By Dakuku Peterside

Jonathan Tepperman’s book, “The Fix,” is about how some nations fixed significant social challenges like inequality, corruption, and civil wars using innovative leadership and policies. No one has yet written a book about how nations fix profligacy. Therefore, it is justifiable that Nigerian leaders have not bothered to read a book that does not exist. When such a book is eventually written, Nigeria’s chronicle of shameless profligacy will qualify as a unique case study. It is perceived as a culture our elite have come to embrace or tolerate as an acceptable national social habit. Profligacy, defined as reckless or wasteful extravagance, is a concern in various aspects of Nigerian society. It touches different levels, from personal lifestyle choices to government spending and business practices. This culture of profligacy, if left unchecked, will continue to drain our resources, hinder our development, and perpetuate a cycle of corruption and mismanagement.

Social habits are ingrained behavioural patterns that shape societies and influence how things are done. It might have a good or bad impact. Andrew Sykes ,co-author of “The 11th Habit“believes that the collective culture of a people shapes their habits, and habits cyclically reinforce culture. The habits of a nation reflect its values. This habit of profligacy among Nigeria’s ruling cadre is interconnected with the culture of corruption, lack of accountability in public life, short-term thinking, and lack of personal stake in the Nigerian project. Most importantly, it is proof of a total disconnect from reality. Since the Nigerian civil war, a deeply ingrained culture of wasteful expenditure and consumption-driven governance has plagued successive Nigerian governments. However, this is not a fate we are bound to. With the right cultural shifts and systemic reforms, we can break free from this cycle and build a more responsible and prosperous Nigeria.

There is substantial empirical evidence linking this culture of wastefulness to our oil economy, which provides the government with oil revenues at all levels without accountability. Oil receipts have increased spending, often on non-essential projects that do not benefit the citizens. With an abundance of oil money and less emphasis on accountability and transparency, an environment of profligacy became prevalent and is now a national social habit. This profligacy, in turn, fuels corruption and mismanagement, creating a vicious cycle that hampers our progress and development. It is crucial that we recognise and address this interconnectedness to pave the way for a more responsible and accountable Nigeria.

There is no responsible public affairs management culture, which feeds the decadent habit of wastefulness that our elite has adopted. Our weak institutions encourage mismanagement since they cannot enforce laws and regulations. A political patronage and nepotism culture has made us prone to wrong priorities, and we need the ability to plan strategically. Oversight by the legislature is highly compromised. Decisions made by public authorities are now driven more by personal interests than by sustainable use of resources for common interests due to a combination of economic pressure and poverty.

The Nigerian government is often criticised for high spending on non-essential items, such as luxury cars for officials, unreasonable cost of renovation of offices and accommodation, large delegation to foreign trips and frequent travel expenses. This is particularly controversial given the country’s significant economic challenges and infrastructural gaps. Corruption is a considerable issue, with funds frequently misappropriated or embezzled. High-profile cases of public funds being diverted for personal use contribute to a culture of extravagance among some officials. The civil service and government agencies often have large, inefficient workforces, leading to unnecessary expenditures on salaries and administrative costs.

Examples litter our landscape to prove that there is nothing untoward in the culture of profligacy. For brevity and conciseness, I will give four examples. First, NNPC, the national oil company, spent $25 billion (over N12 trillion) over 20 years on turnaround maintenance of Nigeria’s four refineries, yet none can refine a drop of oil. The average cost of building a 350,000-bpd refinery is about $ 3.5-5 billion. This may not convince you about a national habit that has calcified. Between 2010 and 2020, crude oil theft led to the disappearance of 619.7 million barrels of oil worth N16.25 trillion, according to NEITI, an extractive industry transparency watchdog. None of these two high-profile cases resulted in arrest, prosecution, or national protest. It is normal and an acceptable national habit for the elite and average citizen.  You will be tempted to think that this habit of national profligacy is restricted to the oil and gas industry. You are dead wrong!

Second, how can we quickly forget what qualified for a national embarrassment in 2023 when the government registered 1,411 persons—a mixture of court jesters, government officials, professionals, a sprinkle of environmental activists, academia, and political jobbers for COP 28 in Dubai? Nigeria had the third highest delegation to COP 28, even though we contribute less than 0.0001 percent to climate change and its minimal impact on us. A public uproar was raised, but it came down before long because it is our culture and an acceptable habit amongst the elite.

