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Wanted: Structural reform


SIR: Pat Utomi, professor of political economy and entrepreneurship in The Guardian of Sunday April 11, 2010, advised that the “challenge of the Finance Ministry is to rebuild credit economy.”  I am in total agreement with him but Nigeria needs a structural policy first. The term structural policy includes government policy aimed at changing the underlying structure or institutions of the nation’s economy.
Structural policies come in many forms, from minor tinkering to ambitious overhaul of the entire economic system, that is a move away from subsistence economy to commercial economy. Supporters of structural policy hope that by changing the basic characteristics of the economy or by remaking its institutions or industries, they can stimulate economic growth and improve living standards, restructuring the agricultural industry by changing or remaking it. That is, replacing subsistence farming with commercial farming.
With commercial agriculture, engineers, technicians, accountants, marketers, and other experts will be employed.  That means many university graduates, polytechnic graduates, Senior Secondary School graduates will be employed.  With subsistence economy, monetary policy and fiscal policy have no impact.  A subsistence economy is an unorganised economy
Fiscal policy has no impact on subsistence farmers. Since they are in the informal sector and do not produce enough and no record of production. They do not pay tax. Expansionary fiscal policy has no effect on them. With commercial agriculture, a lot of jobs will be created and a lot of taxes will be collected. Output will be increased and that will bring about economic growth and high standard of living. We need commercial farms and ranches. Fiscal policy yes, monetary policy yes, credit policy yes, but structural policy first.

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