In fact, these increments are a direct negation of the economic objectives of the Nigerian state. The hikes have inevitably triggered an inflationary chain-reaction that is affecting every thing from bank interest rates to prices of foodstuff. They amount to a default devaluation of an already weak currency and diminish the spending power of the average citizen. Early this year, the government reintroduced coins into circulation with much fanfare but the recent inflationary jump means that those coins are now no more than relics of unfulfilled intention. Of course, production costs in Nigeria which are already high are now guaranteed to rise even higher, scarcely a strategy for attracting foreign investors.

The labour community is mobilizing its troops for a total strike, clearly intending to send a message of its resolve to the new administration which is now burdened by the inexplicable last minute decisions taken by the recently departed regime. If the strike goes ahead, it will mean more losses for an economy that is hardly the epitome of vibrancy. The government’s explanations for the increments are unsatisfactory. The fuel pump price hike as usual is a consequence of subsidy modulations or “deregulation” required to meet the reality of the oil markets. This argument has been rehashed for so long now that it is scarcely worthy of a response. As for the VAT increase, one of the reasons adduced was that Nigeria’s VAT rates are among the lowest on the continent and that the increase was to align the economy with the demands of the imminent economic integration of the sub-region.

For this, we must resort to some logic. Regardless of the VAT rates in other West African countries, Nigeria possesses the largest economy by far in the sub-region. Common sense suggests that it is these other countries that should be adapting their economies to ours rather than vice versa. The United States is part of the North American Free Trade Association (NAFTA) which includes Canada and Mexico. There is no scenario in which the US would feel compelled to hitch its economic policies to that of Mexico or Canada. It does not need to. It is the largest economy, the largest market and the driver of the entire NAFTA economy. The situation is the same with regard to Nigeria and ECOWAS. Secondly, considering the inflationary effects of the VAT increments, is it then to be understood that our economy has to be hobbled and crippled in order to conform it to the sub-regional standard? What possible good is served by a merger of ten or more crippled West African economies? The world’s most powerful trade blocs are composed of healthy and productive economies. Thirdly, a measure of wisdom is necessary with regard to our dealings with ECOWAS. No country with a sane government subjects its economic interests to the vagaries of other nations. Regional integration should not be pursued as though it is a theological absolute to the detriment of our national interest. It is not for nothing that Britain has refused to commit totally to the EU. There is such a thing as economic sovereignty, and it is this that ultimately informs, a country’s political sovereignty. Clearly, the VAT increment is simply unacceptable.

          It is quite possible that the government and labour will reach an accord that will forestall a strike action. The present eyeball to eyeball confrontation between both parties might well be a first exercise in brinkmanship for the new Yar’Adua administration. Even if the debacle is resolved and Nigerians are permitted to go back to a normal existence, new questions must be raised regarding the plans of the government. Beyond the current drama, the time has come for a review and a rethinking of the philosophical underpinnings of the economic reform program. The obvious contradictions between the government’s policy propositions and the impact of implemented measures now necessitate such an inquest. It has become necessary, for example, to understand precisely what metrics are used by the government in assessing the health of the nation’s economy. It is possible that the state measures the health of the economy by how much money it is drawing into its coffers. This may well explain the government’s eagerness to tax its own citizens to a hilt as though conscious only of the revenue flowing into its coffers while being completely unaware of the crushing burden laid on the citizenry. Such thinking makes government less an agent of development than a rent collecting enterprise.

Throughout the world, the metrics for measuring the health, wealth and happiness of nations have evolved over time. It used to be the Gross National Product (GNP) which conceptually linked an economy’s health to its productivity. Later, development theorists invented the Human Development Index (HDI) which assessed countries in terms of their citizens’ access to the basic social infrastructure – electricity, water, food, shelter, health, etc. Today, people speak in terms of Gross Well being (GWB) which measures abstractions such as contentment, fulfilment, quality of life and satisfaction. Regrettably, on all these counts, Nigeria scores extremely low. Ours is a single resource economy with a comatose manufacturing sector. This makes us basically unproductive. Social infrastructure is lacking and millions of Nigerians have no access to basic necessities. Using GWB is not possible, because for its abstraction, it is a concept that is light years ahead of our social realities; nor do its subtleties even remotely register on the radar of state policy. All of this leaves us with a situation in which public officials cite vague, almost esoteric statistics and a fat foreign reserve as evidence of growth. To be sure, the Obasanjo administration’s greatest advances were on the macro-economic front, but even then it apparently failed to realize the interdependence of macro and micro-economic goals. Hence the mentality in the circles of power that measures the wealth of the average Nigerian in terms of the wealth of the state. It is interesting to note that nowhere else on earth is such a measure employed to ascertain the health of an economy. Typically the prime indicator of economic health is the spending power of the average citizen. Only in feudal systems is the wealth of the state (taxes and tribute accruing to the king) used as a measure of the country’s prosperity. Obviously, the wealth of a King has no bearing on the prosperity of his subjects, as several African countries will testify. This suggests very strongly and with supportive evidence, that the operation of the Nigerian state is driven by a feudal psychology.