Third, most recently, Nigeria’s delegation, according to The Cable, a digital news platform, was the largest among 187 countries to the International Labour Organisation’s (ILO) 112th conference in Geneva, Switzerland. This is happening at a time when the economy of the country is in some form of life support.

The final example that raised curiosity was the news that the government reportedly spent N90 billion to subsidise the cost of the 2024 Hajj pilgrimage for citizens. The arithmetic of a huge subsidy for what ought to be a private religious obligation in a period of economic distress required advanced economic numeracy to solve. The list of our profligate habits as a nation is unending.

Profligacy is not only akin to the political class and government. We see a preponderance of activities that scream profligacy at personal and social life levels.  Nigerians are known for hosting grand and often extravagant celebrations, including weddings, birthdays, and funerals. These events can involve large guest lists, expensive venues, elaborate decorations, and abundant food and drink. There is a strong emphasis on displaying wealth and status, often through acquiring luxury goods such as high-end cars, designer clothing, and expensive jewellery. This can sometimes lead to excessive spending and financial strain. At social events, it is common to see money being “sprayed” or thrown at people, particularly the celebrants, as a sign of generosity and celebration. This practice, while culturally significant, is often seen as wasteful. EFCC is working hard to clamp down on this practice.

There is often societal pressure to conform to specific standards of appearance and lifestyle, leading individuals to spend beyond their means. This includes pressures to host large, expensive events or to own the latest luxury items. Maintaining social prestige and not “losing face” in many Nigerian communities can lead to extravagant spending. This can involve keeping up appearances through high expenditure on clothes, homes, and social activities. Both the government and private individuals often accrue significant debts to finance their extravagant lifestyles or projects, leading to financial instability and long-term economic challenges. Resources are sometimes misallocated to non-essential projects or luxurious expenditures, neglecting crucial areas like healthcare, education, and infrastructure.

In the business sector, some Nigerian corporations, especially those in the oil and gas sector, tend to pursue luxurious corporate lifestyles, including high-end office spaces, expensive company retreats, and lavish entertainment expenses. There are over-invoicing and kickbacks, where inflated contracts and procurement costs are used to syphon funds for personal gain.

Our entertainment industry is the window for showcasing opulence and luxury. Our Nollywood and Afrobeat often feature extravagant displays of wealth. Music videos and films frequently showcase luxury cars, opulent houses, and designer outfits. Our celebrities, including musicians, actors, and influencers, often lead lavish lifestyles, displaying their wealth and success through expensive purchases and luxurious vacations. This creates a culture of aspirational spending among fans and the public.

Understanding and addressing profligacy in Nigeria requires a multifaceted approach that includes cultural shifts and systemic reforms. Leaders have to lead by example. We need to implement stricter regulations and oversight on government spending, enhancing transparency and accountability, and reducing waste in public sector expenditures; promote cultural values that prioritise modesty and prudent financial management over ostentatious displays of wealth; increase financial literacy among the public to encourage responsible spending and saving practices; and enhance corporate governance standards to reduce wasteful spending and corruption in the business sector.

Early signs are that those in power today have not only adopted the worst practices of the past but have also positively embraced them. If we continue along the same path, we will be stuck in an endless economic crisis and stagnation. Nigeria and Nigerians deserve better leadership in combating profligacy! We must escape this vicious cycle that has brought us to the quagmire we are in now.

 By Dakuku Peterside

Nigeria is probably in the worst economic crisis of a generation, screamed The New York Times on June 11th, 2024. Two other influential global publications, Foreign Affairs and The Economist, had earlier said the same thing under different headlines. Although Nigeria’s economy is not yet in a recession, all other economic indicators have gone south, and the curve is not bending in the short run. Statistics on inflation (above 33%), youth unemployment (above 50 percent), poverty levels (over 133 million multidimensionally poor), the value of the Naira (over 200 percent decline against dollar in the past year), education (18.3 million out of school children), healthcare (inadequate health facilities and professionals), insecurity (144th position in the 2023 safest countries in the world ranking), and homelessness (24.4 million people without a home) are frightening. More than ever, Nigeria needs crisis leaders to turn things around.

Great leaders have always come up to guide their countries out of the worst crises throughout history .The American people looked up to Barack Obama in 2008 to lead the nation through its worst economic crisis since the Great Depression. He conducted many consultations and made critical but well-considered decisions to lay a new economic foundation. We are in an ‘economic war’ and cannot use the tools applicable in normal times.

