“I go beat you I go nearly kill you
I go beat you, e go be like you get accident!
You see, im no fit do nothing.
Na shakara.” — Fela Anikulapo-Kuti
Afrobeat king, Fela’s track “Shakara” was danceable. But its lyrics went further. Describing how the use of threats in conflict situations could help secure an advantage for the party threatening to deploy violence. Or was it the other way round? For, on second thoughts, it would seem more of a promise on the part of the party with the second mover advantage to disproportionately hurt the other part if his or her first move did not completely disable the other.
I have never been comfortable with game theory. Its permutations are almost innumerable. But pugilists and other belligerents have benefitted from a comprehensive understanding of the role of promises and threats in securing beneficial outcomes in rivalrous situations.
It would seem that governments may also benefit from an appreciation of game theory. For over the last 12 months the Buhari administration has conducted decision-making via “shakara”. It has dealt with conflict situations admirably — the Islamist insurgency is far less potent today than it was since its founding. However, especially in those situations involving beneficiaries of unexplained funds from the operations of the Jonathan administration, this government’s “shakara” has found voice via threats to suspects of invites from the Economic and Financial Crimes Commission (EFCC).
Depending on whom you talk to, the gambit appears to be working. I have heard estimates of monies recovered by the EFCC from beneficiaries of the Jonathan administration’s glad-handing put as high as US$3bn.
At the cooperative level, though, where government is required to husband national resources to our collective advantage, the Buhari government’s “shakara” has shown up in the nature of promises: to keep the exchange rate stable even when our chief foreign exchange earner, crude oil, is selling at bargain basement prices; and to keep the nation supplied with petrol, without paying the subsidies that the Jonathan administration felt a need to pay to keep the pumps primed.
Here, though, unlike with its policy of “threats”, the promises fail. You see, to paraphrase Fela, over the last one year, this government “no fit do nothing” about any of these situations. Indeed, in both the markets for foreign exchange and for petrol, its policies have supported the emergence of new inefficiencies. Finally, last week, even the government admitted its impotence, threw in the towel on its previous policy preference, and freed the market for domestic petrol sales.
One could cavil at the oddity of a deregulated market sitting alongside an official price preference, which is the strange new policy formulation that it opted for. One could also squabble at the huge resources wasted over the last 12 months defending a policy that was dead on arrival; while pointing out how beneficial it would have been to the economy if government had reached this persuasion much earlier in its first term.
But much of that would be persnicketiness. We are here now. And we must move forward. Yet, the details of government’s preferred method of deregulating do raise a few awkward concerns.
What (or is it where), for instance, is the “secondary market”?
It is clearly not the official market where the central bank continues to pretend that the naira exchanges for US$1/N197. It is also not the interbank market. For the central bank shut that down a few months back. There is no sense of what the exchange rate of the naira is in this market any more. Nor, despite the insistence of a number of commentators on the matter, is the “secondary market” the same as the “parallel market”, where the naira reportedly closed Friday last week at US$1/N360.
According to the junior minister in the petroleum ministry, the “secondary market” will sell dollars to fuel importers at US$1/N285. Now, this makes sense, when you consider that most analysts have argued that fuel importers will break-even at the indicative price for petrol adopted by the Buhari government as part of its “deregulation” of the market (N135 – N145/litre) only if they have access to dollars for their import needs at US$1/N300 or lower. At the parallel market’s current US$1/N360, we would be back to petrol scarcity and day-long queues at the filling stations. Or we would have to pay much more than government’s indicative price band.
This is what you get when you deregulate and try to put forward a “recommended retail price” at the same time.
that is not all the confusion there is. For at bottom, we see the petroleum ministry beginning to dictate domestic monetary policy: designating a market — the “secondary market”; and fixing the price at which the naira will exchange in that market — US$1/N285.
Some will say that this is the inevitable upshot of the central bank having abandoned its role in the economy.
This may be so. But it is also another instance of how the current administration turns cooperative situations into conflict ones, through inappropriate use of promises.