Good Economics for 2023

BY KAYODE KOMOLAFE

0805 500 1974

Virtually all the political parties and their presidential candidates have promised working towards economic growth if elected in the 2023 election. Expanding the Gross Domestic Product (GDP) is an objective that is fairly shared by all those seeking power. Incidentally, Finance Minister Zainab Ahmed admitted at the 28th Nigerian Economic Summit that even in the period of economic growth the impact of the material boom has not always been felt by the poor at the bottom of the socio-economic pyramid.

Interestingly, while NESG is already looking towards 2023 and beyond, the incumbent federal government is focussed on the urgent economic questions. President Muhammadu Buhari, who was represented by Vice President Osinbajo at the event, spoke about the need to reduce inflation because it’s “both a tax on the poor and disrupts long-term growth”.

The President also spoke about the imperative of boosting local production, value-addition, and supply, while managing the demand for foreign exchange in a transparent way to engender confidence.

The Nigerian Economic Summit Group (NESG) has fittingly framed the theme of this year’s summit as follows: “2023 and Beyond: Priorities for Shared Prosperity.” And in an appropriate agenda-setting tone, the chairman of NESG, Asue Ighodalo, proposed that the agenda of the next government (that would be in place in seven months from now) should embody some items. Ighodalo identified the following issues: macro-economic management, a new security architecture; rejigging and rebuilding national institutions; job creation policies; accelerated human capital development; social protection; effective response to humanitarian crisis; and heightened infrastructure development.

Hardly would any policy analyst disagree with Ighodalo when he said: “Anyone of our candidates who seeks the office of president and vice president, who does not subscribe to these consensus issues, does not clearly understand the problems facing us as a country, has not thought about how these problems must be dealt with, and cannot have the capacity and understanding to lead this country at this time.” Given the multidimensional nature of the crisis plaguing the land, all the issues listed by Ighodalo are central to governance.

Essentially, Ighodalo advocated a consensus on development. Put in a broader context, in addition to the political parties and their candidates, the idea of a national consensus on development should be shared by other members of the socio-political and economic elite.

Politicians and businessman are enamoured of the cliche that the private sector should be leading in the economy.

Therefore, members of the private sector should also subscribe to this developmental consensus so as to achieve the outcome of the “The Nigeria We Want,” the focus of the opening session of the summit. This is one often- ignored lesson of the nation’s economic history. The private sector should play its assigned leading role by the current ruling class in a responsible manner so as to avoid a systemic collapse.

Just one tragic economic story could illustrate this point. Fuel subsidy is today identified, as a matter of national consensus, a huge economic burden for the present administration and possibly the next government. Talking about the “Nigeria we want,” it is now little remembered that the administration of President Olusegun Obasanjo wanted to solve the problem definitively 21 years ago. Following a popular strike against fuel price hike by the Nigeria Labour Congress (NLC) under the leadership of Comrade Adams Oshiomhole, the Obasanjo administration issued more than 20 licences for those who claimed they wanted to build private refineries. That was in the spirit of the deregulation and liberalisation of the downstream of the petroleum industry. The argument then supported by the NESG in its documents was the strict application of market forces in matters of fuel distribution. Years later, no refinery was built by those members of the private sector who got these licences. Other members of the private in the banking sector preferred to finance importation of fuel instead of investing in refineries. Members of the other private sector were actors in this unfortunate economic play. If 25% of those who received licences at the time had been supported by banks to build refineries, perhaps the story of the downstream of the petroleum sector might be different today. The economic wisdom of building local refineries instead of fuel importation is never in dispute. Now, fuel subsidy has become a big economic incubus for the nation. The hope of the beginning of the end of this national dilemma now rests on the Dangote Refinery, which is expected to begin operation soon. What has happened to the privatisation of the generation and distribution in the electricity sector 17 years after the Power Sector Reform Act came into existence? This is another question about which the private sector should be self-critical. The point at issue is that the private sector should not only set agenda for the state while criticising the public sector, it must also discharge its own responsibility honestly. A good dose of self-criticism could be good for the private sector for improvement.

