SPEECHES
Consul General Brian L. Browne
Speech To
The Nigerian American Chamber Of Commerce
July 27, 2006
I am pleased to be with you this afternoon to mark the end of your fiscal year and to mark an important step in the evolution of the chamber - a change in leadership.
The outgoing Chamber President, Chief Dr. Sola Dada has worked diligently to build a good relationship between the Chamber and the US Mission in Nigeria. Thank you Sola.
At this point I would I would also like to recognize our new Commercial Counselor, Johnny Brown who is really not so new (not trying to say anything about your age, Johnny). I say this because many of you know him from his first tour in Nigeria from 1986 to 1990. Johnny's mandate is to strengthen commercial links between the two nations and he will use his considerable talents and experience to do just that. Thank you for returning to help us Johnny.
Incoming NACC President Olaolu Akinkugbe has also been a key ally in linking the American and Nigerian economics closer together. In fact, his very life personifies that linkage. I know he will ably carry the baton Chief Dada has handed him. Thank you Olaolu.
You have asked me to lead the discussion on "ways in which Nigeria can better take advantage of the non-oil sector of the economy and the benefits therein".
Before I begin my remarks in earnest, it is my custom to issue the following caveat. When you asked me to speak, I presume you do not want to hear the same things that you have so often heard in the past. I assume that you have asked me to speak in a way and a manner that adds value to accepted conventional wisdom. I will try as hard as I can so that I not disappoint you. In this vein, I will speak as plainly and directly as possible.
I do this not to be ungracious. After all I am your guest and am grateful to be that guest. But a sincere guest does not come into a person's home, sit down at the dinner table to eat your food while saying nothing as he sees someone stealing your car. Whosoever does this is not a guest but an intruder. No, a true friend alerts you and helps you chase away the thief, then you both can return to enjoy the meal in greater security and increased trust.
As a representative of the U.S. government and its diplomatic mission in Nigeria, I stand before you as that type of friend. The type of friend that wants to help Nigeria chase away the thief of economic dislocation and underperformance so that Nigeria and Nigerians can sit down at the table to enjoy the full and complete meal of economic opportunities that they deserve and to which they are destined.
In other words, I stand here as the representative of a people who like Nigeria and thus are concerned about its economic trajectory. We want it to go higher and be a more positive one. Thus, as your friend, I ask that you give me a little shall, we say-diplomatic license or leeway -to convey what I think most appropriate to this audience.
Now, the first hurdle to overcome in spurring non-oil economic growth is conceptual. The national economic mindset needs to recast. Each nation, each economy must strike a balance between control and order on one hand and freedom and creativity on the other. If a nation unduly controls and regulates activity it will handcuff the economy and shackle opportunities to create wealth. Yet, too much freedom lends itself to abuse and unfair practices by actors unfamiliar with the notion of self restraint. Neither extreme is desirable.
The optimum lies somewhere in the middle. However, years of military rule in Nigeria has institutionalized a national imbalance toward too much control. The advent of democracy has brought a partial shift to a more productive equilibrium; yet that shift remains incomplete. To fully accomplish this important task, Nigeria's economic policy makers have to be fully conscious about the need to recalibrate this balance. Such a fundamental change does not occur by chance.
The second intangible is related to the first but it has more of a psychological bent. Consider the following scenario: Imagine a two person society. Now imagine there are two ways to order the wealth of that society. One where you had $40 dollars and the other person has $30 or one where you had $20 and the other person had $10. You would be surprised how many people would prefer the latter scenario.
They would pick it because in the first case, the other person had 75% of the wealth of what they would have. But in the second situation, the hapless other person only had 50%, thus the wealth differential between you and the second person is greater in the second case than the first. Although you are less well off than in the first scenario, the fact that you would have twice as much as the other person makes the second example more attractive to some people. The extent that people think in this fashion is the extent to which they will subconsciously choke the overall economy in order to maintain their advantageous hold of it.
