Nigeria's House of Cards

The emerging-market darling is coming apart at the seams. And Boko Haram is just the beginning.

It is late at night in August 2013, and the talk has turned to politics around our small table in the courtyard of the moldering 1970s-era Sheraton Hotel complex in Abuja, the capital of Nigeria. My companion is a former intelligence officer from the country's turbulent, insurgency-ridden north. We are discussing Nigeria's exponential economic growth over the past decade -- how suddenly the West, never particularly interested in Nigeria before, now sees the country as a "frontier market," an "emerging powerhouse," the vanguard of Africa's rise.

"Make no mistake, the illusion will crumble," the officer warns as we sip tea. "This is Nigeria, this is the game: the ultimate 419."

A "419" infamously refers to the section of Nigeria's criminal code that covers the prosecution of fraud and scammers. Colloquially, it refers to anything illusory or deceitful. In this overwhelmingly populous, under-regulated, and under-serviced country, the term gets thrown around a lot.

Eight months after our conversation, the jig may finally be up. Just a few weeks after what was supposed to be Nigeria's crowning moment -- when new statistics, released in April, finally showed it to be the largest economy in Africa -- the Islamist Boko Haram insurgency in Nigeria's northeast erupted into the international community's consciousness as the security threat du jour. Now, instead of new plaudits from Western economists and media organizations, there is fresh news of bombings and attacks every few days. The death toll of a recent attack, on May 20, has climbed to more than 100.

Nigeria's hosting of the World Economic Forum (WEF) on Africa in Abuja on May 7 to 9 was supposed to serve as the country's coming-out party as a global economic force to be reckoned with. Instead, the event only served to focus international attention on the escalating violence and the government's apparent inability or unwillingness to effectively counter it. 

Western pundits had been keen to dub Nigeria one of the MINTs (Mexico, Indonesia, Nigeria and Turkey) -- the countries that are supposed to be the next generation of rising economies, after the BRICs. As recently as January, economist Jim O'Neill, who coined the term BRICs, argued that Nigeria should join the G-20. Nigeria's finance minister, Ngozi Okonjo-Iweala, meanwhile, was feted during a trip to Washington in April. She courted investors and financial institutions following the debut of Nigeria's new GDP numbers, which were revised in a long-overdue rebasing exercise, "boosting" the size of the economy by 89 percent, to $510 billion.

But the events of the past two months -- the bombings, the Chibok schoolgirls' kidnapping, the government's embarrassing, dissembling response, and the arrival of U.S., French, and Israeli military advisors to attempt a belated rescue -- have all served to expose the hollowness of Nigeria's prosperity. Scratch the surface and look beyond the boldfaced numbers, and it quickly becomes evident that long before these horrific recent developments, Nigeria was already grappling with poor governance and failing institutions.

In reality, the growth story was never so simple. Inequality has long been part of the subtext. The majority of Nigerians have actually grown poorer as their country has thrived, exacerbating tensions between the newly rich and those who haven't seen any benefits from the boom. "[C]learly, maintaining the status quo is not tenable," says Elsie S. Kanza, Africa director of the WEF. "It is not tenable to leave populations out of the growth process."

A few numbers illustrate this point all too clearly. Nigeria's growth averaged 7.4 percent over the past decade. In that same period, the number of Nigerians living on less than $1 a day rose from 54.7 to 60.9 percent. And these disparities do not show promising signs of improving for the next generation. According to UNICEF, Nigeria has the world's largest number of children not enrolled in school: Approximately 10 million children don't attend classes. Most of them are concentrated in the underserved, majority Muslim north, the same region that serves as a base for Boko Haram's operations and recruitment. According to Kanza, the recent abductions of schoolgirls are particularly alarming for their potential long-term effects -- "for what it means in terms of access to education if parents feel that their girls are better off being at home rather than being in school," she said. As authorities revealed for the first time in mid-May, Nigeria also has a vast population of internally displaced people, many of whom were uprooted by Boko Haram-related unrest. The country is home to 3.3 million displaced people -- more than the approximately 3 million disrupted by decades of nearly continuous warfare in the Democratic Republic of the Congo.

