Fundamental priorities for president-elect (2)

• Continued from yesterday

WE should fight mass poverty at the BoP not just because it’s an assault on our moral, religious or human sensitivities. A more pragmatic and public-good reason exists for using deliberate policy to enable millions of Nigerians become thriving participants in the economy (i.e. to deliberately expand the BoP economy). It makes eminent economic sense. A pre-industrial society like Nigeria can only create new wealth fastest by expanding economic activity at the level that involves millions of new income earners, promotes increased mass consumption and generates more demand, more supply and more employments. China and other emerging economies have simply repeated this process, decade-on-decade, to produce the virtuous cycle of economic and technological boom that we now witness. Tax collection will also automatically expand. A truly people-oriented government will then apply that bumper tax harvest to supply more public goods, especially human-asset improvement in health, sanitation, technical and vocational skill-building and general education, along with economy-enhancing (and honestly-priced) physical infrastructure, especially rural and inner-city roads.

As the BoP economy expands upwards and outwards, the lowest strata and layers of a middle-class population will start to emerge.

It is precisely this kind of scenario that the biggest, world-class multinational investors find attractive for entry into any developing country. They want to produce, package and competitively export goods across the globe, relying on locally available production-input supplies of the highest grade, alongside world-class technical and managerial skills, especially high labour productivity. Such competitive, cutting-edge export capacity will, of course, be ‘Made in Nigeria’, reflecting positively on GDP, GNP, national profile and international respectability.

Given its 180 million population, if Nigeria rapidly develops its BoP economy, and produces, say, 30 million ‘grassroots millionaires’ over the next 5-6 years (each holding funds or assets of between N1.5 million – N10 million, deployed, with relevant support, into small-business activity), society’s economic goals will be greatly served. Creation of new wealth and the expansion of a mass-consumer, middle-class population would happen faster, than would be the case if we doubled the tiny number of Nigeria’s billionaires over the same period.

Since billionaires won’t stand by the roadside to distribute their money to the masses for health, education or business start-up, it is in the greater interest of inclusive, national economic growth to deliberately use policy, programmes and public-sector contracts to generate opportunities for mass-wealth creation, rather than continue awarding grossly over-priced government contracts to a tiny, top-end minority, whose huge cash-and-asset holdings hardly circulate through the national economy. And yes, we should perhaps also seriously consider awarding oil-blocks to community-clusters, especially within the Niger Delta. As research has shown world-wide, even charitable Foundations (for those few, good-hearted billionaires who do set them up), never manage to achieve the scale or critical mass of interventions needed by society to robustly respond to social exclusion, widespread and deep individual poverty, such as millions of Nigerians currently experience.

Today, about 75% of Nigeria’s population (roughly 120 million people) is trapped in various layers of BoP poverty. That, by definition, makes us a poor country, no matter how much oil and gas we sell. After all, notice how much oil and gas we have sold over the decades, and observe how much poverty, misery and slum expansion have ballooned alongside the oil boom! I strongly propose that a strategic medium-to-long-term objective of the Buhari presidency should be to deliberately and determinedly create conditions and opportunities that enable the BoP economy to grow upwards and outwards, turning Nigeria’s current pyramid of bottom-heavy poverty into a kind of diamond-shaped socio-economic formation. That means a thriving and relentlessly expanding grassroots economy, which in turn produces a ‘middle-society’ economy, as viable, new small businesses, mass incomes and consumption push the most successful BoP entrepreneurs up into various strata of the middle class, whose steadily improving quality-of-life demand will dramatically boost our economic system. To protect their escape from crushing daily poverty, the new middle class will also, by the way, demand more good governance. Impunity by government and public leaders will reduce.

Socio-economically healthy societies are those in which the majority population is spread out across the various layers and strata of middle-class incomes and consumption. That journey starts with building and expanding a thriving BoP economy. For that, potential helpers exist in the international system. Over the last decade and half, a multi-stakeholder collaboration has been at work globally, among some large, multinational corporations, civil-society, grassroots communities, development research and government entities. These BoP economy-building partnerships operate largely through market-based, productive, mass-empowerment programmes, to generate life-changing impacts among millions of previously poor populations.

I now turn to the subject of effective transaction-governance (ETG). Overcoming our deeply entrenched transaction governance failures holds an economic-development promise of yet unimagined benefits for Nigeria, with vast FDI opportunities for economic modernization and wealth creation – both at the BoP and higher levels of investment and productive activity. In particular, if the ETG regime is accompanied by a genuine reduction of our incredibly over-bloated cost of governance, we would be firmly on our way. It could be a simultaneous double-success story.
Over four years, the new government can set free local and international investors who want to employ people and produce economic value, from the shackles of corruptly over-expensive, over-slowed, frustrating and off-putting transactional experience in the hands of government Ministries, Departments and Agencies (MDAs), while simultaneously freeing up hundreds of billions (perhaps over a trillion) of naira lost annually to constitution and corruption-induced high cost of governance – saving that will be useful in human-asset development and mass economic empowerment.

Corrupt transaction governance is the ‘big, bad, ugly’ guy that must get out of way of corporate and individual economic actors. It severely limits the quantity and quality of economic investment, production and profit by all categories of business. Worse still, since poor or barely-educated persons seeking permits or approvals at the ‘bureaucratic point of contact’ (i.e. across the counter, in a government office) have less bribe to give, and generally weaker negotiating capacity, our failed transaction-governance regime negatively impacts opportunities for expanding the BoP economy even more.

Of course, there are other transaction-governance problems facing Nigeria, not least that of respect for the sanctity of legal contracts and their enforcement through the judicial system. I was once told by some UN colleagues who studied Nigeria’s ‘ease-of-doing business’ and related transaction issues, that they estimated lost economic value due to bad transaction administration at almost 50% of Nigeria’s GDP as at 2002!! This includes lost potential FDIs, frustrated opportunities to turn local assets into economically useful resources, foreign businesses who leave to set up elsewhere, start-ups that collapsed due to avoidable transaction delays, etc.

Those long waits, repeated and fruitless visits, endless and inconsistently-applied micro-regulations, the promised ‘few-days’ that turn into weeks and months without the required approvals – all those countless means and methods used so adeptly by many civil servants to frustrate approval or permit seekers – add up to a horrendous cost to Nigeria’s economic well-being.

Some developing countries operate at corruption levels broadly similar to ours. ‘E-Governance tools, enhanced with special processes (involving media, private-sector, ombudsman service, etc), has helped some willing governments to sharply reduce the enormous power of approval, authorization and micro-regulation management at the whims of bureaucrats. Previously powerless citizens, businesses and poor community groups have had their socio-economic lives dramatically transformed by a new ETG regime. Multi-layered, deliberately-delayed processes, un-official payment for ‘fast-track assistance’, etc, were all gone. Millions of people with long bottled-up enterprise ideas rushed to leverage their access to valuable assets, with support of private-sector, freshly re-oriented government officials and NGO mentors. Dramatic interventions, through pragmatic processes, have brought poor millions into the prosperity loop. Such changes are also possible here. Nigeria, let’s go!

• Concluded.
• Ogunseye wrote via [email protected]