LAMIDO’S 50%: AN ILL PRESCRIPTION

I trained as a pharmacist so I often question my ability to hold a candle to the likes of Sanusi Lamido when matters of economics are concerned; but the incontrovertible truth is that I am a Nigerian, presently resident in a rural community in Edo state. I watch as the local government divides allocations from the state every month then wait for the next instalment of this monthly bread. It’s a routine that’s unbearable to watch. The truth is Sanusi Lamido did have a point when he implicitly asserted that the cost of running government is expensive. The fundamental flaw in his narrative was hoping half of all government employees get sacked. Government austerity delivered via reduction in government size may have some initial benefits such as redistribution of tax payers’ monies into the economy but the fundamental concept of demand and supply and the Nigerian milieu absolutely negates these merits. This means that if civil servants get sacked, and consequently become unemployed the prevailing economic assumption is that more money gets pumped into the private sector via borrowing; investment in production is spurred; the sacked workers are absorbed into the private sector; and the labour balance is maintained.

That last statement may be wordy but I think it does summarise Sanusi Lamido’s viewpoint. However, using my local government as an example we must understand that Nigeria’s economy is presently stunted by two key factors and Lamido’s prescribed form of austerity cannot assuage either. The first is fiscal fraud. The second is gross under-estimation of unemployment rates.

First, corruption. In my local government monthly allocations are allotted based on the discretion of executive council officers. This includes the elected local government chairman (or as is now norm in many states, a caretaker chairman), his team of councillors, head of service and departmental heads. Other ancillary officers are usually part of the ensemble. The prevailing modus operandi is that funds are first allotted to recurrent expenditures like salaries, allowances, gratuities etc. After this cut only a fragment is left for capital expenditure. The temptation many such councils face is whether to defalcate the money or use it judiciously. Many times they blend both alternatives. This means that spurious contracts are awarded and shoddily done by members – or family members – of these executives. The presence of EFCC and ICPC at local levels is negligible so the matter gets forgotten. This is not essentially a failing of an economic principle as much as it is an evidence of corroding moral values. For now I shall stick to the economics purview.

Secondly, there is a big problem of documentation in Nigeria. We do not have figures that specifically show that 40 or 50 or 60 per cent of Nigerians are currently unemployed. My empirical guess is that the actual figure hovers around 30%. That figure is a conservative conjecture nonetheless it is abysmal considering that David Cameron gets pilloried daily for unemployment rates of 5.5% in the UK. The question then is if for a nation of 140 million with close to 42 million being unemployed the most prudent economic move would be to further cut more jobs in the civil service? What Lamido and his zealots may not understand is that for many parts of Nigeria including where I currently live the salaries of civil servants is the life blood of the economy. I was born in Lagos. I spent my first 18 years in the city but while Lagos may be a shining beacon of capitalist success we cannot necessarily extrapolate it’s example to other parts of Nigeria on two counts. First, Lagos has a man power no other Nigerian state can boast of. This man power is specialised into a plethora of industries hence diversity of ecomony is feasible. With my community in Edo state this is not true. Currently the population of the entire local government stands at 150,000. There are only about 7 doctors – only two of which work independently of government –  and until recently I was the only pharmacist. This is a reflection of other professions. Qualified personnel are few. The only people traders count on to patronise their goods and services are largely the civil servants. Sack them and you create a mess considering the now available funds would go to the private pockets of the politicians. Secondly, Lagos has the infrastructure many states of Nigeria can scarcely boast of. This is the same sentiment I share when the case of cashless banking was being canvassed by the same Sanusi Lamido. Where I live there is no ATM. I usually spend 30 minutes on the road to get access to an ATM.

My concern is not the personality of Mr Lamido. I can see beyond his oft-displayed affectedness but I certainly think his years away from a typical Nigerian rural community has distorted his empirical reasoning.  Also, Mr Lamido does not practise what he preaches. Reports suggest that he has increased the staff of CBN by as much as 50% since assumption of office. Coincidence of figures? What we need in Nigeria is extensive wealth redistribution. Salaries of political executives should be halved instead. Emphasis should be on capital projects like roads, houses, and tourist centres. Education is also important. Interest rates should be reduced so private persons can borrow and fund their respective business. If the CBN will play any role in improving the Nigerian economy it will be via regulation of borrowing costs, interest rates and foreign exchange rates. Austerity at face value is promising but considering the Nigerian factors at play it is not the best road to take

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