The Nigerian economy is currently structured on an unfair status quo model where elites protect their big privileges while the poor get the crumbs. This decades-old elitist model is now emitting signs of collapse, hit by repeated economic crises after short booms.
The case of Sri Lanka shows that global turmoil that cuts our low remittances and export base may trigger a currency and, thus, an economic collapse. That may be very chaotic for a 200 million-plus oil and gas producing nation facing extremism, internal threats, ethnic strife, and religious intolerance.
Nigeria needs a new economic model that ends our perennial issues of low growth, twin deficits, and inequity. The main state models are East Asian (export-led), Scandinavian (welfare), American (large domestic economy), Gulf states (natural resources), Caribbean (tax havens), North Korean (reclusive), and some criminal states. The last four are not possible or desirable. But by linking parts of the first three, we may devise an innovative ‘poor-led progress’ model.
Many of our development economists now support pro-poor or inclusive growth as poverty harms not only the poor but also national progress via conflict and small economic size. But going beyond such models, the proposed “poor-led progress” model sees investing in the poor not just as an ethical or anti-conflict concern but actually as the main driver of national progress and prosperity. Undeniably, there are some liberal-minded Nigerian economists who may oppose policies that penalize the rich and cause capital flight. But with the “poor-led progress” model, Nigeria may be able to reduce poverty and inequality, thereby igniting win-win growth that also benefits the rich.
Our internal market is small, despite a large population, given the low incomes of the majority. Increasing citizens’ incomes expand the market size and profits for producers and attracts investments. This in turn expands jobs and incomes for the poor and ignites a virtuous cycle of national progress and prosperity. The poor spend more on local goods than the rich, benefiting local producers and the external account. So, investing in the poor, largely seen as a moral aim, can actually be the main national growth engine under trickle-up economics that puts those at the bottom at the top.
The proposed “poor-led progress” economic model is guided by a seven-step approach (COMPASS) that goes beyond giving out only cash handouts, such as trader moni and other unsustainable cash transfer schemes.
One, governments at all levels must, with a sense of urgency, expand the poor’s ownership of assets. This includes land reforms, key to East Asian progress. Two, governments, in collaboration or partnership with financial institutions, must also design innovative means with which to expand easy credit for the poor. Three, the government, in partnership with private sector players, must also expand the access of the poor to appropriate skills and technology. Four, the government—at all levels—must ensure the rule of law to protect citizens from economic and physical abuse, e.g., evictions, false cases, and labor abuse. Five: Locally devolved quality education, health, and other social services for the poor must be expanded. Sixth, governments must support community-based organizations that mobilize, connect, and advocate for the poor. Seven, increasing the bargaining power of the poor in markets is key. Minorities, women, and people in far-flung (rural or semi-urban) areas must be prioritized. All this may require the Nigerian state to invest a trillion-plus naira yearly in the poor, which it can do by increasing agriculture, property, retail, transport, and wealth taxes; and cutting state enterprise losses, elite subsidies, and defense outlays, and tax evasion.
The proposed “poor-led progress” economic model, if adopted, will give our economic growth, fiscal balance, and equity. But the external deficit will still be a challenge. Thus, expanding exports through special economic zones but also, where possible, by supporting small and medium export units of non-elites will be key. Leftists often advocate the delinking of poor states from the global economy to avoid its vagaries. That has failed, as in North Korea. But strategic, selective delinking in three key areas that expose them most to such vagaries and external deficits may help food, fuel, and finance.
It means more food self-reliance by increasing agricultural output via small-/medium-sized farms; more fuel self-reliance via wind, solar, micro-hydel units, fuel-saving, etc.; and light curbs on hot money inflow. All this is especially doable for us, but only if the Nigerian state builds a mostly missing unified progress strategy that ties fiscal (tax and outlays), industrial, labour, social, gender, trade, environment, debt, and investment policies cohesively to achieve these aims and escape the IMF and World Bank’s clutches forever.
The proposed “poor-led progress” model needs a new social compact and bargain among the strong and weak that alone can bring peace and progress in today’s Nigeria. Despite the value the model may bring forth, some rich and very powerful elites may oppose it, as it is not just reform, but societal restructuring. Political action by activists, at the risk of getting intimidated, will be key to mobilizing Nigerian citizens and confronting such interests, especially those who have made us an insecure state and are all-in-one security, landed, real estate, and corporate super elites.