The State of Our Economy
“Social overhead capitals which ought to be subsidized by the government are outrageously expensive to access and this is affecting, negatively, the cost of doing business in the economy.”
Our economy, I mean Nigeria’s economy is, from all indications, cadaverous. As in the views of John Mayne Keynes, the renowned 20th century British Economist, our economy has no tendency to either move forward or backward. No thanks to the obtuseness of the managers of the economy. From June, 2015 to date, the central authority has not come out with a blue print for the development of the economy; and due to the inability of the managers of the economy to properly direct the macro economy
on course, the micro-economy is affected. Businesses are finding it difficult to break even, which is a clear departure from what was happening between June, 1999 and May, 2015.
Actually, the economy needs direction; but nobody, this time around, appears ready to direct it. Everybody, particularly those calling the shots, are suspected to be busy promoting ethnic and tribal chauvinism in the name of playing politics or enthroning democracy. the political leaders who are supposed to be the managers of the economy seem to have completely jettisoned economic craftsmanship for ethnic chauvinism. their political philosophy seems to be blurring their understanding and respect of even the constitution, let alone the intricacies of managing an economy. the naturally heterogeneous activities of the private sector need to be coordinated by economic craftsmen to avoid activities that conflict with the principles of economic growth. Kidnapping, armed robbery, smuggling and insurgency are not synonymous with economic activities, yet these activities are flourishing because our legal system has failed to avert such obnoxious activities.
How can a notorious, well-known kidnapper or armed robber be allowed the luxury of the court room atmosphere when he or she is supposed to be immediately isolated in a dungeon or demobilized? There is no reason for us to continue to have in our markets, foreign consumable items that could be economically produced in the domestic economy. We cannot continue to import fuel when we are major producers of crude oil. Our monetary and fiscal policies are always in conflict with one another, no thanks to the managers of the economy. When they conflict, it is always the common man who would suffer. these two tools for demand management are owned and controlled by the government. there is, therefore, no reason for them to be in conflict with one another if the managers of the economy know what to do.
The managers of our economy lack scientific knowledge to understand how the economy works. the managers of our economy can decipher inflation but they do not know how to curb it or take preemptive steps against its occurrence. For instance, in most cases, fiscal policies are expansionary when the economy is overheated with excess liquidity, and therefore the economy needs a contracting fiscal policy. What an intelligent administration should do when it is confronted with the need
to redeem its electioneering promises, is to observe the cyclical stage of the economy before embarking on any holistic public spending program. What is being emphasized here is that the execution of public projects should, in most cases, take cognizance of the cyclical position of the economy to avoid pumping excess liquidity into an economy already liquidity-saturated. We cannot continue to depend on the ability of the monetary authority to mop up any excessive liquidity because the poverty rate in the country would naturally frustrate the effort of the monetary authority in carrying out this function, except that in most cases, foreign investors would come to our rescue to stabilize prices and the naira exchange rate by investing in our government stocks. But what happens if the foreign investors would, one day, decide to snub our government stocks?
This phenomenon has rendered the economy unable to be self-adjusting. Most of the things we consume as a nation are imported. this is abnormal. there is no effort to encourage home production: the government in power few years ago was trying to promote home production when it came up with many economic empowerment programs for the citizenry. We, as a nation, do not have the wherewithal to play in the international economic arena, yet we continue to subscribe to global trade conventions such as the World Trade Organisation (WTO).
But we have to play along because we have no alternative in the global economy. the players in our domestic economy are very corrupt: corrupt morally and financially. They have no respect for market situations. When Lever Brothers achieves efficiency in the production of its detergents and so comes out with new products at much reduced prices, why should retailers of the new products continue to charge higher prices? Unemployment keeps rising because of moral and financial corruption. Private and public businesses are not properly managed and so there is high turnover of business failures. Our concept of profit and professionalism are faulty and not progressive. Imagine a company tasking its marketing corps to generate a certain outrageous income target. Is this not madness? What the management of a company in a growing economy should entrust its marketing department with, is to ask the department to conceptualize a kind of marketing strategy that would enhance the patronage of the products and service of the company, such as design of posters for bill boards, adverts for the electronic and print media, and flyers and stickers; and not to ask the staff of the department to go out on the streets to arrest customers to patronize the company.
A salesman is different from a marketer, just as a nurse is different from a doctor. In a small, underdeveloped economy where businesses like the type we had in the 1960s and 1970s, are at their nascent stages, salesmanship can suffice but not in a well-developed economy where businesses are growing and expanding. At the end of the day, the marketer is unable to meet his or her target, and so he or she is fired. the domestic macro-economic environment is not conducive for growth of businesses and it is the government that makes it so. Social overhead capitals which ought to be subsidized by the government are outrageously expensive to access and this is affecting, negatively, the cost of doing business in the economy. How should Power Holding Company of Nigeria (PHCN) formerly called National Electric Power Authority (NEPA) be giving out outrageous bills? If PHCN is giving a monthly bill of N40,000.00 to a residential house, how much is it giving to factories? You can imagine! How can businesses break even under this circumstance?
Finally, I posit that Nigeria’s economy is dying because it is not properly managed by the authorities.