Nigeria Economic Re-Invention: An Urgent Need for Unconventional Measures
Introduction:
The recent application of shock therapies in the Nigeria economy has resulted in severe hardships for its citizens revealing the limitations of prevailing economic policies. It has become quite evident that the conventional economic policies, often derived from popular economics textbook and journal-based strategies, are insufficient to address the nation’s complex economic challenges.
To catalyze meaningful progress, Nigeria must embrace a radical departure from these conventional economic approaches and seek new, innovative policies that align with the country’s unique characteristics and needs. To save the Nigeria economy, a shift towards new, unprecedented economic policies is essential, necessitating radical and innovative thinking. The famous Harvard development economist Dani Rodrik once quipped : whether “anyone can name the (Western) economists or the piece of research that played an instrumental role in China’s reforms”. He answered by saying that “economic research, at least as conventionally understood” did not play “a significant role” (Rodrik, 2010, 34). This shows that Nigeria’s economic policy and economic experts needs to draw inspiration from China’s unconventional economic transformation.
A Call for Rigorous Economic Debate in Nigeria:
Nigeria finds itself at a crossroads, facing the shortcomings of conventional economic policies that have not yielded the desired outcomes. To navigate this challenging terrain, Nigeria must foster a culture of rigorous economic debate. This debate should focus on identifying alternative, bold, and groundbreaking policies that are tailored to the nation’s unique characteristics. The result of such genuine and intellectual debate must be a well theorized, contested, and defended economic policy against shock therapy.
For instance, according to M. Webber in her work: How China Escaped Shock therapy she posited that the economic policies that China has adopted in its transformation from state socialism are well known and researched. “However, vastly overlooked is the fact that China’s gradual and state-guided marketization was anything but a foregone conclusion or a “natural” choice predetermined by Chinese exceptionalism.
In the first decade of “reform and opening up” under Deng Xiaoping (1978–1988), China’s mode of marketization was carved out in a fierce debate.” Economists arguing in favor of a shock therapy–style liberalization battled over the question of China’s future with those who promoted gradual marketization beginning at the margins of the economic system. “Twice, China had everything in place for a “big bang” in price reform. Twice, it ultimately abstained from implementing it. China chose a unique path that defied conventional wisdom at the time and went on to achieve remarkable growth and development.”
Nigeria could draw inspiration from China’s willingness to explore uncharted economic waters and develop strategies that suit its own context. The proverbial rain of economic distortion has been beating us for a while and how recourse has always been one economic theory or the other, without sitting down to look back on our history, antecedents and peculiarities to fashion and develop suitable economic policies for our Country. History matters, as Daron Acemoglu and James A Robinson argued in Why Nations Fail (2012), moreso in building suitable economic policies.
Abandoning the familiar:
For Nigeria to break free from her current economic retrogression, she must be bold enough to refuse to follow popular reform and policy recommendations on the grounds that these “universally applicable” reform measures do not fit into her reality. She should be ready to deviate from acclaimed practices of the advanced market economies in the long run, and redefine her own market Economy from it’s past and present realities. All countries have different initial historical conditions and face a distinct and different contemporary constraints, however similar; thus making it certain that there can never be a one size fit all Economic or policy theory solution to all developing countries woes. Nigeria must devise new and never-before-seen policies that take into account its unique circumstances and aspirations. A one-size-fits-all approach cannot unlock the country’s potential.
According to Yingyan in the book how reform worked in China there is no doubt that China’s economic reform has worked, but this economic reform is still puzzling to the western economists. This is because China was bold enough to fashion it’s economic policy outside of the acclaimed Washington consensus of transitioning from planned economy to market economy. Stabilization, liberalization and privatization – it was adjourged an economic suicide for a transitioning country not to follow this route and such reform will fail. Although China has adopted many of the policies advocated by popular economists e.g trade liberalization. Yet, for the most part, China’s reform succeeded without complete liberalization and without privatization, which normally ought not be so judging from popular economic positions. For instance instead of shocking China’s planned economy to death, it created a dual price system approach, which is the opposite of shock therapy.
Instead of liberalizing all prices in one fell swoop, it continued with it’s planned economy and set the prices of essential goods while the prices of surplus output and nonessential goods were successively liberalized. As a result, prices were gradually determined by the market. The essence here is to show the unconventional approach engaged by China outside of popular economic theories, and to show that Nigeria’s economic miracle lies in the birth of a rigorous policy guided by our particular circumstances, history and antecedent.
A recent buzzword, in the last few months, on every Nigeria lip is “market forces” because the Government is currently subjecting all facets of governance to market forces; but we must learn to fashion a means to use the market as a tool in the pursuit of our larger development goals. Yes, economic theories posits the need for a free market, the need for the free reign of the invisible hand of market, yet we should understand that the ‘invisible hand of market’ needs the ‘visible hand of government’. Even the United States of America the self declared pioneer of free enterprise, retreated to a pragmatic approach in its use of the visible hand to stem inflation and others; at a point it even deployed price control as a form of central planning.
Manifesto and early deviations:
The Crux of President Tinubu’s manifesto is based on a planned economy, advocating for active State involvement. His manifesto even went as far as proposing the return of the price control board of the late 1960s and 1970s; and an active government involved in economic transactions. The recent policies of the Government speaks otherwise, has made little attempt at a command economy especially now that the country’s vital indices are nose diving and economic hardship is on the rise. A complete and sudden transition to a market-driven economy is not be ideal for Nigeria’s weak production and industrial sectors. A post mortem of our economic failure shows the reluctance to commit to a rigorous and radical transformation of economic models. Previous economic and policy makers were less programmatic in their adopted reform process, which has brought us to this point.
In conclusion, Given the intricacies of global finance and economics, Nigeria must embrace unconventional economic measures to address its multifaceted challenges. Our economic challenges are multifaceted, requiring innovative approaches that address its unique circumstances. Conventional policies, while theoretically sound, may prove inadequate in grappling with the interwoven issues of inflation, unemployment, external debt, and domestic growth. The way forward is a strategically planned approach to economic development that focuses on redefining it’s own market economy from it’s past and present realities and lived experiences of it’s societies and deliberately removed all constraints that held back the people from production.
Opatola Victor is a lawyer and policy strategist.
