(Modest Thoughts with Ayuba, Yilgak'ha; February 10, 2024; 08116181263)
Nigeria and Nigerians are currently passing through increasingly difficult times. The country's economic downturn has become a recurrent decimal that has left the country's citizens with worst living conditions. However, it is unfortunate that economic experts and public affairs commentators have often underestimate the problem. Ours has been a case of diagnosing and treating malaria when the problems at hand is a near cancerous one, maybe, because of cheap political expediency or patronage.
History has shown clearly that Nigerians have high capacity to adapt even to harsh situations. The citizens adapt to situations with relative ease when such conditions get bad and cannot be tolerated in other climes. Perhaps, this is part of the explanation for why the country's citizens are rated the happiest people on planet earth.
Truth be told, times are real hard for Nigerians. Our situation is that of a people that are 'smiling in tears'. The ironic smiling spree is a function of false sense of hope occasioned by religious passusion and encouragements. No wonder, Karl Marx postulated that religion is the opium of the people - meaning, religious is a soothing embalmment that brings emotional relief when situations got haywire (confused or disorderly)!
These are not the best of times for Nigerians. The situation of the country is what economic experts regard as stagflation. Any statistic that suggest Nigeria is out of recession in the light of current realities can only confirm one of the three (3) lies Mark Twain talked about. According to Twain, there are 3 types of lies in the world: "Lies, damned lies, and statistics". Stagflation is the real name of Nigeria's current economic problem!
Stagflation is an unwanted economic condition of an economy where the three economic evils: Very weak and slow growth, high unemployment and hyper inflation are dangerously moving in the same direction. It is an advanced situation of recession where a economy experienced negative economic growth in two successive quarters of a year. This on its own a problem enough for an economy, not to talk of advancing into a stagflationary situation!
It is necessary to note that stagflation is a very dangerous economic situation because, under Phillip's curve theory, there is a trade-off relationship between unemployment and inflation. In other words, when inflation increases; unemployment is expected to decrease correspondingly. Where this trade-off does not occur, the economy is said to be in a state of lock jam (stagflation).
Stagnation is an indication of failure of a country's stabilisation policy which covers both the fiscal and monetary policy structures of the economy. When the fiscal and monetary policy instruments of an economy failed to moderate or fix the tendencies of an economy, the economy suffers greatly.
Fiscal policy is a policy that has to do with government revenue, government expenditure and public debt. It is a budget centred responsibility of government which determines the sources of revenue to be explored (tax and/or debt), type of budget to be adopted and the debt opportunities and obligations to be relied upon. Fiscal policy is an executive function of government which is subject to the scrutiny and passage by the legislature. It Monetary policy, on the the other hand, deals with the determination of control interest rate, exchange rate, money supply, reserve ratio of banks as well of exchange rate by the central bank of a country.
The interplay of the fiscal and monetary policies of an economy will determine the growth and stability of an economy. This implies that the mix of these policies in Nigeria, has not yielded the expected output that will place the country on the path of stability let alone sustainable development.
The reality of the presence of stagflation in Nigeria is evident in the poor performance of the country's economic indicators (economic growth, unemployment, inflation, poverty, exchange rate, etc). In the country, the most current economic growth statistic stood at 2.3% after running into recession in 2016 and 2020; poverty, 40%; unemployment, 33.3%; inflation, 28.9% inequality rated at 35.1 while exchange rate is N1580 to $1 (reports of Jonathan Lain & Pape UTZ, 2023; Nation Bureau of Statistics, 2023; PWC, 2023). There is gross deficit in infrastructure and human capital development. These statistics are harvested in the face of enormous natural resource endowment in the country. It is a classical case of 'suffering in the midst of plenty'. They have compromised the overall economic development of the country with far reaching implications on the living conditions (wellbeing or welfare of) of the citizenry.
Just as political scientist could describe a failed state in terms of rampaging insecurity, absence of national consensus, etc.; economists described a failed economy as a composite function of Stagflation.The cumulative effect of stagflation is surely part of the potential threat or trigger of the wide scale insecurity or glaring unrest Nigeria is suffocating from and, gasping for fresh air of peace and social stability.
