from their home governments against probable re-nationalization in the future. Such guarantees would be given – based on intention to seize Nigeria’ assets abroad in the event of such a renationalization. This way, by ‘privatising’, Government would among other ruinous consequences, be mortgaging our assets abroad.
(7). Sir, even if, by one means or another, Nigerians produce the money to buy these enterprises, patriotic Nigerians and the military government will be deluding themselves if they believe that these vital properties will long remain in Nigerian hands, for capitalism is an expansive and supremely international, phenomenon, as I shall argue in greater details later on in this letter. This international character of capitalism means that the sale of public enterprises to private Nigerian hands will, given the extreme weakness of the Nigerian “capitalist” class, amount to selling the enterprises to foreigners with the Nigerians merely serving as fronts or, at best, stop-gap, intermediate, buyers. Hence, going ahead with the “privatization” of these vital assets – just as in the case of admitting foreign private participation into our agriculture –will constitute a significant, first, step in the direction of selling our country; and constitute a significant, first, step in the direction of selling our country; and what a historic irony that would be at a time when the military Government has mobilized all the country’s news media to call on the people to be patriotic! What a classic example that would be of preaching one thing and practicing another!
(8). All enterprises earmarked for sale to the private sector” namely:
- The Nigerian External Telecommunications;
- The Nigerian Airway;
- The Nigerian national Shipping Line; and
- The Nigerian ports Authority
are of strategic, economic and military importance to the country, if for no other reason than that they provide vital links between Nigerian and other countries of the world, both are legitimate and logical complements of the Air-Force and the Navy. Hence, no government, which has not lost control of its faculties, will let go any of these enterprises, especially when selling them, to anybody, ultimately means selling them to foreign interests.
(9). Privatization”, of necessity, assumes that any of the enterprises to be sold can be allowed to collapse without serious consequences to the country economically, militarily and politically. Such an assumption – that any of these enterprises can be allowed to collapse and liquidate –is patently wrong and needs no refuting. It refutes itself. This being so, the proposal that these enterprises should be “privatized” has two very dangerous implications. These are: (i) Either, in spite of their being vital to the country economically, militarily and politically, the FGN should sell them into private hands where, among other possibilities, they could collapse, or (ii) that even while handing them, dirty cheap, to private profit-seekers, the FGN should hold itself ready to salvage them with the infusion of public money in the very probable event of their being poorly managed to the point of having to liquidate. Either of these two implications of “privatization” is highly objectionable to the nation and its vital economics, military and political interests. And for those who currently hold them in trust for the people, the two proposals should be objectionable on grounds of honour also.
