On 23 June 2016, the Britons conducted a referendum to either remain or leave the European Union (EU). Before the referendum, there were series of debates as to whether Britain should leave or remain as a member of the EU. To further justify the arguments that there should be no Brexit, (acronym for Britain’s exit), the British Prime Minister and some world leaders declared that Britain was doing well economically more than any other period in the 21st Century.
Some argued that it was commonsense for Britain to remain in the EU as an exit is irreversible. They argued that an exit from the EU will result in trade damage while investments in Britain will suffer because businesses would find it difficult to access the EU from Britain. Again, David Cameron was quoted as saying that “only abject and self-imposed humiliation awaits if we walk away.”
The outcome of the referendum reflected that most Britons were in favour of their country leaving the EU. They claim “leaving EU would enable Britain perform miracles – to deregulate and unleash the magic of free markets,” which according to them “will ultimately lead to explosive growth.” This is just a figment of their imagination, and this is where they got the analysis completely wrong. It is the same free-market fantasy that has proved to be delusional in most parts of the world. Those who voted in favour of Brexit have been blindfolded by emotions which makes other arguments to remain in the EU weak and inferior.
The free-market was championed by Adam Smith who in his wisdom regarded it as the “invisible hand” by which prices, quantities, and production methods are governed by the forces of demand and supply. Due to emotions and sentiments, the Britons who voted for Brexit forgot that the “invisible hand” is not infallible. This is because of increase in unemployment and inflation in the UK.
Immediately after the Brexit, the British currency, the Pounds Sterling, sank 10 percent in value on currency markets to its weakest level since 1985. At the time of writing, available data shows that the British Sterling is gradually recovering after its 2-week drop as the UK authorities flagged measures to mitigate the impact of the Brexit on the economy. As if these are not enough devastating consequences, the Scots and Welsh are now preparing to be part of the EU.
The risks associated with the Brexit have started to crystallize. The British government is however, rolling out measures to fight a probable recession in the UK. Analysts suggest that Britain will be about 2 percent poorer than it was before Brexit. These and other adverse unintended consequences of economic activities may likely lead to market failure.
Thank goodness, Britain did not change its currency to the Euro when the country joined the EU about 43 years ago. It retains its own currency and borrows in it. The risk is minimized as Brexit could have created economic chaos in the international market. This is because Britain would have been saddled with the problem of printing its own currency which would have destabilized global economy as a major power. By implication, there would have been financial crisis globally.
The political fallout has been tumultuous and the immediate feeling is uncertainty. What lies ahead for businesses and public servants who have to live with the consequences of Brexit is unquantifiable. Those who voted for Brexit were myopic. They did not look at the big picture despite warnings from David Cameron and other world leaders.
From the above, Nigeria needs to draw lessons. This is because for every choice a nation makes, there are consequences. Politically, those who are canvassing for referendum to enable Nigeria have true federalism and political restructuring should think deep. Their recommendations as genuine as they may be should not be laced with emotions. This is because among several contending issues or questions on federalism and political restructuring in Nigeria, I am compelled to ask: should Nigeria run a presidential, parliamentary, or mixed presidential-parliamentary system of government?
Importantly, what should be constitutional responsibilities of governments- federal, state, and local levels, in areas such as education, security, agriculture, and infrastructure? How can we allocate revenue in an equitable and sustainable manner? Are states and local governments too many or few, and can we redefine “federal character” principle and power sharing practices in an equitable manner in order to strengthen democracy? I hope these few thorny issues out of many have been adequately discussed in previous constitutional conferences.
With respect to Nigeria’s membership of the ECOWAS, the nation should thread cautiously in accepting the Eco as a legal tender. This is because Nigeria which is the strongest economy has economic challenges at home with high unemployment and inflation rates. The remaining West African countries are not better because of what I respectfully refer to as “disunity in diversity”.
The convergence of foreign interests has resulted in dissimilarities in economic capabilities of ECOWAS nations. Diversity in language, culture, core values, strategic national objectives and the influence of global powers in the region have not strengthened regional cooperation within the West African sub-region. What happens to a nation of about 200 million people with more than 70 percent living in poverty, when a sub-regional currency is adopted as legal tender? Will the Eco as a legal tender solve Nigeria’s economic problems? Will the Eco usher in economic development and reduce poverty in the West African sub-region?
I strongly advise that the Nigerian government should be careful because economics does not follow a straight line graph as all things are not equal in real life. All heads of governments in the ECOWAS should put their countries in order and find ways of improving their economies. When poverty, hunger, unemployment, and inequality is predominant within the West African sub-region, it is not wise for Nigeria to adopt the Eco as its currency.
MA Johnson
