Nigeria: Oligarchs in the Ring by Chidi Amuta – THISDAY
The unfolding nasty money feud between Mr. Femi Otedola and Alhaji Aliko Dangote may not go away so easily. They are also likely to claim institutional and private casualties far beyond the immediate theatre of conflict. The reasons lie somewhere between the very origins of their stupendous wealth, the very nature of their merchandise and the peculiar rules of engagement in the jungle of primitive accumulation in
which they navigate. Like the privileged pigs in Orwell’s oft quoted Animal Farm, they are viciously nibbling at each other’s tail. One has chased the other into exile allegedly with a chalice of poison. The exile has rebutted with unprintable allegations (they were actually printed!) of massive stock related fraud and corporate armed robbery against his adversary.
But before the two drown some major banks and obliterate whatever is left of the Nigerian Stock Exchange (NSE) and the Securities and Exchange Commission (SEC), someone needs to stop them. But there is a most apposite venue for a resolution which both men need to explore in order to save us the nauseating details of further revelations. They should take their quarrel to former President Olusegun Obasanjo’s living room either in Ota or Abeokuta. They are likely to emerge from there as friends again especially if while the meeting lasts they can put a conference call across to President Umaru Musa Yar’dua.
Somehow, this confrontation was bound to be one of the predictable legacies of the Obasanjo presidency and its Yar’dua aftermath. Through the manipulation of state power, Obasanjo either created or fed a carefully selected oligarchy of mega rich Nigerians. Through a flawed privatisation exercise, carefully chosen national assets were sold to these cronies while lucrative licences, monopolies and concessions for telecommunications, petroleum products imports, and essential daily need items were generously handed out to a few individuals.
In the context of a transition to a free market economy, privatisation would seem a perfectly logical step to take. Nor can anyone fault the vindication of private control of business and commercial enterprise over government control and meddling in business. Our history of public sector ownership and control of major commercial undertakings is quite unflattering. Yet even in the best of circumstances, the transfer of public assets into private hands is an area of public policy that requires the highest levels of transparency and adherence to due process. That requirement is even more imperative in a country such as ours where the notion of a private sector is more a manner of speaking than a reality. Our private sector is, as at now at least, largely an appendage of the state apparatus, depending largely on state protection, patronage, connivance and even outright handouts to balance their books.
As a matter of deliberate policy, Obasanjo went out of his way to empower and stupendously enrich just a handful of Nigerians. I suspect that someone may have sold him the classic lie that a free market economy would thrive best if the commanding heights of national wealth are entrusted in the hands of a handful of “enterprising” individuals. The logic presupposes that these individuals would create further wealth, produce goods and services that would add value to the common good and generally, through a trickledown effect, provide employment for the majority. There is the additional pseudo nationalistic argument that it is better to hand our strategic assets to our nationals than to allow foreigners to control and prey on our national wealth.
The latter argument is quickly deflated by the fact that the government that dreamt of creating the local equivalent of the South Korean Chebols (Hyundai and Daewoo, especially) by erecting the oligarchs and setting up Transcorp as the corporate expression of a latter day nationalism was also out there literally begging for Foreign Direct Investment(FDI). Because of inadequate capital and a scandalous paucity of capacity, no sooner did the Nigerian oligarchs acquire the privatised assets than they headed out in search of foreign “partners”, thereby vitiating the original nationalistic argument.
Therefore, enter the Nigerian oligarchs among who are arguably Dangote and Otedola and the other recurrent characters and fringe actors that bestrode the public-private space throughout Obasanjo’s eight-year tenure. For a government that made a virtue of dismantling government monopolies and parastatals, the creation of the controversial Transcorp with its succession of management calamities provide a rallying platform. That is Obasanjo’s answer to South Korea’s Daewoo and Hyundai, even if we forget the travails of these mega corporations.
In fairness to some of these Nigerians, their own initiatives over time would ordinarily earn them a decent amount of wealth in any situation. Some of them have worked quite hard to create wealth, render valuable service and add value to our national life. But their relationship with the Obasanjo administration would leave the permanent impression that their business empires grew because of the deliberate policy of the Obasanjo administration.