Nigeria's endemic corruption, meanwhile, remains as entrenched as ever. In April, Lamido Sanusi, then the highly respected central bank governor, made public records demonstrating that at least $20 billion had disappeared from accounts at the state-run Nigerian National Petroleum Corporation (NNPC) -- a shortfall equivalent to nearly double the GDP of Zimbabwe. Sanusi was summarily fired by President Goodluck Jonathan, who accused him of "financial recklessness" while in office. Sanusi then filed suit against the president, saying Jonathan had violated the constitutionally enshrined autonomy of the central bank. But on May 20, a court dismissed Sanusi's suit, saying that the dispute was a matter of contract law between an employer and employee, and not a constitutional matter.

The ruling does little to reinforce confidence in the independence of the country's central bank -- or the judiciary, for that matter. Amid all this, the missing billions seem to have become something of an afterthought. The government appears to have no interest in digging into the NNPC's books -- which would align it against entrenched interests fleecing public coffers -- in the lead-up to the 2015 election. "Campaign fundraising is closely linked to oil revenues, and so the timing for a real crackdown is not ripe as the long election season heats up," explained Philippe de Pontet, head of the Africa practice at the political risk firm Eurasia Group.

And the government has made only limited progress in shaking off its dependence on oil. Nigeria's rebased GDP reveals that only 5 percent of government revenues come from taxes -- "about one of the weakest revenue mobilization ratios anywhere," says Razia Khan, head of Africa research at Standard Chartered. Another 70 percent of revenues come from oil, and oil comprises 97 percent of Nigeria's exports. "Yes, oil is a much smaller share of overall GDP, and the economy itself is more diversified. But ... its overall dependence on oil earnings remains in place," Khan said. "It's still a big concern."

Nigeria's security forces fare no better when held up to scrutiny. Boko Haram's tactics -- targeting churches, bus depots, schools, and other vulnerable civilian targets -- are deplorable. But the roots of the movement lie in large part with the group's dissatisfaction with the Nigerian state and, in particular, with the subset of the military and police force known as the Nigerian Joint Task Force (JTF). The JTF, based in Maiduguri, the capital of the northeastern state of Borno, and dedicated to countering the Islamist insurgency, is infamous for its brutality. While Boko Haram abducts local women and children, the JTF has also "disappeared" thousands of men and boys suspected of being linked to the insurgency, and it has held families of suspects as leverage during interrogations. Amnesty International reported a March 14 incident in which Boko Haram operatives attacked the Maiduguri prison, freeing over 1,000 detainees. Nigerian military planes fired on the unarmed escapees from above, according to the New York Times. By the end of the day, the JTF rounded up and summarily shot at least 622 of them. The bodies were buried in three mass graves the following day.

The splinter groups that would eventually form Boko Haram in 2002 had been coalescing in Borno state since the mid-1990s, in a vacuum left by an inattentive federal government more interested in extracting oil from the rich southern deltas. The group's founder, Mohammed Yusuf, a Salafist, did not initially preach the overthrow of the Nigerian state. Violent overthrow only became one of the group's ambitions in 2009, after Yusuf and several family members and lieutenants were executed on camera by the military. While some reports claim that popular support for Boko Haram may now be waning, the heavy-handed tactics of the Nigerian military and the government's neglect of the region have helped ensure the group local support for many years. 

The area where Nigeria appears to have had some limited success in curbing an insurgency is in the south, where once-rampant kidnappings and incidents of oil pipeline sabotage conducted by an alliance known as the Movement for the Emancipation of the Niger Delta (MEND) have ebbed somewhat. Since 2009, when the campaign was in its heyday, the number of kidnappings has fallen from more than 1,000 per year to one or two per month, according to reports from the leading kidnapping and ransom insurer AKE Group.

