In a recent article Prof Soludo fired missiles at all corners of the polity to jog collective memory. What he said was not new but the way he said it and his personality– a highly knowledgeable former Central Bank Governor makes his contribution special. What is the motive? I may never know but I believe it is more ideological than political. As a former Governor, Chief economic Adviser ,who had tried to be a Governor of a state, above all a Professor of Economics who is very much in love with market –driven policies of the Chicago school of thought fame with considerable access to the IMF and world Bank, Soludo is certainly not an ordinary Nigerian to be easily ignored. As Sanya Oni noted ‘whatever is the motive, Soludo is hardly a man you can put away as a nincompoop as far as the issues of the nation’s economic management is concerned’. His words ‘conveyed with the profound insight of an insider are not just weighty but authoritative… helpful and illuminating’ (The Nation 27-1-2015 p21).
Soludo’s intervention is timely in trying to refocus the campaigns to the leading issues of the day and stimulate healthy debate for a better future of the country. In spite of the Abuja Accord, the campaigns had deviated from standards to focus on inanities. For instance, instead of focusing on such issues as security, employment, poverty, -in short the economy which Soludo raised, some people have been wasting time on inanities such as the certificates of a former head of state, selective recollection of a military era without paying attention to context of leadership, spreading wrong information about possible’ Islamalization’ of the country by a man who did not do so as Military head of state when he had supreme powers and Commanders in all the states, canvassing for a shift of election for no just reason, threatening fire and brimstone if one or other candidate fails to win even under clean condition-forgetting that periodic elections make the difference between democracy and monarchy or Military rule. This is not the right way to move forward.
The Soludo intervention thus returns us to proper course. As Remini 2008 (p101-117) observed, a time comes in the life of a nation when there is ‘collective desire to improve society- the conditions people work and live, create a beautiful, just and harmonious life, show pride and patriotism, fix what was broken and develop a zeal for reforms – the age re-awakening’. It is the kind of experience that was witnessed in the USA from 1720-1820 when people began to organize for the abolition of slavery and eradication of other evils such as corruption. There is no better time than now –the eve of a new administration by either the PDP or APC for the re-awakening of the spirit of nationalism and patriotism in Nigeria.
My real concern is with the ideological bias of Soludo’s intervention. For me it is an ideological exercise for the soul of Nigeria- a subtle attempt to force his private-sector-led market ideology on society and to persuade us to continue travelling on the same wrong ,barren and harmful road. But given our sad history of development over the past thirty years with private sector –led market economy, there is need for a change of route to state led market economy.
SUMMARY OF ARTICLE : It would be helpful to start with a summary of the article here. Based on statistics from Federal Bureau of Statistic, Soludo scored the Jonathan administration low in performance and dismissed his Economic Team as ‘weak, and selfish-dominated by self-interested and self-conflicted group of traders’ who turned the Team’s meetings to ‘showbiz time’. He called on Mr President to take charge of the economy, ‘claw back his powers which he had outsourced and roll-back his sleeves for a new beginning if GOD is magnanimous to give him a second chance to redeem himself’. He advised ‘President Jonathan— to stop wasting — time trying to campaign on his job record’ on the economy because it was ‘not looking great’ – ‘ a clear ‘F’. ‘The mismanagement of our economy’ he observed ‘has brought us once more to the brink.’
Generally economic growth has been slow. According to him ‘despite presiding over the biggest oil boom in our history’ the Jonathan administration ‘has not added one percentage point to the growth rate of GDP -having been stuck to 6% as against Obasanjo’s 7%. Also ‘this is the only government in our history where rapidly increasing expenditure was associated with increasing poverty’. To him about 112 million Nigerians lived in poverty in 2011. He reports that ‘unemployment rate is at record24% , poverty rate is all time high at 71% and naira exchanges for N210 to $1’. And the economy was ‘on auto pilot, with confusion as to who is in charge… Since the ‘economic management has been out-sourced’ and no big ideas’, it was ‘difficult to see where economic policy is headed’.
His thesis is that were ‘the Nigerian economy to be properly managed, it should have been growing at an annual rate of about 12%’ and given the oil boom, ‘poverty and unemployment should have fallen dramatically over the last five years’. The transformation agenda he said ‘is merely an empty slogan’, growing ‘only grasses and no trees- let alone Iroko trees’. To him, the President’s performance was unimpressive and if he wins re- election, he would a ‘need a team of big and bold thinkers…with excellent execution capacity to help write his name in history and cement legacy’.
The professor turned to the APC and observed that the party had said nothing about what it would do with the national conference report, the kind of federalism it envisaged for Nigeria and how it proposes to fund its promises. To him APC’s promises to create 20,000 jobs per state-720000, as against PDP’S target of 2 million jobs annually was meager both ways and part of the problem he observed was that about ‘60% of graduates are unemployable’ due to poor quality of tertiary education. Yet neither party has concrete plan for the job creation-how much and where resources will come from, no grand vision —. The APC he observed has not defined the specifics of the ‘change’ it has in mind.
