Leadership In Action: 

Whose Country Is It Anyway?

 - Cletus Olebune

  courtesy of nel-mag.org

    It is perhaps the core question most Nigerians would want a true answer to in the management of the nation’s economy and distribution of the Nigeria’s wealth. Does the nation exist for the benefit of “shareholders”, or does it have other, equally important stakeholders, such as Nigerian citizens?

Last month, I wrote that for Nigeria to achieve her 2020 dream goal as one of the 20 world economies, it has to engage its younger generations, and pull out half its poor population from poverty. Currently, the economy is more of "Shareholder” Capitalism that benefits those holding shares at the right places. But in showing the various benefits of true governance with a more citizen-holder approach, the country can, and will achieve its 2020 goal.

It is the citizens that have to choose among the advantages and disadvantages of “shareholder”, or citizen-holder oriented nation. First, “shareholder-oriented” nations as in most developing countries, have lower output and pay higher prices in debt management, and can create lesser value than citizen-oriented nations. Second, nations may voluntarily choose to be citizen-holder-oriented because it will increase their value through productivity. Third, countries that prefer citizen-holder mindset can increase the number of their citizens employed, therefore moving citizens from poverty into middle-class society. 

Countries with a citizen-holder-oriented climate are quick to revive their moribund economies by adopting policies that are closer to the citizen-holder-oriented view. This stems from the understanding of the disadvantages of “shareholder” mindset, where the smallest of the securities is completely non-existence.

“Shareholder” mindset is grounded in the thinking about governance, "in terms of leaders versus followers, governor versus governed, owners versus workers, but there is more to it than that. Usually if a nation is earning ever-higher reserves and is generally doing better, its citizens should somehow be better off, particularly those in the rural areas, thereby, lowering the interest to migrate to the urban areas.

Unfortunately, and not surprising, "some leaders may choose “shareholder”-oriented mindset because it increases their value and benefits them as “shareholders.” 

True governance and the role of the leadership vis-à-vis the citizens makes it clear that citizen-holders are the owners of a country and that the leadership has a fiduciary responsibility to act in the interests of citizen-holders. In the private sector, governance begins with this perspective and, indeed, this is the dominant orientation of the business and investment communities of most developed countries

Citizen Participation in Decision Making: The Legislative Body
Legislative body indeed, what economic policy initiative towards 2020 has been pursued for the past five months by that branch of the government. Poor executive, the nation’s chief strategist, the President may never be helped by this section of the nation’s leadership, as their only economic strategic agenda seems to be the protection of their individual network, pushing the peoples business to the backburner. The people should demand performance pay—do people’s job and get paid, if you don’t do people’s business, you don’t get paid. 

This do-peoples-job and get paid model will define citizen-holder governance and demonstrates that when elected representatives put citizens’ economic interest first, they will expect to be compensated. 

The fact that elected representatives can boost their value by showing concern for citizens’ economic interest raises the possibility that they may actually want to put in place governance structures that commit them to taking steps to address the concerns of their constituencies.

Even in circumstances where elected members may not voluntarily adopt a citizen-holder orientation, such governance structures as those that exist in developed economies citizen-holder orientation may arise nonetheless, if citizens are more conscious of the situation, and will be willing to support leaderships that care about them. Interestingly, this will lead to a situation of self-enforcing societies where citizens induce the leaderships to adopt citizen-holder concerns, and consequently increase the value of the entire nation.

Policy Making Without Direction: A Closer Look at Nigeria’s Economy.

It's a significant long-run issue—Is Nigeria preparing itself for a future independent of natural resource (oil)? How are we fairing in the knowledge and idea driven global economy? Building a future beyond oil economy—training Nigeria’s human resources to compete on much broader level in the year 2020 and beyond needs to start now. What is our diversification strategy, and what policy direction do we have in place? 

