Thursday 4 December 2014

#MustRead: Eco-Stoves And Nigeria’s Rent-Seeking Curse - Greg Odogwu

Last week, the Federal Executive Council approved N9.2billion for the importation of 750,000 clean cookstoves and 18,000 “wonder bags” to be shared to rural dwellers in order to discourage tree felling and safeguard their health from the smoke from inefficient cooking. The storyline sounds eco-friendly; but after taking a second look, one would understand that it is a poisonous development in the environmental sector of the nation. What the government wants to do is use the people’s money and buy energy efficient cookstoves for rural women at the rate of approximately N12,000 per stove!

This will effectively do two damage: Close the emerging market for energy efficient cookstoves in Nigeria as the entrepreneurs in the sector are shoved off their turf; and erode people’s confidence in the nation’s ecological efforts as the stoves are now seen not for what they are, but as campaign gifts to be torn down by the opposition and misused by the (handpicked) beneficiaries – who will automatically see it as their share of the national cake.

In the international environmental parlance, Nigeria is officially doing the despicable: green-washing. It is greenwashing when a company or organisation spends more time and money claiming to be “green” through advertising and marketing than actually implementing business practices that minimise environmental impact. It means they are whitewashing with a green brush.

But the most troubling aspect of the government’s decision is that it is a rude reminder of our current national reality, known as rent-seeking. Wikipedia describes rent-seeking as spending wealth on political lobbying to increase one’s share of existing wealth without creating wealth. The effects of rent-seeking are reduced economic efficiency through poor allocation of resources, reduced wealth creation, lost government revenue, increased income inequality, and national decline. Doesn’t this sound like a diagnosis check list for the Nigeria of today?

Many economists in Nigeria – some of whose opinions I sampled before writing this piece – describe rent-seeking as either jostling to get a share of our oil money (Nigeria’s rent) or the practice of procuring and issuing contracts by proxy in a wholesale-and-retail fashion we are used to today.

The classic example of rent-seeking, according to the Nobel laureate and economist, Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.

Shiller’s example typified the general practice in Nigeria. When a politician gets elected, he calls up his cronies and empowers them to go on a rent-seeking spree. In many market-driven economies, much of the competition for rents is legal, regardless of the harm it may do to an economy. In America, for example, there are official lobbyists from various blue-chip companies who influence even the legislative processes, and also financially “arm-twist” even the executive to cut them a piece of the American pie. This was demonstrated in the workers’ sit-ins across America just after the last global recession, after Congress gave bailouts to top corporate organisation without the funds trickling down to the ordinary man in the “sweatshops”.

However, some rent-seeking competition is illegal, such as bribery, corruption, smuggling, and even black market deals. The problem with the Nigerian rent-seeking narrative is that the line between legality and illegality has been perfectly blotted out. Today, all sorts of shady deals and dirty acts are subsumed under the general term; we use all types of local terms to describe them. Everywhere you go, people ask “what is my share in that deal/contract” and “how much percentage am I getting?” before they can even pass on a file – which by the way is their official and “salary-paid” duty to do.

My pain is that rent-seeking has finally caught up with the environmental sector! We do not need a prophet to tell us that the N9.2bn to be used to procure eco-stoves is going to go down the drain without achieving what it is set out to do. It will neither create new jobs nor solve our environmental problems. It is a “rent” to be collected by the rent-seeking players in the corridors of power, each of them cutting out a percentage in the “deal”.

During the FEC meeting, it was announced that the eco-stoves would be shared free among rural women, but the stoves to be imported and assembled could only carter to only about 750,000 people. This simply means that there will be dog-eat-dog competition among rural dwellers to lay their hands on the available “free stoves”, thereby creating a perfect setting for the local “rent-collectors” to get a hand on their own share of the national cake.

Of course, the people in charge of the distribution will then demand a value from the rural women before the free stoves go to them. For instance, the person who wins the contract or “deal” to distribute the stoves to, say, Enugu State, shall demand a value from each local government sub-contractor, who then demands a value from the ward sub-contractor, who then demands from the community liaison, who then demands from the families. So, at the end of the day, the stove, which is supposed to be free, now has an “unspoken” price tied to it, and goes to the highest bidder. This is the curse of rent-seeking.

To make matters worse, the rural women will no longer need to patronise the local energy cooking stove manufacturers, who have taken up eco-stove making as an enterprise. The stove maker is then chased out of business, and then at the end of the day, everybody goes back to the polluting and wood-consuming stoves they were used to, and the Earth suffers for it.

It baffles me that the Federal Government is so rash in sharing stoves. Projects are supposed to be carried out in organised processes, inventories taken and results studied to avoid future mistakes. Jigawa State had shared out more than 100,000 free cookstoves; and no one bothered to analyse its impact before going for a national free stove project.

Had the FEC checked, it would have found that Jigawa changed tactics. Today, because free stoves can never create lasting jobs, the Jigawa State Government trains people and empowers them to start eco-stove making enterprises with a business model. This is the only way it will outlive the present government, create jobs, and help clean the environment and end tree-felling.

What about Kenya? In March, I was privileged to be in Nairobi when the government launched its eco-cook stove national factory, which employs 300 Kenyans and shall supply 3.5 million stoves in the next 10 years. They will manufacture the stove from scratch in Kenya; nothing is imported. Ironically, the amount for setting up the factory is 500million Kenyan Shillings; an equivalent of N1bn – this is just 10 per cent of what our government is throwing out to import bits and pieces that it said shall be assembled here. Bet me, after the “sharing bonanza”, the phantom stove assembly factory shall close down because there was never a business in the first place!

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