The Horizon Kayode Komolafe kayode.komolafe@thisdaylive.com 0805 500 1974
Since July 21 last year when the federal government declared that the economy “is technically in recession,” some of the pronouncements by experts and technocrats have sounded oracular. The voices of these oracles of the Nigerian economy have even become more strident since the launch of the Economic Recovery and Growth Plan (ERGP) almost two years into the administration of President Muhammadu Buhari. Unfortunately, the public sphere is not quite structured to engage these oracles on the veracity of their economic divination as well as the efficacy of their policy prescriptions.
It is intriguing that some of the sharpest criticisms of the current economic management are coming from the former economic managers. Other experts, who also criticised the substance and style of previous attempts at economic management, are also making important statements. Now, the past policymakers and other experts operate essentially in the same philosophical framework as the present economic managers being assailed.
Both the government and its critics give a lot weight to the views of the International Monetary Fund (IMF), the World Bank and international rating agencies on whatever solution they seek for the nation’s economic problems. This is a feature of the debate on the economy. This has made the matter more complex for us – the laymen and general observers – to comprehend. For instance, according the authors of the new plan, armed with 60 interventions it would be possible in four years “to remove, impediments to growth; to make markets function better; and to leverage the power of the private sector.”
When you listen carefully to the critics of government all they advocate too is a more efficient application of the market solution. They talk of privatisation, deregulation, liberalisation and they dream of a “private-sector-led economy.” They like to sell assets to fund budgets. They make a fetish of foreign exchange as the barometer of the economy. So, ideologically there is no fundamental disagreement between the government and its critics on the market solution to the economic problem.
Like Kingsley Moghalu recently posited on this page, Nigeria is in need of deep economic thoughts. Moghalu is also right in adding that the thinking should not be the business of only professional economists. The crisis being confronted is multi-dimensional. Philosophical thoughts on Nigeria’s political economy are needed to plan for development and not just to craft a “recovery and growth” document meant for the creditors to approve. You can always get western consultants to that technically. But the needed conversations should go beyond technicist arguments of the oracles that make proclamations as if they operate in a historical vacuum. Yes, some debates are on in the public sphere, but rigor is indispensable in examining the issues. The work of economic managers is not like that of a mechanic in his workshop hammering the device under repairs without moral and social concerns.
To be sure, economic management in Nigeria has been reduced to merely a technical exercise since planning for development (even in liberal bourgeois terms) was abandoned over three decades ago. The recast of the Nigerian political economy came with the inauguration of the Structural Adjustment Programmes (SAPs) in the mid-1980s in many African countries. In fact, the correct position was that SAP was imposed on the poor African countries including Nigeria. Planning became a dirty word. In fact, the technical position of some of the IMF-inspired economists then was that planning was akin to adopting the “communist command approach.” Interestingly, before the imposition of SAP, African countries on their own had put together the “Lagos Plan of Action.” in 1980 in a bid to chart a path to autochthonous development. It was jettisoned in the face of SAP. Since then, the SAP orthodoxy has been ruling the wave of economic management.
There is hardly anything being proclaimed by the oracles of the Nigerian economy today that you would not find in the original components of SAP – privatisation, deregulation, and liberalisation and other neo-liberal recipes. The slogans remain essentially the same: “government has no business in business,” “private sector-led economy,” “market forces –driven economy” etc. As an aside, when liberalised banks, for instance, are run down, the same government is called upon to come to the rescue and devise a bailout strategy. Any honest audit of this economic direction would reveal the grim outcomes: insecurity, the collapse of the middle class, shrinking of the real sector, joblessness, mass poverty, widening inequality, collapse of public education and healthcare delivery among others. Cumulatively, this has been the scorecard of SAP and SAP-like approach to economic management in over 30 years.
The oracles should pause their pontificating and explain to the public why the gods of SAP have failed woefully. For instance, in 1986 it was prophesied in a bid to justify the devaluation of the naira that the foreign exchange market would be like any other market with free sellers and free buyers without any panic. Then it was N4 to $1. Even 31 years after, when the matter came to N500 to $1, some oracles are still calling for a deeper faith in market forces to float foreign exchange. Our experts are so deep in the orthodoxy of the market that they don’t even countenance any review of its operations. Maybe, without prejudice to the soundness of their technical logic, the oracles of Nigerian economy should pay some attention to economic history, especially the history of this economy since the abandonment of economic planning. They would discover that hardly is any one saying anything new out there.
