A vote for private sector-led strategy for Nigeria

Indeed, when the government plays its role well, the success is resounding. But the corollary is true; when the government is inept, or worse still, inept and corrupt, the damage can be traumatic and remedy long drawn.

Each nation should identify what works for it. Those with failed or grossly underperforming governments should put the private sector on the front foot.

 “With the miserable failure of governance, we should leave them the task of paying the Civil Service a living wage.”

Sadly, I think we belong to the category of failed governments. So we should be deliberate in pushing for a constrained and limited government, an aggressively expansive private sector, hopefully birthing prosperous households. We are better off with a private sector and households that are so large compared to the government that government madness becomes containable.

The private sector should own and run airports and ports; they should build rail tracks and run the railways; they should manage public social services, including education and health. With the miserable failure of governance, we should leave them the task of paying the Civil Service a living wage. Almost everything else should be outsourced to the private sector.

It is perhaps worth contemplating how dominant the private sector was in building America. Weren’t the rich barons the builders of America? I ask because I’m not sure, but I think so. Italy manages to thrive despite less than sterling transparency credentials and significant organised crime—I’m still trying to understand that strange G7 nation, Italy.

In conclusion, a nation should pivot to what will work within its peculiarities. Governments in our climate tend to fail miserably.

Austerity has been proven to be the worst panacea for recession or stagflation. Government spending is a critical stimulus to pull out of the doldrums.

But we are an exception. We are not in stagflation or an economic crisis because of normal economic cycles. A profligate and inept president combined with an unprecedentedly profligate CBN governor, along with the support of a totally inert and complicit National Assembly, sank us into deep debt with very little to show. Buhari took the federal budget from N4.5 trillion to almost N20 trillion in 8 years, significantly funded by ways and means and frivolous international and local loans.

I think this government’s double-down on aggressive spending is wrongheaded. We needed four years to repair the government’s balance sheet by paring back, not charging forward. The government’s first-term objective should be very disciplined spending and an unfettered recovery of flight capital, particularly those diverted from local and foreign loans. Recovering $10-$20bn as well as N10-N20 trillion is not nice to have; it is a TINA. THERE IS NO ALTERNATIVE. Simultaneously, a framework for massive private-sector infrastructure spending would turn Nigeria into a huge construction site, funded by the private sector, not the government. Returning to peak production of 2.3m bpd should have been do or die.

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But Asiwaju has a big-spend philosophy. To his credit, he has one; his predecessor had none. But I think it is wrong. I doubt that the value of each Naira of government capital spend exceeds 30k. Add quality shortfalls and avoidable time overruns, and value per Naira could drop to 20k. And this is being funded by impoverishing businesses and households with a devalued Naira, huge tariff increases a la Band A, and N1000 per litre fuel. Much fatter governments at all levels and emasculated businesses and citizens, the exact opposite of what we need.

We are in a hole, and we are digging deeper, furiously.

I pray the next two years prove me wrong and the other philosophy right.

A policy-led stagflation is puzzling. Unparalleled inflation from devaluation and other massive price adjustments. And no growth as the same price adjustments contract both the private sector and obliterate household spending. If external factors like oil price crashes or the Ukrainian war-imposed stagflation occurred, we might excuse our czars. Not here. These czars blew off of our pockets and added it to their fat purses—in Zurich and the Isle of Man.

Honestly, the current government’s single-minded pursuit of big spending leaves me perplexed. I wish they would organise a session of 8, four on each side, hoping the better argument wins. Because there is some chance that if by a miracle Asiwaju is persuaded of the perfidy of the current policy set, he would reset. Those who have them a dial away should try, or try much harder if they’ve been trying.

Mr Kola Ayeye is a seasoned professional in the finance industry with over thirty years’ experience in Banking, Financial Services, Audit and Advisory Services at an executive level in both public and private sector.