Sunday, 4th June 2023

Saibu and ‘compassionate’ economic model

By Victor C. Ariole
25 November 2021   |   3:55 am
Coming from Indonesia, there are lots of similarities between Indonesia and Nigeria … in short term ensure macro-stability, whether it is the exchange rate or petrol subsidy removal… Nigeria does have a high number...

Coming from Indonesia, there are lots of similarities between Indonesia and Nigeria … in short term ensure macro-stability, whether it is the exchange rate or petrol subsidy removal… Nigeria does have a high number of kids that are not in school as well as what we call learning poverty…. Mari Pangestu (World Bank MD)
For the Indonesians, after a child birth, a woman would put a salt pack in her vagina ostensibly to restore its firmness… for the African women it was: why would a woman inflict pain on herself? Look for a bigger man!… Obama’s mother An Durham in A Singular Woman

Mari, an Indonesian, the country that habours the highest number of Muslims in the world over 200 million of a population of about 273.5million and they do not do so well compared to Nigeria, as they also have a big chunk of their population living below poverty level. According to her, both Nigeria and Indonesia could as well be seen as harbouring the greatest number of children classified as learning poverty group, hence as the World Bank Managing Director, instructing Nigeria on what to do to save its economy, it sounds counter to Obama’s mother observation of Indonesians as well as that of the inaugural lecture delivered by Professor Olufemi Muibi Saibu of Economics Department of University of Lagos.

That lecture was captioned  “Rethinking The Development Process in Nigeria: A Choice Between LAMBORGHINI AND AJAGBE-EJO”. It is like: why choose to shrink the size of your economy so as to have few people enjoying LAMBORGHINI luxury car instead of making available more AJAGBE-EJO type of vehicle to accommodate more people for the same purpose of getting to the same destination. According to him, it is difficult for anybody,  well informed about the economic reality of Nigeria, like him, to advocate devaluation of Naira, removal of oil subsidy  and the adoption of labour saving technology as the best development strategy for a Nigeria that has more than all of its active population unemployed, three quarter of its people poor and import more than 90%  of its manufactured consumable goods. In effect the World Bank MD is rehashing what landed Nigeria in trouble during the SAP era of IBB. Hence it is a further means of compounding Nigeria’s financial woes and never helpful to macro-stability as feels the MD of World Bank, Mari.

Again, contradiction comes in here as the type of Ajagbe-Ejo (Long vehicle, like snake type of vehicle) seen in train mode of transportation in Nigeria, currently, carried out by Amaechi, is even costlier to ride-in than riding in small vehicle to any destination in Nigeria. Hence quite difficult also to think of the Ajagbe-Ejo model which the elite could easily sabotage by grounding its operation if seen as obnoxious to their interest like the PDP administration building almajiri schools which are, today, rendered inoperative as, according to MD Mari, over 10 million children already 10 year-old in the North, mostly, are out of school and are classified as learning poverty group. And 3.5 million active youths cannot find job.

Comparatively, Indonesia is supposed to be worse hit than Nigeria with higher population figure than Nigeria and as learnt in the book of Scott, as detailed account of the experience of Obama’s mother as Anthropologist in Indonesia.

However, Indonesian operates effectively the Ajagbe-Ejo model as Saibu explains in the adoption of “follow the comparative advantage path to development which Lin and Rosenblait see as leaning mostly to natural endowment or endowment structure using the excessive labour in areas like light manufacturing and mining.

Accordingly, as the economy grows, and most of the redundant unemployed youths are engaged and empowered and later the competitive sector could become increasingly capital intensive and as capital accumulates, the natural endowment becomes abstracted for new leveraged endowment structure not dependent on the natural endowment any longer. Somehow, it is conceivable in what cost accountants refer to as the effacement of cost when marginal cost tends to average cost to an extent that optimum capacity of a system is attained and abundance follows. Check Facebook or Google models that seem to be free services but are making enormously great profits; models driven by reasonable elite unlike the Nigerian elite that fear competition from the talakawas or the almajiri.

Saibu is emphasizing the fact that as many people are left uneducated and as many people are left out (in enforcing fuel subsidy removal in order to obey the World Bank and IMF prescriptions, the Ajagbe-Ejo model of inclusiveness which could make development work for Nigeria could be elusive. Mari’s model is absolutely non inclusive and could engender growth seen in GDP without making development or collective well-being of Nigerians possible.

According to him, Ajagbe-Ejo translates to positive changes and growth trickling down to all the components of the system and remaining sustainable without inhibiting the survival of future generations. It is unlike Lamborghini model, leaning on excessive access to foreign goods, foreign programmes and ready-made and turn-key projects transposed to Nigeria that hinder the development of local alternatives, development of comparative advantages and enhancement of the productive capacity of local options.

Ajagbe-ejo model seems to be what is working for Indonesia where the World Bank MD comes from and should also be made implementable in Nigeria as against the debt trap driven type of model currently canvassed by the World Bank, insisting that Nigeria’s GDP-DEBT ratio is very low at 33.3% and with another side of the mouth acknowledging that debt transparency is not quite evident in Nigeria as 37% remains the interests payments to revenue ratio. Like the Minister of Finance rehashes always without seeing that something is wrong in borrowing when the capacity of the economy to pay back is weak; that is, having and engine that is running at 50% as it consumes much more fuel than when allowed to run its full capacity, pressing the throttle, to reduce fuel consumption. It is as if Nigerian government is afraid of looking for ‘the biggerman’ to get the economy to its full capacity the Ajagbe-Ejo way and prefers to shrink it, the Indonesian women way.

For whichever way, one sees it, for every hundred naira Nigeria earns, it is bound to set aside 37 naira for its debtors and it could increase as naira value goes down south. And in all, the elites seem better off as they round-trip the dollar or outsmart the majority poor in making fictitious gains out of rentier businesses.

It happened in 1789 in France as the king and his vassals hijacked the treasury and agricultural products’ silos of France leaving the poor peasants who constituted almost 90% of the population to cry for the release of cheaper bread to them and it was never headed to, hence French Revolution that beheaded the king and released the silos for the poor. For now as mentioned the deposed emir of Kano, the political elite serving as the vassals gulp about 25% of the recurrent budget and they are not up to1million as the remaining 200million Nigerians cry for better living.

The Finance Minister should be mindful of not being the queen of France that watched from the windows of the palace and mockingly asked the gathered hungry peasants of France to rather ask of cake instead of bread as the Minister sees spending just a trillion naira as expensive for Nigerian education. And here is where the MD of the World Bank from Indonesia should let her fellow lady know that over 50 million students are effectively taken care of in Indonesia with over 300,000 teachers and it makes for avoiding revolution as the youths are effectively occupied.
Ariole, Ph.D is Professor of French and Francophone Studies, University of Lagos.