• Friday, December 08, 2023
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Sense and nonsense in the economic debate

Nigeria: Still a homeless nation at 62.

An old maxim of military strategy states that “war is far too important to be left to the generals”. The same can be said of the economy: it is far too important to be left to the economists. Just as military choices are ultimately political, economic policy choices are ultimately political. Economists can advise about costs and prices, but the ultimate decision about which needs to fulfil and which to forego and at what costs are ultimately political decisions. It is in the nature of politics since the age of Aristotle.

The notion that economic reason can override all other considerations is a fraudulent presupposition hatched from the academic sanctums of Anglo-American social science. The Germans don’t believe it; neither do the French, the Austrians, the Japanese, the Chinese and the Koreans.

In this electioneering season, the economists have been at it again. The opening salvo came from Charles Chukwuma Soludo who advanced a provocative critique of the Goodluck Jonathan economic record in an article titled, “Buhari vs. Jonathan: Beyond the Election”.  There was a lot of sense in what he said. But there was also a lot of nonsense. Indeed, President Ronald Reagan used to joke that if the game of trivial pursuit had been invented by economists, it would have 100 questions and 3,000 answers. The dismal science is the only discipline in which it is possible for people to share the Nobel Prize for saying diametrically opposite things, as did the Swedish economist Gunnar Myrdal and the Austrian Frederick August Hayek in 1974.

Read also: Jonathan vs Buhari: Hard choices in next month’s election

Soludo was right to raise issues regarding the lack of costing for the wild promises that both incumbent PDP government and the opposition APC are making. He is right about the need for rigour in costing those promises or indicating where the money will come from. There is a binding budget constraint that will become even stringent in the years ahead.

Soludo is also right about the challenge of rising unemployment and deepening poverty. But the controversy regarding the accuracy of the statistics should not overly worry us. When is the level of poverty unacceptable? Is it when it is 30 percent, 60 percent or 70 percent? And when should we begin to cry foul with respect to youth unemployment? Is it when the figures reach 10 percent, 20 percent or 50 percent?

My take is that both poverty and unemployment are nightmares that continue to bedevil our social system. The controversy about the actual figures is of marginal interest to the ordinary man and woman.

Soludo is also right about the corruption and the leakages in our government coffers. The government has not handled the controversy regarding the alleged missing $20 billion in the oil sector as was alleged by outgoing CBN governor, now Emir of Kano. The oil theft in the Niger Delta is a millennial scandal, however you look at it.

But there was also a lot of nonsense that spewed from the pen of the former CBN Governor. In 1999 Olusegun Obasanjo did not inherit “a bankrupt economy”. The economy was crying for reforms after decades of military misrule, but there were things that were done right even under the Abacha dictatorship. As it turns out, Abacha was less corrupt than the rulers who succeeded him.

The reforms that were undertaken in the banking sector during 2005-2007 were relatively successful. But there were also serious anomalies. There were severe shortcomings with regard to the supervision of the post-reform banks. The Minister of Finance and Coordinating Minister of the Economy was right in pointing out that it was sometimes difficult to distinguish between the regulator and the regulated. The idea of sending in-house regulators to the banks was foolish. It was reminiscent of the medieval Popes who used to send emissaries from the Vatican to take over provincial Bishoprics. It was often the case that the Bishops would go native and work against the Vatican. After being pampered, the in-house regulators probably began to see themselves more as working for the banks than for the regulator or, indeed, the Nigerian people.

Okonjo-Iweala rightly points to some of the notable achievements of the government. Nobody can take that away from her. Whether people accept it or not, this government has invested more than any of its predecessors in infrastructures, power and energy, transport, education and human development. The Obasanjo administration spent over $16 billion on the power sector with virtually nothing to show for it. The unbundling of the Power Holding Company (PHCN) under the current administration has led to significant improvements in energy generation and transmission. Some of the power projects will soon be commissioned, leading to even greater improvements in the electricity sector.

Agriculture has made significant gains. My worry is that the focus on large multinational agricultural investors is dangerous. Land grabbing by multinationals in Latin America has led to displacement of peasant farmers, resulting in worsening poverty in the in the agrarian countryside.

We seem to forget that the Green Revolution in Asia in the seventies and eighties was anchored on the small peasant producer. Enhancing local farm productivity and providing affordable inputs such as support services, fertilisers, pesticides, herbicides, tractors, seedlings and credit is the key to real agricultural transformation. We are not seeing much of these under the current dispensation. The real policy thrust of the agricultural reform seems skewed in favour of greedy American multinational corporations. It cannot be in the national and collective interest of the Nigerian peasantry.

Former Ekiti governor and head of APC Policy and Strategy wrote a lucid response to Soludo which I find refreshing but rather effete. Femi Fani-Kayode, Oby Ezekwesili and Pat Utomi all added their own takes to the debate. Fani Power Junior declared that Soludo is “out of touch” with current developments in Nigeria. Oby pitched her tent on the side of the suffering and the oppressed. Pat Utomi declaimed in favour of institutional reforms to make the Nigerian system to work.

Soludo wrote a second article largely repeating vitriol against Okonjo-Iweala and again whitewashing his own record as CBN governor. Perhaps the real economy and the future of the Nigerian people was not the real issue after all. It would seem Soludo had a long-standing axe to grind and the economy was just an excuse to take the minister to the cleaners. This is where the nonsense outstrips the sense.

Obadiah Mailafia