Abia is open for business for serious-minded entrepreneurs, investors – Otti

Alex Otti, governor of Abia State, has said that the state was open for serious-minded entrepreneurs and investors. Otti made the declaration Thursday, during the maiden Business Round table meeting with the business communities across Nigeria which took place at the International Conference Centre (ICC), Umuahia.

Otti, in his speech entitled ‘Opportunites, Partnership and Prosperity’ noted that
the debate on the role of government in economic management was as old as it was evergreen.

He said that while one group of scholars, drawing from the views of 18th Century Scottish philosopher and economist, Adam Smith, favours the laissez-faire, free market orientation wherein the government sits back to let the metaphorical invisible hand set price and output levels, another group lean more favourably to the views of 20th Century English mathematician and economist, John Maynard Keynes, who insisted that government’s deliberate involvement in economic matters of the state is the only way to guarantee long term macroeconomic stability.

He noted that for those who belong to free market school of thought, policy instruments like price control, taxes or direct investment only create distortions and promote inefficiency.

He said that the Keynesians on their part argue that the most effective way of keeping aggregate demand predictable is to get the government involved in driving economic outcomes through the deft application of strategic policy instruments, the very ones their ideological opponents reject. The classical economic view is that economic efficiency is best determined by competition and market forces; the interventionists on the other hand insist that the only way to mitigate market failures and the attendant challenges is to get the government directly involved in creating patterns of incentives and deterrents.

“We may not be able to close the argument today but these dominant philosophies offer us a peek into the nuances of the debates around the role of government in business. What we can, however, do is to agree that like in all subjects of social sciences, there are no absolutes considering the unpredictability of human behaviour and events.

“At any rate, we hold strongly to the view that there is a clear role for government in business, but we are also reluctant to agree that it is the obligation of government to directly run businesses,” Otti said.

According to him, “Our position is that since business decisions are driven by clear economic considerations, the express role of the government is to create a system of incentives that sends definite signal to investors that their legitimate interests can be protected over the long haul within the territory.”

He further said that the logic here was that for the invisible hand to become an effective driver of economic efficiency, the government must first show its hands through direct investments in critical public infrastructure, institution building, maintenance of law and order and the adoption of policy initiatives that reward enterprise, incentivises innovation and enables the attainment of pre-determined socioeconomic goals.

The governor said: “Our conviction is that for an economy to develop and thrive in the present global economic order underpinned by innovation and cross border competition, a holistic assessment must be undertaken to situate its place on the development ladder; this will in turn determine the level of government involvement required to achieve certain volume of aggregate production before competition and innovation take centre stage.

“In an environment like ours, the private sector can only thrive when the government plays a definite but measured role in the management of the economy; in the advanced economies of the West however, the public sector may just focus on regulations and occasional policy interventions while the private businesses focus on deepening their competitive advantage through innovation.

“The blind adoption of the views of either the free-market proponents or that of their intellectual adversaries across the aisle, without an awareness of their limitations under certain circumstances, would inevitably lead to disruptions and in some instances, systemwide collapse as we saw with the Great Depression of the late 1920s to 1930s, and most recently, the subprime mortgage crisis of 2008 – 2009. It is comforting to observe that lessons from those unfortunate historical events have progressively shaped the economic policy disposition of governments around the world.

“This is partly why private enterprises are flourishing in economies with strong communist orientation like China and then in places like the USA with a long history of free market outlook, you still see the hand of the government on every critical economic node.”