I did not vote in the elections on Saturday, 25 February ― which you won. If I had voted, it is not likely that I would have voted for you or your party. Largely, this is because I share the view that at the heart of the “Nigerian problem” is the absence of consequences for bad behaviour. Nearly always, this is a law and order thing.
In our inner cities, much of the “dead traffic” experience owes to traffic participants’ failure to adhere to the traffic code. In Lagos State, there is concern that traffic participants might not even be familiar with the code’s provisions.
Beyond diurnal descriptions of the cult of impunity that has the nation in thrall, though, the absence of consequences manifests in larger orders of magnitude. After eight years of the All Progressives Congress’ criminally negligent management of the domestic economy, surely, it qualifies as an absence of consequences to have returned the party and you, its flagbearer, to Aso Rock.
If you consider my description of the two terms of the Buhari government harsh, please do not think of its border closure and how much that hurt the economy. Nor how it has run down domestic reserves without boosting the naira’s exchange value and domestic productivity. You could, equally ignore the adverse consequences of the policy of fiscal repression on the efficient allocation of capital within the economy over the last eight years.
But you cannot ignore the ongoing damage from your predecessor’s currency swap programme. Given the task ahead of you, this is the most important near-term hurdle you must surmount. Whether it is the ease with which you roll back the subsidy on the pump-station price of petrol, or how easily you transition the naira’s price to a market-determined one, you will need for the people to be alongside you.
And yet, with 37% of the vote, yours is not exactly a popular mandate. Besides, it is likely to be compromised by the two main consequences of the banknotes swap: the erosion of popular trust in government; and the destruction of the credibility of the financial services sector.
Whether it is the raising of interest rates to combat inflation or to improve the yield on naira-denominated assets ― a precondition for strengthening the naira ― you will need a healthy financial services sector. Simply correcting the current cash reserve policy ― required if you must restart and recalibrate the money transmission mechanism ― will impose costs across the economy. As will the removal of petrol subsidies. These costs will be easier to bear when the markets see you coming.
Markets are key to any local change plan. Not just because they are at the heart of the much-vaunted, but so far ineffective, attempt to transition the economy on to a private sector-led model. But if inflation-constrained consumers are to start spending again, it will be because lets to demand (such as the banknotes swap) and supply (hefty doing business costs) are reduced to the “barest minimum”, as we are wont to put it.
As with every government since we committed to move the economy to a private sector-led growth platform, your predecessor struggled to eat its cake and have it. But it is immediately obvious that you cannot boost domestic entrepreneurial activity without roots-and-branch reforms to the purpose, organisation and structure of the civil service. How easily can this happen, given the state of the fiscus?
On the hustings, I listened to you describe how through factoring of accounts receivables for government-owned enterprises, you aim to improve the federal government’s financial performance. We might as well sell some of these enterprises ― if not all of them. Done well, we could obtain the net present value of those income streams, while giving the private sector a shot in the arm.
What to do with federal revenue after debt service charges have been deducted? To invest, as your predecessor did, in infrastructure whose linkages to the economy remain dubious ― in part because we continue to ticket below cost ― would be as unwise as using such money to meet a bloated and effete public services’ wage bills.
Meaningful economic reforms are costly. None more so than de-risking the economy in a way that boosts the inflow of private investments; and on this we ought to be indifferent to the provenance of capital ― whether local or foreign.
Clearly, therefore, the costs of successful governance over the next four years will be some of the most expensive in our nation’s history. And the conditions for success, some of the most dismal. But we have run out of alternatives to strengthening our institutions ― both private and public ― and how we run them.
Your task won’t be easy. But it can be done.
By Uddin Ifeanyi
The views expressed in this article are the author’s own and do not necessarily reflect The Chronicle’s stance.