• Thursday, March 28, 2024
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The perils of being an economist

World Bank projects Nigeria’s growth to rebound by 1.1% in 2021

The year 2020 was a rather tumultuous one for the world economy. The spread of the novel coronavirus from the provincial city of Wuhan in China to the rest of the world was one of those Black Swan events that appear once in a century. By year’s end 2020, the total number of Covid-19 infections globally stood at over 80 million, with a total figure of 1,770,695 deaths.

The global impact has been unprecedented. International trade and logistics have been crippled. Commodity prices have plummeted. Global oil prices came down to a low of $12 per barrel, before rebounding to the current $48.8 per barrel. Foreign capital flows have been dampened. Capital markets have plummeted. Thousands of firms have gone bellyup. Unemployment figures have swelled across the world. Poverty and misery have deepened, especially in the poorest countries. World output fell by 4.4 percent during the past year.

Central banks have implemented loose monetary policies that are likely to increase national debts while spewing up future financial crises. Advanced industrial countries have cut back on their ODA budgets. Commitment towards the global sustainable development goals has weakened.

Today, Nigeria is officially in recession. My gentle readers would recall that during 2015-2017 we had a rather severe recession. Recession is back again, with high inflation, falling naira, dwindling investments, manufacturing doldrums, worsening business climate and a dire geopolitical environment, insecurity, uncertainty and collective anomie.

Nigerians are beginning to distrust the figures being churned out by the National Bureau of Statistics. The annual headline inflation rate has been put at 14.23 percent while food inflation is said to hover around 17.38 percent mark. However, the American economist Steve Hanke, of Johns Hopkins University, has faulted these figures. He believes that annual inflation under the current administration has been hovering way above the 30 percent mark.

In November last year, it was reported that a staggering 428 federal government agencies were unable to pay salaries to civil servants for two months running. This is likely to further weaken aggregate demand and public morale, given the prominence of the public sector in our political economy.

One of the key factors in the current recession is falling agricultural production. Rural banditry, particularly in the Middle Belt, which is incontrovertibly the bread basket of our country, has meant that there are food shortages

Read also: Will Nigeria’s refining renaissance happen in 2021?

One of the key factors in the current recession is falling agricultural production. Rural banditry, particularly in the Middle Belt, which is incontrovertibly the bread basket of our country, has meant that there are food shortages which are reflected in rising prices and hunger among the poor. Approximately 70 percent of our population have agriculture as their primary economic preoccupation. Killings, beheadings, kidnapping, abductions, rape, banditry and rapine are destroying rural food production and livelihoods of rural dwellers. Social capital is being eroded. Millions of defenceless peasants are being assaulted. Many have flooded into the cities and towns while a good number have become IDPs in makeshift camps.

The hard lessons of history make it clear that appeasement never works. As a matter of fact, it provides a system of perverse incentives for terrorists. We were once told, “An attack on Boko Haram is an attack on Islam”. Now that the chickens have come home to roost, the North has become a desert wasteland of poverty, destitution and hopelessness. I hate the idea of negotiating with the insurgents. It has become big business for all key stakeholders in government and the military and security services. That vicious cycle must be broken if we are to make any progress as a country.

I am of the opinion that no exclusively technical economic nostrums – important as they are — will work under the current distemper. This is because the roots of our economic predicaments are deep-rooted and structural. Even with the best economic team in the world, we have no hope of escaping from our collective nightmares unless we address fundamental bottlenecks such as insecurity, decaying public institutions and poor governance,

The distinguished Cambridge economist, Joan Robinson, was a gadfly during her days. A mentee and disciple of the great John Maynard Keynes, she famously noted that the purpose for studying economics “is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists”.

I could not agree more. I began my academic studies as a political scientist. I then veered into economics in order, precisely, to call the bluff of the economists. Many of the research agendas in economics in Africa are set by foreign interests that are totally opposed to the technological and industrial transformation of our continent.

The venerable ancient citadel of learning, University of Oxford, does not offer a single B.Sc. Honours course in Economics. What they offer is a BA in Politics, Philosophy and Economics (PPE). They believe that offering pure economics as a subject to young impressionable minds without equipping them with the tools for political, moral and philosophical analysis is a recipe for disaster. It will turn them into one-eyed monsters who know the price of everything but cannot appreciate the value of anything.

Today, the PPE degree is a highly sought-after qualification, for which competition for admission is rivalled only by Medicine and Law. Former graduates include former British Prime Ministers Harold Wilson and David Cameron; Kukrit Pramoj, former Prime Minister of Thailand; former Pakistani Prime Ministers Liaqat Ali Khan, Zulfiqar Ali Bhutto and daughter Benazir Bhutto. There is also John Kufuor, former President of Ghana; Malcolm Fraser, former Prime Minister of Australia; and countless businesspeople, finance ministers and academics from across the world.

A good economist must be well-grounded in quantitative analysis as well as understanding of politics and values. They must appreciate the price of everything as well as the value of the most important things that matter for civilisation. Tackling our current malaise requires wide-ranging multidisciplinary approaches to institutional reforms and renewed state building. It calls for leadership skills of the highest order. Just as war is far too important to be left to the generals, we can say that the economy is far too important to be left to the economists.