Wednesday, March 28, 2012

LET THERE BE LIGHT






As of today, Wednesday March 28, 2012, there has been no light where I live. The generator has been running since Saturday night (Well, the generator takes a three hour break and resumes for duty).  Erratic power supply is a pet peeve of mine. I cannot comprehend why there would be no constant power supply in Nigeria considering the resources we have and the amount of money that has been sunk into that industry. Our electricity challenges make me believe that our leaders do not care about addressing this issue.
I say this because, the process of electricity supply is simple.  It is divided into  three or  four stages. These are: generation(the process of converting raw energy into electrical energy), transmission (the transportation of electricity in high voltages from generation to distribution), distribution (process of delivering electricity at low voltages from the transmission network to the final consumer), and retailing ( this is purchasing wholesale electricity and selling it to the consumers). In Nigeria, we have stages 1-3 (handled by one company NEPA/PHCN). What are the traditional fuel sources of electricity? They are natural gas, hydro, and coal. This begs the question of why we cannot have constant power.
Anyways this post is semi- good news. Before I share the good news, some statistics:

  • Over 2 trillion naira was spent on “tackling” Nigeria’s power problem between 2000- 2007.
  •  In urban areas 40% of the population is connected to the national grid; in rural areas it is 15%.
  • We do not have electricity 60% of the time (that is what researchers say, my experience is more like 90%) About 60 million Nigerians own generators and as at 2009 N1.56 trillion was spent to fuel these generators.
  •  Nigeria claims to have an installed capacity of (6,000 Megawatts) but actually generate a peak of 4,000 Megawatts of electricity. This is a sixth of what New York generates (the State has a peak capacity of 37, 707 Megawatts. This is also a sixth of South Africa’s peak capacity.
Over the years, States (E.g. Rivers and Lagos) have agitated for the right to independently generate power. On the 7th of March, the NERC (Nigerian Electricity Regulation Commission) passed authorizations that would allow states and local government to generate and distribute their own power. You can read the regulations here and here.
 Ideally, these new regulations are good politically and economically: politically, residents in a state can hold their governments accountable for power supply. This is because state and local governments are closer to the people. From experience, I have witnessed residents visiting their representatives and leaders to report issues that affect them. Thus, citizens who feel strongly about power supply would make their demands known to the government. Related to this is that, it is easier to vote out a governor or local government chairman for failing to deliver constant power than a president.
 Economically, these regulations do two things. First, states that are not financially buoyant can collaborate with States that have the financial capacity to generate electricity. For instance South Western states of Nigeria can incorporate electricity generation and distribution into their DAWN (Development for Western Nigeria) Agenda, second, these regulations may provoke healthy competition among states and local governments and promote economic development. For instance, if Osun state has 24 hours power supply and my business is in Oyo State or Lagos, holding constant other factors, I would relocate my business to Osun and pay taxes there. This leads to more revenues for Osun State and Oyo may see the need for constant power supply. We see a real life example of this in significant number of Nigerian businesses and investments located in Ghana and South Africa.
 Practically, how can States utilize these regulations? I don’t think States that decide to generate their own power should create NEPA-like institutions because of the inefficiency of NEPA. If state governments get involved in generating, transmitting and distributing power, the same problems of NEPA would be recreated. I submit that States can provide the necessary infrastructure for generation and transmission. That is, States can enter into public- private partnerships (PPP) with interested investors. PPPs are necessary because States can’t go it alone for above reason and also because there are competing needs with limited resources. Alternatively, they can hands off PPPs and assist private investors get partial risk guarantees from IFIs like the World bank.
 Let us assume that the problem of capital is solved, how would the government prevent exploitation investors get capital to generate, transmit and distribute electricity, what would the government do to prevent exploitation. My answer is regulate and set prices (tariffs on electricity) like it is done in the US and UK. As an aside, in sister African countries like Ghana and Botswana, electricity generation is done by the state and there is constant power supply.
That said, I recommend privatization because of the Nigerian factor. However, in what ever PPPs that would come up as a result of these authorizations, the government should remember that their role is to protect the people from exploitation by businesses – hence the need for strong regulation- and yet create conditions that incentivize the private to come into this business.
 After all is said and done, what would be the role of the NEPA? One important issue that needs to be addressed is the issue of power generation and I propose that this should be the focus of the agency Our electricity generation is far below optimal and the FG’s goal is to generate 10,000 MWs by 2020. This is incredible! 10,000 MWs in 2011 does not effectively address our power problem now. I suggest that at the Federal level, the power ministry should work on harnessing and utilizing the sources of power generation. The ministry needs to look into other sources of power generation such as solar energy wind, coal and nuclear energy so that by 2020 we have an installed capacity of 50, 000 MWs.
 Ok, so that’s the end of my submissions and proposal.

