The Political Economy Approach
Kayode Komolafe
While appreciating the mission of the Nigerian Economic Summit Group (NESG) last Wednesday on this page, it was suggested that the think tank should consider the political economy approach in its advocacy.
The group has performed creditably what could sometimes appear as a Sisyphean task for 31 years. In projecting into the future, it may need to pay greater attention to the economic thoughts behind its propositions.
The essence of the political economy approach is that economic policies could not be divorced from the political stimulus. While professional economists are busy with the correctness of their models and scenario buildings, politicians are focussed on the electoral consequences of the policies. In real terms, the intersection between politics and economics has always been there from the beginning. The advocacy for economic reforms should be sufficiently informed about the dynamics of things in the political landscape. In his book, “New Ideas from Dead Economists,” Todd G. Buchholz observes as follows: “The strongest link between economists and the real world has been politics. Indeed, until this (20th) century economics was called “political economy.” Almost all the stellar economists served at some level of government. Two of them, David Ricardo and John Stuart Mill, won election to the British parliament. Among the greatest economists we consistently see not just a spark of scientific interest, but a surge of passion. Among the numerous symbols of calculus and statistics we see bold exclamation points.”
In fact, the evolution of NESG itself could be employed to illustrate the point about the political economy approach. The idea of NESG was born in 1993. In that year alone, three regimes oversaw Nigeria. Of course, each had its own policy direction. In January 1993, the military regime of President Ibrahim Babangida was expected to conclude its transition programme with the election of a new president in June. The crisis triggered by the annulment of the election forced the government to handover to an “interim government” headed by Chief Ernest Shonekan in August. By November of the same year, General Sani Abacha announced the sack of the Shonekan government and thus began a five-year military rule by the dictator. Vision 2010 was drawn up under the regime of Abacha as a pathway for economic transformation of Nigeria. The NESG expectedly played a role in the making of Vision 2010 by providing the technical platform for dialogue between the public sector and the private sector. Meanwhile, the whole exercise was received with a good dose cynicism in many quarters where it was viewed as part of Abacha’s attempt to legitimise his regime. The vision was for Nigeria’s economy to be developed by the Year 2010 with an annual growth rate of 10%, poverty reduction to 20% of the population and $1, 6000 per capital income. While experts were immersed in the visioning thing with all sincerity of purpose the forces fighting for democracy were largely alienated from the whole process. They called it the Abacha agenda.
Abacha died two years after Vision 2010 was conceived. Following a speedy transition organised by the regime of General Abdulsalami Abubakar, who succeeded Abacha, President Olusegun Obasanjo was elected at the onset of the present dispensation in 1999. Obasanjo was imprisoned by the Abacha regime on charges of coup plotting. The charges were denied. Now, the interaction of motivating force of politics and advocacy based on economic ideas was glaring in the Obasanjo years. It was unimaginable that Obasanjo would countenance wholesale a Vision 2010 of the Abacha era. While NESG and other think tanks might find the ideas informing the Vision 2010 technically correct, it might not be politically wise to make it the basis of advocacy for the Obasanjo administration.
However, the NESG has continued its advocacy basically on the economic ideas of privatisation, liberalisation, deregulation and a greater role for the private sector in the economy. Some of the economic ideas canvassed during the economic summits have successfully influenced policies as evident in some reforms. Examples are the reforms in sectors such as telecommunication, pension, maritime and shipping, ease of doing business etc. The twin policies of the administration of President Bola Tinubu – removal subsidies on petroleum products and liberalisation of the foreign exchange market- are among the reforms the NESG had advocated for years.
Yet deep economic thoughts are still needed on some of ideas popularised on the platform of NESG and other think tanks. For instance, a proper policy audit of privatisation may compel a critical review of the idea and its application. Not all privatised companies have flourished after sale despite the glowing promises. Some privatised entities have become objects of asset striping. It should probably be noted that the telecom sector reforms are often mistaken for a success of privatisation. No. The only privatisation in the telecom sector is the sale off the Nigerian Telecommunications Limited (NITEL), which turned out to be a failure. The flourishing telecom companies are products of liberalisation and not privatisation.
The debacle of the privatisation in the electricity sector is also a matter eminently suitable for critical review of concepts and implementation. While privatisation was assumed to be the elixir readily possessed by the private investors 13 years ago for the sector, the state is still expected to ensure steady supply of electricity by the electorate. That is the element of political economy required in thinking about policies. In fact, in the popular imagination the image of that publicly owned National Electric Power of Authority of Nigeria (NEPA) still looms large. People still talk of the “problems” of NEPA years after the public corporation had become defunct. They hardly mention the DISCOS and GENCOS, the products of the unbundling of NEPA which happened over a decade ago. The failure of the privatisation conducted in the electricity sector should be a matter of a critical policy review of economic thoughts.
The efficacy of the political economy approach lies in the fact that it is the state which is held responsible by the people for the outcome of economic policies.
So, it is important for non-state advocates of policies to always bear this point in mind.
RIGHT OF REPLY
Government’s Presence at Economic Summits
By Joe Keshi
This morning, I read Kayode’s Komolafe’s interesting and enlightening write-up on the Nigeria Economic Summit Group, and l think it is the best l have read about the NESG as an institution.
That said, l has a few concerns about the efficacy of the group these days, as l doubt how seriously its views found acceptance by the government. Before l go further, let me correct Komolafe on one aspect where he wrote about our presidential candidates traveling to London to speak about Nigeria at Chatham House rather than engage the NESG. I am aware that Mr Peter Obi had an engagement with the NESG and with the Lagos Chamber of Commerce during the campaign, and l think one other presidential candidate did. These, l believe, were reported in several newspapers. However, my concern is that Komolafe may not have observed that in recent years, government attendance is limited mostly to the opening ceremony, after which most government officials disappear leaving only the private sector and development agencies to discuss among themselves. Worst still is the absence of key economic ministries. I do not think this was the way the Summit was originally designed. And this could also be some of the reasons why neo- liberal thoughts dominate at the summit and our system, especially in the absence of the academia whom l suspect is also not too represented (I might be wrong on this). Even state governments, except on some rare occasions, rarely participate in the annual conversation. I think efforts should be made to compel ministers, permanent secretaries, and directors to be part of the conversation. So also, the academia and the states. Maybe the Summit itself should be moved around to some key cities like Port Harcourt, Enugu, and Kaduna as Dr. Tayo Aduloju, the director-general of NESG, has been thinking of regional summits. Such broad participation is what the summit needs to be relevant and useful.
This would further consolidate it as a national institution.
•Ambassador Keshi, former Permanent Secretary in the Ministry of Foreign Affairs, is the President of the Association of Retired Career Ambassadors of Nigeria.
