Tinubu’s Renewed Hope, New Nigeria: In Long-run, We Are All Dead

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John Maynard Keynes is an economist who lived in the 1930s. He developed macroeconomic ideas parallel to that of classical school of economics that believes in absolute economic freedom which needs no government intervention to stabilize an economy when it’s in a state of disequilibrium.

The classical school ideas were centered around economic growth and freedom. During the 1930s great depression, many western policymakers were proponents of classical school. They believed economic downturn would be corrected by less government intervention (deregulation) in the economy, and by encouraging businesses and investors to take advantage of the lower input and prices in order to pursue their businesses-interest. In that regard, it would return output and prices to equilibrium state.

But to Keynes, the economic meltdown proved the classical notion to be flawed and needs to be rejigged. As there was low output corresponded with high rate of unemployment and prices instability. These inspired Keynes to think differently, which led him to developed the macroeconomic ideas which according to him, represents the reality of economic downturn.

Keynes’ approach advocates for government intervention during an economic meltdown through spending which will create job opportunities in the process, in order to stimulate more demands in the face of economic slump, which at the end will restore the economy back to equilibrium and not allow businesses and investors to determine the fate of the economy.

Although, this theory can be practiced and in constant play in capitalist model of economy, but, it has major implication of pushing the government to excessive borrowing to spend, which would push it to a constant state of indebtedness without end in sight. These formed the basis of Keynes famous quote, “In the long-run, we are all dead”.

In Nigeria, the immediate past administration of President Muhammadu Buhari, has succeeded in administering poor economic policies which plunged the economy into a slump state. His utopian economic policies yielded close to zero positive results even with it’s huge spending. Likewise, his border closure policy which enriched few local intensive rice farmers and deprived millions of their cross-border businesses. Even as the local farmers could not bridge the demand gap in the area of rice production, he also blocked major rice importers to bridge the gap.

No thanks to his performance in the areas of transportation and insecurity, where major roads in some parts of the country where constructed/renovated, while other populated regions were neglected, but, railways began to function. On the security side, less successes were recorded in the fight against secessionists, banditry and kidnappings, thus left some regions at the mercy of bandits, kidnappers and IPOB terrorists. Although, a remarkable success was recorded in the fight against Boko Haram terrorists.

Inflation, insecurity, communal clashes, unemployment, epileptic labor strike and high-cost of living became the hallmark of the last administration, these were borne out of poor economic policies.

 

Tinubu, Renewed Hope and New Nigeria

In his effort to alleviate the economic sufferings caused by the wayward policies of the previous administration, President Bola Ahmed Tinubu, is trying to implement economic policies that have long-term impact. This has started with subsidy removal on some essential goods and services, more government spendings, introduction of students loan, unification of exchange rate, suspension of taxes on some commodities and services among others. These and many more policies are classical economic policies that have a long-run positive impact on the economy. On the long-run, the downturn would be corrected, in which the hardworking would have something to take home.

During his inauguration, President Bola Ahmed Tinubu announced the removal of subsidies on petroleum products. Without a doubt, subsidy is a heavy burden to Nigeria’s economy where a few would always exploit it to their advantage.

Due to the problematic nature of the subsidy scheme, almost all the previous Nigeria’s Presidents had promised to remove it at a time, for the same reasons. It is riddled with corruption and that only a few had been enjoying it at the expense of the state, leaving the majority with negative consequences.

The country is entangled in constant state of borrowing to finance the subsidy payment, which hinders it from funds to finance major infrastructural projects, social welfare programs and reforming the security sector to a variant one capable of meeting the modern day challenges. Therefore, if the subsidy scheme is abolished, funds will be available to finance all the critical sectors.

If the system can be done in an honest and transparent way, it is a legitimate cause worthy of support and sacrifice, but, corruption in all levels of governance is what makes one skeptical of the government’s commitment to transparency and accountability in governance and it’s sincerity in abolishing the subsidy.

However, looking at the current state of the nation’s economy, petroleum subsidy is the only guaranteed general state welfare that will be enjoyed by all and has general impact on the whole population. It has direct linkage to transportation, manufacturing, energy, school fees, prices of foodstuff, services and many more necessities. Any slight impact on the prices of petroleum products leads to inflation, hike in transport fees, jobs cuts and high unemployment prospects.

 

Subsidy Against Subsidy Removal:

According to reports, the Federal Government has proposed a monthly payment of N8000 allowance to be disbursed to 12 million households in the country for the duration of 6 months. Additionally, One Hundred Billion is marked for roads construction, several billions for the judiciary, Seventy Billion for the national legislative welfare, while Eighteen Billion is earmarked for the agriculture. These are proposed as remedies to cushion the effect of petroleum products subsidy removal for the time being. No doubt, there are clear misplacement of priorities in this proposal.

If the policymakers are honest in their said effort to cushioning the effect of the removal of the fuel subsidy, agricultural sector is the most critical sector that needs urgent intervention to create windows that would encourage farmers to access soft loans, low cost hybrid seeds, subsidized chemicals and fertilizers, and other farming implements. This would enable them farm with ease, as such, the multiplier effects of that would be: availability of food products in the market and a moderate prices of food items due to the subsidized mechanisms that farmers enjoyed. This would have real positive impact on the live of the common man. But giving out N8000 to 12 million households could only cushion the instant impact, leaving them exposed to more suffering and uncertain future on the long-run.

Now, let us examine the palliative distribution formula according to regions as reported, If numbers are anything to go by in governance, majority must have his way, while, minority can have a say. If this is true, one will find it difficult to understand the rationale behind given out 57% of N500bn to the South West Region of 47 Million people at the expense of the North West, a region with a stunning population of over 49 Million which was given only 4% out of that total amount. If population matters in the distribution of wealth, then, there is an undeniable discrepancy here.

What is more alarming and unbalanced is how the Northeast region is almost left out of this allocation, even with it’s unprecedented challenges in social, political and economic destruction by Boko Haram insurgency, high poverty index and outrageous number of out of school children.

It was reported that only 1% of the N500Billion is allocated to the Northeast, the region that comprises 6 states, with a population of 26 million that includes millions of internally displaced persons (IDPs) from within and neighboring regions.

Frankly, I don’t want to believe that this administration has started on wrong footing, with preference on nepotism and sectionalism in the administration of appointments and lopsided distribution of country’s wealth in this critical economic period. I hope President Tinubu will work hard to change this narrative and give hope to the renewed Nigeria.

This is a clear indication that, some parts of the country will continue to be sidelined, even as the other side was the major beneficiary of the immediate administration of a Northerner, a President who mysteriously supervised the underdevelopment of his region in order to develope other regions’ economic future.

Muhammad Sagir writes from Bauchi.

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