Security problems like Boko Haram insurgency in the Northern East; banditry and kidnappings in the Northern West, north Central and parts of South West, the activities of Independent People of Biafra (IPOB) and oil bunkering, illegal refineries and bombing oil installations are cases in point of security problems that cannot be de-linked from poverty related contradictions.
Nigeria has since become the poverty capital of the world. It has continued to deny the country of its national pride. Worse still, poverty and insecurity have continued to cause countless lives in Nigeria more than even the fatality figures that were recorded during the 30 months (1967-1970) civil war!
In view of the bad economic situation in Nigeria, the rich are hamming and the poor are dying. Only a few privileged ones who have direct access to public resources or collateral to borrow that are relatively smiling, at least, in the short-run. Even the privileges these ones are enjoying will ultimately be translated into a trans-genrational national or state financial liability for present and succeeding generations.
Our political culture is built on greed and sustained by prebendal political motivations. Unfortunately, any political culture that is built around these tendencies will have no regards for meritocracy. The reward system here is cash and carry with no due regards for objectivity at all. The reward system is nothing but illicit patronage. Character, competence and capacity which are the hallmark of credible Leadership have no place in a prebendal political equation or order such as the one we operate in Nigeria.
It is important to add that the present economic downturn in Nigeria is further compounded by the reality of the post election hangover too. What post election hangover means is the effect of the extravagant expenses of the political class during electioneering campaigns. The huge monies spent during these campaigns will always trigger inflationary problems after the poll. Where hard currencies like the US dollars, pound sterling, Euros were used, exchange rate problems will be complicated. This is, perhaps, part of those potent explanations to the present Nigerian economic hemorrhage or diarrhea.
All said, it is sad to announce that the solution to these complex socio-economic problems cannot be immediate. There are no quick fixes. In the short run, palliatives or even social safety nets will be necessary but, ultimately, massive production to meet up with the shortfall in output in the country. No economy that is caught in the web of conspicuous consumption can come out of stagflation without rejigging and upgrading its productivity quotient!
Ordinarily, the current depreciation of the naira should attract patronage of local products in the international market. This is simple law of demand and supply. This demand-induced explanation in respect of trade advantage is not for a country that is deficient in productivity and, grossly dependent on importation to survive like Nigeria. For such an economy like ours, the current exchange rate disequilibrium is a serious challenge that requires frontal austerity measures. Our monetary policy regulators must look inward to regulate the exchange rate as an interim measure to adjust before relaxing the proposed exchange rate policy.
It is important to state that the sudden removal of fuel subsidy and the deregulation of the exchange rate at the same time without any provision for robust palliative arrangements to cushion the effect of such decision on the citizens was ill-timed. Agreed, the successive subsidy regimes that have been in the country were more or less scams. Nigerians were not reaping the full benefits of the subsidy.
Perhaps some of the reasons Nigerians are suffering excessively have a lot to do with increasing debt servicing, increasing tax, especially, Value Added Tax (VAT) as well as the absence of price control in the system. Exposing the citizenry to a completely deregulated economic system without any robust security and safety (welfare) nets is a recipe for hardship and misery for the people. The adverse effect of these capitalist orientation is worst with fixed income earners who have to battle to survive under highly inflationary economic conditions.
It is important to note that the issues confronting the Nigerian economy are extraordinary ones which requires extraordinary solution. The application of mere economic laws and conventions may not work. Our policy makers will have to think outside the box to find solutions that will ameliorate the excruciating pains and frustrations the citizens are going through. No policy excuses will be excused, no plea for extended citizens' patience can be tolerated for too long. The resumption of hunger demonstrate across states is a clear warning sign that Nigerians are running out of patience. This is even so as the the Nigerian Labour Congress (NLC) and Trade Union Congress (TUC) issued fourteen (14) days ultimatum to the federal government to fix the economy.
These labour and trade unions - NLC and TUC must not be hypocritical in the push for solutions; the government must not indifferent in their response either. There has to be frontal political will to make this Nigeria work in all its ramifications; nothing matter anymore but to make this happen within the shortest possible time. God bless the Federal Republic of Nigeria and it citizens!
