Why we must restructure government a la Sanusi Lamido, By Ifeanyi Uddin

Ifeanyi Uddin disagrees with official statistics saying inflation has been on the upswing all year, causing rising food prices, reducing disposable income, and hurting households' welfare

Once again, SLS (our moniker for Sanusi Lamido Sanusi, Governor of the Central Bank of Nigeria ―CBN) walks into a new tempest. In fact, he did not walk into this. He seeded it. Almost inevitably, so soon as he suggested government sack half of its workforce as part of a restructuring process necessary to steady public finances, he was bound to come under intense fire from all sides. Most prominent amongst his critics, so far, has been the labour unions ― with one of them calling for his immediate sack. As with most knee-jerk responses to SLS’ contribution to national discourse since becoming central bank governor, once again, much of the reaction to his suggestion is abuse. As much also, focuses on his person (unlikely, any longer to win a popularity contest). And not enough on the principles he is asking us to interrogate.

A substantial part of the difficulty with trying to appreciate this country is a strange conceit, which, while strenuously avoiding discussion around the core principles around which more successful communities have organised themselves, insists on the existence of a consensus across every department of our lived experience. Of course we then brawl over the nature of such “consensuses”, with the additional characteristic that those in power at any point in time then describe countervailing interpretations of these consensuses as seditious.

The nature and purpose of the state is arguably the most important of the paradigms (of course, because of its knock-on effects across the economy) that we have thus far failed to reach agreement on. One consequence? A certain (and very crucial) interpretation of the best-accepted thinking around this paradigm has long defined access to and use of state office as means of personal aggrandisement. An oft-repeated Yoruba aphorism puts it quaintly: “our gain comes from our workplace”. Much to its credit, by 1986, the Ibrahim Babangida military administration essayed a re-definition of government’s purpose. It pushed for a private sector-led economy, with emphasis on the market (consumer and supplier choices), and expectations that the competitive impulses associated therewith will drive efficient production processes, product and service innovations, and lower prices.

That attempt to shape a new consensus around the purpose of government lost much traction on the back of a visceral left-leaning opposition (which demonised the reform process as the neo-imperialist dictate of the “Washington Consensus”). But, far and away its biggest burden was the administration’s failure to see that it had to change the nature of government just as radically if it was to stand any chance of persuading on the need for new thinking around its purpose. The need here was as much for a change that prevented public assets from being privatised in less than transparent ways, as it was for the design of programmes that improved the processes for including popular voices in the design of public policy.

We have come a long way since then, though. Glasnost, perestroika, and a failed Soviet experiment at organising society along socialist lines were necessary to wrest the moral high ground from the left. But it has been the success of Deng Xiaoping’s reform of Chinese communism by marrying it with capitalist features that was most critical in persuading the left of the need for change. This change has consisted of a move to the right. While quibbling at the processes involved, we are all agreed on the need to transfer state-owned enterprises to the private sector if those enterprises must work well. The telecommunications sector is the poster child of this change. Away went NITEL. We all forget now how much funding NITEL used to take off federal budgets. And in came a plethora of telcos. Few of us are aware how much these contribute to federal and state coffers by way of taxes, and payment on the installation of their infrastructure. Many of NITEL’s staff (the ones who knew their onions) ended up working for the telcos (in some cases as highly paid “consultants”).

So useful has this model been in shaping our attitude to private ownership and service efficiency that we greet meter readers from the PHCN with the hope that one day the electricity monopoly will go NITEL’s way.

Government on the other hand, never ceases to advertise its transition from service provider to regulator. In any case, given that most SOEs were monopolies, an independent regulator is important to drive efficient processes post-privatisation, and to ensure adequate investment in innovations that improve consumer welfare. No less important is the realisation that in the absence of adequate regulation, post-privatisation, gains from reform efforts end up in the pocket of producers and not their customers.

Therefore, along with this change in the purpose of government and its organisation, must come a change in its establishment. A transition to a private sector-led economy requires government to free up all the assets currently held under its dead hand. Oftentimes we think of these assets as including credit, and the fixed variety (buildings, machinery, etc.); but all Sanusi Lamido has done is remind us that labour is arguably the most important such asset. Moreover, if government must have this economy running based on private choices (made freely) it cannot continue to sit on huge reserves of labour. It must let them go, willy-nilly!

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