Economic reforms: Beyond the ‘copy and paste’ of President Tinubu

Ruminating on the excruciating economic terrain and its social costs in most of Africa, and with Nigeria doing “atrociously” bad in the socioeconomic landscape, London-based magazine “The Economist” in its recent issue, not only deplored the “depressing record of stagnant productivity” but counselled that any meaningful “starting point” is to ditch decades of bad ideas, […]

Ruminating on the excruciating economic terrain and its social costs in most of Africa, and with Nigeria doing “atrociously” bad in the socioeconomic landscape, London-based magazine “The Economist” in its recent issue, not only deplored the “depressing record of stagnant productivity” but counselled that any meaningful “starting point” is to ditch decades of bad ideas, especially “copying and pasting proposals by World Bank technocrats”.

The unapologetically liberal magazine in the article “The Capitalist Revolution Africa Needs” warned that there is no substitute for creating the conditions that would allow African businesses to thrive and expand.”. Nigeria’s historic destiny is to lead the way in Africa’s industrial revolution and enable the continent to position itself as the world’s industrial frontier

Despite the economic reform measures of the President Bola Tinubu government, Nigeria’s economy is in a deep freeze and the crises of its current trajectory are fundamentally related to its origin as the foremost showpiece of the “copying and pasting proposals by World Bank technocrats”.

The Bank has dutifully awarded its price, for what it mischievously claimed was supporting Nigeria’s homegrown reforms. It said its $2.25 billion loan facility “provides immediate financial and technical support to Nigeria’s urgent efforts to stabilise the economy and scale up support to the poor and the most economically at risk”. The poor need an enhanced capacity to exit the cyclic trap of poverty and become net wealth creators and not just hand-out stipends, which only maintain them in poverty.

But it is in effect, the bank’s misinterpretations, assumptions and willful efforts to structurally transform and shift Nigeria to a mere financial outpost of the international finance capital that is at the root of the country’s economic crises and which will only escalate and worsen in the years ahead.

Given Nigeria’s resources endowment in both material and human capital and the advantage of the youth bulge, her future is as an industrial hub and a prospective workshop of the world and not a mere financial bubble that President Tinubu’s government and his World Bank handlers are desperate to foist on her.

To start to restore macroeconomic stability, according to the report, “The government started to move towards market-based pricing of gasoline to address the large fiscal cost of subsidised pricing”. Further, the report urged exchange rate flexibility, which eliminated the parallel premium, an implicit foreign exchange subsidy along with other reforms – such as rationalizing tax expenditures, and introducing withholding VAT for key sectors”.

The bank’s fiscal recipe which the government have thoughtlessly copied and pasted, with a consequence of unfathomable social misery and economic hardship on Nigerians includes what it called “building on progress towards market-reflective pricings, which the report claimed “is essential to address the remaining implicit PMS subsidy by allowing retail prices to adjust periodically in line with market fundamentals; exchange rates and international prices”.

For the tax brouhaha that the government is putting Nigerians through, it was the bank’s admonition that “Nigeria’s tax revenues of 3.8 per cent of GDP in 2023 remained extremely low by international standards” and then urged for what it called “continued progress on non-oil revenue growth through tax reforms and improved administration”.

Since the bank’s claim that Nigeria’s tax revenue to GDP is ‘extremely low’, the government personnel and several regime acolytes have been doing overtime in hyping the bank’s credo, even adding that Nigeria’s tax revenue to GDP is the lowest in Africa. But they have not dared to raise the question of Nigeria’s oil revenue ratio to GDP and its standing in Africa and the rest of the world, despite the extensive corruption and brazen theft in the industry. 

Qatars, Dubais of this world along with other shining infrastructure masterpieces in the Arab world was built with oil revenues as a kickoff point while revenues from other sources add to their wealth expansion.

 However, as the government has turned itself, singularly into an aggressive revenue and tax collection agency, the banks and other financial institutions, which should ordinarily function as enabler of mainstream economic activities, with support of concessional credits to core economic sectors – manufacturing, industries, agriculture, small and medium scale businesses have become storehouses of excess liquidity thereby providing the window to foreign portfolio investors, who without physical addresses are cashing out in real-time at the expense of key actors in the strategic sectors of the economy whose positive performance  would signal the real recovery of the economy and its sustainable and inclusive growth trajectories.

 With humongous revenues accruing to the governments at all levels, including the departments and agencies, no appreciable or visible investments have been made in rural infrastructure, human capital development through improved primary health facilities, education that are key to any meaningful rural revitalisation and the creation of viable markets that would enable people to trade and produce themselves out of poverty.

Instead of embarking on an aggressive scale of rural infrastructure constructions to boost production and institute an industrial policy of mapping out geo-economic zones to match the resource endowment of each zone with appropriate industrial and agricultural support programmes, the government of President Tinubu is more disposed to the simplistic counsel of the World Bank to “accelerating the roll-out of social protection measures including the direct benefit transfer programme to counteract purchasing power losses and hardships”. 

If the distant and socially insensitive World Bank technocrats could be forgiven for believing that a direct benefit transfer programme of N75,000 about the equivalent of $40 to a household in Nigeria “would counteract purchasing power losses and hardships”, how would Nigerian politicians who ostensibly campaigned for votes in communities and towns riddled with squalor, misery and excruciating poverty take such advisory seriously. But tragically, that is where we are, with the government and their surrogates hyping renewed hope with completely borrowed economic measures that are totally out of sync with the Nigerian reality. Against the reality of the excruciating economic hardship and the widening social misery and its aftermath of worsening security challenges, the question remains as to what is to be done.

Except President Tinubu and his government show commitment to enabling the consensus on the imperative of the development bargain by eschewing profligacy, and several networks of draining public resources and developing an original national strategic development plan, wholly from Nigeria’s existential reality, he is headed to the trash can of history as being in charge of another Nigeria’s missed opportunities.

 

Mr Onunaiju contributed this from Abuja