Abuja, The Resource Curse

At The Airport

I landed at the international airport in the Nigeria’s capital Abuja – a planned city (Like Canberra or Brasilia) built in the ‘70s out of nothing – in thick haze of desert dust and a blinding sun. It is hotter than Accra, closing in on 100 degrees, but is much drier, so in the shade the heat is bearable. I made my way through the Chinese built airport that feels about 90% complete, through large empty spaces, some with the odd security guard sitting awkwardly on a folding chair and to a spot with a row of battered wooden desks where the money changers sat, each with an automatic bill counter prominently displayed. They look like they’ve been lifted straight out of the bazaar in a large town and are missing the hustle and bustle in which they would normally ply their trade. What could possibly go wrong working with these guys?

The thing in Nigeria is that you’ll always need some local cash – Naira – but using a credit or debit card to get this can be fraught (They often get hacked). The Benjamin rules here, as it does in many places – I had meant to bring a stack with me but let that slip when getting ready to travel. So, I may have to break down and use my card at some point anyway but for now I pull several US twenties out of my wallet and give them to a sharp looking fellow in a Kufi and a loose, full length Agbada behind a wobbly table. He does the math as I hand him the bills and has returned me a stack of 1000 Niara notes from his counting machine before I can blink.

My driver is there to meet me at the curb and we head off down a broad freeway into the City whose first couple of kilometres are lined with tall Cypress trees, with cars ripping down the open road, large gas stations every now and then. The odd pedestrian walking on the shoulder; a guy with a cart of firewood pushing it slowly along. What looks like a large covered stadium that Joseph proudly tells me is Nigeria’s largest church. The landscape is dry and dusty, not the Sahel exactly – that starts at Nigeria’s Northern border – but close.

Joseph is as thin as a rail and quiet and handles his somewhat broken down car with care and speed, making it off the freeway and onto City streets smoothly, tooting his horn steadily, slipping into the slowly moving whirlpool of metal in an uncontrolled intersection, taking on trucks and buses, parrying and thrusting in a manner that all seem to understand preternaturally. The car is a little worse for wear with windows that work intermittently, a touched up paint job, loose trim and door seals that are carefully placed before each trip and a general feel of wear. I feel perfectly at home.

We listen to a station with lots of good local hip hop that is less misogynistic and rude than what I remember back home, DJed by a young woman whose accent is straight out of Orange County. Now and then Joseph switches to country gospel tunes, complete with pedal steel that he sings along to quietly, sincerely.

The hotel is ‘90s modern and reminds me of places I would stay in Texas on business trips in that decade. Shiny marble and granite surfaces, chrome, air conditioning full on. I go through a security screen, the alarm wails loudly because I haven’t emptied my pockets; no gives this any mind and I head into the lobby.

A large, mostly empty dining room with a sizable buffet with a few forlorn looking people stabbing at a plate of pasta or a salad. Businessmen and women come and go, some in some amazing outfits: I saw a fellow with a silvered goatee, a brightly patterned Agbada and bright fuchsia headgear that could have been a turban right out of Disney’s Aladdin. The odd Westerner that looks like they’ve weathered a few storms; the kind of folks whose career path may not have been entirely orthodox.

I walk to the Abuja National Mosque before sundown one evening as the air begins to cool along large open boulevards laid out when the automobile ruled supreme, with locals driving to beat speed records. Crossing the road on foot is a life risking task. Past a number of half constructed and abandoned buildings, the concrete and re bar rusted and stained, greenery overtaking the site steadily, slowly. Some have squatters – I see washing neatly hung out to dry between two concrete columns. Undaunted by their abandoned brethren, construction cranes pop up on the skyline – hope springs eternal. By a couple of fellows selling garden plants, watering their charges all neatly laid out along a stretch of empty lot. Ferns, cactuses and items I recognize from our garden back home but cannot name.

The mosque’s minarets look like so many missiles ready to launch, its metaled dome gleaming in the setting sun. I get glimpses of the empty and cavernous worship space. I chat up a gaggle of men relaxing on a prayer rug at one of the gates and they invite me for sweet spicy tea served in a red Solo cup – beer pong for the faithful – and fresh fruit. They are contented fellows with 2 – 5 children each and do this every day – prayers at 4 PM, bro down until prayers at 8 PM and then home to the family whose wrangling and needs have been taken care of by their wives. One carefully explained to me that he could have up to four wives but that it was way too complicated and expensive to do so. I try to imagine the personal dynamics of a family with four wives but it just makes my head hurt.