He acknowledged that Buhari ‘ is honest’ but the APC had no ‘coherent, credible, agenda that is consistent with the fundamentals of the economy’. Though its ‘manifesto contains some good principles and wish list’ yet ‘as a blue print for Nigeria’s security and prosperity it is largely hollow’. The party ‘needs to transform from a group of highly aggrieved peoples’ congregation—to a true political party with a soul —’. Equally ‘in spite of 16 years in power, the PDP is an assembly of people held together …by dining table politics and not many of its members can tell what their party stands for or its mission and vision for Nigeria’. Both parties are silent on ‘the cost of their promises, the near bankruptcy of the country and how to fix it. To him, neither the APC nor the PDP has ‘credible agenda to deal with relevant issues’ of today ‘within the context of the evolving global economy and Nigeria’s broken public finance’.
WHAT IS THE REAL MOTIVE? Generally Soludo was unsparing and hard-hitting. This is perhaps so because he did ‘not need a job from government’ or was ‘ready to die for Nigeria’ or simply disappointed and angry. Still the question must be asked: What is the real motive of Professor Soludo? This shall remain debatable. Though he lays claims to patriotism and altruism because according to him ‘the survival and prosperity of Nigeria are at stake and there is need for the real debate to begin to stop the drift of the macro-economy and fix Nigeria’s broken public finance’, not many believe him.
For instance to Peter Obi, Soludo was on vengeful mission ‘to hit back at those he is nursing secret grudges against’- a ‘man hunted by his past and still nursing deep hatred against those he wrongly assumed were responsible for not renewing his appointment as the Governor of Central Bank and those that thwarted his move towards becoming the Governor of Anambra State. To the PDP Presidential Campaign Organization, Soludo’s statements’ were simply absurd and self –depreciating’ while to Femi Fani-kayode who seems to have forgotten his earlier unpalatable references to Mr President, Soludo is a ‘confused and conflicted’ man who has ‘lost touch with reality’ (Vanguard 27-1-2015 p55).
For Dr kayode Fayemi, Soludo’s article was ‘insightful and incisive’ and went ahead to explain some of the APC’s plans and strategies to fix the economy especially through job creation (The nation 28-1-2015 p47). To Okonjo-Iweala, Soludo lacks the moral authority to criticize. According to her ‘he is the worst CBN Governor ever who mismanaged inflation which hurts the poor and vulnerable and which he left at 13% as against the single digit of 8%’ today. Also he ‘thoroughly mismanaged the implementation of consolidation of the banking sector leading to the worst financial crisis in Nigeria’s history and an incredible accumulation of liabilities that would cost N5.67 trillion to clean up’… (The Nation 30-1 -2015p9). But as I have suggested earlier, the article is more to sell market ideology-what he calls ‘private sector-led the market economy’.
In very subtle way Soludo reveals the real motive of his article which is to advance the American model of capitalist ideology. This could have been informed by a number of factors including his training, beliefs and some generational gap fears –a kind of nostalgia for a past gone and yearning for its return and continuity in order to be able to have a world that makes meaning to him. He speaks of the absence of ‘big ideas’, ‘economic fundamentals’, ‘evolving global economy’, ’ out-sourcing’ etc all sexy words about global capitalism. He dwells more on the virtue of the market than mismanagement which he said brought us to a sorry pass. It is his style of showing the way forward after the election.
After comparing Jonathan’ s record with that of Obasanjo in which the latter was reportedly better than the former, he hits the nail on the head: ‘ In Nigeria’s recent past, two examples- one under the military and the other under a civilian government demonstrate that where the political will exists Nigeria has the capacity to overcome severe challenges’. Both were tied to market economy. One was the ‘painful Structural Adjustment Program of General Babangida regime which laid ‘the foundation for the current market economy’ –private sector-led economy- the pillars of our deepening market economy’. The other is the Obasanjo democratic administration which ‘inherited a bankrupt economy but consolidated and deepened the market economy structures’ through for instance ‘the consolidation of banking system which is powering the emergence of a new but truly private sector-led economy…’
To him these are ‘the two Presidents who made the most fundamental transformation of the economy — and were exceptional in the teams they put together’. Both regimes he noted recorded growth-Babangida 5.5% from almost negative and poverty incidence of 42% in 1992 and Obasanjo attained 7% from 2.2% he met in office. Their periods-being exemplary, should serve as guide to the future. But he forgot that fundamentally both Yara ‘dua and Jonathan did not deviate from the market- path constructed by Babangida and the latter recorded a growth rate of 6% with the largest economy in Africa after some rebasing . In any case, of what importance is economic growth without quality development in society in terms of visible reduction in poverty, unemployment, hunger, housing and rural neglect ?
