Every successive government in Nigeria promises economic stability, unfortunately this objective is never or under achieved. It is not as if some of them never meant the promise they made, it is the fiscal and monetary frameworks deployed that often prove abortive. For instance, the Structural Adjustment Programme (SAP) which was meant to drive economic growth and stability ended up doing the opposite. SAP gave legal backing to the state-owned enterprises to be privatized or commercialized. The objective was to increase efficiency and positive return on investment in the enterprises, but the programme ended up in making life more miserable for both individuals and firms.
Nigeria as a nation has a history of policy somersaulting which has resulted into market failure. When the forces of demand and supply refuse to allocate resources efficiently, the market is bound to fail. And when the market fails, the economy will experience instability.
Economic stability is a situation where the economy is at equilibrium. When the economy is at equilibrium, everyone is glad to buy and sell given the prevailing market price. It is a peaceful state of the economy where there is neither waste nor scarcity of goods or services. This kind of stability has eluded the Nigerian economy for a long period of time with little or no redemption in sight.
In pursuance of economic stability through balanced budgeting and low inflationary gap, many public assets have been privatized and some of these assets were sold below the market value. It was told that assets worth billions of dollars were sold for merely above hundreds of dollars under the regime of former President Olusegun Obasanjo.
In the same vein, former President Goodluck Jonathan handed over Power Holding Company of Nigeria (PHCN) to the private sector in 2013, the move was to ensure they would provide Nigerians with uninterrupted power supply. We all know what is currently going on now, as it was reported that Nigerians are paying for darkness.
In a recent report by the Bureau of Public Enterprises (BPE), ‘FG and 36 state governors have finally agreed to sell five power plants under the National Integrated Power Projects and use the proceeds to fund the 2023 budget’. The FG is driving privatization by transferring ownership and control to the organized private sector or individuals. In doing so, we are leaving the economy to the hands of individuals to drive GDP growth, distribution of income through employment, as well as efficient utilization of resources.
Front leading presidential candidates for the 2023 general election told Nigerians they would grow the economy through private sector participation. One candidate even said he was going to sell off all the refineries owned by government, and use the proceeds as a stimulus fund to the private sector.
One thing that can be deduced from all of these conscious efforts is that the government wants to achieve optimality within the economy but the channel through which they’re driving it does not permeate it. The private sector would only provide and deliver pure private goods to those who are willing to pay for it. How these goods get delivered may not matter to them, as long as they’re making profit.
The only impetus that is propelling the private sector is profit. They are in the business to make money through provision of private goods. If making profit will continue to shift the economy away from the equilibrium, the capitalists would continue to do so.
A presidential candidate was asked about privatization of the power sector, his response was, “privatization did not work because we privatized profit and socialized losses”. If we continue to entrust our national assets into the hands of the few, we would continue to experience market failure which is economic instability.
The role of the government is to implement simple policy that would ensure seamless running of businesses without needing to engage in skulduggery activities. Many businesses are serving the interest of the board without putting the interest of the masses in mind due to the harsh business environment. Infrastructures that are supposed to be provided by the government are already being provided by individuals to ensure survival of their empires. The role of the government is to provide public goods while that of the private sector is to provide pure private goods. The moment the private sector begins to provide public goods that ought to have been provided by the government, that marks the beginning of market failure.
*Crowther, an economist, writes from Lagos
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