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Saturday, May 18, 2024

Soulless Public Policy 101

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Bala Mohammed Liman. Phd

Knowing what economic foundation, ideas and policy(ies) to adopt in a country is like trying to find the exit in a maze due to the nature of economic thinking and its numerous contradictions. The global north is largely capitalist in nature with most of the economies based on free market ideas that rely on strong institutions. More recently, countries such as China, Vietnam and to a lesser degree Singapore rely on authoritarian governments that allow some level of market independence while ensuring very tough controls.

Unfortunately, many countries like Nigeria that were under colonial rule were unable or unwilling to develop their own economic ideas and simply adopted those of the colonizing state. Nigeria has flip flopped between purely socialist policies that were founded on a strong state that provides basic services. As the world evolved and moved towards a greater role for the market, many countries such as Nigeria were forced to reduce the role of the state and focus on the role of the private sector and the market which was seen as the driver of development and the provider of services because of its so called ‘self-correcting mechanism’.

The first attempts after independence focused on developing strong public institutions with policies geared towards providing education and health services. Awolowo in the Western region had a policy of free education while the North’s policies were similar as it was playing catch up with the rest of the country. Huge resources were pumped into critical sectors and we could actually see positive impacts in development indices.

Fast forward 60 years after independence and the country has gone from the long-term development plans based on a strong state public sector, to more liberal based policies that are relying more on the private sector. I am of the opinion that government needs to understand that its purpose is to impact positively on the lives of citizens rather than a very narrow band of groups. Public policy making which is seen as a good policy, is a complex interactive process influenced by the diverse nature of socio-political forces. These include social, cultural and environmental factors that form the policy context and results in variations in policies and affects the output and impact. Having noted that government has a pivotal responsibility in improving the lives of its citizens, this positive inference must form the foundation when developing public policy. This is in direct contrast to the private sector that puts profit front and centre.

If we examine the ‘removal’ of fuel subsidy, we can ask if this has impacted positively on improving the lives of the citizens? While government has argued that the subsidy was a drain on government resources that could have been better channeled to the provision of social services and was further fueling the rentier space, the question is what has its impact been? Since the removal prices of essential goods and services has been increasing upwards, making basic goods out of the reach of average Nigerians. The increased revenue to all tiers of government has not been translated to better living standards, rather it can be argued that we see more waste especially at the sub-nationals. More Nigerians are now poorer than before the removal.

Before government decided to remove the subsidy, it really should have been asking why it was ever put in place. Most likely it was seen as a welfare progamme that would keep the cost of transportation for people and goods low and affordable since its impact cuts across all parts of the economy. Its removal has triggered a rise in the cost of transportation leading to an increase in cost of goods especially foodstuff thus impacting negatively on the average Nigerian. The argument that a few groups were abusing the system should have meant that government would audit the system first so as to address the abuses rather than throw Nigerians under the bus for the wrongs of a few powerful Nigerians who have already ‘over’ benefitted from the system.

The second issue has been the recent removal of the other ‘subsidy’ in the electricity sector. Government increased electricity charges by over 200% for one band of users. These Band A users are supposedly those that enjoy over 20 hours of electricity and constitute 15% of all users (government claims). These users are being punished for being provided electricity and at the same time being used to subsidize the sector as a whole as the other users are still being subsidized.

This is one of the strangest policies I have ever seen introduced anywhere in the world and I am still trying to wrap my head around the thinking that led to this. Why price discrimination? This usually only favours the supplier of the good or service and I do agree that the large companies will be willing to pay the new rates as they can push these cost to consumers (more price increases of goods and services which is another issue) against powering their businesses using generators.

However, most of the average users rely on their wages to pay for energy and cannot afford such a huge increase with no commensurate increase in their incomes. It would have made more sense to spread the subsidy between the different bands at different rates with the bands between E and A getting increases at 10%, 15%, 20%, 25% and 30% respectively. With this current policy, what we will see now is the distribution companies will focus on the provision of power to Band A users at the expense of other users and this results in increasing inequality in the provision of the service. This is an un anticipated effect of a poorly thought out policy.

Nigerian public policy space is still poorly developed, with the country importing policies from the global north without any consideration of the differences between those economies and the Nigerian economy. In a country of over 100 million people living below the poverty line, government should be focusing on developing long term policies that alleviate the suffering of the average Nigerian. And I am not talking about the distribution of palliatives! Public policy needs to have a soul because a soulless set of policies that focus on developing a robust economy irrespective of its effect on the citizens is a sure recipe for disaster.

Bala Liman can be reached on balamliman@gmail.com

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