USAfrica: Palliatives, politics and SAP 2. By Chidi Amuta

Special to USAfrica magazine (Houston) and USAfricaonline.com, the first African-owned, US-based newspaper published on the Internet.

Dr. Chidi Amuta is Executive Editor of USAfrica

My brother and friend, Kayode Komolafe (the man we all call KK) is an uncommon patriot. With an unassuming depth as a public intellectual, KK is equally disarming in his witty humour, a matter to which I shall return someday in the future. But he is unfailingly felicitous in his approach to national issues. In one of our recent conversations about national affairs in general, he drew my attention to what I seemed to have overlooked. The two key economic policies of the hundred-day-old Bola Tinubu administration may, in a limited sense, represent a second phase of the Structural Adjustment Programme in Nigeria.

Even Mr. Tinubu’s most ardent critics have since admitted that on the twin issues of fuel subsidy removal and unification of the exchange rate of the Naira, the new President had little or no choice. He had to make those decisions if indeed he was to have a country to preside over. The decisions were existential in essence.

Predictably, the prime pontiffs of international free market capitalism have hailed him. The IMF and the World Bank have since variously endorsed Mr. Tinubu’s boldness in these policies. Key Western governments like those in Washington and London have, with measured optimism, welcomed these policy shifts as positive for Nigerians in the long run. In turn, the Nigerian business community has conditionally applauded the president while of course warning about the high costs of doing business and the jobs that may be lost if costs continue to rise. But by and large, through the stock market’s initial positive response, corporate Nigeria has positively welcomed the policies as evidenced by an upward trend in market capitalization and volume of trade on the floor of the Lagos exchange. Nigerian Bankers, those hydra-headed parasites are smiling or grumbling depending on the games they like playing with the foreign exchange market.

The huge proceeds of the fuel subsidy removal mean that governments at all levels are hugging huge troves of cash. It ought to mean that they can find cash to fund infrastructure and social investment programmes. And a massively devalued Naira now fetches huge baskets of relatively worthless Naira notes for the government to pay its huge recurrent costs and may fund a few capital projects. What is going on is a fundamental structural adjustment of the economy away from the subsidized regime of the immediate past Buhari profligacy to a market-driven terrain. The government and its friends in pinstripe suits in the boardrooms of Lagos and Abuja may be smiling. Not quite so the vast majority of ordinary Nigerians and what used to be the now vastly pauperized middle class.

On the streets, the agonies, pains and pangs are becoming unbearable. Jobs are being lost as businesses contract or shut down because of impossible operational costs and tanking demand. Transportation costs for people and goods have shot through the roof in urban and rural areas. Costs in education, healthcare and basic living have skyrocketed as proprietors struggle to adjust operational costs to catch up with rapid inflation. Food inflation is sky-high. In Lagos, a loaf of bread now goes for as much as N1.300, thereby limiting those who can fall back to the staple of white bread and akara balls for breakfast.

While the NNPC has been crowing that national consumption of premium motorspirit is down by 30%, the number of vehicles on the roads has shrunk by about that percentage. Freer traffic in the streets of places like Lagos also means a shrunken level of economic and a looming potential of lost income, joblessness and potentially more crime statistics.

The instant early warning of the coming crisis has come in the form of repeated labour wild cat strikes and threats thereof. Literally, all unions are up in arms. So also are students unions protesting sharp increases in fees and living costs. The government’s response to these many streams of hardship has been a mixture of knee-jerk reflexes, hasty panic reactions and astonishing confusion. Initially, a hasty proposal to dole out N8,000 to families of the poorest was dropped quickly as it had no reliable statistical basis nor was it well thought out. As it turns out, previous social alleviation efforts under Mr Buhari were based on dodgy statistics and phoney data on the basis of which billions of Naira disappeared into the back pockets of government officials who seemed more interested in alleviating their own personal circumstances.

The admission by governments that these policies have triggered massive hardship has now popularized ‘palliatives’ as a new catchphrase of political correctness. It is one that has quickly been bastardized and trivialized by politicians. The government has been stampeded by the newly inaugurated state governors into signing off N5 billion to each state and the FCT to provide palliatives to desperate citizens. It does not matter if the state in question is Kano or Lagos with teeming populations or the FCT with miserable demographics.

In line with Nigeria’s lazy school of governance, nearly all state governments have invaded the markets to buy bags of rice for distribution to the poor and vulnerable as palliatives. It is uncertain how much the states are prepared to spend on this rice jamboree. Dangerous scrambles have ensued at the palliative distribution centres, leading to a few broken heads and many other injuries requiring first aid that is hardly available in public clinics and hospitals. We are yet to hear the last from this new palliatives racket.

