Direct palliatives to infrastructures for production

The Federal Government recently indicated the intention to provide another series of palliatives for the citizens to meet their consumption needs. Such palliatives have become a common feature of governance since the COVID-19 period in 2020. The present government will carry out consumer palliatives for the third or fourth time in 18 months. What has changed? Has it worked and improved the economy? Are there assessments of the exercises and published reports? If it exists, nothing has changed, and an official assessment cannot be positive unless it is a doctored report.

Writing on “Economics of Tokenism” in November 2021, I stated: “The Federal Government has over the years engaged in different forms of what is referred to as Social Protection Programmes or for ease of comprehension, empowerment programmes. These include Cash transfers like Tradermoni which is regarded as a kind of loan initiative or one of Borgen Project; the N-Power programme established in June 2016 to address the issue of youth unemployment; the school feeding programme, et, cetera. These are the economics of tokenism that are too simplistic to address more complex economic problems Nigerians face. Since introducing these programmes in Nigeria, the conditions of citizens, particularly the middle class and the downtrodden or the group Karl Marx referred to as the ‘proletariat’ have worsened. If proper monitoring of the effects of policies is undertaken, we should have withdrawn from this path of failure a long time and charted a new course of actions unless the government objective is economic exclusiveness…”

I explained further that what was required was and still is inclusive development. I wrote: “Development inclusiveness or inclusive development creates economic opportunities for all citizens and ensures equal access to the opportunities created for all segments of the society, particularly for the poor as it focuses on increasing per capita income in the economy. This means development that includes marginalised people in social, political, and economic processes for improved human well-being, and, social and environmental sustainability. Elements of inclusive development entail poverty reduction through empowering people to generate income; creating new jobs for a reduction in unemployment; promoting sectoral development such as economic diversification; protecting the environment including a green economy; and equal distribution of income through taxation and use of such taxes for overall development. How many of these elements do we find in the current economic programmes the government is running?”

In addition, the required elements for inclusive growth can be achieved through: “skills development; early childhood development and universal access to good quality education; support policies for small and medium scale enterprises for employment generation; capacity to innovate and absorb new technologies through the promotion of science, technology, engineering, and mathematics; ability to produce higher quality and greater range of products through industrialisation and reformed, mechanised but labour intensive agriculture to absorb millions of youths; and investment in social and physical infrastructure like education, health, electricity, and transportation. It is not that the government and even the private sector are not engaged in promoting these elements but they are not doing so in ordered manner …”
Instead of throwing money at us for consumption in the name of palliatives, why not throw the money into infrastructure that will facilitate production and business expansion which will result in employment generation and earning decent incomes from such employment and the government itself generating revenues from personal and corporate income taxes from new employees and the employers. The natural grid has collapsed many times in as many months or weeks. Use the funds to maintain and upgrade the electricity facilities for efficiency and effectiveness instead of milking the citizens and private sectors through inefficient and fraudulent Bands A and B supplies.

It is as if the governments see us as customers that must be exploited and not citizens that should be cared for. So, they give us money in the form of palliatives and recover the same through buying their expensive products. They give students loans instead of bursaries and take the money back through increases in school fees and levies by the universities or the tertiary institutions generally who now get less subvention from the government. The bursary by State governments, which we enjoyed as students, made us committed to serving Nigeria after our studies.

The consumption palliative funds can be used to complete roads, seaports, and extend rails for easy movement of raw materials and finished goods at affordable prices that will translate to large outputs with lowered unit cost and selling prices. The palliative funds can also be invested in production-enhancing infrastructure to assist the survival of small and medium-scale businesses that are suffering from the current unfriendly business policies. There are many industrial estates created by previous governments with decaying infrastructure due to negligence. Mechanic villages have roads that can disengage vehicle tires and other parts immediately after repairs; many agricultural villages or settlements have dilapidated accommodations, no motorable roads to move produce and products, and no electricity to process some of the farm outputs.
Recently, the Minister for Works promised to carry out palliatives on the Sagamu-Ore expressway. Particularly the Sagamu interchange to Ijebu-Ode part. That was a road, from Benin to Lagos-Ibadan expressway, that was awarded during Olusegun Obasanjo’s presidency. It was never completed despite the action of the ‘weeping lady’ Allison Madueke when she was Minister for Transportation in 2007. The same thing with Lagos – Ibadan expressway is still ongoing from the same period. They are the two main roads linking the Southwest to the East and North respectively.

Which major road was completed in the Southwest by the federal government since 1999? Which major roads in the Southeast were completed and which roads in other regions since 1999? The same scenario for other infrastructures in education, health, seaports, airports, and railways which have gulped trillions of naira since the beginning of the Fourth Republic. Each year, there were oversight functions by the legislature and the civil societies.

The accounts of two consumer palliative funds from the oil subsidy removal that was shared with the states have not been released. The impression that the fund was part of what exerts pressure on the foreign exchange through the dollarisation of the fund by most of the governors can only be erased through the release of the audit report of the exercise. There is, however, no gainsaying that the exercise was a massive failure or massive fraud. Going through the same path now is like taking the citizens for a ride.

Since the removal of the subsidies, the exchange rate has depreciated massively; running inflation is moving towards hyperinflation with the cost of living going through the roof while more Nigerians have joined the mass of those already in the poverty trap under Muhammadu Buhari. Political leaders and their cohorts are moving carelessly in a fool’s paradise and with arrogance. Productivity is falling out of policy uncertainty and instability as well as workers’ despondency. Innovation and technological advancement which our diaspora colleagues engage in with ease and encouragement is being killed with short-term survival instinct in a hostile environment. As we discuss almost 20 million children out of school in Nigeria we forget to mention over 20 million unemployed Nigerian graduates. It is also a time bomb that must be nip in the bud through deliberate policy of actions to expand the industrial sector.

Domestic investments are being discouraged by government arm-twisting policy of taxation, high cost of production, and price manipulation while foreign investors have taken note of the poor treatment of local investors; the massive depreciation of the naira which will affect their dollar-denominated return on investment or profits; the high costs of production arising from policy and poor infrastructure like energy which will make their products uncompetitive; and the likely ineffective demand for their products due to a large number of poor people in Nigeria, as well as absence of long term industrial policies that will spell out the incentives for foreign investors.

Enough of the economics of tokenism. The government should provide incentives for production expansion rather than palliatives for consumption. When businesses expand, workers are paid efficiency wages, more outputs will be generated with lower unit costs and selling prices. The resulting effective demand will encourage more production and employment. Happily engaged citizens will also give the government rest of mind to engage in politicking and take them away from regular protests.