Leadership during normal times is different from leading in the storm which is the subject of my forthcoming book. The expertise and skill set required for both cases are different. The dynamism and multiplicity of socio-economic and political factors converging to create the Nigerian volatile ecosystem are such that effective crisis leadership is needed at all governance strata.  Although required in normal times, these crisis leadership competencies are most relevant during a crisis. They include sensemaking, effective decision-making, team coordination, facilitating learning, emotional intelligence, and effective communication. It is the masterful use of these competencies that makes great crisis leaders.

The commentariat have attributed our present economic crisis to a cycle of thoughtless policies, squandering as governance, negative or low investment in innovation, uncoordinated economic thinking and placing politics above commonsense economic frugality. It is also true that our poor understanding of the interplay of global events and its impact on local economic factors also contributed . The consequence is the country’s inability to respond to vulnerabilities, shocks and opportunities.

Nigerian leaders need to make sense of these complex circumstances. The situation requires a more focused perspective on historical and immediate causes and possible solutions to the current crisis. Sensemaking is critical to effective crisis leadership, especially in complex and diverse environments like Nigeria. Sensemaking involves gathering information and putting it in context, exploring different perspectives to develop a coherent narrative, and interpreting and understanding complex, ambiguous, and rapidly changing situations to guide decision-making and action. During this economic crisis, sensemaking allows leaders to comprehend its scope, identify its root causes, anticipate its impacts, and develop appropriate responses. This piece will focus on and explore sensemaking as the first step in crisis leadership.

Our leaders must develop a contextual understanding and historical context of our economic crisis. Nigeria is characterised by significant cultural, ethnic, and economic diversity. Effective crisis leadership requires leaders to understand these complexities, how they influence the crisis, and the potential responses. Economic crises in Nigeria often have roots in historical issues such as colonial legacies, policy missteps, structural inequalities and global turbulence . Leaders must consider these historical contexts to grasp the crisis’s nuances fully. They must identify and interpret economic, social, and political signals.

Furthermore, the way our leaders frame this economic crisis matters. We often have the tendency to reduce complex issues to one or two narratives . This is what my Kellogg Professor, Loran Nordgren calls “ narrow framing”.  Based on the robust content analysis we carried out, we identified the dominant frame of this economic crisis by the government as ‘inherited and requires tough actions that will cause some pain to the citizens in the short run, but the pain is necessary for achieving better economic prosperity in the medium to long term’. The danger of this framing is that it sounds more like an excuse than a creative strategy to upturn our economic woes. This frame lulls our leaders to the proverbial sleep of inertia – inaction when there is fire on the mountain.

How this economic crisis is communicated to the public and stakeholders influences their perceptions and reactions. Effective crisis leadership involves framing  and communicating the situation in an understandable and actionable way for diverse audiences. Little wonder Nigerians are at a loss regarding our political class’s perceived poor choices. The government needs to rethink its crisis communication strategy.

Since economic crises are by their very nature dynamic and unpredictable, leaders must update their understanding of the issues, modify their response strategy and adapt their strategies accordingly. Involving various stakeholders, including experts, community leaders, and affected populations, enriches the process, and ensures more comprehensive insights. This comprehensive insight allows crisis leaders to make informed decisions that cater to the greater good. Things like government being more prudent, quitting luxury spending, reducing taxes to encourage savings and investment, fixing insecurity to encourage inflow of investment and borrowing less from external sources, are easily intelligible choices.

To illustrate the importance of deep insight in Nigerian leadership during the economic crisis, let us examine three recent crises. The first is the economic recession of 2016. The 2016 recession was triggered by a significant drop in oil prices and compounded by policy challenges and security issues. Our Leaders needed to interpret the interconnected causes, including global oil dynamics, domestic economic policies, and security concerns in the Niger Delta. The Economic Recovery and Growth Plan (ERGP) was developed as a response, focusing on diversification and stabilisation. While the ERGP provided a strategic framework, the process highlighted the need for consistent policy implementation and addressing underlying structural issues. This still needs to be done, and our leaders have yet to learn any lessons they could apply in subsequent crises.