The previous leadership removed the burden of debt—this obstacle removal means we have more monies to invest in rural infrastructures. The use of the free cash flow from excess crude oil to pay down the nation’s debt is the greatest economic policy so far by any leadership since the end of the uncivil war. This is why: there are five possible uses of free cash flow that organizations (nations) can employ to increase shareholder yield (citizen-holder value) depending on their present economic situation. These five uses include:

1. Cash dividends

2. Stock repurchases

3. Debt reduction

4. Acquisitions

5. Reinvestment in capital projects

Very often, combination of these uses are employed, but unless the return on incremental capital is superior to the organization’s average cost of capital, there is little point in pursuing option 4 (making acquisitions) or option 5 (reinvestment beyond maintenance of capital expenditures). Therefore, when options 4 and 5 will not generate sufficient returns, free cash flow should be returned to shareholders (citizen-holders) via one of the first three options. Any of the first three options will effectively pay dividends to shareholders (citizen-holders) and add value to citizen-holders.

In employing option 3 (debt reduction), Ngozi Okonjo-Iweala and her team created citizen-holder value—producing a de facto dividend. This will allow for the use of options 4 and 5 (acquisitions and reinvestments respectively) for organization (nation) growth. Organization (nation) growth is a growth concept while citizen-holder value is a value concept.

Every organization needs to understand its present situation—growth concept or value concept, to effectively employ proper use of its free cash flow. Now that Nigeria has added value to its economy through debt reduction, it is time we focus on the concept of growth as we look towards 2020.

This brings me to the present leadership’s fulcrum on the rule of law and due process. The present leadership has attached itself to these basic principles of rule of law and due process. Behind these core principle attitudes, we need to connect the dots in the basic elements of our economic strategy and balance them. The questions then are:

How does this fulcrum strategy on the rule of law, and due process play along with our pursuit of economic relevance? Does the fulcrum matter in our 2020 goal for economic relevance?

The combination of rule of law, and due process is the basis of a strong leadership in the calculated management of any resources, for the benefit of the citizen-holders. In essence rule of law, and due process are ways of doing things right for the accomplishment of right results. Take for instance in the mathematical solution of a problem involving, addition, division, multiplication, and subtraction. The rule of mathematical law follows the mathematical due process (multiplication, division, then addition and subtraction in that order) that must be followed in order to arrive at the correct result, or answer. Deviating from this rule order will lead one to the wrong end result, or answer.

Rule of law, and due process may not appear relevant to the untrained eyes, but without them any economic policy is as dead as a dead work that easily catches fire and burn to ashes.

Building Nigeria’s Future
Paying down debt, following the elements of the rule of law, and due process without involving the younger generation will not build the future we hope for. The number one challenge is—how do we engage the younger generation for a sustainable development beyond 2020? The key is in the training of the younger generation to add value to the country, and this requires that the education system be revamped—directing the younger generation towards their future aspirations. Are we doing enough to secure the financial future of the next generation, or are we only secured in the financial interest of current “shareholders? The goal is to become a Conscious nation. More on becoming conscious nation in next month’s new article.

Cletus E. Olebunne

Executive Director, NEL

Author: The Way It Is: Ideas & Solutions for Entrepreneurs www.thewayitis-thebook.com

Foundering Partner: CEO Management Company www.ceomgt.com 

November 2007

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Together we can build a nation where its economic strength is comparable to its individual citizen's capabilities. A 2020 Nigeria economy where manufacturing is the driving force. We are always glad to hear from you. 

ABOUT THE AUTHOR: Cletus E. Olebunne, Is the Executive Director of Nigerian Entrepreneurial Leadership (www.nel-m.org ) An accomplished scientist, and entrepreneur in the global healthcare product distribution. He is the founder of Eastern Pharmaceuticals (www.easternpharmaceuticals.com), a global distributor of healthcare products based in New Jersey. An active member of Regulatory Affairs Professional Society (RAPS), the global pharmaceutical regulatory body, the American Chemical Society, and the American Management Association (AMA).
The NEL organization seeks to:
1 Support and promote a community of entrepreneurs
2 Promote public understanding of manufacturing entrepreneurship
3 Promote and enhance the role models that reflect the ideals of manufacturing entrepreneurship
4 Be the source for information about best practices in business leadership.

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