Monday, January 09, 2012

Beyond transactions and allocation of subsidy. The economics of value

Long time and New years if you still check this place out.

It seems that our government has chosen to handle a profound change from the manual on how to score own goals and make a bad situation worse. Much has been said about this whole mess but for me, putting this Nigeria and its existence at risk is unpardonable. Nigeria is much more than just for those who hold her passport and are born within her borders. It is the boldest African experiment, her success is the dreams, the wish of every well-meaning African and those all over the world who do not subscribe to the inferiority of the people of this continent. It is a sacred trusts that if it fails it confines generations to come to abject inferiority complex. For Nigerians, Africans and the truly committed across the world we owe them the best in us. Worse still we are all trustees by birth and have a profound fiduciary obligation not just to posterity but also to the rest of hopeful and faithful world. As such we are obliged to reflect and respond with a sense of deep responsibility.

Much has been made and rightly so of the Government’s total failure in making a credible case or engaging Nigerians or even preparing them for this policy on ‘subsidy removal.’ It seems to me that they failed the most profound test framing the issue as a technical economic issue hence pushing their economic team out but ignoring that this is a profound adaptive challenge and it is not really their work but the people’s work since they bare the profound effects of this change. I will not use much time on this not because it does not deserve it but because the blaming of personalities ignore a more egregious and deeper challenge. If the government or its advisers bothered they will know that we are trapped in a pattern of immunity to change ,the architecture of which is not fully mapped out either by the Government or its wide ranging popular opposition. It is consistent that we treat one of the most complex countries in the world like a simplistic engine, which with a competent technical authority can be instructed correctly. The consequence is a systemic dysfunction, which drags well-meaning people across all sections of society into desperate and damaging choices.

Our broad economic system of extraction of natural resources, its market exploitation and distribution of the proceeds through proximity and access is no longer fit for purpose. On either side of the subsidy debate the issue is still allocation and management of the proceeds. The fundamental issue is that the system worked for the colonials and partly the 1970s because the numbers worked. A population under 100 million, largely uneducated with lower expectations, each group of elite were able to paternalistic allocate and share opaquely. In the 21st century this cannot and will not work. No matter how you cut the cake and reduce wastage, manage corruption and change Governments the system of rewarding for anything other than value creation, adding value and productivity is doomed to failure. The formal economy that is totally dependent on this transactional changes had by 2002, across all sectors, below 5million jobs. Even if doubled by deregulation in the past 10 years you still have below 10% of the population supported by its expansion. It is woefully inadequate. The true transformation in the short term is not tinkering with this part of the economy but wholesale transformation of the informal economy that involves nearly 90% of Nigerians. It is in this transformation that lies the solution to corruption. If we make the informal economy active, involved and supported we ensure its transparency. We will expand the economy, diversify its capacity, embed real value and uplift lives across the country. With improved capacity for mechanics, tailors, traders and organizing them into effective clusters we improve the tax base of government and inevitably increase citizenship. Much can be done in the short term starting with the markets. For example every member of the National Assemblies community allowance should be conditional to the infrastructure and development of the markets in their local areas.
We must arrive by 2014 to a place where majority of Nigerians have income traceable to productive and legitimate activities in that period government can work to delivering a plan of similar productivity improvements in the public sector and so called deregulation in the organized private sector. In the short term on this issue of subsidy we should have a set of options framed in terms of questions put before a referendum. Government can use the same markets and telecoms organization with overseeing ombudsman or team to decide where we go on this specific policy issue.
It is time to put Nigeria ahead of all our allocating divisions and resources competition we should build her towards the future we want for our children. For me it has to be a meritocratic place of equality of opportunity and wisdom about complexity. We have no right to put her at such risk and we should be humble enough to work beyond or our allocation obsession and our life of entitlements.