The second is the current economic crisis that has been exacerbated due to the implementation of fuel subsidy removal policy. Every Nigerian knows the need to remove fuel subsidies, but it takes work. Periodic attempts to remove fuel subsidies faced public resistance due to their impact on living costs and inflation. Our Leaders needed to balance fiscal sustainability with socio-economic impacts. Understanding public sentiment and economic realities was crucial in framing and communicating subsidy reforms. Subsidy removals were often met with protests, highlighting the need for transparent communication, phased implementation, and accompanying social protection measures.

However, the hurried end of the subsidy without mapping the multiple scenario implications and making adequate provisions to cushion the impact threw our economy into a whirlwind of desperation, and the repercussions have been devastating, as indicated in the above economic statistics. Developing multiple scenarios based on different interpretations of the crisis helps prepare for various potential outcomes. Effective sensemaking includes proactive risk management and contingency planning. Lack of effective policy management is creating more public angst than the actual policy itself.

The third is the unintended devastating impact of harmonisation of the exchange rate during a period of dollar crunch and scarcity without remedial provisions for the inflationary implications of a devalued Naira in an import-dependent economy. The Naira has collapsed by over 200% in the past year, forcing the prices of all imported goods to follow suit. The combo of exchange rate-induced inflation and subsidy removal inflation has resulted in the worst inflationary rate in a generation in Nigeria.

Crisis leaders are problem solvers. They can adjust plans, policies, and responses as new information is gathered or situations change. This means listening to stakeholders, voices of reason, and experts. The recurring question throughout this economic crisis is: Where are our crisis leaders? Political leaders are poor crisis leaders because they fail to recognise the warning indications of impending challenges and rarely put the lessons they have learnt from past crises into practice.

Decision-making in a position of leadership is challenging. It is more significant when a decision impacts the lives of numerous individuals. Our leaders at various strata have yet to appreciate this. Decisions are often made without the rigour of clear thinking or fall back to the narrow framing of A or B. Lack of strategic foresight and thinking abilities manifest in most of our decisions.

Therefore, Nigerian leaders must deeply analyse the crisis’s economic, social, political, and cultural dimensions. This involves understanding both macroeconomic trends and grassroots realities. They should engage with various stakeholders to enrich the sensemaking process. Collaboration with experts, community leaders, and international partners provides diverse insights and fosters collective action. Sensemaking is not a one-time activity but a continuous process. Leaders must remain open to new information, willing to reassess situations, and ready to adapt strategies as the crisis evolves. Transparent and consistent communication will help them in managing public perceptions and reactions.

By Dakuku Peterside

South Africans voted in national and local elections on May 29, exactly one year after Nigeria inaugurated its current president. Since 1994, this election has been the most significant post-apartheid election and the most unpredictable in the country’s 30 years of democratic rule. The ruling African National Congress (ANC) lost its parliament majority for the first time, possibly paving the way for the country’s first coalition government.

With voter discontent, leading opposition parties, including the Democratic Alliance (DA), the Economic Freedom Fighters (EFF), and newcomer umKhonto we Sizwe (MK), put pressure on the ANC through uninterrupted mass campaigns and countrywide rallies, promising sweeping reforms in hopes of swaying most registered voters to their side. Unlike in most parts of Nigeria, the elections proceeded smoothly, without violence, ballot snatching, or shootings. South Africans demonstrated discipline and respect for the law. This notwithstanding, the stakes were high, and ANC’s historical advantage was side-stepped. This election significantly shakes the existing political order and deepens democracy in South Africa.

Economic concerns had a massive impact on the election’s result. South Africans shifted their focus from a “freedom-centric politics” to an “economy-centric politics.” Under the ANC administration, South Africa has had to deal with a high unemployment rate, the highest murder rate in 20 years, and pervasive corruption. Their economic concerns include a lower GDP per person than in 2008 and the state is becoming less effective. A case in point, in 1997, South Africa ranked 47th of 123 countries in the Economic Freedom Index, a ranking by the Fraser Institute, a Canadian think-tank, based on the size of the public sector and the extent of regulation, but by 2021 it had slipped to 94th, just ahead of Nicaragua; national debt as a share of GDP has more than tripled, from 24 percent in 2008 to 75 percent; a staggering unemployment rate of 33 percent with above 40 percent employment among youths and black people; massive infrastructural decay and deficiency.  Last year, Eskom, the state-run power company, with a generation capacity of 44,175MW, way above Nigeria’s 4,000MW, had to schedule a record number of blackouts because its generation fell so far short of demand, and customers lost almost 40 percent of piped water  before it reaches customers.  The railway system is dysfunctional. The World Bank reckons that crime costs South Africa at least 10 percent of GDP annually. South Africa was the seventh most crime-saddled country in the world, according to an index compiled by the Global Initiative Against Transnational Organised Crime.

