2019: Atiku is right to put marketisation above statism

This is the season for manifestos, a period when political parties and their candidates set out their offers to the electorate ahead of a general election. President Buhari, of the All Progressives Congress (APC), who is seeking re-election next year, has already launched his party’s manifesto, tagged “Next Level”, about which I wrote last week. My focus this week is Buhari’s main opponent, former vice president Atiku Abubakar, of the People’s Democratic Party (PDP). He too has published his manifesto, entitled “My plan to get Nigeria working again”. The 213-page document is very strong on policy diagnosis, analysis and prescription, covering the “many economic and political structural fault lines” affecting Nigeria’s progress.My focus here is on Atiku’s economic vision.

For me, this is really interesting because the difference between Buhari’s economic agenda and Atiku’s economic plan couldn’t be starker. It is often said that there are no ideological differences between Nigerian political parties and politicians. Well, there will be between Buhari and Atiku in next year’s election. For while Buhari elevates the power of the state, Atiku privileges the role of the market. Buhari’s manifesto is all about how the government would create jobs, fund investment and tackle poverty. By contrast, Atiku’s plan is based on stimulating the private sector to drive job-creation, infrastructure investment and poverty reduction. As he puts it, “The promotion of private sector-led growth shall be the first basic principle of our economic development strategy”, adding that “We will expect a sizeable proportion, up to 70%, of the spending plans of the Federal Government to come from the private sector”. As a result, he promises to “pursue with vigour the process of de-regulation and liberalisation of the economy”.

Atiku’s marketisation or liberalisation approach extends to virtually every policy area, from measures toincreaseFDI inflows, expand Nigeria export base and increase investments in infrastructure to policies to create jobs andalleviate poverty.

TakeFDI inflows first.To stimulate this, Atiku promised to guarantee “a level-playing field for all investors irrespective of their country of origin”. This is not something that many international business people believe currently exists in Nigeria. The treatment of MTN and HSBC by the Buhari administration undermines any pretence to having a level-playing field in Nigeria. Atiku’s plan also commits to guaranteeing the repatriation of funds “by removing all barriers to the repatriation of capital, profits and dividends out of the economy”. That would be music to the ears of foreign investors who would argue that the Buhari government does not provide such guarantee. What’s more, Atiku promised to guarantee “freedom of entry and exit of foreign investors’ staff” and “non-expropriation of investment assets”. He also promised to consolidate and simplify investment regulations and laws in Nigeria, and to work towards achieving “the lowest corporate income tax rate in Africa”. Surely, Atiku’s plan would make Nigeria one of the countries with the most liberal investment regimes in Africa with positive spinoffs.

Then, take the plan to expand Nigeria’s export base. Atiku rightly argues that Nigeria “must diversify the products we export and the markets we export to”. He wants Nigeria to export 10-15% of manufacturing output by 2030 and 25% by 2035. But how? Well, first, Nigeria must increase its market share in the African continent. So, to that end, his government would sign the agreement establishing the African Continental Free Trade Area (AfCFTA), saying:“We are confident of the potential gains of our participation (in AfCFTA) and conscious of the risks of inaction”. That’s a world apartfrom the Buhari government, which has failed to show leadership but has kicked the signing of the AfCFTA agreement into the long grass.

Atiku’s non-oil export drive strategy is, however, not just African-focused. His government would work with the private sector to identify how best Nigeria could harness the benefits of the US Africa Growth Opportunity Act (AGOA) and how to develop strong trade and economic relations with a post-Brexit Britain. Interestingly, he has not avoided the controversial issue of the Economic Partnership Agreement (EPA) with the EU. He promised a strategic response to the EPA, recognising that with 13 ECOWAS member states, bar Nigeria and The Gambia, having signed the agreement, “the EPA would ultimately draw those countries economically closer to the EU” than to the West African region. As someone who has long advocated a holistic, constructive and positive approach to external trade relations for Nigeria and Africa, I believe that Atiku’s plan is good for Nigeria.

