By Wale OGUNBANJO (email: adewaleogunbanjo@yahoo.com)
Public discussion in Nigeria is increasingly framed around personalities and political camps. Once a policy is associated with a particular government, supporting or opposing it is often interpreted as support for or opposition to the government itself.
A more useful approach is to separate the person from the policy and evaluate public policy on its merits, strategic importance and long-term consequences.
This requires taking a big-picture view of governance. It also requires distinguishing between matters of law and matters of personal morality. Political conduct should primarily be judged against the Constitution, statutes and established rules rather than subjective moral standards that may differ from one individual to another.
The moral and institutional questions
There are legitimate concerns about aspects of governance under the present administration.
Among them are potential conflicts of interest in public procurement and what sometimes appears to be the selective deployment of law-enforcement institutions against political opponents.
These are serious matters that should be scrutinised. But they are not peculiar to the present government. Selective prosecution, patronage, questionable procurement practices and the political use of state institutions have appeared, in varying degrees, under successive administrations.
That does not excuse them. Rather, it suggests that they are institutional problems requiring institutional solutions, instead of problems to be rediscovered whenever one’s political opponents are in power.
A big-picture approach to corruption
Corruption provides a useful illustration of the difference between routine corrections and systemic reform.
At one level are the everyday manifestations of waste and corruption: excessive expenditure on the emoluments and allowances of public officials, potentially inflated contracts, unnecessary government spending, gratification of officials and other forms of leakage.
These matter. They should be exposed, investigated and, where laws have been violated, prosecuted.
But there is another dimension that can impose substantially greater costs on society: systemic distortions that create opportunities for rent-seeking on a massive scale.
Two important examples from Nigeria’s recent economic history are petrol subsidy and the multiple foreign-exchange regime.
For approximately 25 years between 1999 and 2023, Nigeria maintained systems under which enormous economic rents could arise from subsidised petrol and preferential access to foreign exchange.
Using broad historical estimates, petrol subsidy expenditure over the period averaged roughly β¦620 billion annually.
Similarly, the gap between official and market exchange rates created substantial opportunities for FX arbitrage. Depending on assumptions about the amount of foreign exchange sold through official channels and the official-market differential, the value of these arbitrage opportunities could have averaged roughly $5.6 billion annually over the 1999β2023 period.
These figures should not be interpreted as estimates of money actually stolen. Not every subsidised litre was diverted, and not every dollar obtained at the official rate was resold in the parallel market. They illustrate something more fundamental: the scale of economic rents created by the systems themselves.
A government may prosecute an official for receiving a β¦10 million bribe or investigate an inflated β¦500 million contract. That is necessary. But if the underlying economic system simultaneously creates billions of dollars of arbitrage opportunities, prosecuting individuals without changing the system amounts to repeatedly treating the symptoms while leaving the disease intact.
A sustainable anti-corruption strategy must therefore combine enforcement with systemic reform that removes opportunities for arbitrage and rent-seeking in the first place.
Subsidy and foreign-exchange reform
This provides an important context for assessing two major decisions taken by the present administration in 2023: the removal of petrol subsidy and the attempt to unify and liberalise the foreign-exchange market.
The immediate consequences were extremely painful.
Petrol prices rose sharply. The naira depreciated substantially. Inflation accelerated. Household purchasing power declined, while businesses faced dramatically higher input costs.
Those consequences should neither be denied nor trivialised.
But a strategic assessment must ask another question:
Were the systems that existed before May 2023 sustainable, and should Nigeria have continued with them?
Nigeria had debated petrol subsidy reform for decades. Successive governments recognised the problem but repeatedly struggled to resolve it.
Similarly, the country had spent years complaining about multiple exchange rates, preferential access to official foreign exchange, round-tripping and the enormous profits that could be generated simply by obtaining dollars at one government-determined price and selling them at another.
Eventually, these structures had to be dismantled.
Whatever criticisms may legitimately be made of the present administration, it deserves credit for confronting both problems.
Systemic reform or routine corrections?
Ideally, good governance should deliver both.
Consider two categories of action:
π: Reduce everyday government waste, excessive official expenditure, questionable allowances, potentially inflated contracts, gratification, procurement irregularities and other routine abuses of public resources.
