Evidently, the economy’s reset button begs for pressing action. And whatever government decides to do, the people will hurt. Freeing an entrepreneurial spirit that our nationals so obviously have, by giving the markets more prominence will hurt far less. And thankfully, technology and new identity management schemes make it easier today to target palliatives…


By weekend, the buzz around the announcement by the federal government of the appointment of an economic advisory council (by and) for President Muhammadu Buhari, was practically lost in the haze of speculations about the near-term political fortunes of his vice president. There were moments when one could have been forgiven for interpreting the new council as part of a larger arrangement designed to whittle down the power and influence of the vice president. Fleeting, these moments were, however. Against the larger picture of the economy’s deteriorating power and influence, the council certainly felt like a stroke of luck.

Finally, it began to seem as if there is a chance for the president to get advice on the economy from some of the leading thinkers on the subject in the country. And motives there are aplenty for members of the council to put in a decent shift. Some of the more public critics of the administration are getting their day in the sun. Yet, it is hard to argue that the bane of the economy, today, is a consequence of sub-par counsel. Once upon a time, there was a transition committee. Similarly composed of some of the best minds in the country, including some on the new team, that committee of yore was to have hand-held the new Buhari administration through the main challenges before the economy it was inheriting.

Wags are minded to write-off that former committee as having failed. Either because its advice led the government down this cul-de-sac. Or because despite its exertions, the government paid no heed to it. To its credit, that committee remains one of the more disciplined the country has had – its findings remain shrouded in secret, even till date. Leaks did not happen! Commendable, though, this feat is, it has fuelled debate about how much attention the president pays to his advisers. Especially when their advice runs counter to two pillars of his philosophy: a love of the people, and a preference for state’s provision of products and services.

Challenged by its empty pockets, government is proposing to raise value added tax and to tax e-business. Members of the committee should offer muted applause. They will do well to remind the president that taxes lead to a drop in consumption. And since household spending is about two-thirds of our gross domestic product, any constraints to it will hurt the economy…


It is hard to ignore this consideration. The balance of sentiments on the new advisory council is in favour of the market and strengthening the economy’s private response function. In a sense, this isn’t as bad as it sounds. For, of the many experiments the incumbent administration has set itself to, emplacing a competitive economy has not had front burner space. Now this is strange. For, even when, there’s little doubt anymore of the government’s poor financial position, it remains committed to plugging the economy’s infrastructure deficit from the exchequer.

Why not make it easy for private operators to provide and run the much-needed infrastructure? True, with private provision, consumption of what were previously public goods will no longer be free at the point of use. Then, again, the notion that all public goods had to be free at any point was always a dubious one. At the very least, we owe ourselves a duty to recover the costs of putting them up, in order that we may be able to maintain them properly, or to replicate their provision. To hold that public goods boost the net welfare of the citizens is to miss a key point in our circumstances. Given the inability of the state to raise and collect taxes from the activity of private economic entities, these freebies involve a sub-optimal transfer of scarce state resources.

Challenged by its empty pockets, government is proposing to raise value added tax and to tax e-business. Members of the committee should offer muted applause. They will do well to remind the president that taxes lead to a drop in consumption. And since household spending is about two-thirds of our gross domestic product, any constraints to it will hurt the economy disproportionately. Moreover, in an economy as pinched as ours, it’s hard to tell from this vantage how restrictive of trade the new tax rates and regime will be. Far better, therefore, to take a root-and-branch look at the government’s subsidy regime as part of a comprehensive review of government’s wallet.

…do subsidies not distort the allocative efficiency of economies? And in our case, there is a body of evidence in support of the argument that because our subsidies are not targeted, they are being creamed by sectors of society that ordinarily would have been able to afford the subsidised goods/services at market prices.


Mention the noun “subsidy”, and critics point you to the more than N1 trillion that the economy spends annually keeping the pump-station price of fuel unchanged at N145 per litre – irrespective of where global crude oil prices are at. Is this the best use of money, given both how scarce it has become, and competing needs for it – healthcare provision, improving the options from our education sector, etc. Besides, do subsidies not distort the allocative efficiency of economies? And in our case, there is a body of evidence in support of the argument that because our subsidies are not targeted, they are being creamed by sectors of society that ordinarily would have been able to afford the subsidised goods/services at market prices.

This argument holds for the portfolio of subsidies that the economy carries – on “federal character”, the circa US$40 billion annually spent on holding the naira’s exchange rate steady, and the king’s ransom that we require to keep non-resident investors’ interest in our money market instruments. Evidently, the economy’s reset button begs for pressing action. And whatever government decides to do, the people will hurt. Freeing an entrepreneurial spirit that our nationals so obviously have, by giving the markets more prominence will hurt far less. And thankfully, technology and new identity management schemes make it easier today to target palliatives at the poor and vulnerable.

All that the new economic advisory council must do, is persuade the president that this is the way out of the difficult place we’re currently in!

Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.