The power of markets in good governance

By Charles Iyore

“The Nigerian factor”, that’s the expression and usual retort you hear, when things are not properly done. I am not against the expression, used in patriotism, but I want it to represent when things are done properly, when politicians run with a clear growth agenda, when professionals are in pursuit of excellence, and youths take pride in their academic pursuits.

That was so, not very long ago when all regions had bold education agenda, created some of the best institutions, awarded scholarships for the brightest to acquire the golden fleece abroad, and followed it up with job creation, establishing industrial estates and zones, and pursuing arts and crafts, in their regions.

That was appropriate competition.

The failing of that political class, was their naivety in believing they could build safe bubbles of creed, tribe, tongue and many bubbles of deviant descriptions. (this Mafia and that Mafia)

The insanity of those bitter differences needed correction, but not by military politicians, hell bent on settling scores, and with no growth agenda. All the same, thanks to them, for keeping Nigeria one. They have all since rewarded themselves in manners that continue to see wild expressions, in Swiss banks and other safe financial havens around the globe. No comments!

As against the regional pathfinders, all we can see for agenda in the military rule, are imports of cement and beer in ship armadas, war against indiscipline, operation feed the nation, a drive for primitive acquisition to the total neglect of the development of human capital.  A silver lining in the dark clouds of this period is the establishment of the National Youths Service Corps (NYSC)

MARKETS AND COMPETITIONS

Many political leaders are afraid of the word, markets. They see the enthronement of free markets, as a withering away of their powers to dictate and control markets, for pre-determined outcomes. That is in the mode of emperors!

Markets, however, are the only way we all live our lives, using what we have, to get what we need or want. It is the activity going on everywhere, from the smallest village communities to the biggest mega-cities. It lies at the heart of public accountability, if freely and fairly operated. Fairness coming by way of appropriate competition laws and the stamping out of anti-trust, or other market abuses.

It is life!

One of the hallmarks of good governance are markets that work well.

So whether you run societies by presumed capitalist or socialist principles, you cannot escape markets.

The question has always been whether we want run our markets, free and deregulated or do we want to command and control them.

You cannot be trying to fix interest rates by command, after you have deregulated the economy. You must know how to unleash the powers of legislation and fiscal initiatives, to bring about a band of interest rates to support your production targets.

Deregulation here is not the absence of oversight regulation (offices of utility regulation), but the opening up of the economic production space, for other players to come in and to through competition, secure better deals for the consumers.

The Nigerian deregulation in 1986, created opportunities in the core financial system area of banking, as well as, shipping and aviation, but the benefits extracted by weak and uninformed competition oversight, has left us the worse for it, after 34 years.

Widening income inequalities, destruction of our industrial and agricultural base, a compromised judicial system and a decimated countryside, are all we can show for deregulation.

Ever since we went down the path of deregulation in 1986, after the fallouts of unplanned indigenization and badly managed national reserves, central planners have been confused about what course of action to take.

The introduction of democracy after the long period of military rule in 1999, has brought a worse form of violence, than military coups. The capturing of principal offices of state by rigged elections, supported by the brilliant arguments of lawyers, charging astronomically high fees, in our compromised judicial system. This is a far cry from NADECO and the vision that drove it.

Dr. Beko Ransome Kuti,  Alao Aka-Bashorun Esq, Dr Tajudeen Abdulrahman, and many more of blessed memory, would turn in their graves now. The others, still alive from the struggle, just stare in disbelief, at the petulance of political office holders, to their former colleagues in the trenches.

This trend has left many to wonder, why political office contestants are prepared to spend so much, for the opportunity to serve, if they do not have ignoble motives.

Whereas the legal frame work of any governance activity is critical in setting the stalls, the market activity at the point of delivery (exchange), is what determines the successful outcome of governance initiatives. This is what determines the ability of leaders to deal with unintended consequences of their fiscal actions, and strengthens market linkages.

The neglect of market linkages, has left our economy in the doldrums, since the 2008 global economic crisis. No effective forecasting or scenario planning by central planners has been possible since then, both public and private operators.

I am therefore not surprised, when political office holders see strategic sovereign market advisory as sacrifice, whilst they are ready to pay astronomically high legal fees to capture offices.

