No economy can grow when wages have to be so high so as to gain the trust of the workmen rather than risk them thieving away capitalist investments.
(Public Affairs Analyst)
The right economic route is a mix of responsible government and free market without either of both human rights abuses and exploitation- both of which are weaknesses of the two systems.The best economic model is a free market model because all free markets tend to the average.That is to say that as everyone seeks the highest returns, inefficiencies are wiped out and the mass emulates the best until there is no real difference between any of the market’s practitioners.
However in its quest for efficiency it often throws humanity to the dust and this is where government has a right to intervene. Intervention should not be to get into business but rather to regulate the market from exploiting its workers and from taking advantage of the poor.By over-regulating the market, the government allows for inefficiencies and for the rise of the black market.Also the heavy handedness of too much government stifles creativity-that divine force upon which industry relies.
Reflecting on the Structural Adjustment Program (SAP) instituted by the regime of Ibrahim Babaginda in the late 1980’s while it had good intentions, its mismanagement led to the institution of waste as a cultural more in Nigeria. The SAP would have worked well if the monies saved were invested into the right industries and infrastructure.However most of the monies saved were channeled into the accounts of a few.The idea of the SAP was to let the citizenry take some pain so that the monies saved from the subsidies done away with could be reinvested into the real economy.By allowing profligacy, these pains went to waste and our value system was distorted in such a way that it has come to haunt our development down the years.The fierce resistance of Nigerians to the removal of fuel subsidy and the SURE program of the Goodluck administration can be traced to the similarities between these projects and the failed SAP project of the late 1980’s.
The breakdown of the social fabric of Nigeria which can be traced to the unbridled corruption of the SAP era has led to the breakdown of interpersonal trust in such a manner that has ensured the stymieing of economic development. This is so because no economy can grow when wages have to be so high so as to gain the trust of the workmen rather than risk them thieving away capitalist investments.Such overpaid wages are monies lost-monies that could have been reinvested into expanding businesses and employing even more people.Also such high wages have encouraged double digit inflation and real suffering for those not employed in the formal sector- who do not earn these wages.
The right mix I propose should follow the free market model with strong, frugal government institutions to provide regulatory oversight.
In the midterm we should not be export oriented, rather we should focus on integrating all aspects of the economy.By this I mean that for instance, if a pharmaceutical manufacturer in Lagos needs acetaminophen to make Panadol tablets he should not go to China to import it; rather a petrochemical plant in Warri should supply him.Such a model will maintain the value of our currency by saving forex and will protect against capital flight.With such a model, value will be retained and multiplied through the various sectors of our economy.
In the long term we should focus on being the producers of choice for the rest of the African market.It makes no sense for China and India, though located thousands of kilometers away to dominate the markets of African countries as they currently do.By developing our capacity we should be able to run them off these markets by taking advantage of our location and inherent capacities for innovation and hard work.
In conclusion, all of Africa should attempt to integrate their economies and remove restrictive trade and migration barriers. This will ensure processing of commodities, job creation and economic linkages with its associated attendant benefits.
3 thoughts on “The Right Economic Model For Nigeria (Ed. 2)”
Superb site you have here but I was wanting
to know if you knew of any community forums that cover the same topics talked about here?
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Though this article doesn’t propose anything particularly new, it is a good read to re-calibrate one’s mindset to the basic politico-economic paradigm that can work in Nigeria. An extended writing could form the bedrock of a book. I invite you, Bayo, to publish an article in an edited book which we intend to publish in 2015 titled: Emerging issues in Business and Governance in Nigeria.
Kenneth Ogonna Ezeani
London School of Commerce
I am interested in this project. Please send project plan.