Obtaining a Handle on the Domestic Economy, 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

The Sallah holiday weekend was usual in many ways. Electricity supply was epileptic. The fuel scarcity has held out long enough for an ecosystem to evolve on its back. Long queues if you are minded to pay the recommended retail price (RRP); and often, the supply at such outlets never is enough for the queue. At the stations that succumb to the logic of the new disequilibrium, the main concern is their preference for odd hours. Now, this is a major worry because there is clear evidence of a further breakdown in the general security condition. But given that patrons pay above the RRP for petrol at these stations, the furtiveness makes sense. No light. No fuel. Of course, no water. We still have not found ways to power submersible water pumps with air or water!

A generally miserable four days, then? Almost automatically, thoughts turned to the nature of the Nigerian problem. “Bad leadership”? Yes. We can make a strong case for the dominance of economic illiterates in political/public offices countrywide. What this element of our national life does is to multiply the adverse consequences of governments’ natural tendency (and this is a global thing) to intervene in its bid to improve economy’s prospects. “Corruption in high places”? Doubtless, there is a Nigerian bent to this. “419” is the new global moniker for the art of the confidence trickster. One of the more intriguing Nigerian contributions to the world’s lexicon.

Not surprising, this. The criminal justice system is shambolic. Ill-paid court personnel record proceedings in longhand. Even if court personnel were tech-savvy enough to capture proceedings digitally, the average battery life for laptops, tablets, and UPS for desktop PCs, is no match for the PHCN’s incompetence. Generators? This would drive up the cost of procuring justice through the courts. The police? Unspeakable, really. The butt of much public contempt, their investigative nous (their forensic deficit means they actually trample on evidence in their approach to crime scenes) contributes to much of the delay in courts, as marshaled evidence falls well short of the requirement that conviction be “beyond reasonable doubt”!

Still, at its worst, corruption is nought but an additional tax on domestic transactions. True, by increasing the cost of doing business domestically, corrupt practices make it harder for domestic products and services to compete with their imported substitutes. Nevertheless, one would think that the supply side of the economy would then have factored this component into its production arithmetic, and (in order to remain price-competitive, at least) either reward labour less (very possible in a labour-rich environment such as this), or reward capital less (increasingly difficult in a world where capital is fungible and very mobile).

Our story (the worsening of the country’s bodily and mental functions) is thus best told in terms of the failure of supply and demand responses. In an economy where output growth has averaged 7% a year over the past decade, it is hard to understand the failure of demand responses. Arguably, given the pace at which other indices have grown (population, for example) we could have done with higher growth rates. But how to explain the current levels of unemployment and want in the face of these output numbers? One possibility is that higher levels of income inequality limit the domestic economy’s demand responses. After all, the top 10% of our compatriots, who, as incomes become more unequal, account for more of it, can only buy so much; limiting, therefore, the demand responses that would have been available, were the gains from the yearly increases in output growth trickling down a lot more.

And supply? The shortage/failure/lack of resilience of domestic supply responses (domestic service providers/manufacturers take forever to crank up their systems to meet changing customer needs, and when they finally manage a response it’s often inadequate and miserly) are due to an almost insurmountable mix of failings. Infrastructure. Not just NEPA in its many incarnations. We must include inadequate and colonial era transport infrastructure, and the absence of depots in this category. (In agriculture for instance, I am not sure how to classify this part of the problem. But the fact is that everything post-farm-gate is designed for the failure of supply responses).

A culture that increasingly waits on government to set the tone for how the economy ought to respond to new demand streams is also implicated here. We can explain this in terms of the economy’s special response to the fickleness and fecklessness of public policy making. But how to justify it? Obviously, a lot is amiss with this economy, and the culture evolving on its back. But we can do no worse than start by insisting on competent government (at all levels) in response to these.


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