A clear trend is emerging in the thinking around the best way to manage our economy. It is unashamedly mercantilist. In response to the question, “How do we accelerate domestic economic growth?”, the Jonathan administration conflates two ordinarily separate lines of thought on the issues facing the economy, confusing an autarkic, self-sufficient policy as substitute for one that drives aggressive growth rates. Whereas the one involves picking industrial winners and erecting barriers to guard them against predatory foreign imports, the other is concerned with freeing commercial activities within our borders, and between this economy and the rest of the world.
Mercantilism failed in the 19th and 20th centuries, because it is erected on lets (high tariff and non-tariff barriers) that impose higher costs on economic actors, and in consequence distorts the resource allocation mechanism in ways that the market would not ordinarily support. In this (the 21st) century, where ideas are at a premium, information and communication technology is the new infrastructure of choice, and on account of all of which, the rest of the world is a mouse click away from my backyard, the mercantilist mindset’s chances of further failure is all but assured.
Thus persuaded, I have agonised over successive economic initiatives of the central government. What could the driving arguments be? Last week, came some clarity. Obviously disturbed by Nigeria’s relatively low non-oil export earnings, and having assured itself that the tanning of hides and skins, and subsequent export of leather products could contribute to boosting export earnings, the central government is mulling a ban on the consumption of cowhide (“ponmo”) – a culinary treat in some parts of the country.
I should enter two caveats at this point. I relish “ponmo” as part of my meal. If nothing else, it is a useful source of dietary fibre. Thus, I would accept a ban on this ingredient of my diet on two conditions only. First, that new research has found adverse health implications from its consumption. As indeed, the conversation around consuming “bush meat” has moved from conservation of our biodiversity, to prophylactic angst. Second, that worry with elevated noise levels demand that the crunchy sounds associated with masticating certain varieties of this delicacy be reduced. Otherwise, the choice to eat or to refrain from eating “ponmo” must be one that is left to me and other diners.
Obviously, then, the interventionist impulses that underpin the new mercantilist bent of economic policy making are threatening of personal freedoms, to the extent that they curtail choice. Worse is that they betray less than an abecedarian understanding of economics. Why for instance does cowhide find their way on to dining tables rather than the export markets? It is counter-intuitive that a Nigerian businessperson would disavow the possibility of dollar earnings for the small naira denominations with which “ponmo” is paid for.
Is it instead the case that the quality of our leather (poor pastoral practices and non-existent animal husbandry) make them suitable only for the dinner plate? Is there a chance that quality control stands in our local tanneries cannot produce leather of the quality that shoe manufacturers and carmakers want? Moreover, how competitive are our processes? This latter question is both about the costs of getting products from the input end to export destinations, as it is about the bureaucracy that describes the different procedures around this.
These questions advert attention to the pressing need for the design of a new round of useful reforms to the economy. If we were to think this through from first principles, successful reform would eschew the caprices of government apparatchiks, no matter how nattily attired, irrespective of erudition, or education. What should matter is our understanding of the incentives that the markets respond to. The task would then be to structure incentives that drive our intended goals.
From my vantage, new and improved infrastructure would be an obvious starting point. Most times, when we discuss infrastructure, better public transport, electricity supply, and social ones (the criminal enforcement system) are to the fore and centre. However, with 67.4 million internet subscribers in the country as at June 2014, access, download speed, and cost-per-gigabyte of internet use have become equally central to our conversations, our lived experiences, and the way we do business. If the mobile phone had as much an impact on output growth as was evidenced in the 10 years since 2001, one can only imagine what universal broadband access could do for this economy.
Expectedly, supported by the changes in ICT deployment and use, we have seen services account for a growing share of domestic economic activity. Labour force participation would now increase, not so much through the traditional channel of workers migrating from our villages to manufacturing work in urban centres. But, instead, through new vacancies in the services sector. Work in the latter sector is a lot more flexible, so labour laws would have to be re-defined in aid of newer work practices. No less important, work in the services sector requires a new (more sophisticated, at least, relative to manufacturing’s drudgery) skill set. Of course, we then need to invest in educating the new worker.
All of these, with some hope, and plenty of prayers, should occur within a free market, where price signals and consumer choices (and not ministerial caprices) drive supply responses.