It may even be further argued that there may not be too much that is wrong with a Nigerian government going out deliberately to empower an indigenous business collective either for nationalistic reasons or as a matter of propriety and national interest.
But the less than even handed and in fact translucent manner in which this was done raises questions that may continue to haunt Nigerians for quite some time. Some may in fact attribute the periodic but scandalous shortages of power and petroleum products to this policy. For Obasanjo, the frequent recurrence of these experiences and the untidy squabbles among his oligarchs could make his retirement a little more interesting.
More dangerously, the Obasanjo oligarchs would have fared better if they had managed to steer clear of the tortuous politics of Obasanjo’s monarchical presidency. It is alleged, quite pointedly and sometimes with incontrovertible evidence, that some of these individuals and organisations funded Obasanjo’s flawed re-election in 2003. It is no secret that the same group largely bankrolled and backed the ill-fated Third Term gambit. At least, very few of these individuals can deny their rather generous “donations” to the Obasanjo library project.
If we were dealing with a straightforward financial oligarchy, matters would have been much easier. But this is also a highly politicised group of very ambitious individuals now armed with vast troves of fairly easy cash. In most places, the relationship between big business and political outcomes is never farfetched. It is the recognition that business interests could bedevil the democratic process that countries such as US and Britain have strict legislations limiting campaign donations by companies. But for Obasanjo and the PDP, there seems to be no limits to “donations” and contributions towards the hegemony of the party in power.
One prominent recent example of a conscious creation of a financial oligarchy as a means of transiting from a centralised economy to a free market one is Russia. As a matter of deliberate policy after the fall of communism, the late Boris Yeltsin sold off the vast state controlled assets of the Russian state especially in oil and gas to a select few. Overnight, these individuals who had all manner of links with operatives of state and were indeed quite young became multi-billionaires in dollar terms.
They bought state oil and gas companies, etc and in turn began to set up steel plants, media conglomerates not only in Russia but also in major world centres. By the time Vladimir Putin took over, the oligarchs had become as powerful as to constitute a threat to the Russian state. I guess some of them have since fled not to return to Russia in any hurry. Others have had their vast assets retaken by the state with long prison sentences in Siberia and other inhospitable places in return for all their troubles.
The ongoing interest in the face-off between Otedola and Dangote points to some of the unwritten codes that govern relationships among them and between oligarchs and the state that created them or whose patronage sustains them. First, a money oligarchy thrives on territory. They carve up their target market into sectors and agree, even if informally on who controls what. Anyone who breaks this code commits hubris and sets off a war to re-demarcate territory. So, when Dangote who is better known for sugar, cement and flour ventured into oil and gas, he was straying into Otedola’s territory. So, Otedola quickly deployed his vast resources into cement imports. The consequence is partly what we are witnessing.
Secondly, because oligarchs feed on state concessions and monopolies, they are never indifferent to the political terrain of the state. They jostle for vantage positions in relation to the command and control structures of the state. Because their money brings administrations into being, they also seek to control those they empower. If they cannot gain remote control, they themselves allow it to be mentioned that they can also enter the fray of partisan politics. This often frightens the state and encourages the government in power to ask questions about taxation, customs duty, due process and rules of corporate governance. Most money oligarchs are not the most compliant in matters of financial regulation and best business practices.
Thirdly, wars of supremacy among oligarchs have no rules of engagement. All is fair in these wars: poison, blackmail, leaks, sabotage, and privileged disclosures. In this array of assaults and counter assaults, the institutions of state are recruited at will: police, security, stock exchanges, banks etc are all within the gun sights in a war of oligarchs.
I wager that the feuding between Otedola and Dangote may just be the beginning of the unravelling of the house of money that Obasanjo built. In the attempt by each of these parties to gain an advantage, there may be revelations that could unsettle the rest of the pack and, unfortunately, even those of us outside the immediate range of targets.
from thisdayonline