π: Remove large systemic distortions such as petrol subsidy and multiple exchange rates that can create economic rents measured in hundreds of billions of naira and billions of dollars.
Both are important. There should, ideally, be no need to choose between them.
But public policy also requires recognising differences in scale and long-term impact.
If political reality does not immediately deliver both, abandoning B because government has performed inadequately on A would be penny wise and pound foolish.
This does not mean shortcomings under A should be forgiven. Waste should be challenged. Questionable contracts should be investigated. Conflicts of interest should be addressed. Where laws have been broken, accountability should follow.
The point is one of strategic priority.
It would make little sense to preserve vastly more expensive structural distortions merely because the government removing them has shortcomings of its own.
Doing the Heavy Lifting
This is one way of understanding the present phase of Nigeria’s economic development.
The current administration is undertaking some of the heavy lifting on problems that Nigeria has discussed for decades but repeatedly postponed.
Petrol subsidy is one example. Foreign-exchange reform is another. Attempts to establish more sustainable electricity pricing, address longstanding petroleum-sector problems and improve the country’s fiscal structure belong broadly to the same category.
These reforms are politically difficult because their costs tend to be immediate while their benefits take time to materialise.
Citizens immediately see higher petrol prices, currency depreciation and inflation. The eventual benefits of eliminating arbitrage, improving fiscal sustainability, attracting investment and allocating resources more efficiently are less immediate and often less visible.
Implementing difficult structural reforms therefore requires political courage, guile, negotiation and tact. Some of the methods employed may be unconventional and open to legitimate criticism.
But political effectiveness is also relevant when reforms that defeated or discouraged successive administrations are finally implemented.
This does not mean that reform automatically equals success.
The ultimate test must be whether these reforms translate into greater investment, productivity, employment, economic growth and, ultimately, improved living standards.
Structural reform is a means, not an end.
Governance as a relay race
No single administration will solve all of Nigeria’s problems.
National development is better understood as a relay race.
One government addresses certain structural problems and leaves others unresolved. The next government should preserve what worked, correct what failed and tackle the outstanding problems.
The administration that eventually succeeds the present one should therefore not have to reopen the question of whether Nigeria should permanently subsidise petrol consumption or operate an exchange-rate system that creates large arbitrage opportunities.
Those issues should, ideally, have been settled.
A future administration can then concentrate more aggressively on procurement transparency, institutional independence, conflicts of interest, government expenditure, law enforcement and other areas where the present administration may have fallen short.
The next government should take the baton from where this one leaves it rather than return the country to the starting line.
That is how institutional progress becomes cumulative.
Policy should outlive government
Public policy should ultimately be judged independently of political personalities.
Supporting a sound policy does not require supporting the political party that introduced it. Likewise, opposing a bad policy should not depend on which political party happens to be in government.
The relevant questions should be:
πΎπππ πππππππ ππ πππ ππππππ ππππππ ππ πππππ? π°π πππ πππππππ ππππ? π°π πππ ππππππ π ππππππππ πππππππππππ? πΎπππ πππ πππ πππππ πππ ππππππππ? πΎπππ ππ πππ πππππ ππ πππππ πππππ πππ ππππππππ? π¨ππ ππππ π΅ππππππ ππ ππππππππππππ ππππππ ππππππππππ ππππ πππ ππππππ ππ πππππππππ ππππ ππ πππ ππππππ ππ πππππ?
That is the essence of a big-picture approach.
Nigeria has repeatedly approached difficult structural reforms only to retreat when their political and social costs became uncomfortable. The country may now have another opportunity to put some of the most damaging economic distortions of the past quarter-century behind it.
The appropriate response is neither unconditional support for government nor reflexive opposition to it. It is to preserve good policies, criticise bad ones, demand accountability for wrongdoing and ensure that necessary reforms survive the governments that introduced them.
There is no contradiction in demanding greater transparency in public procurement while supporting subsidy reform. There is no contradiction in opposing selective law enforcement while supporting FX reform. One addresses failures in governance; the other supports correction of structural economic failures.
Both positions can be held simultaneously.
Governments will come and go. Political parties will gain and lose power. Good policies should outlive them.
If the present government succeeds in resolving some of Nigeria’s longstanding structural problems, future governments should correct what it failed to correct and build upon what it got rightβnot take the country back to where it started.