 Deuces.

Sunday, March 25, 2012

#WBpresident

JYK, NOI& Jose Ocampo


The race for the job of the World Bank president has made international politics interesting for various reasons. First, this is a position that is traditionally held by a US citizen and is a routine appointment by whomever is the US president.  The North challenged by the global South and has agreed to a merit based and open selection of the new WB president last year.  Second, a woman is vying for the position (If she wins, the top 2 IFIs would be headed by women.Christine Lagarde heads the IMF). Third, the front runner has stepped down. Thus, it is a three way race between three minorities- Jim Yong Kim (An Asian-American), Ngozi Okonjo- Iweala (An African woman) and Jose Ocampo (A Columbian)
. Why should we care about who heads the World Bank? We should care because World bank policies affect countries like ours. Over the years, the IMF and the World bank have been criticized for proposing policies that harm developing countries economically. Their policies are considered harmful not necessarily because they are evil but because they fail to consider local factors in their policy recommendations and conditions for aid. Consequently, their policies negatively affect the economies of developing countries – remember SAP.

Bretton Woods policies also tend to benefit the global North rather than South- the classic example of this is trade liberalization and its effect on developing nations.
I do not know a lot about Bob Zoellick’s positions and legacies at the World Bank  but I know that in the last few years the institution has been involved in open data and project mapping in Africa. That is a good thing because it promotes transparency.
The World Bank Article lists the criteria for a World Bank president as:

  1. a proven track record of leadership
  2. experience managing large organizations with international exposure, and  familiarity with the public sector
  3. ability to articulate a clear vision of the Bank’s development mission
  4. a firm commitment to and appreciation for multilateral cooperation, and
  5. effective and diplomatic communication skills, impartiality and objectivity
Considering the level of development and urbanization that would occur in the global South in the following years, now is the time for the institution to be headed by someone who knows the business and who can direct the bank so that its development objectives are achieved.  There have been calls for an “unconventional” president that would transform the organization in the areas of its goals and internal structure. Three candidates have been nominated for the position. They are:
•                     Mrs Okonjo- Iweala (NOI). She is a favourite for the position and she is eminently qualified for the job. However,  her disconnect with the realities of her country may mean that her leadership of the institution may not translate into positive changes for developing countries. Secondly, Mrs Iweala’s country of origin may be third world but her ideals are similar to that of an American or European- If one listens to NOI, her policies and proposals seem elitist.
•                     I never heard of Jim Yong Kim until this afternoon. He also has very  credentials that put him in good stead for the job.  He is also an unconventional candidate because he is an outsider- he is not an economist. However, he needs to be accepted by developing  countries even if it is only for legitimacy purposes.  His lack of financial and economic experience may work against him but hey, he is a university president. He surely knows a thing or two about administration   
•                     Jose Antonio Ocampo Columbia’s former finance minister and academic is a well liked candidate that lacks the support of his country but was nominated by Brazil and Dominican Republic. He is also eminently qualified and has served IFIs in various capacities.