There needs to be a revision of the assumptions which currently guide the reform agenda. A new philosophy which places the average Nigerian at the epicentre of government plans, policies and programs is long overdue. The Nigerian citizen must be regarded in policy plans not as a digit or a statistic but as a life impacted for better or worse by the government’s actions. The state’s policies must now be interpreted as portending both human benefit as well as human costs. Growth percentages and other units of arcane reform-speak must be understood as the ability of a family to feed or perish, to send their children to school or out on the streets to hawk and literally, not figuratively, as the difference between life and death. Unfortunately, the prevalent philosophy is a legacy of the IMF and World Bank shock treatments of the eighties. Under those regimes, the suffering of the people is seen as collateral damage; a necessary sacrifice needed to achieve ‘structural adjustment.’ If, for example, the average Nigerian was the focal point of public policy, the deregulation of the downstream oil sector would have emphasized one hundred percent fuel supply self-sufficiency by rejuvenating our local refineries, rather than encouraging the creation of a cartel of marketers.

Over the last eight years, government officials spoke several times about the necessity of enduring short-term hardship in order to reap long-term benefits. But in fact, Nigerians have been making sacrifices since the failed boom of the seventies. From the era of austerity measures and essential commodities to SAP and now the present reform program, they have made sacrifices and now have themselves become sacrifices on the slaughter-slab of economic expediency. This is as immoral as it is needless. Policy is meant for the people and not the other way round. The average Nigerian, the common man, the favourite sacrificial lamb of all governments should no longer be regarded as collateral damage or as cannon fodder. Instead of demanding more sacrifices from Nigerians, the government should demonstrate leadership by making sacrifices of its own. The state can and should be less ostentatious. The president can reduce the number of ministers, aides, assistants and political jobbers of indeterminate description that are strewn all over Abuja and declare a new era of public functionality, simplicity and flexibility. Government can actually save more money through a culture of fiscal discipline and public frugality. There should also be an end to the Owambe mentality that predisposes public officials to all kinds of crude flamboyance. The point is to lead by example and raise the bar of public performance.

Nigerians are a resilient people but that resilience is now being mistaken for an elastic tolerance of pain. Those who have not fled to other lands and have opted to stay on to make an honest living in their own country are now being crushed in the vice-like grip of economic hardship. The flawed idealization of foreign investment as the kick starter of development is also a problem. If it were not, policy architects would have realized that no really prosperous nation is developed by foreign capital. This is because capitalism is not a charitable adventure in nation-building. US, Europe and Asia were built by the entrepreneurial labours of their own citizens. The multinational corporations that our government imagines to be the harbingers of growth began as small scale businesses in their countries of origin. Without an enabling environment created by their governments, Microsoft, Hyundai, Daewoo, Sony or Nokia would not have become the global giants that they are today. Foreign capital tends to seek already established systems to augment. This is why the lack of infrastructure in Nigeria discourages foreign investors. Yet, small and medium scale entrepreneurs who are the engine of the economy are marginalized. The average entrepreneur in Nigeria does not contend with mere passive neglect by the government but with determined efforts to stamp home-grown enterprise into non-existence. Again, it is impossible to reconcile the stated aspirations to be a leading economy in the world with the visible operations of policy.

Living and working in Nigeria is increasingly becoming the art of the impossible – the contemporary equivalent of making bricks without straw. The last king that asked his subjects to manufacture bricks without straw did not end too well; his government and his nation’s economy collapsed. Twenty years ago, former President Olusegun Obasanjo then a retired Head of State and elder statesman urged General Ibrahim Babangida to give SAP “a human face.” Many will feel that the former president should have taken his own advice when he was at the helm of power himself. For the new administration of Umar Musa Yar’Adua, it is however good advice that has come twenty years early.             

Robot  Villager

# 1 ...Read the full article. Posted by Robot| 22.06.2007 07:33