The new successes in the old socialist block, have all been because of their recent embrace of free markets and competition, as well as their superior discipline, in efficient asset allocation.

Gorbachev’s Perestroika and Glasnost in USSR and the market revolution of Deng Xiao Ping in China are two cases in point. If we are going to join the comity of nations, we must begin to put the blocks together now, and exercise power responsibly.

The failure of governance at all levels since 1999, has made laughing stocks of all who spent their valuable time in ARIB and the New Nigeria forum, and in trenches everywhere, in dedicated search for new alternatives.

If we refuse to raise the quality of our public policy debates, in decision making processes, and take appropriate courses of actions thereafter, it would be instructive to know that the global ecosystem, in which we operate, will punish us, and that the quality of governance, may slide faster than under military rule. I hope we don’t have to go back to the trenches.

How will this happen?

Competitions, properly used, bring out the best in human beings, driving innovations, creativity and helping with efficient allocation of finite resources (use of capital). They impel man’s search for excellence and have been the weapons of his effective conquest of his hostile environment.

In sports, economics and various areas of human endeavours, competitions are the refining fires, of human efforts.

Those who have used them well, to grow food, provide healthcare, open access to education and direct research, have experienced phenomenal economic growths, as against those more interested in the competition for the best weapons of war and mass destruction.

At the Olympics, individual and team efforts, focus and dedicated training, have seen new records of performance, set at various Olympiads.

Improving regulatory oversight, has also ensured that competitors, keen to cheat their ways to laurels are denied the joy of taking us all for a ride.

In industry and commerce, which dictate the path of world economic order, it has become clear that cheating, (done beyond national borders), is acceptable. This has been so for a long while.

This is the wrong use of competitions and would eventually unravel the present world economic order.

In corollary to sports and the individual events, it is unlikely that an athlete not equipped, and therefore not a match to other competitors, will be allowed in a competition?

This is why contestants, have to go through qualifying rounds, to compete.

Now the rub!

How does a country that cannot grow its own food and is desperate as a consequence, negotiate prices for her extractive minerals?

If such a country loses out in the mineral commodities’ markets, does allocating more land for cash crops, (which it does not need), improve their ability to command appropriate pricing for their agricultural produce?

If they lose out, in all trade negotiations, how do they create the exchange value to support their currencies?

If their currencies do not achieve convertibility, can they be considered part of the global financial system?

Do these conditions allow for fair trade competition?

It is therefore easy to see that global industrial competition, is led by the struggle for access to industrial inputs. That is the scenario that makes big industrial players, think they need to prop up rogue leaders around the world, in order to maintain access to industrial inputs.

Political ideologies, then and now, are just smoke screens to gain access to reserves, and are the crack drugs of cheats (political leaders), in global economic competitions. Insincere leaders, anywhere, will swing both ways to achieve their devious objectives.

If we do not allow cheats in sports, why do we celebrate them in global economic competitions?

What the Bretton Wood institutions need to do, is to help create opportunities for all, and we’d all be the wealthier for it. –This is possible!

The resignation of the world Bank President, and the preference of the IMF president for a regional body, may be indication of frustration and helplessness of these institutions, in the face of suffocating and overbearing conducts, of some cheating world leaders.

International aid, no matter the size, won’t do it (reduce global poverty), cheating won’t do it, local internal arrangements would, and it doesn’t have to be by violent change.

This is not the time to be irreverent and gloat over a unipolar world. The challenges to our collective civilization, as humans, might actually be greater now, than it was during the “cold war”.

The pygmy, hottentot or bushmen might not meet your description of the civilized man, but you never know what they bring to our common gene pool for survival. Yours truly, covid-19 has demonstrated that your problem is my problem, and that my problem is your problem

But who is really gaining from the many trade wars, or the little bubbles that are developing all the time?

Why are the economic underclasses, rapidly expanding, in supposedly successful economies?

Global economic competition rules, are drawn up and implemented by political leaders, some of whom do not see the need for collegiate action.

Standing alone, they want to be first, without realizing that to be first, you also have to secure your rear guard, except if you want to be first in a bubble.

