The #EndBadGovernance protest finally ended on Saturday with a one million-march. The days started like play, like play, then looked as if it would not end so soon but as the days went by the protest activities toned down while economic activities picked up gradually. There are a lot of messages in the whole saga while it lasted. Lives were lost, some avoidably. Property destroyed, vandalised or merely torched. Time, which is in essence in everything, was wasted and gained: wasted for producers and gained by the protesters. Man-hours of work were sacrificed and billions of naira were lost.
The question is why should the government allow this to happen? Good governance would have prevented protest as citizens would hardly protest in favour of good governance. I wish to see, in modern Nigeria, an immediate local government chairman, an ex-governor or an ex-president who can take a leisurely or peaceful walk on a street in his domain without looking suspiciously over his shoulders.
There are lots of takeaways from the protest by the government, the organisers, the common protesters and even those who sat on the fence. Analysis and opinions would vary from person to person such that one opinion cannot be exhaustive. Economic reforms in Nigeria have become a ritual as every government engages in one economic reform or another and it is best to look at these.
What is important now is for the government to note that its economic policies have not been working, reflective of the continuously worsening living conditions of the citizens. The policies favour the leaders as they are growing in wealth, living in affluence and oblivious to the precarious conditions of the poor. The cumulative negative effects and frustration resulted in the just concluded protest. That is the first takeaway and a major one.
The National Assembly approves no national plan. There is an outstanding long-term national development plan launched by former President Muhammadu Buhari but now ignored by President Bola Tinubu. But if Tinubu wants to make a difference as he said, he must reassess or reevaluate the current economic policies. For example, the entire economy cannot be left in the hands of market forces. There is always the need for intervention in African economies with lots of structural problems, particularly the issue of corruption that has eaten deep into the fabric of society. Corruption corrupts and destroys every policy and action. It has taken us to where we are now and unless it is tackled politically and legally, the country will not grow.
Price control has lots of disadvantages but also has advantages. A general price control can destroy the workings of economic factors to achieve desirable outputs but guided price control can solve lots of problems. For instance, controlling the price of fuel in an economy that is virtually dependent on oil products for production can indirectly moderate the prices of various inputs and outcomes of production including transportation, energy costs, secondary operating costs and service costs. These invariably bring down the prices of final goods purchased by consumers. When petroleum products are produced in excess locally, the final liberalisation of the prices in the sector is gradually achieved.
Interest rate is a price in the financial market and affordability of funds or credit is instrumental to the expansion of businesses. Research reports have shown that one of the major impediments to production in the small- and medium-scale businesses which generate most employment in our clime is funding for expansion. The concern of borrowers in developing countries is availability rather than cost of funds. That is why businesses are ready to pay high interest rates to obtain the funds.
However, the Central Bank of Nigeria can ease its availability by reducing the Monetary Policy Rate, and the cash and liquidity reserve requirements which will assist the banks to create money for onward lending at affordable costs to investors. The central bank can deliberately raise savings rates through regulation to generate savings in the banks as they do on government bonds when raising capital for the government.
The issue of debt accumulation with the excuse that funds are required for development has not been helpful. It is one of the failed Buhari economic reforms based on “borrowing our way out of poverty.” Reports have shown that despite the timely repayment and servicing of debts, this government has accumulated much more such that the ratio of GDP to debt is now 50 per cent as the threshold recommended by the World Bank and IMF. But that recommendation is wrong, in that, what pays the debt is not GDP but revenue.
A situation where more than 60 per cent of revenue is spent on servicing debt is very unhelpful to sustainable development. Unfortunately, the borrowed funds are stolen and returned abroad or used on avoidable travels and payment of exotic consumer goods. Head or tail, the economy benefits little. That is why recent research reports on the relationship between loans and economic development have not shown significant positive results. There is a need to put a moratorium on payment and servicing of existing loans and stoppage of new loans, whether private or institutional.
The economic policies of subsidy and palliatives have not achieved desirable goals because of some contradictions. Every country extends one form of subsidy or another. If it does not exist in reality, it won’t be in the dictionary. The subsidy on petrol is desirable but its removal is more desirous because it has been grossly abused by the oil mafia, who are still around making sure that the product does not flow, even after the price has tripled. They are still trying to make sure that the local production does not succeed and there are indications that the government knows but cannot dislodge them. That is part of the structural blocs that make nonsense of economic policies of the market economy.
Whoever advised the government to pursue palliatives for consumption before production did not think through it. Production was at its lowest ebb and the government was doling out money to consumers to purchase what was not available. It is being reversed partially now but the consumption bribery is still going on. If, as it is being done now, a large number of small businesses were given subsidised loans to improve their businesses and the results started showing, then consumers started getting palliatives to purchase the outputs, the hunger protest might not have happened.
The government policy of generating revenue through taxes rather than through production deepens rent-seeking activities which do not promote growth and development if the taxes raised are mismanaged. Taxes often kill the incentive to make profits in economies where the cost of production is already high. That is why tax holidays are one of the incentives to attract foreign direct investments. So when a country is in distress like we are, increasing tax rates is not the best of policies. The fiscal authorities will need to widen the tax nets to reduce free riders. They have to prevent tax avoidance and punish tax evasion.
As I often point out, tax should be seen as a derivative of income. The higher the income and employment level, the higher the tax collectable. The fiscal authority should put less pressure on businesses to generate profit without improved productivity so that they can pay higher taxes. The authority has done this by allowing telecommunication and electricity providers to increase their prices. Such increases in prices have added to the cost of production for small businesses in particular such that some of them have folded up, invariably resulting in the loss of revenue to the government from those sources and promoting unemployment. We cannot exhaust takeaways from government economic policies in a piece like this.
On the social policy front, the government would have seen the role of illiteracy in the prosecution of the protest. Many kids who should forcefully be in school in the North were seen on the streets protesting because they were out of school.
The takeaway for the organisers can be linked to the implications of the long period of the nature of this kind of protest. For instance, three days in a month for the next six months in the first instance could be more effective and result-oriented than ten days at a stretch. It could become embarrassing for the government to allow six months of protests. Hopefully, some lessons have been learnt for future reference.
