A burden firmly weighs on the shoulders of our President: a burden of choice. He, as the leader has to respond to declining revenues and increasing expenditure or alternatively, engage in public borrowing just like his predecessor(s) to finance recurrent expenditure, that is the heart of the matter.

The track of economic reform is a beaten track that most developed and developing countries have tread upon. Taking that track is an imperative automatically imposed on any government confronted by the reality of a diminishing capacity to continue discretional allocation of public resources in sub-optimal manner.
This power of allocation and control over the economy bring in its wake the attendant problems of corruption, distortion and unbridled consumption that eventually takes its toll on national budgets.

As governments require some level of consensus to remain in power, they usually seek for ways to finance the consumption of the urban working class and elite; the most articulate wing of the population with the capacity for strikes and violent opposition to government policies. The methods of such financing include subsidies; corruption and creating distortions in the economy that eventually lead to a debt crisis, inflation and rent seeking.

Let’s take a cursory walk down the history lane.

By 1983 in Nigeria, the Shagari government had reached its wits end in trying to sustain the consumption pattern that the pastmilitary regimes unleashed. The presidential system of government and federalism with the attendant duplication of functions raises the cost of running an efficient government. The administration was unmindful of the increased cost of running government that the presidential system and a more federal structure had imposed on the budget. While continuing with the projects started by the military, without attendant increase in revenue, the cost of running a burgeoning bureaucracy and financing the governance structure in 19 states continued to escalate. The government had no choice but to resort to borrowing, borrowing to finance the subsidies granted the urban elite and the greed of rent-seeking power coalition. That was unworkable and prudence dictated that cutting spending should have been the rational course of action.

Due to lack of political will and the quest to sustain the power coalition, Nigeria became a debtor nation with poor balance of payment, hyperinflation, negative growth, worthless currency and inability to fund three months of import. The cause of this untoward situation was clearly and definitely not only corruption but also an unprecedented increase in government spending that the government itself was incapable of confronting.

This meant only one thing, Democracy was tried again in Nigeria; it failed.

Under the military, a semblance of sanity was attained. Imports were restricted, State governments became lean and allocations reduced; currency restrictions were re-imposed, public spending reduced without corresponding increase in revenue or productivity. Corruption thrived but in a smaller circle since the winning coalition was fewer. Distortion continued because allocation of resources were not driven by rational economic indices.

General Babangida took over the reins and tried to liberalise the economy, increase productivity and encourage market reforms in some sectors of the economy. The IMF, which insisted on reforms (privatization and devaluation) as a condition for loans, prompted these reforms. The liberalisation and deregulation of the Aviation and Banking sector brought about new investments, higher wages and increased productivity. Nigerians are still enjoying benefits in those sectors of the economy. The absence of fiscal discipline and a strong commitment to the reforms were downside of the Babangida attempt.

General Abacha halted the reforms and applied a control mechanism that reduced consumption, increased foreign reserves and stabilized the naira after a massive devaluation through closing of government window, which stood at 22Naira at the inception of government. After a year of full control of the economy, the Abacha government gave in to some market reforms through increase in fuel price and devaluation of the currency. Low investment in public infrastructure, burgeoning corruption, a pariah status and a strong civil society opposition led to increased emasculation of the economy and greater distortion.

The advent of Obasanjo in 1999 was amidst flurry of great expectations. The government pursued policies in favour of privatization, war against corruption through due process, certification and greater transparency in award of licenses like GSM bid. These efforts did not yield its anticipated results because of the increasing recurrent expenditure in all tiers of government, distortions arising from subsidies to urban working class and elite, poor state in physical infrastructure and low investment in education sector.

The Yar’adua-Jonathan days were more or less dominated by the same struggles as in Obasanjo’s, albeit much less successful in the their attempts. Political expediency thrived over everything else including economic reform.

Under president Buhari, hard-nosed neoliberal economic policies which included countless rounds of devaluation of the Naira and institutionalisation of multiple taxation regimes plunged the country into an unprecedented economic hardship. The strategy seemed only to be ‘borrow’ and ‘spend’, then do it all over again. We saw the maladies that marred previous administrations; corruption, debt crisis, inflation and rent seeking at their extremes.

President Tinubu, we must not forget, who was ushered in by only 8.7million of about 200million Nigerians, is quite unpopular and has inherited a country that is polarized, worn and drifting. Predictably, he will embark on the quest to increase, sustain and consolidate the power coalition. Hopefully, it shall not be done at the detriment of the economic reform. To his credit, the fuel subsidy removal (if subsidy was real) is a step in the right direction mainly because it’s a break away from the previously unsuccessful way of doing things

The federal government’s declining revenue due to external debts servicing, huge local debts, increased cost of governance, corruption as a result of allocation of capacity in the public sector and low direct foreign investment imposed a burden of reforms on the president, this burden is an imperative of which refusal will distort the economy further and destroy our competitive edge as a destination for direct foreign investment.

The government capacity for employing the rising population has diminished considerably, hence the search for global capital. As global capital roams in search of good returns, Nigeria needs to urgently reposition itself to attract enough capital that will provide productive outlet for our teeming population.

To position Nigeria, Tinubu has to embark on a reform process that will remove subsidies to the bureaucratic elite and public service through monetization of fringe benefits; reorient the public service through the already existing but poorly implemented privatization and market reforms; free government resources through removal of public subsidies via deregulation. These reforms will provide government the fund to invest in infrastructure and people. These investments will unleash the productive capacity of Nigerians through cheaper cost of business and trained workforce. A combination of these two factors will return a competitive edge to Nigeria as a destination for foreign investment and provide well-paying jobs that will ameliorate the unintended effects of the reform.

However, these reforms stand the risk of an abortion if the political class do not curb their greed and increase transparency in the conduct of government business at all tiers. Also, strong fiscal discipline and tight monetary policies are required to curb conspicuous consumption and release the pressure on the Naira. Thus, the ban on the importation of only some selected goods was a step in the right direction. The privatization policy should be geared towards attracting foreign investment and also improving the capacity of local business class on whose shoulders the growth of this economy rests.

I am aware of the mass opposition to what many have deemed to be mindless adherence to the prescriptions of World Bank and International Monetary Fund (IMF), that privatization is the panacea for ineffectiveness and inefficiency in government. This opposition stemming from the social costs of these prescriptions to the generality of Nigerians. I agree. I advocate that those whose task it is to decide our economic options ought to look towards homegrown solutions. But, this is easier said than done.

For Nigeria to be a fitting participant in the (new) international economic order, we must first establish both economic and political order, which must be based on sound parameters. Such order would not be attained through diplomatic negotiations and resolutions at the United Nations only, it must also entail a clean break with dependency syndrome of the past. These plausible ideals would be farfetched if the country fails to clean its political house.

The burden of reform is a historical necessity, which every economy must periodically engage in to remain nimble, competitive and capable of discharging its obligations to its citizens. Whether it is Britain under Thatcher, France under the socialist government of Mitterrand, USA under Reagan or Singapore under Lee Kuan Yew, nations like human beings must continually confront its dogmas and find new paradigm.

To lead Nigeria on the path of sustainable economic growth is the burden of leadership Tinubu must bear.