Managing Cross River During An Economic Depression
(The PPP arrangement) is the only sure way the government could develop the economy and also decouple the State in this period of depression without leaving mounting debts for the future generations of Cross Riverians.
An economy is said to be in depression when growth in some economic variables, namely income, investment and production are retarded or are completely stopped. When this becomes the case, the growth in government finances would also slow down or would completely stop since the income of businesses on which the public tax is based, would also begin to decline as tax evasion and avoidance would become the order of the day. But a government that is worth its salt would not fold its arms and allow Depression in the economy to take the wind out of its sails. A worthy government would, therefore, want to continue with its social responsibility of facilitating the growth of the economy as well as maintain laws and order. But it is quite difficult to do any of these things when there is erratic flow of revenue into government coffers. But the government that is worth its salt would devise means of overcoming the problems posed by inadequate funds. This is not to amplify the aphorism, “economics has explanation to justify every stupid action of the government”.
Without mincing words, I am bold to state that the concept of Ayade’s development agenda clearly points to the philosophy of going outside the conventional method of managing government revenue of: “collect and spend”. Even the philosophy of “collect and spend” is unattainable in an economy facing depression. In managing public finance in a depressed economy, the full Process of making fiscal choice is brought into play. His Excellency’s development agenda focuses on industrialization; but how does he go about it in a depressed economy when government finances are inadequate to tide it over its expenditure program. His Excellency is of course, clearly convinced that industrialization holds the key to the complete growth of the State economy.
He must have reasoned that the inadequacy of government funds should not be allowed to put a wedge on the wheel of the state’s economic progress. Consequently, a fiscal choice would have to be made on how to Fund the industrialization program. Consequently, the Ayade administration has begun “to think outside the box”; to borrow his fond expression. In going About this philosophy, which many admirers of his administration have christened “Ayadeism”, His Excellency has to explore and exploit the private sectors ever-growing desire to invest where the opportunity avails itself.
The public and private partnership (PPP) concept which allows government to go into partnership with the private investor in funding public sector projects is, therefore, being fully exploited by the Ayade administration. This approach is the sure way through which the state could be decoupled by garnering enough resources that could be invested to provide the state with enough assets and sufficient social overhead capitals that should accelerate and sustain a development continuum that is inveterate. Also, through the PPP arrangement, more funds are brought into the state to reflate the economy and stimulate investments in its other sectors which would grow the state’s gross domestic product. With more funds in the hands of the people, consumer spending would rise, which goes to stimulate production and free the economy from its inert position. I wish to assure Cross Riverians that there is nothing to fear about the PPP concept. Nobody is selling the State to any private man, whether European, Asian or African. The private investor under the PPP would provide the greater percentage of the capital, which is the essence of the arrangement in the first place; and he or she would also provide the technical Know-how for the running of the project. He or she is called the technical partner; While the government would augment the required capital and would provide the Administrative know-how (administrative partner).
The gains from the projects are often shared according to the proportion of the capital contributed by each partner. For instance, if the government provides 40% of the capital, it would have 40% of the profit; and the assets, if the project is wound up in future. Some public sector projects, however, generate benefits that are not divisible. When this type of project is funded under the PPP arrangement, the private Investor is allowed to run and manage the project on completion until such a time that the investor has fully recouped his or her financial investment in the project; after which he or she would hand over the project to the government. Examples of projects that generate indivisible benefits are roads, bridges, street lighting, etc. For this reason, tollgates are often constructed along roads funded under the PPP arrangement. The disadvantage of funding this type of project under the PPP is that the citizenry are made to pay for the benefits that would accrue from the public projects that ought to have been enjoyed free of charge.
Nearly, the entire industrial projects being undertaken by the Ayade administration are, therefore, executed under the PPP arrangement. this is the only sure way the government could develop the economy and also decouple the State in this period of depression without leaving mounting debts for the future generations of Cross Riverians