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Eight years of the Buhari government has been nothing but a burden on the Nigerian economy. One could try humour the government’s boosters and do a list of “key” infrastructure projects that the government has spent its time, effort and associated resources on since coming into office
roads (including the perennial work on the Lagos-Ibadan Expressway), railways (tracks and rolling stock), bridges, too. Ideally, capital investment of these types should boost domestic productivity. Equally, one could argue that the return on these investments will pass through to the economy only over a much longer time period than the eight years in which critics will appraise this government. All of this is true, only if you ignore the cost to the economy of these investments. Not just have these costs
the size of the national debt (both relative to the size of the economy, and on its own), and the cost of servicing the debt (again, relative to official earnings, and on its own)
ballooned on President Buhari’s watch.
Their duration risks mirror and currently more than compensate for the anticipated productivity gains from the respective investments. And this is before you add idiosyncratic costs, such as those imposed by the fact that ticketing on the trains are way below the cost of providing the service. This, of course, means that some of these infrastructure would be moribund long before they have been fully paid for. Still, there are other costs. Traditional measures of an economy’s efficiency
its output growth rate, unemployment levels, the consumer price index, the naira’s exchange rate, for one
have all slipped precariously in the last eight years. All of this provide context for appraising the incoming Bola Ahmed Tinubu government. At its most basic, the next federal government has got to find ways to boost domestic productivity
higher domestic output growth rates, stable domestic prices, lower levels of unemployment (especially youth and urban unemployment rates), steadier value for the naira, etc.
without letting the debt burden drag everyone down with it.
Squaring this circle will impose costs across the economy. Someone will have to pay for it. Given how inadequately the poor and vulnerable segments of the population came off under the Buhari government, it is tempting to imagine that the larger burden of this new round of economic adjustment will fall disproportionately on this cadre. As the crisis with the availability of cash earlier this year illustrated, the informal sector
daily-paid, and savings-poor
lacks the resilience to ride shocks to the economy. Invariably, they are going to be no less vulnerable to future shocks. But there are reasons to believe that more affluent segments of our society are in for a more severe reckoning this time around. Take fiscal policy. Consensus is that government’s tax take has been, and currently remains too low. Solutions to this dilemma have ranged from increasing the tax burden to broadening the incidence of tax across the economy. Whatever we decide to do about official tax revenue, one fact that we might not be able to run away from on the road to a more efficient economy is that up until now, those segments of the population with the more resources have gotten away with paying the least.
If our wealthy classes must now pay more, then they might hold up the wrong end of the forthcoming period of austerity. It might not end there. Up until now, despite being advertised as pro-poor, government’s most expensive subsidy programmes have been regressive. Those with the least resources have seen far fewer of such monies ending up in their pockets. And this is so, irrespective of whether it is the subsidy at the pump-gate for petrol. Or the subsidy for foreign holidays, children’s school fees abroad, or for religious pilgrimages.
A fairer fiscal arrangement in the years ahead should see taxes rise for all and sundry, with those who have more coughing up more. While hidden benefits, especially by way of subsidies, must be eliminated if we are to drive efficiency gains through the economy; an improved IT and telecommunications environment ought to make means-testing possible in the distribution of cash benefits to the poor and the vulnerable. Because of this, much of the push-back to the reform agenda in the near-term will come from an entitled middle class. More transparent governance should however take the sting out of such griping. A lot will depend, though, on how tight a grip the next government has on these matters.
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