I have two clients in Abuja that I have come here to see. Oayje has built an IT services firm of about 150 people that serves all of Nigeria with hosting, network support and analytics and wants to quadruple the company’s revenues in a few years. He is a quiet, thoughtful man and has delegated much of what needs to get done to his senior management team. A good chunk of his business comes from government agencies whose budgets are in a constant state of flux so he often has to finance them until he gets paid.

Gboyega just got back from pitching business in Senegal – a French speaking country West of Nigeria – for his 180 person mechanical engineering firm, which has worked on most of the major Nigerian shopping malls constructed recently He too has made the shift from “I started this company, I control everything” to delegating to his senior management team. Early one afternoon he took me for lunch at an Indian place on a shaded terrace in a new shopping mall, chauffeuring me in his Range Rover with the air conditioning blasting while I viewed the City slip by through tinted windows.

My five clients for the first half of the year have much in common but are different in their own ways.  I am impressed by the leaders’ desire to contribute to their country’s development and find this quite humbling; it is difficult to start and run a business anywhere but here the obstacles are very large. All the clients need help with marketing and sales (easy enough to figure out), all have to deal with corruption. Capital is universally difficult to access in West Africa, even bank loans have interest rates in the high 20s, so funding expansion is difficult. Finding people that can work in a team structure within a flat organization is difficult as the standard business culture here relies on a hierarchical “command and control” set up.

Two of my clients in Accra haven’t made the shift from a closely held, family run organization to one that has a senior management team that can enable the business to scale and I think it will be challenging.

The Resource Curse

Nigeria was often cited a few decades ago as an example of a country with a Resource Curse – in the late ‘70s, oil made up 38% of its exports and the money that flooded into the country after oil shot up in price distorted the local economy, made many people wealthy, especially politicians, but didn’t help most folks.

The Resource Curse is an idea that became popular among development community a couple of decades ago, suggesting that countries with a surfeit of exportable resources (Oil, minerals, diamonds) often are destabilized and damaged by the revenues those resources generate. The revenues drive up the prices of goods in the country, attract human capital to the resource extraction business from other industries, delays diversification, and often leads to significant corruption.

This idea has been around a while – it was known as the “Dutch Disease” in the ‘50s, when the Netherlands developed offshore gas fields and the subsequent revenues drove up prices and exchange rates, making its labor less competitive and the economy more dependent on imports.

One not need look too far to see examples of this: the Democratic Republic of the Congo, whose Eastern region is large source of Coltan, a critical ingredient in the device you are reading this on, is pretty much a failed state, in spite of being resource rich. Millions of people had died in the country due to an ongoing civil war (Principally through starvation and disease) and today over 2 MM children there are acutely malnourished. The revenues from resource extraction go to the despot in power and the gangs that control its trade, not to the people.

There have been more recent studies that suggest that either the effects are correlated not causal (i.e. resource wealth and weak economic and social development occur together but the former does not cause the latter) and even that resource wealth can be a blessing (Not a curse): Norway and Australia have done rather well with resource export based economies, as has my home province of Alberta.

These days oil contributes about 8.5% to Nigeria’s GDP and it is no longer a key source of petroleum products in world markets.

Comments

  1. Anna-Mary G Morgan says

    Wonderful to hear all this.
    So interesting.

  2. This is an especially relevant and interesting post. We have contact and friendships with at least 6 Nigerian families who have immigrated to Calgary with their Very Strong Education, mostlly from the UK, and are now part of our circle of friends. So your descriptive stories really fill in the blanks for me. None of them are 50 so the human resource drain is huge. They are lovely. USA has just added Nigeria to the countries whose people cannot apply for immigration, as of yesterday. Sigh.

  3. Ah Nigeria!
    You describe your experiences and observations so well, Hugh.
    I can almost smell the harmattan dust and hear the taxi driver softly singing along with the radio as he manoeuvres his precious vehicle through the traffic.
    Thanks for writing.

    • Hugh Morgan says

      Thanks Justine – I am hoping to get up to Naimey (Niger) to visit some American missionary friends, really want to see the Sahel / Sahara with its strong Muslim tone.

  4. Sheri Stock says

    Am so enjoying your posts and education they provide. I hope you are enjoying, too!!!
    sheri

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