Besides, there is an inexplicable sense of hubris on the part of the oracles whether in or out of government. This is despite the fact that the public is hardly enamoured with the ideology of employing market to deliver public goods. Take a sample. The Power Sector Reform Act was signed 12 years ago as an achievement of the administration of President Olusegun Obasanjo. Four years ago, it was also an accomplishment of President Goodluck Jonathan as his administration concluded the first phase of the privatisation in the power sector. Yet, it is still blasphemous to the ears of our economic oracles that this privatisation has failed to deliver electricity to the consumers.
For them, the problem is that pricing is not good enough for good returns on the alleged private investments in the sector amidst darkness delivered to domestic and industrial consumers. The point to be stressed here is simply this: in the public outcry against the power outage, you hardly hear the name of the owners or managers of the GENCOS and DISCOS. The names you hear are those of Buhari and his minister, Babatunde Raji Fashola. People are asking government, not market-forces, to ensure steady supply of electricity.
It is not as if those putting pressure on the government to steady power supply are oblivious of the 12-year old privatisation journey in the sector. To the people, electricity is not just another commodity. The nature of the consumption of electricity is not the same as that of luxury cars, expensive wines or the services of five-star hotels that could be left to purely market forces. The public perception seems to be that electricity should be in the category of public goods even if the consumers are paying appropriate price for it. Our economic oracles would need to explain this phenomenon. But, it is an ideological question that they would rather avoid.
Given the structure of the Nigerian political economy largely defined by burgeoning poverty and scandalous inequality, public goods have to be recognised as different from other services and commodities that market forces alone would allocate. Public goods cannot be delivered for everyone in need of the goods in this poverty-ridden environment by only market forces. It is the role of government in the course of economic management to ensure how the public goods are paid for collectively based on the philosophy of doing public good. You cannot seriously be talking of development in Nigeria when you treat security, primary education, primary healthcare, potable water, sanitation, social housing, mass transit etc.
as just commodities to be left at the mercy of market-forces buccaneers. When you do that you are not working for the development of the majority of the people. You are managing the economy in the interests of the view. From a purely liberal position, former President of the American Economic Association and Harvard Professor, John Kenneth Galbraith, once argued that, in particular, the government could not escape playing a role in the supply of electricity, mass transit and social security. This is because as he put in the in the preface to one of his over 50 books, Economics and the Public Purpose, “On no conclusion is this book more clear: Left to themselves, economic forces do not work out for the best except perhaps, for the powerful.” The reality of Nigeria is that market forces have worked only in favour of a few and the powerful.
There is no national economy anywhere that is managed by the private sector. Governments are elected to manage economies and not to delegate the duty to the private sector. Those who elected Donald Trump in America believed his government would manage the American economy in their interests. The Asian miracles that some of our oracles are fascinated about did not come about through abandonment of economic development to market forces. Responsible governments have managed the economies of those countries with credible plans and visions.
Here in Nigeria, Nigeria used to have Development Plans. The generation of the Phillip Asiodus and Allison Ayidas in the public service witnessed the execution of that paradigm of development. They worked with scholars in Nigerian universities and research institutions to design the plans.
of the existing highways, bridges, water schemes, and educational and healthcare institutions were once proposed in development plans of the 1960s and 1970s. That was before the importation of the Washington Consensus by our experts and technocrats. Subsequent economic management could not even ensure the sustenance let alone the maintenance of the facilities conceived and built in the course of the design and implementation of those plans. Some of the significant investments in the electricity and rail transport were envisioned in those development plans. Amazingly, the contemporary economic wizardry is to devise the formula for privatising these public facilities to “private investors” including those whose vision is limited to asset stripping.
For example, a nation with development plans should not be having millions of children out school after decades of budgeting for education. Even before the birth of those poor children projections ought to have made for them in terms of population growth and the need to expand school infrastructure and teacher training. That is the work of economic development planners. It is not the business of any private sector; the duty of the chief executive officers in the private is to plan for their corporate profits. Those of them with some social conscience could only embark on social responsibility projects.
It is also the duty of government to energise the public sector to deliver public goods. It is not enough to dismiss the public sector as unproductive and corrupt. The necessary context has to be created for increased productivity. The public sector has to be improved in terms of skills and equipment. It is through a purposeful public sector that government could encourage research in the interest of development.
Corruption in the public sector has to be tackled structurally as well as through law enforcement in a credible justice system. The morale of those working in the sector should be raised while their moral fibre is strengthened. Every government needs an efficient public sector to deliver public goods. No system can do without a bureaucracy. Despite the cloud of pessismism hovering on the public sector, a competent government can add a genuine public sector reforms to its list of achievements.
So are we back to economic planning?
As the conversations continue on the current economic management, the point should be made that what we have on display is not yet an economic development plan. Yet it is governments that are elected to make economic development plans and not market forces.