The question is: which of these candidates is capable of transforming the Bank and repositioning the global institution to achieve the goal of poverty reduction? Answer: I can’t tell because all three meet the criteria but I submit that JYK would win because 1) historically, the WB head has been a US nominee. 2) Even though the North has pledged to an open and transparent system for choosing the new president, the North holds majority of the voting bloc and decides who wins the presidency.
Not to sound pessismistic, the individual that would emerge as the next WB President seems a done deal but I would welcome any surprises.
On lighter note, JYK Is having the time of his life.
May the best man win.



Saturday, March 10, 2012

Wednesday, March 07, 2012

Open government, transparency and corruption


Sunshine is the best disinfectant- Louis Brandeis

This is going to read like a lecture, please bear with me.
Here goes:

In other parts of the world (read: UK, US, Australia and Kenya) governance is being redefined. How you may ask, governments are making themselves vulnerable by releasing to the public, information on the processes, activities and expenses of government. Thus making them more accountable and transparent. In the US and UK, governance is becoming a shared activity between, the elected, the civil service and the people.
First, some definitions: open government is “the notion that the people have the right to access the documents and proceedings of government…it means a  government where citizens not only have access to information, documents and proceedings but can also become participants in a meaningful way”. A term associated with the open government movement is open data. Open data as it relates to government is the ideal that information/data should be freely available to everyone to use and monitor the government. This is different from the Freedom of Information Act (FOIA) which is request driven. For instance, I want to find out how much a senator earns, I would write to the appropriate authorities in the Senate and demand that information. On the other hand, open data is when the Senate releases figures and information on its expenditure e.g. the number of jeeps purchased for legislators each year; when FRSC releases publicly in a machine-readable format, the victims of vehicle accidents; the amount of money spent on coffee in the Ministries etc. In summary, open data is not request driven, it is openly given. Open data can be used for mapping (health incidents, community projects) and citizen engagement. I believe that open data (more like open information) can be used to address corruption which sadly has become a part of our DNA as Nigerians. I read an article on corruption and sadly, I agree that in Nigeria, corruption pays.

How can open information reduce corruption?
 I agree that sunshine is the best disinfectant. I may be wrong but I think we humans have the capacity for shame and no matter how thick-skinned we claim to be, no one wants to see their names appear in damaging newspaper headlines. The simple solution is governments at all levels should make publicly available information on their activities. That is in 2011, we budget 10 million for so and so and at the end of the year, we spent so and so. That’s it.

However, it is not that simple. For open information to be useful and truly exist, two things have to happen and they are:
1)   The re-organization of the civil service: the civil service is the backbone of any government and society.  Sadly, on the issue of corruption, Nigerian civil servants jointly share the blame with rulers. Political willingness is vital in ridding the civil service of the patronage system. The civil service at all levels has to be reformed and re-organized because information may be released but may be manipulated such that it becomes a case of the more you look, the less you see. The challenge here is that the civil service would kick against reforms because their corruption would be exposed. If somehow, Nigerian civil servants can submit themselves to public scrutiny, we may see better governance and improved development.
Related to civil service reforms is participatory budgeting (I suggest this though we may not be quite ready yet). If communities and citizens are involved in the budget process at the local and state levels, governments may be made to provide what citizens actually need and not what the government thinks they need.
2)   National discourse and agreement on how to strengthen our institutions such that they do not revolve around people. Nigeria and Nigerians need to have that very frank conversation. Second, our constitution has to be changed. I understand the need for federal character but this promotes corruption.
If we can address these underlying issues, we are on track to tackling our graft problem. An aside, check out this site on budget watch and citizen engagement this is an example of a citizen- led effort to promote open government.
 Might I suggest that international financial institutions have a role to play. They know and we know how highly respected they are in our country, so rather that imposing austerity measures as conditions for loans, they should insist on open data so that they and Nigerians can track on monies are spent. Active roles by international financial organizations would also assist reform minded technocrats in speeding up the change process.

Conclusion…
OK, thank you. You have come to the end of the lecture. I rest my case.

Thursday, March 01, 2012