While he left none in doubt about his love, faith and preference for private-sector led market economy, our worry is that Soludo does not appear to appreciate how very inappropriate, harmful and retarding his cherished model has been to the development of the country. Both periods failed to make significant improvement in the life of the average citizen. They were far from golden. Generally life was harsh, hurtful hard and depressing for majority of Nigerians during the periods mentioned. A cardinal feature of the model was the exclusion of the state from economic activities. Given the hardship ,unemployment, poverty and underdevelopment of the past 30 years since our experimentation with private sector-led market economy our argument is for Nigeria to adopt a better , more creative, humane and realistic approach to nation-building – a state led market economy henceforth. Here there would full liberalization of the economy to enable both the state and private sector and indeed anyone willing and able, to participate in economic activities to the best of their ability.
For many reasons private sector –led market economy was a wrong choice- the wrong way to travel and shall not take us to the promised land any soon if continued with. The idea of private sector- led market economy is unoriginal to its proponents. It is also against the spirit of the Constitution’s economic objectives contained in Chapter 2(16)1&2) which among other expects the state ‘ to harness resources of the nation and promote national prosperity, control the national economy for maximum welfare, freedom, and happiness of citizens, manage and operate the major sectors of the economy, ensure that the economic system is not operated in such manner as not to permit the concentration of wealth or the means of production and exchange in the hands of few individuals or of a group’.
While there is need to respect the constitution, the adoption of private sector –led economy represents a fundamental error in the thought process of makers of our development policy. First the state which has the cardinal duty to protect the lives and property of citizens and provide for their welfare and with stronger muscle to tackle poverty and under-development was stripped of its role. The private sector still at its infancy, unprepared and unready with its value of individualism that is opposed to our communal way of life was dragged to forefront of economic leadership.
Based on poor understanding of history of development, it was wrongly assumed that the private sector could lead by mere proclamation without due preparation. Issues of leadership and management including consequence management which bedeviled public enterprise were ignored. While the private sector lacked the maturity, financial muscle, experience etc, the state which was better suited to lead was excluded for ideological reasons- believing that sloganeering would do the trick. It was both unwise and irrational.
The persistent state of under-development of the country today is an eloquent testimony to the failure of that model of development prevalent in the country within the last thirty years. No , we cannot continue in the same old way. The history of Nigeria showed SAP and NEEDS as unmitigated failure characterized by needless hardship, loss of jobs and alienation of majority of citizens. As a way forward the model is inappropriate. This should be clear after 30 years of applying it. The marginal growth recorded did not translate to development of society and welfare of the people. For instance, the SAP program sapped citizens’ energy almost beyond redemption and crashed the naira which has not been able to climb to its pre-SAP days ever since. Few multi-millionaires were made but the majority of people -the masses were impoverished. It was an unjust and unfair system.
The series of labour clashes with the authority in the 1980s were indicative of the bad times. The trend of hardship and alienation continued under the Obasanjo administration. The NEEDS failed to deliver on its goal of wealth creation for all, employment generation, poverty reduction, eradication of corruption and value re-orientation. In the name of privatization, nearly all our common wealth was traded away, unemployment swelled as a result of down-sizing, social tension increased, rural areas and infrastructure were hugely neglected and the citizens became alienated as a result of wrong policy measures by the false prophets of development who likened people to an egg which must first be broken in order to make omelette as though human beings were inanimate objects without feeling and sense of judgment. It was unkind to citizens and disastrous for the economy.
In a word SAP and NEEDS failed because of the inherent contradictions of the market. They are features of a wrong ideology of development for the country. It is instructive to observe that the major reason for doing privatization of public enterprises in Nigeria was their mismanagement and today Soludo still has reason to blame the same factor- mismanagement for our problems. So nothing has changed in spite of privatization-private sector-led market economy. In other words, if there is good management, the economy would bloom. Fortunately management skills can be learnt and they are by no means the exclusive property of the private sector. So why not deal with the problem directly by learning and doing leadership and management better. Here organizations such as the Nigerian Institute of Management should be assisted to promote management/ leadership education, values and culture of honesty, efficiency, transparency, ethics and economic ways of doing
Soludo decried absence of ‘big ideas or Irokos’ but their presence is not necessarily a guarantee for success. But who needs Irokos if the grasses are green enough for comfort? What is the development value of having few millionaires in the midst of mass-poverty even if normal in a market setting with its value of ‘survival of the fittest’? In any case, history teaches that small can be beautiful and depending on the nature of management in place, big or small enterprises do go under. The experience of banking sector reforms which robbed Peter to pay Paul, violated human rights to own or patronize small business including banks in order to create 25 big banks out of 89 is instructive. As EL Rufai 2013 p192-3 observed, very soon many of the consolidated banks went crashing: many large banks ‘became insolvent—and to bail out the banks and prevent a national economic melt-down would cost some N4 trillions’. The state had to intervene to keep the market sane and the economy healthy.
