The Economy of Rent Extraction: KPMG, how dare you?

“It’s the economy, stupid.” — James Carville, 1992   Nigeria is not just suffering from bad governance or poor execution. It is also suffering from an economic ideology that has hollowed out the social contract while insisting—against all evidence—that it is scientific, neutral, and inevitable. Neoliberal economics presents itself as a universal science, built on […]

“It’s the economy, stupid.”

— James Carville, 1992

 

Nigeria is not just suffering from bad governance or poor execution. It is also suffering from an economic ideology that has hollowed out the social contract while insisting—against all evidence—that it is scientific, neutral, and inevitable.

Neoliberal economics presents itself as a universal science, built on elegant equations and PowerPoint slides. In reality, it is an ideology constructed through mathematical abstraction and axiomatic assumptions, not through observation, historical analysis, or engagement with lived social reality. Its models are internally consistent but externally detached. When outcomes contradict predictions, reality—not theory—is blamed.

Unlike physics, economics is not governed by immutable natural laws. It is a social phenomenon shaped by human imagination, institutions, power relations, culture, and conflict. Humans are irrational, adaptive, fearful, hopeful, and historically contingent. Societies evolve. Incentives mutate. Outcomes are uncertain. Any economic system that denies this reality is not scientific—it is ideological.

The attempt to impose predetermined outcomes based on false assumptions explains why, today, across much of the world, nothing seems to work.

 

The National Siphon

What Nigeria is experiencing is not economic reform but a systematic transfer of wealth from the general population to financial, corporate, and political elites. This is neoliberal economics at its best.

With interest rates at historic highs, capital has abandoned productive investment in favour of speculative assets and risk-free government debt. When investors can earn returns exceeding 20 per cent with minimal risk, there is no incentive to invest in factories, machinery, innovation, or job creation. Production collapses. Employment dries up. Wages disappear.

For every billion Naira redirected into government securities, hundreds of millions are removed from wage circulation. Workers are laid off. Businesses close. Yet those rendered unemployed are still expected to pay rent, transport, food, and taxes in an economy that no longer provides income. This is not market efficiency. It is systemic dispossession.

Nigeria’s economy is now structured around debt servicing. Roughly 4 per cent of GDP and between 60 and 70 per cent of government revenue are consumed by debt service. To sustain investor confidence, the state must continuously extract revenue from its citizens. With oil revenues declining, production falling, corruption rampant, and foreign interests prioritised, how does the government meet the demands of hot-money investors?

The answer is simple: it taxes its way out—or inflates its way out. Inflation, after all, is merely taxation by other means.

The public is subjected to a continuous national siphoning programme through taxation and inflation to sustain what increasingly resembles a structurally unsustainable system—one dependent on perpetual extraction from a shrinking base. No last-minute consultancy report, not even from KPMG, can rescue policies designed to advance inequality. As extraction intensifies, private financial intermediaries multiply, positioning themselves to extract even more from an already exhausted population. This is rent-extraction economics in its purest form.

Nigeria is not alone. Across continents, younger generations are protesting futures hollowed out by debt, insecurity, and stagnation. This is not innovation-driven capitalism. It is a regression toward an 18th-century colonial model—where wealth is extracted from societies and consolidated by oligarchs and corporations.

Technology firms now buy startups rather than build technology. Pharmaceutical giants acquire research firms rather than invest in discovery. Capital is deployed to inflate asset prices, manipulate valuations, and hoard wealth—not to build productive capacity or social value.

 

Financialising Shelter

Few sectors expose neoliberal extraction more clearly than housing—a basic human necessity transformed into a speculative asset.

By financialising shelter, the system manufactures artificial scarcity. Homes sit vacant for years, deliberately withheld from use to preserve asset values, while millions remain unhoused. Nigeria faces a housing deficit of over 20 million affordable units, yet rents soar, and home ownership drifts beyond reach.

Former and current public officials reportedly control hundreds of thousands of properties worth trillions of Naira, many of them empty. Just two individuals—a former Minister of Justice and a former Central Bank Governor—are reported to hold nearly 1,000 high-end properties valued in the hundreds of billions. That unused wealth alone could provide affordable housing to more than 200,000 Nigerian families.

There are thousands such individuals. If only 100 such individuals redirected their hoarded property wealth, Nigeria’s housing deficit could be resolved.

This is not an accident. It is the predictable outcome of policies that reward non-use over habitation, hoarding over housing, speculation over shelter. Citizens pay the price through exorbitant rents and the psychological costs of insecurity—depression, anxiety, family breakdown, and normalised social violence.

 

The Broken Social Contract

Basic survival has become a luxury in Nigeria. Neoliberal governance minimises state responsibility while privatising public assets and degrading social goods. Citizenship has been replaced by customerhood.

Hospitals operate as death traps—understaffed, under-equipped, and overwhelmed. Medical negligence is routine; accountability is absent. Public education has collapsed, replaced by poorly regulated private schools masquerading as “international” institutions. Clean water provision has failed, forcing reliance on environmentally destructive boreholes. Electricity shortages compel households and businesses to generate their own power.

Security, too, has been commodified. Nearly half of Nigeria’s police force protects VIPs, while the general population faces unprecedented insecurity. The police have effectively become a revenue-generating enterprise rather than a public safety institution.

This is not merely a policy failure. It is the collapse of the social contract.

 

Shamwil Mukhtar is a member of Daily Trust Board of Economists

 

An Unsustainable System

 

Unless something changes fundamentally, inequality will deepen, social trust will continue to erode, and extraction will intensify. The social contract that once existed—however imperfectly—has been broken. What is required is not reform at the margins, but a renegotiation of governance and economic purpose itself.

 

This model is no longer sustainable.

 

And what is unsustainable cannot be sustained.

 

Ever.