In September this year, President Muhammadu Buhari constituted an Economic Advisory Council, EAC, headed by Doyin Salami, an academic at the Lagos Business School and, for eight years, member of Monetary Policy Committee of the Central Bank of Nigeria. Other members of the council are Chukwuma Soludo, former governor of the CBN; Ode Ojowu, an economics professor and former chief executive of the National Planning Commission; Bismarck Rewane, a respected financial expert and commentator; Shehu Yahaya, chairman of the Development bank of Nigeria; Iyabo Masha, a former IMF official; and Mohammad Sagagi, a development economist.
The constitution of the EAC is, arguably, the most positive decision that President Buhari has taken on the management of Nigeria’s economy since he assumed office in 2015. Throughout his first term, Buhari shunned economic technocrats; he did not have any credible economic team or advisers. And he started his second term by appointing a cabinet made up entirely of career politicians and party loyalists, none of whom can remotely be described as a reputable economist. The acute lack of economic technocracy was a gaping hole in Buhari’s government, which is why it’s hard to underestimate the significance of his decision to constitute, if belatedly, a high-profile team of economic advisers.
But here’s the question: can they really influence the substance and delivery of economic policies? In a sense, the EAC members are “technopols”, a term coined by the economists Jorge Dominguez and Richard Feinberg to describe economic technocrats who operate in a political environment. And, according to John Williamson, the renowned economist, technopols must have two sets of skills. The first is that they must be applied economists who can judge what institutions and policies are needed to achieve positive economic outcomes. Then, second, they must have the political skills to persuade others to adopt the policies that they have judged necessary to bring about the desired economic outcomes.
Few would doubt that at least some of the members of the EAC possess the skills of successful applied economists. But are they able to persuade the president and his government to adopt the policies needed to turn Nigeria’s ailing economy around? Put more specifically, can they turn Nigeria from a dirigiste, statist, mercantilist, closed economy to an open and competitive economy where the markets, not the state, allocate resources?
The sole objective of economic policy is to promote the general good. But how? Well, as Williamson argues in the book “The Political Economy of Policy Reforms”, the general welfare will be promoted by a combination of competitive markets and integration into the world economy through open trade policy. Price stability and a unified exchange rate are also part of the toolkit for a welfare-enhancing economic system, as are the rule of law, property rights, economic deregulation and privatisation. These economic institutions and policies create the incentives for the emergence of a free enterprise, wealth-creating and poverty-reducing economy. The market economy system is the route to prosperity!
However, President Buhari’s statist, interventionist and protectionist instincts run contrary to the necessities of an open, competitive market economy. He believes more in the power of the state than in that of the market to drive economic progress. When President Buhari called for “homegrown” solutions to Nigeria’s economic challenges, what he really meant were unconventional or unorthodox policy measures, such as those favoured by the central governor, Godwin Emefiele, which isolate Nigeria from the world economy.
But how many members of the EAC share Buhari’s economic worldview? It is not clear how many of them have the post-war development mindset, popularised by Latin American development economists, such as Raúl Prebisch and Hans Singer, that import-substitution and the attendant protectionism, rather than a free market economy, are the solutions to Nigeria’s underdevelopment. Given that members of the EAC were invited to help revive Nigeria’s comatose economy, it’s important that they are be able to judge correctly the institutions and policies needed to do so. But they can’t judge rightly if, like Buhari, they believe in import-substitution and the Utopian idea of economic self-sufficiency.
That said, we know that at least one member of the EAC does not believe that Nigeria should become an autarchy. Professor Soludo stands out as someone who, through his writings and speeches, is a strong advocate of the market economy system. Indeed, he’s called for a holistic approach to tackling Nigeria’s economic underdevelopment.
In a recent speech titled “Economic and institutional restructuring for the next Nigeria”, Soludo argued that “it will be difficult to have a competitive and prosperous post-oil economy of the future with the same legal and institutional foundation designed for consumption of oil rent”. He has long argued that to create a post-oil competitive economy, the existing constitution must be fundamentally altered. In an earlier speech, titled “Avoiding the mistakes of the old Buharinomics”, Soludo cautioned against the return of the protectionist measures that Buhari introduced as military dictator in the 1980s, such as indiscriminate bans on imports. There are other members of the EAC, such as Doyin Salami and Bismarck Rewane, who hold broadly liberal economic views.
But what advice are the EAC members giving to President Buhari? Of course, they are not expected to give their advice to the president on the pages of newspapers or shout them from the rooftops. But we should know what advice they are giving, or what influence they have, by the actions of the president and his government.
So, for instance, what advice did members of the EAC give to the president on the recent closure of Nigeria’s land borders? Given that, as the Financial Times recently reminded us, “the blockade echoes one that Mr Buhari instituted as military dictator in the 1980s”, does Soludo see it as one mistake of the old Buharinomics that should have been avoided?
Well, the truth, let’s face it, is that the EAC is constrained in many ways. First, its members are unlikely to have a common, coherent view of what should be done. Second, they do not command what Williamson calls “the instruments of concentrated executive authority”. Third, they have at the top a political master, the president, who is impervious to the vision of Nigeria as an open, competitive market economy. Finally, they operate in an environment where there is no desire, let alone the urgency, to embark on a comprehensive programme for transformation of the economy, the type that Soludo advocates.
The late economist Marcur Olson propounded the crisis hypothesis, arguing that a major crisis opens the door to policy reform. But what policy reform has emerged from the ashes of a crisis in this country? None! Nigeria has suffered repeated oil-price shocks, putting its economy out of kilter, but has that triggered a reform to build the country’s non-oil export competitiveness? No. Take the “widespread” smuggling and dumping that the government blamed for closing Nigeria’s land borders. Shouldn’t the smuggling/dumping crisis trigger a reform to build critical institutions, such as transforming Nigeria’s corrupt and ineffective customs and border agencies and creating a robust trade remedies regime? But instead of such institutional and policy reforms, there’s a knee-jerk, counter-productive response: border closures!
Which inevitably raises the question: Where are Buhari’s high-profile economic gurus? Surely, they should be steering the government away from bad policies. If they can’t influence the substance and direction of policies, one might wonder what they are all about. Yet, they’ve put their technocratic credentials on the line. They must guard them jealously!