Walls might help create the bubble, but covid-19 has shown that if you are first to shut the door on China, covid-19 can get in through the rear door. (Europe, or perhaps anywhere else in the world)

With these laughable arguments, akin to those of 5 year olds, it is little wonder that the world economic order, cannot eliminate insufficiency, as envisaged by the UN’s SDG programme -Those visions for now, are just pipe dreams.

Some of the emerging leadership behaviours, are a departure from the spirit of the founding fathers, of the League of Nations and later the UN. They are not keen to lending a helping hand to countries unable to organize their affairs, as the United States of America did for Europe after World War II, or President John Fitzgerald Kennedy did with the American Peace Corps programme, to build on the gains of Europe around the world.

Global economic reporting must interrogate domestic and external trade and exchange linkages, to expose all perpetrators of cheating, as is done in the Olympics.

The celebration of global capital gains at all cost, as demonstrated by the Lockheed aircraft scandal should not be the way that international business is conducted.

Those excluded from the global table of the living, have their leaders to blame, as indicated by hunger, abject poverty, low access to education and health care and above all, an inability to achieve convertibility for their currencies.

I was at an Obasanjo Presidential Advisory Committee meeting, in London England, 3 weeks after 911 in 2003, and sat with Late Robert McNamara, former President of the World Bank, and he told me then, that countries that do not play to their strengths, and start by growing the food that they eat, cannot be competitive and will lack the power to negotiate.

Nigeria, however, can feed itself as is indicated by the amount of food rotting and wasting away with the Covid-19 lockdown. It just needs a properly worked out logistics matrix, appropriately tied to the value of money.

Everyone, it would seem, has shifted to the oil economy, either in services or in the active sharing of petrol dollar revenues, without linkage to productivity.

Now is not the time to complain, but time to put our internal arrangements in place, in order to be fighting fit for global competition.

At the heart of those arrangements, is the clarity of roles within the tripod under the Presidency in the executive arm of government.

First we had the Secretary and Head of service in one person, then we introduced a devolved position for the office of the Secretary to government, as apart from the Head of civil service. This followed with the introduction of the principal officer as head of the Presidential office household, and now the new arrangement of the tripod, Chief of Staff, Secretary to Government and Head of Service.

As the kernel of the executive arm of government, we must never allow a turf war to develop here or everything else will flounder. It is the trio, who working together, must put together the mainframe of government bureaucracy, around which the many functions of government will oscillate appropriately.

It is refreshing to see the Secretary to government Boss Mustapha, talk about the interconnectivity of society, and the dangers of leaving 11 million children outside of government’s purview of care and direction.

Covid-19 has brought to the fore the linkages we have not nurtured over time. How do you explain the fact that logistic arrangements, and contracts are not in-place to evacuate the yam output in Kuta, Niger state to their points of need?

The bubbles we build, of creed, tribe and tongue or indeed of any description will burst and one way to avert that, is to reform our markets and drive growth by competition and competence.

That is the only way we can develop uniformly, especially when enhanced by technology, as demonstrated by the ICT revolution, in mobile telephony penetration.

Do we have a base to build-on? yes we do, but our debates lack constructional thought.

Why do the local government, and there are only 774 of them, seem like remote and foreign outposts, to the Abuja leadership?

Why do central planners not know about the deplorable state of our healthcare facilities?

Why is that so much of our agricultural output, is not captured as production and therefore recorded as waste?

If we failed by our counterpart arrangements for import licensing, what new global brokerage and counterpart arrangements, do we have to reduce unaccounted for outflows, of over 60% in our foreign procurement processes?

Has there been moral leadership at the centre? yes there has been.

But the gains made in the fight against corruption lack market perspectives.

Gains like the Treasury Single Account, the domestic plumbing at the JAMB offices, the reigning-in, of the customs collections, all remain in their supervisory administrative solution state.

They have not been replicated in other agencies, because they are manager and not system dependent.

The work needs to start now, with the trio of Chief of Staff, Secretary to Government and Head of the Civil service, providing the needed tapestry of support for a committed President.

They must manage our diversity properly, in a federal setting, to bring our many threads of skills to play.

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•  Charles Iyore 

Partner, DNA Capital

Dioncta@aol.com

Darenth Kent England

+447932945002