Between improving governments’ tax take and growing private spending, By Uddin Ifeanyi

Whatever management style is preferred in the next four years, the main national goal is to get the economy to “escape velocity”. In this way, even if Nigeria’s debt problem is as much a failure of poor official revenue numbers, as a result of dismal domestic productivity growth, we will not fix it by simply consolidating the fiscal space. Another (and better) attraction will come from finding ways to boost personal spending sustainably.

The measure of how grimly the Buhari government has managed the country in the last eight years is in the number (far more than the legacy) and the size (way bigger) of the problems it wants to inherit for its successors. Given the obstacles facing the government we will elect this year, the national capacity to effectively prioritize what needs to be done and orderly implement it will be at a premium over the next decade. The task center of optimizing the functioning of the national economy will include (at the most basic) attention to unemployment, inflation, foreign exchange rates, and interest rates. Other variables will be problematic on a political and social level. But the character of the causal relationship between economic variables and others means that the former is another matter.

The process of setting the economy right must begin by acknowledging the severe constraints imposed by economic illiteracy throughout the Buhari years in these variables – no growing number of young people in education, employment or training in key sectors of the economy; strip away the central bank’s authority as an independent arbiter in and from the monetary policy space; the weakness of the economic capacity to earn foreign exchange, also due to leakage from many “windows” in the market; and impediments to the financial intermediation function of banks, as the central bank single-mindedly clings to measure its financial oppression.

During the 12 months to the first quarter of 2024, there will be low-hanging fruit that will be harvested quickly, such as returning many of these transactions to the market, and away from the long-standing authorization. But sustainable improvements will require deeper reforms, especially a solution to the challenge of how to get the benefits from withdrawing many ineffective subsidies (on petrol-pump-gate prices, and the naira exchange rate) to targeted and tested support. for a section of the poor and vulnerable population.

However, it helps to keep in mind that whatever the government collects at the center as taxes is not available for the private sector to spend. And this should be a problem, given that consumer spending still accounts for two-thirds of domestic output. So, it is understandable, but it would be a consideration of debt repayment at the front and center of the formation of public policy, it would be wrong. A further description of the medium-term task environment that will face Managers of the fiscus, is to find a balance that is possible.

Over this process will loom the huge debt burden racked up by the Buhari government. Since this large amount of debt cannot improve domestic productivity, by building the infrastructure necessary for a better economy, or by paying for reforms that produce the same results, the next government will struggle with the best way to pay this debt without debt. throwing the entire economy out of kilter. So, it is understandable that the government that will be elected this year to focus on increasing revenues and reducing the government is the main priority. After all, Nigeria’s tax take as a share of domestic output is some of the lowest in the world; indeed in Africa. And its public sector, one of the largest and most ineffective, relative to a citizen of economic activity.

However, it helps to keep in mind that whatever the government collects at the center as taxes is not available for the private sector to spend. And this should be a problem, given that consumer spending still accounts for two-thirds of domestic output. So, it is understandable, but it would be a consideration of debt repayment at the front and center of the formation of public policy, it would be wrong. A further description of the medium-term task environment that will face Managers of the fiscus, is to find a balance that is possible. Transferring money to the government to provide at that level where collective provision is more efficient than provision by economic actors acting discretely – the police, the army, etc. – is one way of clarifying what needs to be done. The notion that the central authority has only ancillary functions is another way of regulating the size of government. In this case, the central government will limit itself to carry out tasks that cannot be performed at other local levels, while leaving the tax raising powers at a level consistent with the task environment. Finally, there will be spaces, as in education, where experiments at the edges should allow for private and public provision.

Whatever management style is preferred in the next four years, the main national goal is to get the economy to “escape velocity”. In this way, even if Nigeria’s debt problem is as much a failure of poor official revenue numbers, as a result of dismal domestic productivity growth, we will not fix it by simply consolidating the fiscal space. Another (and better) attraction will come from finding ways to boost personal spending sustainably.

Uddin Ifeanyi, a manqué journalist and retired civil servant, can be contacted @IfeanyiUddin.