The mistake of the Jonathan administration was to have followed the same unfruitful old route hook, line and sinkers. Otherwise the transformation agenda represents a big idea that turned sour because of lack of good managers within the elite group to drive it to success. Here in a typical market fashion, Soludo asserts: ‘the lesson of history is that the best of leaders have been the ones who went yond their narrow and provincial enclave to recruit talents and mobilize capacities for national transformation’…This is only partially correct because at the moment there are talents and the Constitution provides for recruitment into FEC from all corners of the country which presupposes looking for the best. However the major problems of the economy have been corruption, exploitation and leakages which are dominant features of the global capitalism. There are those with talents for self-aggrandizement as opposed to public good. This calls for the cultivation of right set of national elites that are highly patriotic, public-spirited and committed to the collective good and not a refurbishing of wasteful system.
History teaches that the absence of patriotic, national unity –conscious and development –oriented elites is responsible for backwardness, poverty and under-development of developing countries. Any government after the election must change direction by investing in economic and social development to promote employment, infrastructure, modernize rural areas, fight poverty, under-development, corruption etc as well as nurture right men and women for nation-building and deepen leadership and management culture.
The socio-economic problems of the country deserve direct attack and not the indirect method of the market. Studies abound to show that state –led market economy is more suited to former colonial countries. The works of Joseph Stiglitz( 2002)- Globalization and its Discontents and Jeffrey Sachs(2005) The End of Poverty—are relevant here. They teach the wisdom of adapting global ideas to suit local needs including state participation in economic activities. Experience shows that each society has a duty to design and implement development policy and programs that are consistent with its values, culture, problems and aspirations.
Let it be remembered here that when Adam Smith advocated free trade as basis of ‘wealth of nations’ he had the interest of his country in mind. When Hamilton as Secretary of Treasury insisted on using State resources to grow capitalism in the 18thc USA and Roosevelt decided to use the state funds to halt depression and save American capitalism in the 20th century both had the interest of their country- the USA in mind. The Marshall plan of the post second world war was done with European interest at heart. Not long ago-2008, Obama, and even much earlier Bush ploughed public funds to save the USA economy from her financial crisis. Why is Nigeria so afraid to do the needful? The state must be made to lead the economy in a highly liberalized atmosphere of the market.
It was high time we made a rethink based on correct diagnosis of the our problems. The question is what is the best approach to the problems such as unemployment, poverty, insecurity, infrastructure, health, education in a non-industrialized country such as Nigeria with infantile capitalist institutions? What are relevant lessons from history and experiences of other countries? More specifically how do we provide jobs for over 40million unemployed youths today, organize security for all corners of the country, promote rural development and agriculture for food self-sufficiency, urban infrastructure and general amenities, effective citizenry participation, democratize leadership and management, patriotism? Why did our public enterprises fail and how do we rectify things? It is needless to say that the current market approach will not do the magic.
We have travelled for too long on the wrong road of development and it was time to turn to the right way. The right one would consist of intelligent mix of market and state activities in which the state would lead the way. Call it state-led capitalism. The American model is only one of the cultures of capitalism. While Charles Hampden-Turner & co1993 speak of ‘seven models or cultures of capitalism ranging from the individualism of the united states to the community values of Japan’ and explained the underlying ‘values and different approaches ‘ taken by ‘each country to achieve economic success’ it should be emphasized that one of the fallacies of the later part of the 20th century was the relegation of the state to the back seat of development under the wrong notion that it has ‘no business with doing business’. . We are here concerned with national development in all its ramifications and our view is that there are better models than presently obtains say the Japanese, the Chinese model with to follow.
Still there is the need to take Soludo’s criticism of the Economic Management Team seriously especially as it seems to conflict with the role of the National Economic Council – a strategic provision in the Constitution to coordinate the economy under the chairmanship of the Vice President. It provides opportunity for the managers of the economy to meet, review development , trends, and compare notes. Unfortunately for quite a long time in 2014, the Council did not meet. He wants the Economic Management Team strengthened but I suggest its replacement with a Development Management Team to be made up of experts in all aspects of societal development and chaired by an experienced Nigerian-not necessarily an Economist – because societal development is a multi-faceted exercise far beyond the realm of economics. The state can work hand in hand with the private sector but it must lead the path to meaning development of society hence-forth.
Dr. John I. Abhuere, FNIM,-CCYD, writes from Uromi