These issues played on the minds of many of the voters, who are predominantly young and black people and are a bit distanced from the Apartheid politics of freedom and liberation that helped ANC dominate the political space in South Africa. Although ANC won most parliamentary seats, it increasingly requires forming a coalition government because it is not getting the dominance of yesteryears in the political space. Their mismanagement of the economy and the high level of crime and corruption in the system have forced some party loyalists to move to other smaller parties, and voters are increasingly demanding a change. Although we may still have the ANC in power, their dominance has eroded, and their power and authority are challenged. The more the generation that saw apartheid and is sentimentally attached to ANC as the freedom party fades away, the more ANC must rely on young voters who will vote based on the vagaries of the economy. Many young people interviewed after the elections pointed to economic reasons as the most crucial consideration in voting for candidates and parties.

This is a new trend across Africa. In most African democracies, especially those with a high young population, the foremost considerations in the voting pattern are shifting from traditional religious, ethnic, or tribal considerations steeped in the country’s history to economic reasons. A cursory look at the core campaign issues and discussions indicates that they centred on the economy, poor governance, crime, and insecurity. This implies that politics in countries facing economic difficulties are increasingly making economic issues the main burner, although other factors may still be entrenched. What can we learn from the seismic shift in the SA political landscape?

The first implication is that Africans, especially young Africans, have started to expect and demand good economic development from their governments. This is a welcome development for the deepening of democracy in Africa. Young Africans are harshly affected by poor economic management by governments, and they have started to mobilise and understand that politics defines the economy because the people who handle the economy are elected to office by them. Although this is at an early stage, we hope it continues and takes root in our politics. The only negative aspect of this is the level of political apathy among the youth.

The second implication is that the more the economy becomes the centre stage of political rhetoric and discussion, the more efficient management of the economy becomes the dominant political agenda. This is good for African politics. African nations need better economic managers now more than at any other time in their history. With the booming young population, substantial natural resources, and an emerging educated and upskilled workforce in science, technology, and the arts, Africans are poised to bring about sustainable economic development across the continent.

The new politics of pro economic growth is the only hope for Africa if it must get it right and leverage its great potential, especially youthful population, to harness the greatness of its strengths. Here lies the paradox. These strengths and potentials are time bombs that, unless adequately managed by democratically elected leaders who are savvy in the economy, the crisis and doom it will turn to will shock Africa. The evidence of this is the level of increase in crime and insecurity in many African countries.

The mix of economics and politics is the new order, and every serious party of any African nation must take note of this and reshape the vision accordingly. It spells doom when party leaders like Mr Ramaphosa repeatedly prioritised the interests of his party over those of the country. ANC has paid a hefty price for this mistake, and we hope they and other big parties across Africa will learn from it. Leave out the economy at your peril. Young people are looking for answers to Africa’s many problems, especially economic problems. They need solutions, not identification of problems. Everywhere in Africa, economics determines politics.

South Africa has gone to the polls, and Nigeria must learn many lessons from them. First, the elections were free, fair, and well-organised, with citizens disciplined. Even when there were minor hitches, it did not undermine the integrity of the electoral process. In contrast, elections in Nigeria are always overly the opposite. The elections are not primarily free and fair because of many irregularities, which are too many to elucidate here. During elections, some Nigerians are lawless, undisciplined, and unpatriotic. In the words of Basil Odilim, “No nation has ever achieved development with citizens who are undisciplined, lawless, and unpatriotic.”

Consequently, Nigeria’s economic journey is on the road to nowhere. We must put our economic journey on the road to somewhere. A patriotic, disciplined, and creative mindset is needed for economic growth. The best way to show patriotism is by participating in the electoral process and electing leaders who will manage our economy well and prioritise productivity over consumption and corruption. The election is the first step to getting good leaders in Africa.

Every South African voter was concerned about a cocktail of widespread corruption, a high unemployment rate, electricity failure, and stifled economic growth. Nigeria’s democracy will focus more on economics and quality of life than on trivial matters as we cross the 25th anniversary of democracy and more young people join the political process. South African voters were concerned about the same issues we are dealing with in Nigeria. This speaks to Chinua Achebe’s “Things