• Tuesday, May 28, 2024
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Using unconventional principles to revamp the economy

Business owners are perturbed with the state of the economy. The Central Bank of Nigeria is unable to meet the foreign exchange (forex) needs of business owners. The “black market” is where most businesses go to get their forex. Persistent recourse to the black market is increasing the cost of doing business with attendant consequences of rising inflation and price instability. A cursory look at economic uncertainties in the country today, reminds this writer about the Prussian philosopher Carl Von Clausewitz and the Chinese philosopher Sun Tzu.

Is it possible for Nigeria to draw inspiration from the principles articulated by any of these great philosophers to navigate uncharted waters of the economy and map out strategies that suit her peculiarities? Policy decision makers need to reflect on the nation’s history, antecedent and peculiarities in order to win the economic war. Due to lack of space, I will be considering the application of the principles of war to combat the economic crisis bedevilling our nation.

When it comes to solving economic problems, the principles of war may appear irrelevant. We may need to try these principles. Although there are no universally accepted principles of war, Sun Tzu was the first to document the earliest known principles of war. It was after careful analysis of these principles that business experts as well as military veterans discovered that they are applicable to every sphere of human endeavour.

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These principles, ten in number, shaped military planning and execution for ages. Some military theorists have expressed their views that these principles, when carefully thought through and applied, are equally applicable to the competitive battleground of international commercial operations, providing a sound foundation for business activities. These scholars further argue that an individual’s chances of business success will increase if the leader and the team understand and adapt the Principles of War to their business.

The first and very crucial Principle of War is known as “Selection and Maintenance of Aim.” Other principles are: Maintenance of morale, offensive action, security, surprise, and concentration of forces, economy of effort, flexibility, cooperation and sustainability. All the elements of the Principles of War are relevant when it comes to repositioning the economy of a nation. Selection and Maintenance of Aim” is the first principle of war and it’s of utmost importance in revamping an ailing economy.

 For Nigeria to be free from the current economic backwardness, she must be bold enough not to follow rigidly popular reform and policy recommendations of some advanced economies

What are the expectations of the people from politicians having constitutional authority? In selecting and maintaining the aim, it is expected that those in elected and appointed positions will provide unity of effort and unity of purpose to pursue the agenda of the President, state governors and local government chairmen. It is expected that all ministers, commissioners, local government officials and special advisers comprehend what they are to achieve and why they are to achieve it.

We expect all the governors to have their agendas because they are not of the same political party as the President. But in governance, it is imperative to ensure that national development remains the priority. Any clever state governor irrespective of political party will align his state agenda to that of the President at the centre for ease of funding and support. All elected and appointed politicians must decide what to do, why to do it, and keep the agenda in view as events unfold. That is why scholars refer to “Selection and Maintenance of Aim” as the “Master Principle of War.” It is seen as a process, an outcome and an output. There must be clarity. Clarity delivers effectiveness and efficiency.

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Today, the Federal Government has an 8-point agenda as follows: “Food security; ending poverty; economic growth and job creation; access to capital; improving security; improving the playing field on which people and particularly companies operate; rule of law; and fighting corruption.” The aim is to reposition the economy. By the 8-point agenda, the government of the day has selected what this columnist considers as components of the aim to be achieved. To achieve this aim, those with constitutional authority must maintain the aim by having policies in place that will enable them achieve selected objectives. The remaining nine principles of war can be applied in policy formulation and implementation.

For Nigeria to be free from the current economic backwardness, she must be bold enough not to follow rigidly popular reform and policy recommendations of some advanced economies. I say this with all sense of responsibility. We observed that these universally applicable reform measures do not fit into the nation’s reality. Nigeria should be able to redefine its own political economy from past and present realities.

Presently, our reality is that we are a highly indebted nation, unable to build local capacity to process food and to refine crude oil for petroleum products as well as mine effectively our solid minerals for export. A country with poor infrastructural facilities to transport goods and services and to maintain the quality of education and healthcare needed for development. In decades we have had different agendas at state and federal levels but they have barely re-positioned the economy. Why? So many things, particularly policy formulation and implementation strategies go wrong.

Although most countries have political and economic challenges, they differ in content and magnitude. The case of China is very relevant here in my view. China’s economic reform has worked but the mechanism of these reforms still puzzles economists of the global North. Why? China applied homegrown solutions to solving its domestic economic problems. From advanced economies came suggestions that China must transform from a planned economy to a market economy. Privatization, stabilization, and liberalization were some of the economic models suggested to China without which the economy will fail. But China’s reform success was without complete liberalization and without privatization. China showed an unconventional approach towards solving its economic challenges. The essence here is to show that China engaged an unconventional approach outside well known economic theories.

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Nigeria is a peculiar nation when it comes to repositioning our economy. It will not be surprising that Nigeria’s economic miracle lies in the birth of well thought out policy guided by our peculiar circumstances, history and antecedents. Some Nigerians are quick to suggest that everything should be left to “market forces.” In the last ten years, I have been part of the crusade for market forces. While market forces worked in some countries I am yet to see its effectiveness in our country. It’s because the market forces of supply and demand have not brought down the prices of goods and services in the country. Production and consumption are at their lowest in many years.

Since 29 May 2023 when the subsidy on petroleum products was removed, and the forex market was unified, economic experts applauded the moves by the federal government. Alas, the forces of the market has not been able to control the price of fuel and the foreign exchange rate. At the time of writing, the petroleum product is subsidized as the NNPC is alleged to now use dividends accruable to Nigeria to pay the subsidy. The Naira that was exchanged for 460/US$ at the end of May 2023, has been swinging up and down and is now at N980/US$. These values change randomly. Public intellectuals and economists are of the view that “it’s all pain and no gain for one of the world’s worst performing currencies, naira, this year whose 40% slump since June has not been enough to restore investor confidence.”

A business lawyer is of the view that we must learn how to fashion a way to use the market as a tool in the pursuit of the nation’s development objectives. Truly, economic theories will support the need for market forces any day, and a free reign of the invisible hand of the market. We must appreciate that the invisible hand of the market needs the invisible hand of the government.

I submit that the government can apply other principles of war as deemed necessary to reposition the economy. The government through its policies must maintain confidence and trust of local and foreign investors. That is “Maintenance of morale,” while the elements of surprise and offensive actions can be applied to tackle the plots of economic saboteurs. We must be able to surprise our competitors globally. Security must be provided for all the citizens through the application of “concentration of forces.” We must secure our borders, trade and critical infrastructure. There must be an “economy of effort” by ensuring that we have round pegs in round holes in order to revamp our economy, and flexibility in terms of policy formulation and implementation, the same way we solicit for cooperation by all stakeholders in a sustainable manner. Let’s remember that there are always alternatives to policy options that are not working.

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A sudden transition to a market driven economy may not be ideal for Nigeria’s weak production and industrial capabilities. Now that there is an eight -point agenda from the government, conventional approaches may prove inadequate in grappling with complex issues of inflation, unemployment, domestic and external debts, trade deficits and scarcity of foreign exchange. The way forward is to select and ensure maintenance of the aim to reposition our economy while redefining what constitutes the market and its forces as we remove all bottlenecks preventing local production. Thank you.