In the interim, there is as yet no comprehensive national policy on how best to alleviate the spiralling impacts of policies that are designed to fundamentally alter the way Nigerians live and pay their bills. You do not inflict fundamental structural changes in an economy and then address the consequences with stop-gap and flip-flop measures.

What is clear is that the twin policies of the Tinubu administration amount to a limited edition of the infamous Structural Adjustment Programme (SAP) of the mid-1980s. At that earlier stage, the World Bank and International Monetary Fund (IMF) designed and inflicted the same set of adjustment economic policies on nearly all distressed Third World countries. The elements included an end to subsidies and entitlement programmes, privatization of government enterprises, commercialization, import restrictions and the adoption of market-determined exchange rates etc. The Structural Adjustment (SAP) produced protests and dislocations in many countries as these policies imposed severe hardship on the lower segments of the populace.

Many adult Nigerians will recall the introduction of the Structural Adjustment Programme(SAP) by the Ibrahim Babangida military administration. The nation was in a bad place economically and faced the option of accepting a killer loan from the International Monetary Fund (IMF). The terms and conditions of the loan were considered rather stifling and Babangida threw the matter to a public debate. Nigerians rejected the option of an IMF loan but felt the government should accept the ‘conditionalities’ as a self-imposed package for a homegrown programme of economic recovery.

It meant the immediate adoption of free market principles in most areas of the national economy. The exchange rate was freed from official controls. Government enterprises were being privatized or commercialized. A previously planned and government-controlled economy was jolted into an overnight transition into a free market economy. Aggressive competition and entrepreneurship replaced the entitlement state. Private enterprise was encouraged. In the process, living conditions hardened. The general cost of goods and services skyrocketed. While opportunities opened up for the elite to venture into new enterprises, the broad majority of urban and rural masses were being left behind by the rumbling train of the new market economy.

A military government that came to power to alleviate conditions found that SAP was crushing the very people. Something needed to be done to re-establish the compassionate basis of government and cushion the people from the adverse consequences of economic structural adjustment.

In what has now become the most far-reaching programme of systemic palliatives and hardship alleviation programme, the then military administration introduced a slew of poverty alleviation and palliative policies. An aggressive programme of rural development under the defunct DFRRI was introduced to incorporate the rural majority into the national economy through access to rural roads, water supply, agricultural extension services, primary healthcare and public enlightenment.

To extend access to credit to the poor, a Peoples Bank was established. To further penetrate the rural communities with access to credit, a series of community banks were established. To accelerate job creation, a national employment agency, the NDE was established in the Ministry of Labour to facilitate job creation and access to job opportunities. An accessible venture capital mini-credit scheme called the National Economic Recovery Fund (NERFUND) was established to afford funding to bright ideas of youth who had no tangible collaterals other than their certificates. To address the public transportation needs of the masses, a Mass Transit scheme was established in collaboration with Labour unions to provide quick affordable transportation to the masses.

This entire gamut of palliative and ameliorative policies, programmes and institutions were all rolled out within a short space of time and even the harshest critics of the military conceded that these were well-thought-out and bold measures towards the creation of a fair society for Nigerians.

The significant feature of the palliative regime of the Babangida military administration is that there was a deliberate institutionalization of the structures of alleviation. They were not random or subject to the whims of individual state governors. Most of them birthed national institutions with state components following well-thought-out national guidelines.

In plain language, what the nation is going through are the pains and repercussions of a new phase of SAP, SAP 2 for short. It is therefore astonishing that the new Tinubu administration is going about the matter of palliatives as if it was a transient political contingency rather than a deep structural realignment of the economy. It is as though there are no extant pre-existing institutions, organizations and structures that have survived the passage of time on which we can build present efforts. The National Directorate of Employment is still in existence. A company called Labour Mass Transit Limited partly owned by the NLC is still alive. The federal Urban Mass Transit programme survived up to the Obasanjo presidency and bequeathed the ubiquitous Keke NAPEP rickshaws that are still active all over the country.

The urgent challenge of the moment is therefore how to identify the existing instruments and institutions of palliative, compassion and socio-economic alleviation that have survived up to the present and deploy the proceeds of the fuel subsidy removal to reactivate them.
The present approach seems to be heavily weighted on the usual Nigerian politics of sharing. We now need to go beyond the degrading sharing of miserable bags of rice and boxes of Indonesian noodles to more lasting structured legacies of a fair society. Nor should we resort to random cash handouts that can neither alleviate suffering nor poverty but instead create and deepen an entitlement syndrome which could further deepen poverty.

If we are serious about alleviating poverty and ameliorating the impacts of recent policy adjustments, we must rise above silly tokenism and learn from the examples of countries that have embarked on genuine poverty alleviation and deliberate policies of addressing inequality in a sustainable way. I would recommend the examples of Brazil, India and China.

The models in Brazil and India