People & Money

What next for the Tinubu administration?

Nigeria has tried root-and-branch reforms to its economy before. Indeed, when the Bible argues that there is nothing new under the sun, one can be excused for believing that this is commentary on the country’s governance. The structural adjustment programme (SAP) introduced by the Ibrahim Babangida administration in 1986 remains one of the more far-reaching of these efforts at resetting the economy. It tried to fix trade policies. It tinkered with regulations across sectors. It even assayed reforms to the foreign exchange market. And it left us with a cute shibboleth: a commitment, since plighted to by succeeding governments, to supervise and accelerate the economy’s transition from a public sector-led to a private sector-driven economy. As with an earlier attempt by the Obasanjo-led junta (1976-79) to tighten belts across the land, the burden of adjustment of the chapters of reforms attempted by the Nigerian state have fallen disproportionately on segments of the populace least able to cope.

Also Read: Tinubu’s Emergence Sets the Stage for Titanic Presidential Battle, but Mood in the Country Is Foul

As they were so many years ago, so the country’s problems remain. Addicted to the dollar receipts from hydrocarbon exports, and vulnerable to the balance of payments crises that arise perennially each time crude oil prices fall in the global economy, the economy has struggled to reach the levels of productivity that countries in south-East Asia now routinely boast of, talk less of the levels prevalent in developed economies. Just like its predecessors, the Tinubu administration has arrived at structural reform measures by way of a dire fiscus.

Less resilient, lower-income groups are groaning. Unsurprisingly our talking heads are beginning to wonder why the outcomes from the incumbent federal government’s policy pivot would be any different from previous such attempts. Why did SAP fail? In which spheres of the organisation of the Nigerian state might it be said to have succeeded? Is the floating of the naira, and the removal of the subsidy on petrol prices going to lead to a more efficient domestic resource conversion process? Are we able to move from the obsession with providing “palliatives” in the immediate aftermath of shocks to the system to the design and implementation of functional basic social services?

If we cannot keep a lid on domestic price movements, a stable naira exchange rate will remain but a fleeting illusion. And the pursuit of inward investments into the economy, without which productivity cannot happen (including through local refineries) will never be attained.

Put differently, the reforms that have been implemented and the burden that they create have been (and are, in the current circumstances, likely to remain) the consequence of a stalled follow-through. Margaret Thatcher, I believe, it was who said that deregulation is not the absence of regulation. If the freeing of domestic prices across key sectors of the economy is not going to remain an encumbrance on poor and vulnerable segments of the citizenry, if, in other words, we are to grow disposable incomes, especially at the lower tiers where consumption is likelier to happen, and improve supply responses across sectors of the economy, then the candidates for key political offices matter.

The central bank governor. The finance minister. As do the ministers for trade, industry, and agriculture. All of this matters if domestic productivity levels are to rise sustainably over the long-term. In the respective sectors that these officers of the state will bring their respective talents to bear, the Tinubu government seems to currently suggest, price — at the interplay of supply and demand — will offer the main economic signal. If the price mechanism is to work well, the regulatory environment must aim for a level playing field for economic entities across the economy. No commodity boards. Free entry and exit for both consumers and goods and service suppliers. Mechanisms that strengthen the price discovery process, especially market-sensitive information and who and when it is available would be religiously democratised.

Also Read: Consolidating the Tinubu government’s reforms

If this process does not admit of favourites, i.e., governments choosing players through whom they intend to pursue policies in each industry, then the process by which we much choose the heads of the respective regulatory agencies must similarly eschew preferred candidates. Regrettably, we get told that the incumbent president’s political IOUs are numerous — and their holders desperate to cash out. In addition, it would seem that President Tinubu prioritises loyalty in those he wants to work with. The problem is that choices along these lines were behind the economy’s failure to leverage over the long-term, the initial gains from previous reform efforts.

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