How Did We End Up Here?, By Uddin Ifeanyi

How Did We End Up Here?, By Uddin Ifeanyi

…a nation of petty traders should have no difficulty understanding how the price mechanism works. However, barrators would. For the preferment that are their stock in trade requires huge levels of inefficiency in order to be profitable. The market on the other hand, especially one with few restrictions to exit and entry, makes harder to translate into gains, the asymmetries on which both barratry and rent-seeking is based.

“Who would have thought”, a friend asked me over a weekend spent queue jumping in the search for fuel, “that nearly a year into the Buhari administration, Nigerians would still be confronting the same challenges to their existence posed by perennial fuel and electricity shortages?”

Put this way, it summarised much of the conversation that I have had around the Buhari administration since it came into office. Much of it angry. But much equally confused by how the administration had turned out post-election. Still, behind this question lay a number of presumptions. First, was the one that had much of the failures of the Jonathan administration down to its allegedly venal character. “Corruption”, in this sense, had stymied not only the much-trumpeted transition from government as provider of goods/services to government as regulator of an economy in which the private sector was the main engine of growth. It had also put the kybosh on the efficacy of public provision of services, ranging from healthcare through schools. It had become a tax on domestic economic activity across sectors. A huge cost that bore no economic benefits.

That this postulate birthed its own body of dogmas was, with the benefit of hindsight, well-nigh inevitable. Two of these are worth further interrogation. The first, epitomised by the sense that a more competent administration (than Jonathan’s) would give short shrift to the nation’s myriad challenges (including fixing the fuel problem in days) led to the second one. The causal link from this, the second assumption ahead of the elections in 2015 (that then-retired General Muhammadu Buhari’s halo of incorruptibility uniquely qualified him to clean Jonathan’s stables) to the question with which this piece opened is a direct one.

President Buhari appears to have forsworn structural solutions, opting instead to throw (good) men at the problem. Whereas this response is consistent with the “bad men” reading of the Jonathan administration’s wastefulness, it no longer suffices as comprehensive analysis of the nature of our problem.

Unlike the mythical Heracles, however, who, tasked with the labour of cleaning the Augean stables in one day, understood instantly the structural nature of his task, and rerouted the rivers Alpheus and Peneus to wash out the place, our latter day hero has failed to dimension the challenge of better governance of this space properly. President Buhari appears to have forsworn structural solutions, opting instead to throw (good) men at the problem. Whereas this response is consistent with the “bad men” reading of the Jonathan administration’s wastefulness, it no longer suffices as comprehensive analysis of the nature of our problem.

Two illustrations would help describe this problem (and with some hope, its solution). Take the fortunes of Nollywood. This sector is one of the leading producers of films (by volume, at least) in the world, and its exports would (under a visionary government) have boosted the country’s projection of soft power (on the African continent, at least). Yet, none of these sterling achievements was because producers in the sector had access to import waivers, tax holidays for virgin industries, or the myriad boondoggles with which a nanny state runs industrial policy. Instead, producers saw a market for cultural consumption, and produced goods that met the need. There was no need for government subsidies ― to buy the VCDs, DVDs, players, and the TVs without which the poor and the vulnerable would have been excluded culturally. Truth is, in Nollywood, government signally failed as regulator.

In the second example, telecommunications (and the auction of GSM licences), government came good on its regulatory remit (at least up to the point where it sold the licences). But that the price of handsets and SIM cards eventually dropped, or that per-second billing of calls was eventually introduced had everything to do with an increasingly savvy consumer base, and heightened competition from the supply end. The only example that the government’s presence in the sector offers is a negative one: NITEL, and the incompetence and consumption of public funds which saw the nation severely underserved in terms of access to and use of telecommunication facilities.

…by interfering with costs, and market prices, all such interventions distort both supply and buying behaviours leading up to shortages/excess inventories in the wrong places.

Interestingly, none of these examples is as exotic as it comes across. Across huge swathes of the economy, the market determines the quantity sold and at what price. Significantly, for the larger share of purchases by the poor and the vulnerable, government offers no incentive of any kind. Given how important food is in the basket of goods and services consumed by the poor, why don’t we have a line item in the budget that purports to equalise the price of yams (and tomatoes) across the country? At the very least, we could argue such a policy on the need to democratise economic conditions for poor people across the country. But by interfering with costs, and market prices, all such interventions distort both supply and buying behaviours leading up to shortages/excess inventories in the wrong places.

Then again, a nation of petty traders should have no difficulty understanding how the price mechanism works. However, barrators would. For the preferment that are their stock in trade requires huge levels of inefficiency in order to be profitable. The market on the other hand, especially one with few restrictions to exit and entry, makes harder to translate into gains, the asymmetries on which both barratry and rent-seeking is based.

Share This Post

Post Comment