But this, too, was a sort of 419. The Israelis provided assistance, in the form of military advisors who helped train and lead security forces. And some of the drop may be attributable to the effects of a controversial amnesty program, which offers cash in exchange for militants laying down their arms. Yet sources in the Delta argue that much of the decline in kidnappings and sabotage can be chalked up to the fact that southern militant groups have realized that oil theft is the more lucrative business. While ransom for a foreign national usually runs in the $28,000-$204,000 range, theft can net a crew over $6,000 per day -- and attracts considerably less global scrutiny. According to a 2013 study by the think tank Chatham House, Nigeria now loses 100,000 barrels of oil each day (or nearly 5 percent of its total output) to theft. In other words, southern militants -- alongside "the corrupt members of the security forces..." who are involved in facilitating theft, according to the Chatham House study -- have found their own way to share in the benefits of their country's growth.

All this is not to say that Nigeria's economic boom isn't real. As the rebased figures show, the country has flourishing industries in addition to the oil sector: Nigerians are working in services, tech, film and music, and startups. But recent violence and other events should underscore the risks of crowning victors before the title of "country on the rise" has truly been earned.

The West wanted to believe in the narrative of Nigeria's rise because it would have validated long-held assumptions that growth on this scale could not occur without some underpinnings of political substance and popular benefit. Now it's time to revisit these assumptions. The illusion of Nigerian prosperity may have been homegrown -- but it was the determination of the West to believe in, reinforce, and exploit this narrative that allowed it to advance, largely unquestioned, to the point where it could implode so spectacularly.  

STR/AFP/Getty Images


Faster, Stronger, Worse

Why Narendra Modi's new foreign policy won't make Washington happy.

India is about to install a new prime minister who is not a Gandhi, not a member of the Congress party, not a policy intellectual, and not a product of India's westward-looking professional class. After a decade of increasingly stagnant Congress rule, India is heading into the great unknown. Narendra Modi had said a great deal about how he wants to change India's economic policy -- even if most of it is vague and hortatory. But he has said next to nothing about foreign policy. A figure as forceful as Modi and as disdainful of the country's political class would seem likely to reshape India's posture toward the world. But how?

First, it's worth noting that, like the United States, India is a continental nation with water on either side; very few people live near a foreign country. Questions of poverty, economic development, political corruption, and caste identity are vastly more pressing for voters than India's relations with its most powerful neighbors, China and Pakistan. Even India's professional and policy elites are far more preoccupied with domestic concerns than with foreign issues. For this reason, India's conduct of foreign policy has changed very slowly since independence and almost always owing to an evolving consensus rather than a change of government. Modi could, in fact, choose to let the machine run on its own.

I called Hardeep Singh Puri, Modi's spokesman on foreign affairs and India's former ambassador to the United Nations, to ask whether his new prime minister had a worldview and, if so, what it was. "Modi's worldview," Puri responded, "is captured in the Indian concept of 'the whole world is one family.'" That's good to know, but it doesn't dictate much in the way of policy choices. I posed the same question to a seasoned Indian diplomat whom Modi had consulted on foreign affairs. "His worldview is more economic than geopolitical," he said. "He speaks very warmly of East Asia and how they have outdistanced us economically. I have no doubt that Japan will be the first country he will visit." That was more helpful.

As chief minister of Gujarat, Modi visited China, Japan, and Singapore, seeking investments in his state. He is likely to focus his attentions as prime minister on countries that can increase investment in India. Modi would like to see the country urbanize, as China has, by developing the industrial sector, which now constitutes only 14 percent of India's GDP. He would also like to increase spending on infrastructure. Japan has been a major player in Indian infrastructure, including as a partner on the construction of highways to connect New Delhi to Mumbai and Chennai to Bangalore -- a crying need for a country with calamitously poor roads. (Even a quick trip on an Indian highway is both frustrating and terrifying.) India under Modi may thus practice a more frankly mercantilist policy toward the world, as China does.

On matters of national security, India's most fraught relationship is of course with Pakistan. Modi's Bharatiya Janata Party (BJP), with its roots in Hindu nationalism, has traditionally adopted a bellicose posture toward Pakistan. During the campaign, Modi took the kind of cheap shots at Pakistan that played to the gallery. He jeered at the Congress party defense minister, A.K. Antony -- who declined to authorize a sharp military response to a murky cross-border incident that led to the death of several Indian soldiers -- as one of several "agents of Pakistan and enemy of India." Puri dismissed the crack as an "election flourish," and said that Modi "will make a genuine effort to reach out to Pakistan."

