The level of hopelessness at Nigeria’s economic situation seems higher than at most points in the recent past. Most conversations are peppered with descriptions of tightening household budgets, inflationary pressures, and the inability to catch a break. It seems weird to even say this, but in some ways the general mood feels worse than it was pre-2015. And to put this into perspective, I am talking about a comparison with the onset of the worst economic crisis in a century triggered by a combination of economic mismanagement and Covid-19 as well as an increase in the wave of insecurity in the country.
As with previous instances, there’s a fair degree of consensus on what an immediate path out from here — to avoid a default at least — involves. The good thing is that despite pressure from inside and outside government, the finance minister is very clear about this and is relying on basic fundamentals to steer it through. There’s no recourse to voodoo economics, which remained a distinct possibility under those eyeing his seat.
On the whole, the Nigerian population is accustomed to dealing with painful periods of macroeconomic adjustment. The boom-bust cycles are reducing in length, so now we’re seeing a crisis after just a short period of growth (and that too with high inflation).
A number of economists and business persons have mentioned that this crisis opens up the possibility for a consensus-based charter of the economy between the government, opposition, and the military establishment to undertake key reforms. This idea seems to be a recurring one every time the country experiences some form of macroeconomic imbalance. The logic is that if everyone in power (or with a chance of being in power) agrees to solve some basic issues, there will be no ‘politicking’ and no reversals in policy.
The short argument against it is that the economy is inherently a political matter. It involves making decisions that have distributional consequences — ie who wins, who loses when a particular price is regulated when a subsidy is given out, or when an amnesty scheme is issued. Politics offers losers a chance to raise their voice — not just the so-called mafias but also regular people; taking that outlet away from them summarily would involve coercion and violence. How many people/groups are we willing to suppress for this charter to work? What are they going to get in return for an enforced sacrifice?
A better way of thinking about this is to look at how other countries have pushed through reform during difficult times. In 200 years (or more) of economic development overseen by the state, there’s one particular aspect that seems to crop up in a number of cases, but is rarely discussed in the Nigerian context: the role of ideas in generating mass support for reform.
Any path forward for Nigeria will involve painful adjustments in the short term: somewhat for an elite that’s used to getting its way, but mostly for regular people. Weaning people away from petrol subsidies, low electricity prices, higher taxes etc are all going to cause a pinch that will be experienced by working-class families all the way up to upper-middle-income households. If the government is bold enough to remove some subsidies and protections, the pinch will be felt by business owners and other elites as well.
What are all these people hearing in return? That if you experience this pinch today, you’ll be better off at some undisclosed point in the future? That this is necessary to save this abstract entity called the Nigerian economy? It’s hardly an incentive for people to willingly submit to pain in the short run. The anger is to be expected.
What’s so frequently missing in political discourse around the economy is a sense of a shared future. Put differently, people should feel like they have a stake in some defined future of this country and that might make them more amenable to both understanding what needs to be done, and actually withstanding the pain that comes with it.
This is quite a commonplace idea within the literature on industrial development. Writing in the middle of the 20th century, Alexander Gerschenkron pointed out the role of ‘ideologies of industrialization’ in pushing through transformations in countries like 19th-century France, where Saint-Simonian socialists and the Crédit Mobilier thought of economic development (including mundane tasks such as finding productive businesses to give loans to) as religious duty; or in early 20th-century Europe, where Marxism, the appeal of social democracy, and feminist ideals mobilised large populations into the labour force.
During the mid-20th century, South Korean governments invoked local nationalism and a sense of securing territorial security to discipline business owners and to get workers to work at higher levels of productivity. We’re also seeing something similar these days in how a sense of Bengali ethnic nationalism and idea of national destiny provides ideological fuel for Bangladesh’s economic success.
What equivalent do we have in Nigeria these days? In a column written a few months ago, I mentioned that Nigeria is a country where mainstream politicians have failed to dabble in the realm of ideas. They have failed to ask and provide answers to questions such as: What does it mean to be a Nigerian? What would the future of the country look like? Some of these ideals might look or sound vague and ahistorical in nature, but there is no denying that they increasingly resonate with swathes of the population who have nothing to else to go by.
If a project of sustained development is ever to take root in this country, it would have to be built on some idea that’s greater than ‘the World Bank and IMF has asked for it’ or ‘we need to raise prices to avoid default’. Articulating that idea is the challenge that all major political parties and presidential candidates must have to tell Nigerians have they hope to resolve them as we approach the 2023 general elections.