Dysfunctional institutions and dream prosperity

Kaye Whiteman

Development strategies are critical in defining the pathways, magnitude and sustainability of the growth and development of an economy. In its most common manifestations through policies and programmes with expectations and timelines, economic strategies deliberately attempt to influence decision making processes at various levels in order to achieve positive performance of key economic variables.

Common policy targets include inflation and interest rates, curbing unemployment or macroeconomic stability etc. But then influencing the performance of these targets must take place within the space defined by the effectiveness of structures and mechanisms that guarantees social, governance and economic order in addition to the cooperation governing the preferences of the economic agents acting purposively in their own self interests. The argument is very simple: in the absence of ineffective institutions, can Nigeria have successful and sustainable economic development strategies or plans?

Institutions guarantee social order and possess the mandate for making and enforcing the rules which govern cooperative human purposive actions. Thus to the extent that good development strategies and policies are expected to emanate, be sustained by and in turn sustain an orderly society and stable economy, the economy’s institutional setting becomes an indispensable factor for prosperity. To a large extent, the institutional setting determines the effectiveness of government economic policies and plan programmes as well as the chances of attaining the embedded set objectives and targets.

The question albeit rhetorical is: how much can we achieve in this country if for instance the institution for justice management namely the police, the judiciary, the prisons etc remain as they currently are, the havens for brewing and sustaining corruption? The results have been obvious over the years. The weakness in this segment has for a very long time dealt destructive blows on the credibility of contracts and promises from Nigerian business community on one hand and the promises of government and its position holders on the other. This analysis can be extrapolated. For instance how much truly-representative Nigerian laws can we expect from the legislative institution who only thinks about how to increase their personal pay packages by thousands of times the average wage of an ordinary Nigerian that he supposedly stands in for? This can be seen in the quality of bills so far passed and the delays in passing such other bills as the freedom of information in a form that is not watered-down.

How can we successfully scale back the large number of deaths in our hospitals from easily manageable ailments when our hospitals are not provided with basic medical facilities; where the medical practitioners are denied their due compensation etc.

The story is the same in every conceivable sphere of the Nigerian socio-economic life. Thus we have undergone series of reforms and programmes with minimal positive outcomes and impacts on the lives of Nigerians. Every passing year the budget spend is enhanced while the resulting impact declines as if yields to the law that says “the more the spending the less the economic impact”. Weak and defective institutional structures enhance socio-economic destruction. Given the strong interdependent relationship between governance, public policy and economic performance it follows naturally that the rot in the governance and public policy making /execution structures will inevitably attack overall economic performance by more than proportionate relations to the initial change.

Therefore plans which are built on such continually weakening governance and policy management structures are likely to suffer failures. A very good example is the vision 20:20:20 which is doomed to fail unless the institutional arrangements that will guarantee flourishing enterprise in this country is in place. Previous visions have failed on same account because they do not exist in isolation in the minds of the creator only but must be supported by the stakeholders who equally man various structures that are germane to its success.

Nigeria’s developmental crises appear to be a consequence therefore of an institutional trap orchestrated and sustained by the presence of oil revenue. In a way it approximates the kind of harm that some analysts claim that aid presents to some African economies. The massive flow of oil revenue aside, propping the blowing up and replication of bureaucratic structures equally obfuscated accountability. It helped to weaken policy focus on agriculture and industry as national output drivers while relaxing the need and interest on taxable revenue.

Accordingly, from the perspective of those who pay taxes, no need for much inquiry into government business as less or nothing was collected from them. In the absence of prying eyes of other stakeholders, these institutions became despicable houses for sharing national cakes. A good case in mind is the justice system which compromised independence and weak prosecutorial structures and has as a consequence inadvertently sustained the continued weakening of other institutions.

For the achievement of national economic prosperity public and private institutions should systematically engage its internal structures and processes towards market development. The implication is that these institutions will recognize the protection of private property rights which when taken to desirable levels drive growth and development. The spirit of private property rights protection in a typical public sector institutional environment tasks the typical employee to realize (a) that s/he is working for taxpayers who by virtue of taxes (or price of their services) paid deserve the typical ‘customer is the king’ treatment; (b) that the taxpayers are the true shareholders of their enterprise to which they are duly accountable to in every within-the-context respect.

Since effective institutions depend on a number of factors comprising the adequacy of the particular institution’s internal structure and processes, the effectiveness of complementing or supporting institutions, the adequacy of human resource skill and technology availability, the adequacy of funding for maintaining the institution as well as corruption possible solutions need to be sequenced. As a primary supporting institution to all other institutions, the justice system should be accorded priority attention so as to equip it with the needed capacity to ensure that rules are complied with by those who man these institutions.