That could be. India's previous BJP prime minister, Atal Bihari Vajpayee, made a historic visit to Pakistan in 1999 in the hopes of advancing talks on the disputed territory of Kashmir. Ashutosh Varshney, an India scholar at Brown University, has suggested that Modi could be India's "Nixon in China." That might be stretching it, but Modi's shrewd campaign left the impression that, whatever his personal views, he is more politician than ideologue. He is, however, a chesty figure who will not abide incursions, especially from weaker neighbors. Puri says that Modi "will have much less tolerance for acts of terror" than did his predecessor, Manmohan Singh, who did not strike back at Pakistan after the 2008 terrorist attack on Mumbai's Taj Mahal hotel despite abundant evidence of Pakistani involvement. Modi almost certainly would have shown no such restraint. Give that both countries have nuclear weapons, that has to be a frightening thought for Western policymakers.

Modi is unlikely to give a high priority to relations with the United States, a country to which he has not been permitted to travel owing to his role in the 2002 Gujarat riots. Indians did not miss the brusque undertone of President Barack Obama's invitation to Modi to visit the United States at "a mutually agreeable time." The Delhi policy elite believes, with some reason, that Obama has relegated India to the second-class status that it had endured until 2005, when President George W. Bush struck a "strategic partnership" with India, followed three years later by a major nuclear deal. Indians are mystified that Obama, unlike Bush, has not embraced an enthusiastically democratic nation with tremendous potential for economic growth. The "pivot to Asia" seems to bypass India altogether.

Obama will be, if anything, warier about an India under Modi than he was when the country was governed, more or less, by the anodyne Singh. The problem, however, is not personal. India illustrates the fallacy of the assumption that democracies share a common outlook on the world. As a young nation under the leadership of Jawaharlal Nehru, India, like the United States in its infancy, saw itself more as a collective idea than as a set of interests, standing up for the principle of nonalignment and for international peace.

But the 1950s were a long time ago. India is now a regional power with strong economic and national security interests, as well as a skepticism bordering on hostility toward many Western norms. It may well be the most vibrant democracy in the emerging world, but India does not believe in promoting democratic values abroad. India guards the sanctity of national sovereignty almost as zealously as China and Russia do, and it abstained on U.N. Security Council votes on intervention in Libya and Syria. In an essay in the volume Shaping the Emerging World: India and the Multilateral Order, David Malone, Canada's former high commissioner to India and a scholar of the United Nations, along with Rohan Mukherjee, a doctoral student, note a strange paradox: As India has grown stronger, it has become more defensive about sovereignty and less prepared to defend the international order. This inevitably places it at odds with the United States, the chief guarantor of that order.

India is an important partner for the United States where the countries' interests converge, as in Afghanistan, but not in the many places where they don't, most notably Iran, a major oil supplier to India. And with an aggressive nationalist whose party's slogan is "India First" in power, New Delhi will, if anything, make fewer concessions to Washington and the West than his predecessor did. Modi feels a much deeper intuitive bond with the disciplined and socially conservative countries of East Asia than he does with the United States and social democratic Europe. Worse, India's bad habit of aligning with authoritarian states on international questions is likely to increase under Modi, a man considered even by many of his most ardent supporters an autocratic, if benevolent, leader.

In short, Modi is likely to be a net negative for the West. But unless he picks a fight with Pakistan, that won't matter nearly as much as whether he can address India's sense of stagnation. Modi believes that he can spread the business-first, no-red-tape model he established in Gujarat across India. His stunning electoral victory (though with slightly under 32 percent of the popular vote) gives him a mandate to do so. Hundreds of millions of all-too-hopeful Indians are about to find out whether Modi can do what he said he would. Despite merited suspicions about Modi's commitment to democracy and secularism, Western leaders need to begin thinking about what they can do to help him succeed.