The brouhaha is a symptom of the deeper problems of Nigeria’s political economy. It demonstrates how the Nigerian state and its government has failed to create a real economy that works for all Nigerians by lifting millions from poverty to prosperity, but instead has promoted vested interests of various kinds in the name of the “private sector” and “business.” Dangote is far less the issue, in reality, than is the Nigerian government and its track record.

Amidst the controversies over Aliko Dangote’s massive refinery and the stand-off between him and the Nigerian government, let’s not lose sight of the real issues. The brouhaha is a symptom of the deeper problems of Nigeria’s political economy. It demonstrates how the Nigerian state and its government has failed to create a real economy that works for all Nigerians by lifting millions from poverty to prosperity, but instead has promoted vested interests of various kinds in the name of the “private sector” and “business.” Dangote is far less the issue, in reality, than is the Nigerian government and its track record. Because whatever anyone accuses Dangote of, assuming that those allegations were even to be true in the first place, could not be so if the Nigerian government was awake to its responsibilities. This is an opportunity to return to the fundamental questions about our economy, and seek solutions.

Can we? Will we? It would surprise me if the Dangote refinery saga – in which Dangote alleges an intent within the Nigerian National Petroleum Corporation, oil regulators, and the international oil companies to sabotage his refinery by refusing to supply it with crude oil, while the government oil regulators accuse Dangote of seeking to monopolise the oil refining market, in violation of the national oil company’s pre-existing contractual obligations with other customers — results in any real solutions to the fundamental problems of economic governance in Nigeria. These challenges, as is evident, are corruption and rent-seeking, incompetence, and intellectual emptiness when it comes to economic management. This last issue of intellectual vapidity in the management of Nigeria’s economy has been pronounced and dominant over the past 10 years. These factors are the real reasons 133 million Nigerians live in multidimensional poverty. And that figure is certainly outdated because it was established well before the cost of living crisis that has pushed tens of millions more into poverty in the past year since President Bola Tinubu’s administration entered into office.

We love drama in Nigeria – effervescent controversies that appear as if they will bring down the roof on the house but only serve, ultimately, as part of a daily diet of distractions from addressing the underlying challenges of the Nigerian state. They keep our tongues wagging over chilled bottles of beer, wine or in WhatsApp chat groups populated by millions who increasingly can afford neither beer nor wine. The Federal Government and the NNPC – the “prize” public corporation of Nigeria’s political economy – have for years allowed our national refineries to lie defunct, despite the billions of dollars allocated over decades for the repairs and rehabilitation of the same refineries. Now, they turn around to accuse Dangote of monopolistic tendencies after he built one of the largest refineries in the world in Lagos. If that allegation is remotely true, who has allowed it? Where has the government been? Where is the serious thinking, policy and its implementation, and the political will for Nigeria and its citizens to achieve real prosperity? I respect Dangote’s grit and achievements, and his refinery certainly has important potential implications for the Nigerian economy. But, let’s get it straight: Dangote’s wealth is personal to him. It hasn’t made Nigerians broadly rich on any significant scale. Moreover, the question is pertinent: Is that his responsibility?

Who will take us seriously when our business environment, despite its potential, is evidently awash with political and other risks, and the “market” is increasingly impoverished? In any case, foreign investment is no magic wand for our economic problems if the essential conditions of infrastructure, in particular electricity, and skilled human capital are absent.

The controversy over the Dangote Refinery is a national and global embarrassment for our country. It shows us up to the world as unserious at a time our public officials traverse the world seeking “foreign investment.” Who will take us seriously when our business environment, despite its potential, is evidently awash with political and other risks, and the “market” is increasingly impoverished? In any case, foreign investment is no magic wand for our economic problems if the essential conditions of infrastructure, in particular electricity, and skilled human capital are absent.

The heart of the matter is that a succession of Nigerian governments, including the current one, have been unable to do either of two things. Thay have failed to stimulate, through effective economic policy, a set of strategic oligopolies across sectors, under which smaller businesses and supply chains connected to such giant corporations can thrive, creating a successful national economy as in South Korea. Even such oligopolies ought to be subject to “close marking,” so they understand that they are strategic agents of the national economic interest, not that they have put the government in their pocket – as Daewoo’s founder in South Korea discovered when he was jailed for 10 years, for embezzlement and accounting fraud in 2006. Neither has the government, on the other hand, been able to facilitate a truly competitive, level playing field for business in Nigeria, so that wealth creation can be more democratic.

This is a deeply unfortunate outcome of what passes for governance, including its economic aspect, in Nigeria. Capitalism and free markets have faced criticisms, most of them valid. It is an undisputed fact, however, and one supported by historical evidence, that for all its weaknesses, capitalism remains the greatest creator of wealth that the world has seen. It is what helped China – after it abandoned economic socialism – lift 700 million people from poverty into the middle class in 40 years. It is what has lifted millions from poverty into a comfortable life in Brazil, South Korea, Malaysia, and Vietnam. This is because the capitalist system accords most with the basic human instinct to strive and thrive.

…for capitalism to be transformative of broad societies, certain conditions are necessary. Else, what happens, as in the case in Nigeria and most African countries, is the wealth of a tiny few but the poverty of the many. In order words capitalism, to have been successful for any country – socialism having certifiably failed – must create the wealth of nations and not simply that of a small elite. This is the whole argument about inclusive, broad based growth versus mere GDP growth…

But for capitalism to be transformative of broad societies, certain conditions are necessary. Else, what happens, as in the case in Nigeria and most African countries, is the wealth of a tiny few but the poverty of the many. In order words capitalism, to have been successful for any country – socialism having certifiably failed – must create the wealth of nations and not simply that of a small elite. This is the whole argument about inclusive, broad based growth versus mere GDP growth, which economic thinking in Nigeria and much of Africa erroneously worships.To achieve this outcome, we need a competent state – a government that has a deep philosophical understanding of the kinds of capitalism – entrepreneurial, welfarist, crony, or “state” a la the Chinese model – and makes conscious choices between these models or combinations of them.

Such a government must understand the right balance between the role of the state and that of the market. The state cannot be the market. No market can thrive and create wealth without the steady, measured hand of a competent – but not overbearing – state. And the government must understand, and apply that understanding to policy, the fundamental conditions for capitalist success. These are: full property rights, an innovation ecosystem that pipes useful inventions into the market, and across-the-board access to capital.

Finally, the economy cannot prosper without an enabled business environment. This condition includes a secure environment, infrastructure, especially electricity, avoidance of multiple taxation, efficient port and customs, respect for contracts and the rule of law, keeping a lid on corruption, and ensuring a level playing field that avoids distortionary monopolies through effective competition policy. Microsoft and Google are major tech corporations. But they are not allowed to run their competitors out of town. In 2023, the United States government successfully brought antitrust cases against both corporations for violations of competition law in the American market. That’s how capable states function to regulate their markets and give everyone a fair chance.

Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria, is the chairman of Africa Private Sector Summit (APSS).