Ultimately, political, economic and social affairs can be distilled to the themes of power, wealth and status. There is no clear-cut boundary between politics, economics and social affairs. They represent different points on the continuum of human interaction. Power, wealth and status are ingredients of the three. However, there is and should be a difference in emphasis.
In politics, more emphasis is placed on power, while economics should place greater emphasis on wealth and social issues on status. In Nigeria, too often the emphasis is misplaced. In Nigeria, too often politics becomes an avenue to wealth while economics is the tool used to define the power relationship among various actors. In such an atmosphere, economics takes on a quality that transcends normal economic competition. It becomes much too much an adversarial activity.
Thus, too much energy is spent trying to lance the competition instead trying to better one's self and one's economic activity. This attitude spawns wealth dissipation not wealth creation.
Once these conceptual and psychological perspectives are changed, then we need to tackle some structural basics.
Modernization and amelioration of Nigeria's infrastructure base are prerequisites to maximizing the growth of the non-oil sector. One's infrastructural base forms the boundaries within which all economic activity must be performed. If these borders are not expanded, the economy will not expand. After all, a pie can't get any bigger than the pan in which it was baked.
Thus, the need to expand the transportation system (roads, ports, railways, airlines and airports) to improve power generation and to bring water are paramount. These things will drive down costs of production, making it easier for firms to compete in the global marketplace and to attract further investment into the non-oil sector.
Infrastructural improvement is also a great mobilizer of the workforce. This speaks to an important ingredient in putting Nigeria's greatest asset-its people-to work for the good of the nation and for their own personal betterment so they can acquire the skills and employment needed to allow them to shape their own destinies and map out their individual paths to dignity, prosperity and self-fulfillment. Improvement in infrastructure will have a close and positive correlation with growth and expansion of non-oil sector business activity.
This in turn will further increase employment. The more people become employed, the less social stress and the less strain on government's finite resources. This enhanced environment can only further encourage more investment and employment. The heretofore unhealthy cycle of depressed economic activity and unemployment will steadily be replaced by a more salubrious one of business expansion and job creation.
Simultaneously, we need to open the economy. Right now, the Nigerian economy has the aspect of a potentially mighty river that has been reduced to a stream because the flotsam and jetsam of past years of misguided practices and policies have clogged its channels. Less water is flowing than ought to be and even that reduced amount of water is moving slower than it should.
This brings me to the central point I want to make. That is the need to increase the volume and speed of Nigeria's economic activity. If you look at the march of economic progress you will see that one of the driving forces has been the reduction of time it takes to complete an economic event-be it the assembly of a product or the completion of a transaction or provision of a service.
In other words, speed has become increasingly essential when it comes to economic performance. Nations that understand and embrace this postulate to maximize the velocity and volume of their economic transactions will profit and prosper. Those that do not grasp this truth will lag behind. You are either riding in the flow of history or you are struggling against it. The former will win, the latter will lose.
One of the most important components to increasing the speed and volume of economic activity is the need to make land use more economically productive. Despite the advances in software and information technology that now bring much of the world to your keyboard; one cannot escape the reality that a business has to have physical location. You can live anywhere but, you have to build the house somewhere.
Thus, before you can have a factory, bank, or housing estate, you need land. In an optimal economic environment, land conveyance should be unfettered and unrestricted in order to allow the most dynamic economic actors the opportunity acquire the land needed to effectuate their economic plans.
While some regulation is necessary, a liberal real estate market is a prerequisite to sustained economic growth. For not only is the real estate sector important in and of itself, it also is a fount of activity for other sectors such as banking and construction and other related industries.
Unfortunately, layers of land use restrictions and regulations have disabled real estate from being a true catalyst for growth in Nigeria. Conveyance of a parcel of land in Nigeria takes too long and requires too many administrative approvals from too many governmental entities. What may take a week or two elsewhere will take several months in Nigeria.
Due to the slowness and cost of transactions, not as many transactions occur as should occur. The requisite amount and right type of land is not in the hands of the most active economic agents. Thus, land is not put to optimal use in terms of modern economics.
