The Dangote Insurgency
Speaking at the National Institute for Policy and Strategic Studies, (NIPSS), Kuru in Jos on October 27th, 2016, Aliko Dangote, the Head of the Dangote conglomerate in Nigeria alerted the country to the possibility that the companies which took over the power generation and distribution assets of the national electricity infrastructure might actually be “holding the country to ransom”. Dangote told the world that unless the privatisation exercise in that sector was reversed in favour of people with the resource capacity to put in the money required, adequate power supply would remain a forlorn hope.
It is perhaps important to let Dangote speak in his own words: “People who wanted to buy all these plants, both the generating and distribution companies, thought that this was another opportunity like mobile phones, where we have moved from 500,000 lines in 2000 and in ten years we now have 120million lines. Yes it would have been so but, these guys, what they did when they bought these power plants, was that they borrowed 90 per cent of the money in foreign currency. You cannot go and borrow dollars when your base income is in naira, you will have an issue because your earnings are in naira you are taking a huge exchange risk and that is what happened today. The majority of them went in without even understanding what they are doing and the worst thing for any entrepreneur is to go into a business without understanding it.”
The computer dictionary defines insurgency severally as rebellion, revolution, revolt, uprising, riot or mutiny. These meanings make Dangote’s intervention to, effectively, amount to an insurgency, an uprising from within against what seemed a solid and impregnable consensus. Many of those who have replied Dangote have predictably picked on what his motif might be. A particular respondent called it reckless. Others have wondered whether it is not too early for him to enter a judgment on the privatisation exercise in the power sector which is merely three years old.
They are all very interesting but misleading, if not clever, responses. The basis for this standpoint is that, as a policy, privatisation has never been a settled issue in Nigeria. There has never been a successful case of privatisation and there won’t ever be. The telecommunication sector is casually cited as a success story. But privatisation in that sector is not the GSM that is usually cited as such but the NITEL that was consumed by privatisation. Privatisation of NITEL has been a complete disaster for Nigeria. This is not the case with the GSM where no existing public assets were sold until recently and this is already mired in controversy.
The success of the GSM private initiative in Nigeria has, as usual, been taken out of the technological context and the market calculus of the technology companies in the ‘Third World’ in that regard. It is, therefore, surprising that all the celebrants of privatisation conveniently closed their eyes to the incongruence of the ‘success’ in that market and the comprehensive failure of the privatisation project in every other arena: private universities that are fundamentally dependent on public universities; private airlines that are competing with the defunct Nigeria Airways in quality of services; banks that have to be bailed out one way or the other or sink with depositors’ wealth and so on and so forth. How could privatisation be a success in just one arena but a massive failure in all others and we can still sensibly talk about success story? Does it make sense?
It is because it has not been a success and it is not about to be that there is always a convulsion around it, no matter how smart the handlers work. How else did the country erupt in January 2012 in a protest which shook the government of the day to its roots? That protest is the latest and most remarkable manifestation of the continuing contestation and tension that follows privatisation policy as imported into the country by the IBB regime in 1986 but most ruggedly implemented by the Obasanjo regime between 2003 and 2007. That was when it was forced down the throats of Nigerians, without any debates.
In all cases, it remains a flagrant violation of both the letter and spirit of the Nigerian Constitution which anticipated but categorically outlawed it. That the governments in Nigeria could ever contemplate and carry out privatisation without, first of all, amending the relevant sections of the supreme law is further proof that when the logic of primitive accumulation is contested, all pretensions to democracy and constitutionalism can be thrown away by some sections of the power elite.
It is against this background that what Dangote said is not just a critique of the exercise as it affects the power sector but as another convulsion over the handing over of the commanding heights of the economy to some few individuals in the name of market reform. The Dangote insurgency is thus a major rupture from the most surprising quarters even as Dangote has no moral, economic or constitutional reservations against the principle of privatisation itself. It is not surprising that he does not have such objection. What is interesting in his agitation is that the contradictions of the game all of them involved in privatisation are playing catches up with them in such a way that they can become ‘revolutionaries’ without knowing it. Dangote’s idea of re-privatising the sector just to hand it to the members of the caucus with bigger financial muscle is, therefore, not only unacceptable but a manifestation of the idealism of his world outlook.
However, if the number one capitalist in the country is recommending the annulment of the privatisation exercise as conducted in the power sector, those involved should listen while those affected should reflect and reconsider the plausible points of departure. Nobody would say that Dangote does not know his onions in matters of Naira and kobo. He definitely does.
It is obvious for reasons suspected as well as reasons known that the much expected gains and efficiency of the power sector have not been realised. That goes, once again, to show that privatisation as a panacea for public service inefficiency is based on half truth. In Nigeria, the private sector itself has not shown a history of being more efficient than the departments in the public sector. Neither have private sector managers and executives got any history of being more efficient, productive and functional than the public sector. In most cases, they emigrated from one to the other and it is mostly from the public to the private sector rather than the other way round.
