Stimulating the economy through the people (1)

By Poju Akintyanju

There appears to be a consensus that the Federal Government will need to stimulate the economy by pushing more money into the society. Government itself has stated that its recovery programme will be private sector-driven; and through some social safety net measures such as the school feeding system and direct employment of teachers. There is no doubt that a multi-pronged approach will need to be taken to make life more bearable for the people and set the foundation for a truly diversified economy. This article recommends that a large fraction of the stimulation should be done through the people and not the so-called private sector. This position is premised on two reasons. One, the formal private sector in Nigeria is inefficient, unimaginative and complicit in the corruption-induced quagmire in which we have found ourselves and therefore cannot be relied upon as the major driver of (re)building the national economy. Secondly, at this stage of our national development and given the conundrum in which we have found ourselves, the state should participate more directly in programmes that will rescue the economy by involving the people. The aim of government is the welfare of the people and not profit.
The Nigerian private sector is part of the nation’s problems in significant ways. The private sector usage in Nigeria means the formal or organised private sector engaged in big time industrial, construction, banking and service provision employing masses of people. The Small and Medium Scale enterprises as being conceived mimic the formal private sector and hope to transform into it; thus, they are conditioned to have the same mentality. The critical feature of the private sector is that it is profit-driven; that is that making profit is its only goal. This drives its efficiency and ruthlessness. If they do not make profit at the level they envisage, they attack their employees and may even close shop. The number of industrial concerns that have re-located from Nigeria during economically difficult times is instructive. We can also recall here when the backward integration to agriculture was the vogue by industrial concerns in Nigeria. Once they could not make success/profit from it, they back tracked. The private sector establishments are private concerns and they are not about patriotism irrespective of what they mouth. While they are entitled to their modus operandi, the point being made is that they are birds of flight that no nation in the type of difficulty Nigeria is will depend on wholly for economic upturn.
When a nation is in economic crisis calling for the injection of stimulus into the economy, the private sector usually first comes to the mind of government because they are believed to have established structures and possess an inherent degree of efficiency that can utilise the stimulus to cause economic upturn through increased production and employment. However in Nigeria, we have a private sector economy that has no root. There is no industrial root; no educational, research and development, integrity, work ethic, patriotic roots. The claim to efficiency of the private sector is exaggerated. We have the example of the privatised electricity generation and distribution. The level of efficiency and service delivery seems to be worse under the private sector compared to when the facilities were run by a government agency. The consistent poor service of the mobile telephony companies in Nigeria is another evidence of gross ingrained efficiency of our private sector. The private sector in Nigeria does not have robust structure that can be used to resuscitate the economy. We have the evidence of the Central Bank Governor that the scarce foreign exchange made available to the private sector was not used for production but in importing manufactured goods from other countries for sale; meaning that they did not generate additional employment from production. There is also evidence that our private sector is corrupt, unproductive and unpatriotic. The example of the fuel subsidy fraud by the private sector is an open secret. They engage in corruption which undermines government programmes designed to induce greater productivity and increased employment. An example here is the Federal Government’s Export Expansion Grant which in response to pressure from the Manufacturers Association of Nigeria was designed to encourage increased export of locally produced goods to diversify foreign exchange earnings and generate more employment. An investigation inaugurated by the Federal Ministry of Finance showed that huge fraud was perpetrated in this scheme as the Nigerian private sector floated companies that produced nothing but claimed foreign exchange as subsidy.
There is additional evidence that previous subsidies of the private sector had borne no fruit. This can be exemplified by the subsidies that had been provided for our banks whose effect was not felt by the public but it rather deepened the feeding bottle mentality of the banks fastening their mouth on the teats of the national treasury as the implementation of the Treasury Single Account has exposed. Finally, a reason why the government should look beyond the private sector in stimulating the economy is that there is evidence that nations in our stage of development and with the type of crisis we have on hand who invested in the people directly through increased state-directed economic activities were able to build economic structures that rescued the nations and became enduring. The economic mode employed by, for example, Britain, China and Russia (USSR) at the stage of building the base of their development is different from what they employ now. Mouthing or aping the practices in economies that are at a different stage of development and with character totally different from ours will always result in frustrations, even catastrophes. Consequently, government should design programmes that will stimulate the economy through direct involvement of the people. There is a myriad of possibilities in this regard if Government puts its mind to it. This article makes two suggestions.
The first suggestion is that the government should establish new farm settlements. This is not a novel concept in Nigeria. Part of the strategies of the Awolowo-led administration in the then Western Region was the establishment of such settlements which provided employment, produced food for the people and served as a focal point to modernise agriculture. The Federal Government should establish one farm settlement per state; each state three farm settlements, one in each senatorial district; and each Local Government (with some grant aid from the Federal Government) one settlement each. This will give us 918 farm settlements. If on the average 100 farmers are settled in each settlement, we will pull 91,800 persons off the unemployment pool. The settlers will be drawn from the pool of unemployed university graduates of Agriculture, Engineering and Science and those with diploma and certificates in these areas. Any other unemployed person with a flair for farming may be considered. If we provide that each settler will have access to five hectares of land to farm, we will put additional 459, 000 hectares under cultivation (some variation for the riverine area and completely urbanised local governments will occur here). This is a complex but straight forward scheme whose implementation can begin within six months of initiation. The governments will have to acquire the land and do the initial clearing. We may have a residual structure for this in the NALDA.

Poju Akintyanju is a Public Affairs Analyst.

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