As Politics Goes, So Does The Economy

DIALOGUE WITH NIGERIA By AKIN OSUNTOKUN akin.osuntokun@thisdaylive.com

If I were addressing myself to the exclusive audience of a social science class seminar, the topic above would be more appropriately entitled the political economy of Nigeria-under which specialisation, the interaction between politics and the economy is adequately studied and explained. ‘It defines how the economic system, political institutions and the political environment affect and influence each other’; and characterises the interaction between the impact and consequences of political decisions on the economy and vice versa. Such interaction can degenerate, as it seems to be the case with contemporary Nigeria, into a vicious circle-and becomes a sequence of reciprocal cause and effect in which the economic and political crisis intensify and aggravate one another; where one problem causes another problem that then makes the first problem worse’.

It should be readily recalled that the negative momentum in which Nigeria is presently entrapped did not begin as one. From the climax of the concession of defeat by former President Goodluck Jonathan in the outcome of the fraught 2015 presidential election and the overflowing fount of goodwill for the incoming victor, it is improbable to predict the present anti-climax of political and economic downturn. From the perspective of how things could otherwise have easily gone wrong, it was a textbook transition from a defeated incumbent to a successor political opponent. In a glimpse of the political height to which the African continent could only aspire, an incumbent did not bother to wait for the official declaration of the election results to concede defeat; and thereby pre-empt the ominous dark clouds discernable in the horizon. This was the good political beginning whose potential now seems increasingly dissipated and frittered away.

As we go forward with this essay, it is necessary to clarify that a political decision is inferable and can be deemed to be made through omission or commission, through deliberate inaction or overt activity. The choice not to act is itself a decision. In economic parlance, such omission and inaction are calculated as opportunity cost of the option not taken. Of equal importance is the point that a political decision need not be good or bad for it to foster negative economic consequences. Consequences of political acts and policy choices are also subject to the variation of short and long term perspectives. A compelling short run imperative may end up compromising the long run utility and viability of the policy environment; and a short term distress may be nothing more objectionable than the requisite sacrifice for durable long term bliss.

That said I will now proceed to illustrate the intricacies of how Nigeria’s economic and political crisis have tended to feed off one another with two case studies namely the Niger Delta crisis and the argument over constitutional restructuring of the political system. Following the 2015 presidential election, the first potential crisis was contingent on the management of the inevitable affliction of the political power withdrawal syndrome on the Niger Delta-induced by the loss of the son of the soil Jonathan at the election-being a spin-off of the winner takes all and loser loses all crisis fomenting characteristic of Nigerian politics.

The presidency of Jonathan was problematic for Nigeria-It provided a respite and germinated a bigger problem. Albeit inadvertent, it was a significant positive response to the WAZOBIA (acronym of the political domination of the Yoruba, Hausa-Fulani and Igbo ethno-regional entities) fostered self-evident political marginalisation of the Niger Delta region. Hitherto, the region had suffered the double jeopardy of grossly inadequate economic compensation for the entitlement rights of hosting the crude oil economy, the sacrifice of the severe degradation of the source of its primary agricultural livelihood; and power politics marginalisation manifested in the fact that no Nigerian of Niger Delta origin had been head of the federal government prior to the emergence of Jonathan. A further complication is the Nigerian political complexity that defines the Jonathan incumbency as usurper on one hand and victim in another. The death of his principal, Umaru Musa Yar’Adua and his ascension cut short the unstated two-term presidential power entitlement of the North and by the same token, his loss at the 2015 presidential election has abridged a similar two-term entitlement rights for the South-south.

Against this background and the reality of Nigerian politics-where presidential incumbency mostly amounts to exclusive rights to partisan and parochial dispensation of patronage and largesse, the policy prescription for political stability in Nigeria would be deliberate efforts to blunt the interpretation of the 2015 presidential election as a situation of total gain for the political constituency of President Muhammadu Buhari and a corresponding total loss for Jonathan and his people. Playing to this interpretation is the unintended consequence of the anti-corruption drive of Buhari where the preceding government of Jonathan and his cronies are necessarily and conspicuously at the receiving end-as would be the case with any preceding Nigerian government. Notwithstanding the alleged impunity of the Jonathan crowd this would be more or less the case with the tenure of any faction of Nigerian power elite.