What Dangote’s attack on the privatisation exercise in the power sector has done is to enable us take a harder look at the grand notion within which privatisation exists. It is the whole idea that government should not own business, a very recent idea that remains largely untried and untested. Before the late 1970s and early 1980s when Margaret Thatcher and Ronald Reagan compelled much of the Western world to dance to that tune, it wasn’t the music in development strategy. But in whose interests were Thatcher and Reagan acting? There is a clear consensus among leading authorities in global political economy that this economic thinking which privatisation forms its kernel was an attempt to remove the creases hindering mega profit making in the early 1970s. It was in that process that packages aimed at enhancing profit making by “transferring public assets to the private sector at knock down prices” was enthroned in the 1980s based on what its leading Western scholar has called a strategy of “accumulation by dispossession”, characterised by predation, fraud and violence.
For African countries, this came via the notorious Structural Adjustment Programme, (SAP) which is nothing but a scheme for auditing the state in the neocolony for conformity with neoliberal globalisation. Effectively, it came to checkmate the idea of the developmental state or the state that intervenes in the economy to achieve rapid industrialization. But as many of the honest players involved have openly ever admitted, “the Bretton Woods criteria for structural adjustment are perfect for Sweden but are completely wrong-headed for countries such as Zambia and Mozambique”. Thus, there is SAP or the so-called market economy in Nigeria only because the Nigerian elite is always copying blindly, not minding the consequences for the Nigerian people. Otherwise, selling of commanding heights was neither necessary nor timely. The whole concept of privatisation is very, very recent in economic thinking and market forces cannot do the job of the developmental state in an economy that has not industrialized, such as the Nigerian economy.
In fact, in most countries which rely on nuclear energy, state ownership of electricity is substantial or complete. The security implications are such that the power sector cannot be completely privatised in such countries. Would the North Atlantic Treaty Organisation, (NATO) accept, for instance, that the nuclear reactors which power the system be sold during a privatisation exercise in a NATO member country to all comers? Does it have the guarantee as to who may access them in a free for all sales?
It is only in an African country that everything is free for everyone to come and buy even as the level of prosperity of the Africans is so low that they cannot partake in the purchase of other people’s assets anywhere. Even in Africa, Nigeria must be the most all-comer country in selling national assets without considerations for the benefit of the ordinary Nigerians. Yet, the so called Nigerian owners can be taken hostage within the logic and dynamics of global business. Most countries that realise that they are not yet at the level where the citizens will be at the centre of privatisation, they pend it till such is possible. They do so because privatisation is a national security issue in the popular sense of it. It is difficult to understand how Nigeria developed such an incautious, headlong dive into privatisation.
Otherwise, state ownership or partial ownership of the power sector is still the case in South Africa, Egypt, Ethiopia or Kenya. Yet, these are African countries that enjoy no incentives to retain state control than Nigeria, whether on demographic grounds or size of market or capacity for self-reliance. How does a country of Nigeria’s size build Mambilla Plateau or Ajaokuta and hand it over to some people in the name of privatisation or reform? To make matters worse, such projects as the Lagos – Ibadan Expressway, the Murtala Mohammed Airport and the ports that have been on concession have not been stories of stellar performance. In fact, the Nigerian State has to put in more money to make them up. That is exactly what the dissenter in the government’s study group on privatisation in 1984 warned the government against when he said even then that the privatisation strategy had two very dangerous implications, one of it being that even while handing the enterprises “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”. Isn’t that exactly what is happening now?
There is absolutely no virtue, honour, honesty or public purpose in privatisation of national assets in that manner. It can only create oligarchies and private sector monopolies more evil than anything that government or state interventionism can. The overhang of profit motif in all these challenges the idea that services such as water, gas, health and transport should not be prized in a manner as to be unavailable to some sections of the people.
With Dangote’s famous remark, the chickens are beginning to come home to roost. In all the major economies of the world, the idea of commanding heights of the economy being in one hand is rare. It is even rarer in economies that have not achieved transition. Before this, there are fundamentals which only the state can carry out and must carry out if all citizens are to access the benefits of nationhood and thereby guarantee commitment to the national idea. That is what is national security. The Indian railway, irrigation and power sector remained state owned. The Chinese economy remains fundamentally statist, with allowance for creativity in interventionism that does not challenge that statism.
Dangote’s warning has, therefore, come in good time. It is important to draw on individuals with moral authority and oversight on Nigeria such as some of the traditional rulers, some of the former heads of state, the leading clergies and several others with moral authority and credibility to prevail on the Nigerian State to halt the privatisation exercise in all the sectors, review the entire doctrine and come up with something more in tune with the national security of Nigeria today. Projected to hit 500 million souls in another 20 years or so, this country is too big to be a toy in the hands of people who have no business controlling it. For, at that population, it would automatically become the third most populous nation in the world, after China and India. We might not absolutise population as a factor of greatness in itself but there is no time that population will not be a factor in the grading of nations or in the calculus of power at the global arena.