Rethinking our options for refloating the economy, By Uddin Ifeanyi

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Whether one takes one’s prompt from the official numbers on the economy (GDP, inflation, exchange rate, unemployment numbers), or anecdotal evidence off Main Street (rising household prices, rising household indebtedness, even as breadwinners return home late in the evening with nary a polythene bag in sight), there is no question, but that our legendary Tunde, Okoro and Muhammed are having a torrid time in Nigeria today. The Bola Ahmed Tinubu federal government’s efforts at fixing the economy were always going to be fraught. Partly because of the extent of the economic rot it inherited. Partly because of the lag between the implementation of policy initiatives and when the shoots of the desired outcomes begin to emerge. Partly because of the poor sequencing choices the administration has made. But largely because one senses considerable reticence amongst our current crop of policymakers.

Nowhere is this shortage of poise more manifest than in the now recognisable sacramental where government officials at the ministerial level, after considerable amounts of handwringing, cannot end their public addresses without inviting Nigerians to join hands with the government to take the force off the headwinds that the country has run up against. What may the incumbent federal government have done differently? It may have been slipshod in the speed with which it has addressed domestic cost of funds (as an inflation-fighting tool). But on balance, its preference for market-based solutions is what the economy needs. Were it to begin to tighten monetary conditions through increases in the Central Bank of Nigeria’s benchmark interest rate (as most market-watchers now expect the February meeting of the central bank’s policy committee to do), it is not likely that we would see immediate decreases in the rate at which domestic prices are trending up. We may sadly have allowed the inflation bugbear too much elbow room in the economy that we are at a point where it has taken on a life of its own. Even the most hardworking central bank would still find that there is a lag of at least 18 months between when it begins to tighten monetary conditions and when domestic prices begin to trend in the right direction.

Within this period, the hardships that will befall the people will not be any less noticeable nor hard felt. Unfortunately, on matters economic, there are rarely any effective silver bullets. Inevitably, there will be growing resentment of government over the next few months

at least, up until the reforms, few and far between though they have been, begin to bear fruit. In this context, to ask that economic actors heave at the same time and in the same direction, is not just more heroic than searching for silver bullets, it is almost Soviet in its worldview.

For at bottom, an economy is no more than the agglomeration of the activities of discrete economic actors, each acting in his/her/their own best interests. Some of the latter will be complimentary. A lot of them rivalrous. But combined in their effect, none will be negligible, nor ignorable. Most, hopefully, will be legitimate. Important aspects of domestic economic activity will be criminal. Over the last 16 years, the tendency to focus on the latter possibility has been the bane of our policymaking. The Buhari administration, for example, did not see an unintended consequence of its policy intent that it was not minded to ban. And so, we have reached that point where speculation on price movements and/or supply conditions, and the foregoing of present consumption required to support this (that is what “hoarding” is at heart)

all of which are required if markets are to function optimally

have been demonised in the public mind. Yet, the possibility of the misuse of a process, event, or thing is no argument for forbidding use. Instead, governments should find policies that work through the seeming randomness of the many activities of the discrete actors in our economy (another description of “markets”) to nudge outcomes in the desired direction.

This is not as hard a process as it sounds. But it requires a little bit more thinking along with a readiness to ditch the shibboleths that riddle thinking about the economy in these parts. Thankfully, economic literature is replete with examples of how diverse countries have addressed their variants of the multiplicity of problems that confront our economy. All that is required for our government to domesticate these examples is that its functionaries never forget that government’s responsibility is to provide an atmosphere that conduces to the full realisation of the innumerable, legitimate, and discrete aspirations of its people.

Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.

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