As a corollary, funds that should have gone to land and associated transactions go elsewhere. Banks, construction firms and associated industries suffer. Employment is not maximized. Land remains idle and dreams of factories and office buildings go unrealized. Wealth that might have been created to the benefit of thousands will now be enjoyed by none.
Difficult titling procedures drive property into the informal sector, where it cannot be used as collateral for bank credit, or otherwise benefit its owner. Unregistered property does not build the middle class, the economic bedrock of every democracy, and cannot be completely integrated into the modern economy Nigeria needs to build.
Arbitrary restrictions on land titling and transfer have created artificial scarcity, driven up land prices, and stifled economic activity. Confusion in the titling system causes companies to pay two and three time over the access for their land-at great cost to Nigeria's growth. This should change.
I'd like to turn to another critical aspect of the nexus between business and government-the need for rule of law and efficiency in the judicial court system to support commercial transactions.
An efficient court system-where commercial disputes are resolved quickly and impartially-will bolster the confidence of the business community; encourage greater investment and support increasing numbers of transactions. Time is a valuable commodity. Time spent trudging through slow court procedures equates to money lost, even for the eventual winner.
While they should only be resorted to when things go wrong, swift efficient courts and other conflict resolution mechanisms such as arbitrations, are forms of insurance for a businessperson. But the knowledge of their existence will give people confidence to enter into contracts and execute deals with a wider range of business contacts-thus increasing the galaxy of actors and quantity of transactions within a given period of time.
Strengthening the Nigerian legal system is fundamental to ensuring the rule of law and improving Nigeria's investment climate. Rule of law-including systems which ensure the sanctity and enforcement of contracts such as a Uniform Commercial Code -provides predictability and stability for investors, without these security potential investors will go else where.
High tariffs and import bans are other impediments to economic growth. Most critics of bans and tariffs focus on the higher costs of the domestically produced goods that are the beneficiary of the restrictive trade measure.
I too endorse this argument against indiscriminate tariffs and bans. True, narrowly defined measures to support some key domestic industries have their place; however, these measures should be few, far between and strictly construed to achieve their objective while minimizing their collateral damage to other aspects of the economy. In this vain, indiscriminate or over broad measures not only increase costs, they stifle and slow economic activity.
The higher cost domestic goods are usually slower to produce as well. Thus, there are fewer transactions involving these products. The fewer the transactions the less wealth gets produced. Additionally, the absence or reduction in quantity of the imported goods also will extinguish or delay transactions to which such goods otherwise would have been integral. All of these problems, from decreased investment to higher consumer prices, also mean a reduction in the number and speed of transactions over a given period of time.
Last, economic and financial institution building is needed. The bank capitalization exercise was a demonstration of institutional building in the financial sector. This exercise has had its few bumps but overall most people see it as a success. However, more needs to be done. The CBN needs to continue the process of adjusting its role from simply being a regulatory agency to being more of a policy maker. The Central Bank has the key role to play in shaping the money supply, throttling inflation and managing interest rates to establish a financial regime that promotes business activity.
The executive branch and national assembly, and to a lesser degree, the state executives and their assemblies, need to exercise greater fiscal responsibility regarding government spending and to better understand the consequences of fiscal surpluses and deficit spending to the operation of the national and state economies.
As I conclude, let me reiterate that the United States wants to see Nigeria become an economic success. Nigeria's success will spread stability and prosperity to parts of Africa that have seen too much of the woeful things decent people should not have to experience. Two events of the past few weeks exemplify America's support of the Nigeria economy. On July 17, North American Airlines launched its inaugural flight from Lagos to New York. A few days before that, Ex-Im Bank approved 14 Nigerian banks to participate in a 300 million dollar loan guarantee program to support U.S. exports to Nigeria.
In so many ways this is a historic time for Nigeria. Much has been done recently but much more remains to be accomplished. Let us take on the challenge of economic growth and reform with creativity, wisdom and purpose. Let us do this for ourselves, for the sake of our children and ultimately so that posterity will not look back at what we did or did not do during this critical time and find us wanting.
Thank you.
# # # #
Biography
Speeches