Now, the private sector-driven, competitive and open economy that Atiku promises inevitably involves a greater public-private sector partnership. And here his liberalisation ethos plays out strongly with a commitment to privatisation. He promised to privatise state-owned enterprises, including all three government-owned refineries and the concession of Nigeria’s sea and air ports. That’s pretty radical and, if done successfully, Nigeria’s economy now “in bad shape”, according to President Buhari, would receive a positive jolt. Furthermore, Atiku would liberalise the downstream sector of the petroleum industry to “allow market-determined prices for Premium Motor Spirit (PMS) and eliminate subsidies for its consumption”. In other words, he would abolish the petroleum subsidies. Monies saved from the subsidy removal would be used in buildinginfrastructure in education, health etc.

Unsurprisingly, Atiku extends his market-based and private sector-driven approach to job creation and poverty alleviation. His government’s jobs strategy would not involve creating public sector jobs or “employing”graduates on a monthly stipend as done under the Buhari government’s N-Power programme. Rather, it is based on creating private sector jobs both through wage-employment or entrepreneurship. His focus is on macro-economic stability, entrepreneurship, micro, small and medium enterprises (MSME) etc as pathways to job creation.This is similar to the approach successfully followed by the UK. Between 2010 and 2015, the UK Government cut public sector jobs by nearly 25%, reduced budget deficits, cut government debt and promoted apprenticeships, entrepreneurship etc. Interestingly, as public sector jobs were falling, private sector jobs were rising, fuelled by a stable macro-economic climate as well as measures to increase the productive capacities of individuals. Today, the UK has the lowest unemployment rate in the OECD. The truth is, a coherent private sector-based job creation approach, backed with the right incentives, can work!

Which brings me to Atiku’s approach to tackling poverty.Again, it is not statist or government-driven. As he puts it, “The best form of ‘economic empowerment’ and poverty reduction strategy is one that enhances access of the poor to economic opportunities”. Thus, he promised to focus on “provision of skill acquisition opportunities and enterprise development for jobs and wealth creation – rather than direct cash distribution”. Of course, direct cash distribution is a plank of the Buhari government’s anti-poverty strategy. But with youth unemployment rising from 3m in 2015 to 13m in 2018 (a 263% increase over 3½ years), according to the National Bureau of Statistics, it is clear that “pockets approach” is not working.

Now, the foregoing discussion has only focused on Atiku’s economic policy ideas, not on their implementation. Of course, good ideas are not enough. They need to be deliverable. And here is where I become less enthusiastic about the Atiku economic agenda. For, let’s face it, he will face several challenges, both philosophical and practical, in delivering on his promises.

The first is his commitment to do only one term of office as president. The elaborate agenda that Atiku lays out in his plan are not for a one-term only presidency. It is interesting that, according to the plan, most of theoutcomes would not manifest until 2025, two years after he would have left office, if elected. How do Nigerians hold him accountable to the deliveryof the agenda if he is not seeking re-election? This raises serious issues about credible commitments.

The second challenge is vested interests. His bold and radical agenda would unnerve several vested interests, who would fight his administration to the hilt. One policy issue that Atiku’s plan doesn’t discuss in detail is public sector reform. In her book, “Reforming the Unreformable”, former Finance Minister Dr Ngozi Okonjo-Iweala shows how powerful vested interests undermined economic and public sector reforms in Nigeria. Even President Obasanjo balked at pushing customs reforms in the face of the resistance. Can Atiku tread where Obasanjo feared? In any case, is Atiku’s plan fully supported by his party? For instance, he said he would remove petroleum subsidy, but the PDP pledged recently to reduce petrol price from N145 to N87. If his radical plan on privatisation, trade liberalisation etc doesn’t enjoy his party’s full support, he would face serious challenges with the legislators, assuming he even has a strong majority.

Then, there is the question of integrity. Many Nigerians still question Atiku’s handling of privatisationof state assets as vice president under Obasanjo and would be uneasy about his radical plan to privatise state-owned enterprises (SOEs), including therefineries. The Obasanjo administration, under which Atiku served, promoted crony capitalism. How would an Atiku government be different? Finally,economic liberalisationcreateswinners and losers, with pockets of poverty and inequality. Atiku’s plansays that “prosperity shall be all”. A good government must pursue both economic efficiency and social justice in tandem.

Atiku’s radical marketisation, not statism, is what Nigeria needs. But it can’t be achieved without credible commitments, integrity, social justiceand putting national interest above vested interests. Is Nigeria ready for that?

Olu Fasan