By Charles Onunaiju
Ruminating in the excruciating economic terrain and the social costs in most of Africa, and Nigeria doing “atrociously” bad in the circus, London based magazine “The Economist” in its recent issue, not only deplored the “depressing record of stagnant productivity” but counselled that any meaningful “starting point” is to ditch decades of bad ideas, especially “copying and pasting proposals by World Bank technocrats”. The un-apologetically liberal magazine in the article “The Capitalist Revolution Africa Needs” warned that there is no substitute for creating the conditions that would allow African businesses to thrive and expand.” Nigeria’s historic destiny is to lead the way in the Africa’s industrial revolution.
Despite the orchestrated whitewash of the economic reform measures of the President Bola Tinubu government, the Nigeria’s economy is in a deep freeze and the crises of its current trajectory is fundamentally related to its origin as the foremost showpiece of the “copying and pasting proposals by World Bank technocrats”. The Bank has dutifully awarded its price, for what it mischievously claimed was supporting Nigeria’s home grown reforms. It said its 2.25 billion USD loan facility “provides immediate financial and technical support to Nigeria’s urgent efforts to stabilize the economy and scale up support to the poor and the most economically at risk”. But, it is in effect, the bank’s misinterpretations, assumptions and willful efforts to structurally transform and shift Nigeria to a mere financial outpost of the international finance capital that is at the root of the country’s economic crises and which will only escalate and worsens in the years ahead.
Given Nigeria’s resources endowment in both material and human capitals and the advantage of the youth bulge, her future is ,as an industrial hub and a prospective workshop of the world and not a mere financial bubble that president Tinubu’s government and his World Bank handlers are desperate to foist on her.
Last October, the World Bank released a report on its “Nigeria Development Update” in what it called “Staying the Course: progress amid Pressing Challenges”, detailing its diagnosis of the Nigeria’s historical economic malaise and outlining its own magical opium for recovery, sustainable growth and development. And since then, president Tinubu and his government have wired themselves into a celestial frenzy and unleashed on Nigerians, the magical healing liquor, prescribed by the distant, socially insensitive and reclusive technocrats, totally out of touch with Nigeria’s realities and even maliciously tries to turn the country to the back water of international finance capital.
To start to restore macroeconomic stability, according to the report, “The government started to move towards market-based pricing of gasoline to address the large fiscal cost of subsidized pricing”. Further, the report urged exchange rate flexibility, which eliminated the parallel premium an implicit foreign exchange subsidy along with other reforms –such as rationalizing tax expenditures, introducing withholding VAT for key sectors”. The Bank’s fiscal recipe which the government have thoughtlessly copied and pasted, with a consequence of unfathomable social misery and economic hardship on Nigerians includes what it called “building on progress towards market-reflective pricings, which the report claimed “is essential to address the remaining implicit PMS subsidy by allowing retail prices to adjust periodically in line with market fundamentals; exchange rates and international prices”.
For the tax brouhaha that the government is putting Nigerians through, it was the Bank’s admonition that “Nigeria’s tax revenues of 3.8 percent of GDP in 2023 remained extremely low by international standards” and then urged for what it called “continued progress on non-oil revenue growth through tax reforms and improved administration”. Since the Banks claim that Nigeria’s tax revenue to GDP is ‘extremely low’, the government personnel and several regime acolytes have been doing overtime in hyping the Bank’s credo, even adding that Nigeria’s tax revenue to GDP is the lowest in Africa. But, they have not dared to raise the question of Nigeria’s oil revenue ratio to GDP and its standing in Africa and the rest of the world, despite the extensive corruption and brazen theft in the industry.
However, as government has turned herself, singularly into an aggressive revenue and tax collection agency, the Banks and other financial institutions, which should ordinarily function as enabler of mainstream economic activities, with support of concessional credits to core economic sectors – manufacturings, industries, agriculture, small and medium scale businesses have become store houses of excess liquidity thereby providing the window to foreign portfolio investors, who without physical addresses cash out in real time at the expense of crucial and key actors in the strategic sectors of the economy whose positive performance would signal the real recovery of the economy and its sustainable and inclusive growth trajectories.
With humongous revenues accruing to the governments at all levels, including the departments and agencies, no appreciable or visible investments have been made in rural infrastructures, human capital development through improved primary health facilities, education that are key to any meaningful rural revitalization and the creation of viable markets that would enable people to trade and produce themselves out of poverty. Instead of embarking on a broad scale of rural infrastructure constructions to boost production and institute an industrial policy of mapping out geo-economic zones with a view to matching the resource endowment of each zone with appropriate industrial and agricultural support program, the government of President Tinubu is more disposed to the simplistic counsel of the World Bank to “accelerating the roll-out of social protection measures including the direct benefit transfer program to counteract purchasing power losses and hardships”.
If the distant and socially insensitive World Bank technocrats could be forgiven to believe that a direct benefit transfer program of 75,000 naira about the equivalent of 40 U.S Dollar to a household in Nigeria “would counteract purchasing power losses and hardships”, how would Nigerian politicians who campaigned for votes in communities and towns riddled with squalor, misery and excruciating poverty take such advisory serious. But tragically, that is where we are, with the government and their surrogates hyping renewed hope with completely borrowed economic measures that is totally out of sync with the Nigeria reality. Against the reality of the excruciating economic hardship and the widening social misery and its aftermath of worsening security challenges, the question remains as to what is to be done.
In a book “Gambling On Development: Why Some Countries Win and Others Loose” written by an Oxford academic and Development practitioner with many years of experience, Professor Stefan Dercon, argued with compelling data and persuasive erudition that development requires more than policy, even a good one for that matter. According to him, beyond policy outlines, gambling on development must require a tacit elite consensus on a development bargain in which they agree to eschew their greed, stop pulverizing and stealing the common wealth and using the State as the premium vehicle. “In development bargain”, Mr. Dercon writes “economic deal is centered around pursuing growth and development. It needs to provide the basis for peace and stability and it determines the extent to which the State apparatus is best used in pursuit of economic progress”.
In another article of the “The Economist”, it warned that “there is frustration with politics across Africa… and that African States are often incapable of doing the things a State should do, while doing plenty of things that it should not”. The perennially opaque lanes of politics and business in Nigeria and the obvious fusion of the lanes makes it difficult for elites to specialize in either business or politics; resulting in a system rigged by mediocre politicians and politically dependent mediocre business people.
The London based magazine of liberal capitalism rued at the dilemma with an observation that “the closeness of business and politics also helps explain why there are so few entrepreneurs of global standing…. and why it is hard to become a legitimate billionaire when wealth depends on politics”. Government henchmen always more concerned about their privileges may scoff at Western media arrogance but the reality is not far-fetched.
But according to Mr. Dercon “successful countries appear to have pursued a relatively diverse set of economic and other policies but “it is consensus that political and business elites have agreed on an implicit pact that prioritizes increasing the size of the economic pie over simply gobbling it all up that would matter more in the development bargain to foster a trajectory of broad inclusion and long term sustainability.
Except President Tinubu and his government shows to enabling the consensus on the imperative of the development bargain by eschewing profligacy and develop an original national strategic development plan, wholly from the Nigeria’s existential reality, he is headed to the trashcan of history as another Nigeria’s historic missed opportunities.
• Mr. Onunaiju contributes from the FCT, Abuja