Achieving maximum governance through minimum government: Fiscal reform Nigeria’s economy needs

“Increased government revenue hardly translates into an improved economy, but an improved economy easily translates into increased government revenues. Time to separate the office of minister of finance from coordinating minister of the economy, as the two jobs are at loggerheads in Nigeria.”— Olugbenga Jaiyesimi

Tax reforms have been in the news as Mr Taiwo Oyedele, the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, submitted four tax bills for ratification by the Nigerian National Assembly, focusing all eyes on government receipts and their distribution among the tiers of government. Remarkably, tax receipts for governance are not the totality of the fiscal side of governance. How the revenue is spent is of greater importance. In reality, taxation is a tool of fiscal reform, not an end. Making it the main objective of fiscal reform is what Mr. Taiwo Oyedele’s committee has delivered—the cart before the horse.

The economic philosophy underpinning Oyedele’s reforms remains unknown. Is it a supply-side philosophy underpinning the reform, or is it taxation to finance a statist administration? How about reforming for efficient government spending—a reform all Nigerian governments need?

Addictive as social media is, it has its usefulness as an introductory source of vital information. It was on TikTok that a protagonist of Prime Minister Narendra Modi of India reeled off the impressive accomplishments of the Modi government. He topped it by dropping an idea that guided Modi: *”Minimum Government for Maximum Governance.”* The maxim caught my libertarian attention and struck a chord because, in a nutshell, it encapsulated the end a libertarian mindset strives for: maximum governance.

On examination, the maxim seems an oxymoron because, in most parts of the world, more government is vote-catching and regarded as good governance. PM Modi is saying one can have a lean, smooth government delivering more governance. Presently, Nigeria is increasing her ministers and ministries for political exigencies, thus revealing where the heart of our president lies and where fiscal reforms are headed—bigger, bigger government. This means Mr. Taiwo Oyedele’s hands are tied to tax reforms to fund a bigger government.

How minimal should minimum government be? As minimal as to be totally absent while society lapses into a brutish state? Not at all. We libertarians do realize the need for government, but we are guided by the understanding that government is a necessary evil to avert the collapse of society into that brutish state described by Thomas Hobbes. Necessary evil as it is, it must be kept at its barest—administering justice, keeping order, and mobilizing against external threats. So it was for most of history until Karl Marx espoused his Marxist philosophy.

Before Marxism, the concept of a social contract between the state and the people was developed in the 17th and 18th centuries by Thomas Hobbes, John Locke, and Jean-Jacques Rousseau. Marxism came later in the 19th century, espousing that the state and its governments be enlarged beyond securing life and property to providing for all the governed from cradle to grave. Additionally, Maynard Keynes, in response to the Great Depression, put an end to the laissez-faire notion of government.

Keynes postulated that the government should intervene in the economy during business lows by injecting both available and non-available funds into the economy.

The West had a good inkling of how economies worked to create national wealth before adopting welfarism in Keynesian economics. This can’t be said of African countries, which believe natural resources are wealth. Without developing economic skills for sustainable wealth creation, African nations adopted social welfare schemes. These schemes came later to more advanced Western societies after these countries had mastered the tools of national wealth creation codified in the works of Adam Smith, David Ricardo, and Joseph Schumpeter, to mention a few philosophers.

Before I am crucified for my libertarian stance, ask if big government is working for Nigeria or any African country in creating sustainable prosperity. Give me an emerging nation where big government has been successful. Latin American countries were big on government before African countries, with Argentina being a classic example. After about a hundred years of welfarist government in Argentina, doling out humongous welfare schemes, it seems they have had enough of their Peronist spenders.

Argentina slid from being one of the richest countries in the world to one with 50% of its population living in poverty. A year ago, Argentines voted in a libertarian president who promised to and is putting a chainsaw to government agencies. This is unlike the actions of our Nigerian president, who is setting up more ministries and commissions.

How then would good governance be delivered while limiting government? It depends on the aspect of governance. If it is welfare services, the larger society represented by individuals in their communities, the organized private sector, and non-governmental organizations (NGOs) can and are delivering on health and education. Government and its agencies have no business delivering products like cement, premium motor spirit, or electricity. The good old United States is engaging Elon Musk to improve government efficiency by setting up the Department of Government Efficiency to cut government expenses.

There are other vehicles with which to deliver governance outputs besides government agencies. Unfortunately, the customs of a people can condemn them to making the wrong choice in picking government as the only vehicle.

In Nigeria, because of our customary love for authority, big government has been enshrined in our constitution. Hence, the perpetual creation of various government institutions, parastatals, and agencies that have come to naught in deliverables. Yet provision is made for them in each year’s budget. Nigerians also seem to have a penchant for government monopoly over private sector monopoly, which can eventually be broken.

Nigeria is at a crossroads. Would it be government growth as usual or the Indian and Argentine path to achieving maximum governance? Hope Nigeria chooses the Argentine path before it’s too late. Can our current leader lead the charge or change? Implementing the Oronsaye report on trimming the civil service would have been a place to start, but can he? Not likely, as it would be akin to him suffering from cognitive dissonance. Comparisons are currently made between President Tinubu’s approach and President Javier Milei’s approach in Argentina. The outcomes will be watched to see how both fare in the mid and long term.

Dr Jaiyesimi can be reached via [email protected]/Whatsapp No. 08123709109*