Resolving Nigeria’s Economic Crisis

| Leave a comment

Nigeria is facing serious economic crisis. The nation’s currency, the Naira, has lost its value by almost 300 per cent in relations to the United States’ dollar or the United Kingdom’s Pound Sterling. Many companies in various sectors have closed down and laid off their employees. Cost of food items such as rice has increased by over 100 per cent.  Inflation and unemployment have increased drastically.

Foreign direct investment (FDI) is declining seriously. There is serious hunger among the poor and middle-class Nigerians. The Nigerian Bureau of Statistics (NBS) then confirmed the fears of many that the Nigerian economy has slipped into full-scale recession with Quarter 2 figures showing -2.06 per cent.

Many people have been lamenting this situation. Some have called for the sacking of the economic team. Many believe that the solution lies in diversifying into agriculture, away from oil and gas, which have over the years been the mainstay of the nation’s economy. Indeed, there have been so many suggestions, so much talk and many debates that have left us with a cacophony of voices. All measures put in place to rescue the economy have failed. The managers of the economy, confused, find themselves in the panic mode and resort to fire-fighting technique of trial and error.

Having taken some time to study the scenario, I have come to the conclusion that there is a missing link. All the solutions being proffered and all the actions taken so far have failed to appreciate the fundamental fact that the economy is intertwined with politics; there is a critical nexus between politics and economics. My thesis is that we have to align the two properly for us to exit the crisis mode and move into economic prosperity; otherwise the Nigerian economy would continue on a downward slide.

In this article, I wish to remove the academic jargons that scholars deploy in interrogating theories and practice of economics and politics. In simple terms, politics deals with the processes of acquiring and retaining power to control the levers and resources of a given society. It is through the political processes that a particular government comes to power. In many multi-ethnic societies, the pattern of interactions among the ethnic groups defines the character of the prevailing politics: inclusive politics, exclusive politics, bitter politics, do-or-die politics, winner-takes-all politics, consensus politics, etc.

On the other hand, economics deals with managing scarce resources within the mechanism of the demand-supply theory. Economics is concerned with using available resources to generate various productive activities that produce goods and services that satisfy human needs and wants, and creating wealth for individuals, organisations and nations. Economics strives on investments and production, which explains why some nations are rich while others are poor. Economics deals with independent variables that are constant and make economics almost an exact science. Economics strives on research, data and statistics. That also explains why economics is supposed to be unbiased and apolitical.

Politics, they say, is a dirty game, war by other means. Politics is like opium, it intoxicates. The exercise of power which flows from politics can make or destroy a society. Economics on the other hand is gentle yet powerful also. Politics is more of an art while economics is science. Politics and economics are therefore like strange bed fellows that can hardly meet.

However, development scholars are of the view that both politics and economics must be aligned properly for society to move forward.  There is a critical linkage between them. Adam Smith’s classic, The Wealth of Nations and the thoughts of Karl Mark explain this linkage. Unfortunately, in many societies, there is a kind of superiority contest between political power and economic power; and one tries to destroy the other.  And some scholars have asked the question: between politics and economics, which one is superior? Which controls the other?

My postulation here is the need for integration of politics and economics for common good. We must align the two forces in managing and exiting the economic crisis that Nigeria faces at the moment. In today’s societies, politics shapes economic systems and policies. On the other hand if nations want to grow, they must allow economic imperatives or reality to dictate the direction and pattern of its politics and governance. This is more so in a multi-ethnic and multi-religious society where so many interests have to be balanced for the sake of peace and unity.

The truth today is that the economic crisis in Nigeria is being managed without ensuring that the political imperatives are right. In Nigeria, most economic policies and decisions are politically motivated. The allocation of economic resources in Nigeria is political. Budget allocations and implementation are more political than economic. Where government cites key industries in Nigeria are political. Key appointments of government even in the economic sector are purely made on political consideration. Economics has therefore been largely neglected at the expense of politics.

This scenario throws up many contradictions that violate economic principles and laws. When economic laws are violated, the result is economic crisis as we are witnessing. The study of political economy is primarily aimed at managing the conflict between politics and economics to ensure smooth running and prosperity of nations.

The question usually arises: who should run the economy — economists or politicians? This question is quite germane in our case. For instance, managing the economy involves fiscal policy which is controlled by the Minister, a politician while the monetary policy is controlled by economists at the Central Bank. Both fiscal and monetary policies must align properly. In our instant case, both are at variance.

In conclusion, my point is that we should find a way to play good politics, unite all the constituent parts, extinguish fear in the polity, let genuine peace reign, engender a feeling of inclusiveness and togetherness, address the concerns of many, let merit and expertise guide government appointments. The Nigerian sick economy will respond positively, and our economic crisis and recession will disappear.  I humbly submit.

Dr Nkwocha is a communications specialist.


comments powered by Disqus

Daily Columns