It is also timely that the summit is looking at the priorities to ensure “shared prosperity.” But what is really required in a regime of scandalous inequality is more than “shared prosperity.” The theme is silent on the rule and justice of distribution of this prosperity whenever it’s available. To tackle inequality, you need redistributive justice beyond merely the sharing of prosperity by the prosperous. Mere sharing based on unknown rules will not solve the problems of insecurity and social instability caused by, among other things, mass poverty and inequality. Therefore, those seeking power should make elements of socio-economic justice prominent on their agenda.

Socio-economic justice should be emphasised because even amidst prosperity the haves may continue to have more while the have- nots would have less. This seems to be the point that the finance minister was alluding to in her speech at the summit. For instance, in a period of economic growth the rich may afford to increase their fleets of private jets, build more mansions and drink more choice wines. At the same time, the poor majority in the same economy may still be confined to the miserable lives of open defaecation, lack of potable water and hunger. So, to talk of shared prosperity could be euphemistic because of the hidden issues of social injustice which defines the present economic arrangement. The material reality is that some of the issues listed by Ighodalo are unavoidable in a system that legitimises inequality.

Well, in the last 28 years the activities of the NESG, as a great think tank, have been largely informed by neo-liberal economic thoughts. This national institution should, of course, be saluted for its perseverance and consistency in brewing policy ideas. Regrettably, however, the impact of their efforts has not been remarkable on economic management. That is why the NESG should consider the political economy approach instead of relying solely on its technical arguments on how problems could be solved. In other words, in its discussions the NESG should probably pay a greater attention to the interplay of forces among the economy, state and society.

The lack of the political economy approach is evident in the nation’s recent history. The following story also explains this point. Under a brutal military dictator, General Sanni Abacha, the Vision 2010 was put together in 1996. The vision was for Nigeria to break the shackles of socio-economic underdevelopment and become a stable democracy within 14 years. The vision document acknowledged a “transition to democracy” in Nigeria during the period.

As the experts worked assiduously on this lofty vision, the nation was virtually in a suspended animation. The polity was repressed and the society was under a reign of terror. Citizens were detained while some others were forced into exile. A notable businessman, Bashorun Moshood Abiola, won a presidential election in 1993. He was put in detention instead of the presidential villa while the vision was being crafted. A former head of state, General Olusegun Obasanjo, was among those in jail at the time. A few years later, Obasanjo was released following the death of the maximum ruler, Abacha. Obasanjo was subsequently elected as president. In Obasanjo’s eight years in office, the Vision 2010 document was largely treated as a heritage of the Abacha era. Instead of Vision 2010, Obasanjo’s administration came up with its own National Economic Empowerment and Development Strategy (NEEDS).

The logic of the political economy approach is that the politics of any vision or development strategy should be ignored.

So, what could be the good economics for 2023 and beyond? The duo of the 2019 Nobel Prize Winners in Economics, Abhijit V. Banerjee and Esther Duflo appear to have a suggestion in their book, Good Economics for Hard Times. The anti-poverty economists put it like this: “Economists have a tendency to adopt a notion of well-being that is often too narrow, some version of income or material consumption. And yet all of us need much more than that to have a fulfilling life: the respect of the community, the comforts of family and friends, dignity, lightness and pleasure… Restoring human dignity to its central place … sets off a profound rethinking of economic priorities and the ways in which societies care for their members , particularly when they are in need.” The Nobelists describe as bad economics, “the giveaways to the rich and the squeezing of the welfare programmes” in the course of policy-making.

A consequence of the policies informed by neo-liberal economic thinking in over three decades is the total disregard for human dignity in economic management. Where lies the human dignity in the condition of the poor majority defined by hunger, ignorance and disease?

In sum, the experts working on the competing agendas for 2023 should embrace the good economics that could be applied to tackle inequality and mass poverty.