Add to this the largely unresolved underlying issue of equitable redistribution of national crude oil revenue towards an adequate compensation for the Niger Delta made worse by the non-prioritisation of the cost of living welfare support amnesty scheme by the Buhari government. Put all this together and what you get is a heightened sense of victimhood and recipe for the intermittent guerrilla style revolt that has devastated oil production in the region and spawned a drastic shortfall in government revenue.

Of greater economic import is the extant public contemplation on the contentious and all-encompassing subject of the constitutional restructuring of the polity. As envisaged, the restructuring prescription possesses the inherent utility and potential to substantially resolve the Niger Delta crisis and other federalism centred situations of crisis all over the country. What are the economic implications of the constitutional restructuring of Nigeria into a federation of six units corresponding to the six zones of South-south, South-west, South-east, North-west, North-east and North-central?

First is the salutary effect of grouping the presently economically unviable units into lager functional economies. The 36 states do not meet the bar of recognition as semi-autonomous federating units. The only logic derivable from the development whereby almost all of them are unable to grapple with the irreducible minimum responsibility of public service wages and emoluments-(without needing to outsource the duty to Abuja) is that the states have effectively become parastatals of the central Nigerian government. The all important question is-if they are unable to pay the public service wage now, how do they propose to pay in the months and years to come? The economic definition of this state of affairs is that those states are bankrupt and should go into receivership.

If ever they were, the reality now is that these states no longer meet the utilitarian standard of being identified as optimal units of development. The rationale for their existence is, in the first place, questionable by the circumstances of their origin as products of the whimsical nepotism of military dictatorship. All that was needed to get a state created was little beyond the potency of the lobby-such as the good fortune of having the first lady as a promoter of the request. Under the dispensation of civil-democratic rule, state creation is deliberately designed as a constitutional obstacle race-where the exercise would have to scale the eligibility test of considerable capacity for self-reliance and self-sustainability.

Contrary to the enabling criteria of self-reliance, creation of states was rooted in the philosophy of receiving income without working for it; of reaping where nobody has sowed; sharing the cake with scant regard for how it is baked; of a complete lack of positive correspondence between productivity and reward. This philosophy is at the root of the pervasive culture of waste, corruption and ostentatious living in the government of Nigeria. A state governor, who runs the state with monthly stipends from the central government feels, to that extent, not obligated to the citizens of the state and in implicit acknowledgement of who pays the piper dictates the tune wisecrack, the citizenry, in turn, fights shy of holding the governor accountable. This is why the governor cruises around in a motorcade comprising countless numbers of empty sparkling new SUVs and he is cheered on by multitudes of unemployed youths lining the route.

Were state government income largely autonomously sourced from internally generated revenue; from the sweat and exertions of the public at large, it is doubtful if any governor would have the effrontery to indulge in this unseemly display of sheer profligacy; flaunting and summoning, as things were, the tax paying public to bear witness to how he is putting to use income derived from the sweat of its labour.

The immediate economic implication of restructuring is a dramatic downward review and curtailment of government running cost and expenditure- what we learnt in secondary school economics class as economies of scale which arises ‘from the inverse relationship between the quantity produced and per-unit fixed costs; the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are spread out over a larger number of goods. Economies of scale may also reduce variable costs per unit because of operational efficiencies and synergies’.

Translated into our present concerns what this means is the cost curtailing implication of reducing the cost of running six government bureaucracies, officialdom and paraphernalia to just one consolidated regional government. Instead of running six governor offices, mansions and secretariat you have just one. In place of six state universities (glorified secondary schools) you have a functional and well serviced university proper with satellite campuses distributed around the region. And you can replicate this collapsible cost outlay across the board.

It seems fairly inevitable that Nigeria is headed towards a radical political overhaul and the earlier we recognise this and seize the initiative the lesser the cost. I learnt the other day that one reason foreign investors are fighting shy of Nigeria is the fear of political uncertainty. Assuming the inevitable, some are saying they want to wait and see how a restructured Nigeria pans out. I think the seeming self-imposed political paralysis hacks back to the colonial and military rule syndrome of our political history where major political changes, good or bad, tended to await colonial and military dictator.AKINOSUNTOKUN