I am long on strategic subsidies and I believe that governments can subsidize critical components in market systems. I have been making that point for years. The job of a government is to create platforms, and then allow private companies to build companies on top of them. In an efficient market system, roads, security, affordable energy, working postal services, etc are platforms. We teach platforms to startups, explaining that if you build a great one, you win your market. Indeed, the largest and richest companies in the world today (Apple, Amazon, Meta, etc) are all platforms, and the most prosperous countries in the world (China, USA, Japan, etc) build platforms!
In 2019, I was invited to the National Assembly; I made the same point: you need to become effective and subsidize things: “we discussed the mechanics to take this nation from $500B to $3 Trillion GDP. I want to thank the Speaker of the House Femi Gbajabiamila for approving my special day,” I wrote afterwards.
I boldly told our leaders that if they followed my plan that Nigeria would move from $500B to $3 trillion in GDP within 15 years! It was a tough one because I pushed the unconventional wisdom that we must further subsidize postal services, petrol, and education, EFFICIENTLY. I lived in Ovim for years before I left for FUTO. But with our then working post office, I was not far from the city. But when the post office went, the village became a distant place, with the commercial angle gone!
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
As part of my plan to subsidize more, I noted that Nigeria must remove corruption as a “ministry”. I laid the plan here in my hypothetical presidential speech. I called the removal of corruption Pillar 1 and wrote: “We will build a corruption-free nation where it would be extremely impossible to perpetuate corruption because technology will make things obviously transparent. All government systems must be structured to be corruption-resilient so that people that want to perpetuate corruption will fail.”
Of course, I do not also believe in the floating of Naira unless there is an industrialization playbook (you must float industries before you can efficiently float naira). I have explained that no economic fundamentals within a demand–supply framework would help Naira, when our demand is asymmetrically more than supply: “If I apply what he explained in that book [AO Lawal book on economics], floating naira with no capacity to earn USD dollars will kill Naira, because there is an asymmetric imbalance on demand and supply of USD in the Willing Buyer, Willing Seller nexus. In other words, two people may each have $100 to sell while twenty people want to buy each $100. If you do not close that number to near parity, the equilibrium point will keep shifting and I do not see how Naira will stabilize because demand outweighs supply here.”
Fuel subsidy, postal subsidy and dual exchange rate are not the issues. The challenge is that inefficiency in the government is why they appear to be bad policies as I explained here.
Dual FX in a corruption-free system is a subsidy which can help manufacturers; the US has released $billions to Intel, Ford, etc on different initiatives to help them compete, that is their own FX subsidies and dual exchange! Nigeria at our present state of industrialization will struggle to unify our currency unless our diasporas could be asked to save at least 30% of their salaries in Nigerian banks.
Like majorly using interest rates to fight inflation in Nigeria which makes minimal sense, our leaders must be creative because our challenges are unique
Comment on Feed
Please do not read anything political in my posts. When I write, my mind works better, and I feel liberated. Writing is my tea and coffee. These are postulations from a village guy; always consult with the experts. Nonetheless, I am always open to defend my positions. A piece is…
— Ndubuisi Ekekwe (@ndekekwe) July 1, 2023
---
Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.
Our political leaders’ understanding of public governance is both shallow and narrow, partly because we have extortionate mindset. We are more prone to taking than giving, so the concept of service is not well understood within our political and corporate spaces.
These are people who sit down and convince themselves that asking everyone who makes digital transaction to part with N50 is ‘nothing’, after all it’s just N50. They also think adding extra N1 to your call rate or another 1% to your taxes or levies means nothing, because it’s quite ‘small’. That is how people we put in public positions think, and they keep doing it.
We prefer to extort and extract more money from the people and then subsequently propose doling out cash and palliative, in a lopsided form of course, just to ensure that people are subjugated and frustrated. They enjoy being in charge, lording it over the people and enslaving them the more.
We neither have finesse nor capability when it comes to building systems that actually work, so once we introduce any policy, the next is to corrupt it, and then we thunder that it didn’t work, not minding how poorly it was designed and implemented.
We want entrepreneurs to produce things and create jobs, with what?
What platform did the US government create for Amazon Google Tesla and the host of others what platform?? The job of the government is to provide security whatever is left is then given to the banks to make investment in the economy possibly the best ideas because that’s where the money is subsidy is never a permanent solution it’s a temporary fix to a crisis and should not last more than 2 years with the end of subsidy Nigeria is going to have nothing short of 8 trillion naria left if that money about 2 trillion is given to the military and the remaining 6 is given to Farmers across the nation we will be food sufficient and we will be industrialising in less than 3 years because we can’t industrialize without full control of our raw material