The Nigerian government must deploy its economic and political institutions not only as governance tools but as mechanisms to liberate the vulnerable from economic hardship. These institutions must protect property rights while acting as a check on the ruling elite. Nigeria models its democracy after that of the United States, and it can learn from how America used strong institutions to create shared prosperity rather than empower a select few.
“When institutions responsible for providing these services fail to perform, government policies, no matter how well-intentioned, are bound to fail.”
Lessons from America’s industrial pioneers
America often celebrates its industrial pioneers, not for their moral virtues, but for their ability to transform scarce resources into wealth and boost the nation’s economy. Among these pioneers were John Rockefeller, Andrew Carnegie, and J.P. Morgan.
These men controlled vast amounts of the economy, making them incredibly wealthy, while the gap between rich and poor grew wider. Rockefeller had the oil industry under his control, Carnegie dominated steel, and Morgan reigned over the railroads.
These industrialists were monopolists who accumulated unprecedented power in their respective industries. To protect their interests, they even sponsored their presidential candidate, William McKinley, in 1896. Each of them contributed enormous fortunes equivalent to $20 million today to ensure McKinley’s victory. Once in office, McKinley rolled back regulations on these industrial titans, leading to a surge in their profits.
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The role of institutions in breaking monopolies
In 1901, circumstances led to Theodore Roosevelt becoming U.S. President. Unlike McKinley, Roosevelt aggressively pursued these monopolists. He broke J.P. Morgan’s railroad monopoly through the courts, and he didn’t stop there. Roosevelt also went after John D. Rockefeller, who founded Standard Oil in 1870 and quickly grew it to control 90 percent of the U.S. oil market.
In 1906, the U.S. government sued Standard Oil under the Sherman Antitrust Act, accusing it of stifling competition and creating a monopoly. Rockefeller was notorious for acquiring refineries, using intimidation to wipe out competition, and even bribing senators to protect his empire.
By 1911, the U.S. Supreme Court ruled against Standard Oil, leading to its breakup into 34 companies, some of which became modern giants like ExxonMobil and Chevron.
Although Rockefeller was ruthless and powerful, becoming the richest man in American history, he was still not bigger than American institutions. The judiciary ensured that Rockefeller’s and Morgan’s monopolies were short-lived because their practices stifled investment and economic growth. These institutions preserved a level playing field and upheld justice, ensuring that monopolies could not dominate for long.
The danger of weak institutions in Africa
In contrast, if Rockefeller and Morgan had operated in an African country today, they would likely have manipulated the justice system and colluded with elites to maintain their monopolies. They would set prices and production levels to enrich themselves, further impoverishing the masses.
Although data has not clearly shown antecedents of monopolies cases, it’s an eyesore in today’s Nigeria. The substance remains that weak judiciary or institutions have left the vulnerable behind.
The further consequences reveal that Sub-Saharan Africa’s weak institutions allow elites to establish extractive economic systems that stifle competition and deepen poverty.
This contrasts sharply with nations like the United States, the United Kingdom, South Korea, and China, where inclusive institutions promote private property rights and prosperity for all. These countries have narrowed the gap between rich and poor by fostering economic growth through strong institutions.
Nigeria’s institutional weakness
Nigeria, however, continues to grapple with weak institutions despite numerous reforms. Changing the names of institutions and policies is not enough to alleviate poverty, reduce insecurity, or combat inflation. What Nigeria needs are strong, independent institutions that can implement policies effectively.
A recent report by the National Bureau of Statistics (NBS) in partnership with the United Nations Office on Drugs and Crime (UNODC) reveals that 56 percent of Nigerians had at least one contact with a public official in the last year before their survey, far exceeding interactions with the private sector by 28 percent.
Public services like healthcare, education, and safety are essential to human existence. When institutions responsible for providing these services fail to perform, government policies, no matter how well-intentioned, are bound to fail.
The report also shows that 34 percent of those who interacted with public officials were asked to pay bribes, and around 58 percent of bribes were paid before services were rendered. In 2023 alone, Nigerians paid an estimated ₦721 billion in bribes, a figure comparable to the 2021 education budget of ₦742.5 billion.
Corruption and the Judiciary
One of the most disheartening revelations is that judges and magistrates, who are supposed to safeguard justice, are among the highest recipients of bribes in Nigeria. This contrasts starkly with the U.S., where the judiciary played a pivotal role in breaking monopolies and preserving the rule of law. In Nigeria, however, these institutions have been captured by the political elite, and as a result, policy and governance suffer.
Nigeria must enact laws that prevent politicians from having undue influence over the judiciary. Politicians should be forbidden from placing their spouses, children, or loved ones in judicial positions, as this undermines the rule of law. A captured judiciary will always promote policies that benefit the elite, not the masses.
The path forward
To fix Nigeria’s economic and political landscape, the government must first build strong, independent institutions. Economic policies will only succeed if the institutions tasked with implementing them are effective and transparent. As long as institutions remain weak and corrupt, even the best policies will fail, leading to government failure.
The government must tackle issues of nepotism, bribery, and corruption head-on. According to the report, 46 percent of people who secured jobs in the public sector in the past three years admitted to paying bribes to facilitate their recruitment. Furthermore, 60 percent admitted to using either nepotism or bribery, or both to secure their positions. These practices weaken institutions, and until they are eradicated, Nigeria will continue to face institutional failure.
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