Evidently, there is this huge difference between the affluent here, and in economies that work. Ours do not simply fail to create any value, but by their existence are a large financial drain on the economy. By the same token, our poor and indigent differ from the poor and indigent in other places.
When, recently, the Emir of Kano weighed in on the parlous state of the domestic economy, the obstreperousness of the response to his contribution threatened to drown out the pith of his message. Still, step back a wee bit from the new tribal structures that have emerged around the competence (or lack thereof) of the incumbent federal government, and many of the sub-themes in the emir’s message invite a second look.
That our elite is largely rentier in its nature and composition is a well-known fact. Very few really affluent Nigerians (in the country) are invested in the economy in any sense. Most simply leverage their crippling hold on the institutions of the state to create huge profits for themselves without returning any value to society. The coterie that pretends to enterprise, on the other hand, is the willing beneficiary of government cosseting at levels that burden all whom of necessity must access their services, or consume their products.
Within this context, the emir only underlined the new means of access to unearned income in the country today: secure foreign exchange at the official rate (US$1/N199 before the central bank grudgingly freed prices in the interbank market), and proceed to sell the same allocation at the parallel market (where our benighted national currency then traded at circa US$1/N350). Depending on the volume of dollars one had access to, then, you could literally, make a billion naira without leaving the comfort of your patio.
For as long as the arbitrage window has existed between the official and parallel markets, this has been the case. Indeed, it was so, even when the emir was governor of the central bank. With this little difference: that a more buoyant market for crude oil meant that the apex bank was then able, with dollars still flowing into the gross external reserves (unlike now) to meet most domestic demand for the dollar; and so the window between the official and parallel market was thinner. Even then, for the well connected, there was still money to be made.
…therefore, our main policy goal ought to be the dismantling of the structures that conduce to profitable rent-seeking conduct. This problem is easier described than solved though.
However, our elite have always made money from access to the instrument of the state. Way back in 1965, the federal minister of aviation, a certain Dr. Kingsley Ozumba Mbadiwe, (yes, he of the “timber and calibre” fame, but then) a “pragmatic socialist” owned up to having earned “chicken-feed rental” from first having had his company lease land off the federal government, and subsequently sub-leasing the same property to another government agency for like twice the rent he had initially paid. By the early 1980s, rent was most readily obtained from access to import licensing schemes. By the turn of the decade, the main source of rent after the many oil schemes was the waiver on imports. Simply, government bans the importation of some commodity, and grants to a favourite waivers on bringing the same goods in.
Evidently, there is this huge difference between the affluent here, and in economies that work. Ours do not simply fail to create any value, but by their existence are a large financial drain on the economy. By the same token, our poor and indigent differ from the poor and indigent in other places. In these other jurisdictions, much of the new narrative is around how the returns to capital are increasingly larger than that to labour, and how dwindling productivity means that few workers are able to ask for more than this dwindling share. Consequently, the main policy challenge in such places is how to deal with the growth of relative poverty.
Here, the poor are the direct consequence of the affluence of a few. So whereas better education of workers generally (but of the unskilled more especially) is put forward as a solution to the crisis of productivity facing developed economies in Europe and North America, here social infrastructure has failed because the elite must maintain their rent.
Put this way, therefore, our main policy goal ought to be the dismantling of the structures that conduce to profitable rent-seeking conduct. This problem is easier described than solved though. Over five decades ago, Chief Kolawole Balogun, counsel to the NCNC, Dr. K. O. Mbadiwe’s party, justified the latter’s malfeasance by arguing that “All top Nigerian ministers, parliamentarians, top civil servants, journalists,…indulge in these transactions.” It was, according to him, “the Nigerian way of life as it exists today, where everybody regards it as fair to make money.”
Alas, not much has changed since then!
Ifeanyi Uddin, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.