By The Editor
Nigeria has unwittingly drifted to the region of a failed state but it hasn’t failed. Prof Andrew Nevin, Chief Economist at PricewaterhouseCoopers, has an explanation for this. The reason why Nigeria has not failed as a state is the incredible self-organizing capabilities of Nigerians. “In the absence of the State providing essentials, people at individual and collective levels, simply organize themselves”, he said.
Nigerians have been underscored as a self-organizing people running one of the largest informal sectors in the world. The people are gifted in terms of innate ability that somehow compensates for a long existing vacuum of good governance.
In the face of a significantly depreciated public sector, Nigerians have since been organizing themselves in a spirit of self-help rather than wait for non-responding governments. Individuals, companies and groups take steps to empower themselves to function without relying on the public sector to provide basic infrastructures.
The spending capacity of Nigeria’s three tiers of government, as a percentage of GDP, has dropped to about one-half of the average of 25 percent two decades ago. In 2018, total government expenditure, as a percentage of GDP, came to 12.5 percent– one of the least indices even by African standard.
There has been a declining trend in spending capacity all the way from 1999 and which is expected to continue at least over the immediate years ahead. Considering huge annual debt service payments in the region of N2 trillion and rising and the large spending budget of the National Assembly, the actual government spending that affects Nigerian people directly is estimated at 10 percent of GDP.
Government is no longer capable of impacting the economy reasonably in the two critical dimensions of its responsibility – fiscal stimulus and delivery of critical services, including security. Measured by public spending per head, Nigeria’s public sector ranks smaller than most countries in the world in terms of impacting lives.
The expenditure of all tiers of government in Nigeria averaged N85,000 or $236 per head in 2018. This includes all spending by all levels of government on education -primary, secondary and tertiary, healthcare, infrastructure development, security, running the machinery of government at home and abroad, etc.
The mental notion of Nigeria having a big government is no longer true. It is in reality one of the smallest public sectors in the world. “In a very real sense, we have almost no public sector that impacts people’s lives in a significant way”, Nevin said.
The deflated state of the public sector, no doubt, presents immense challenges to the economic and social lives of Nigerians. However, with a rare self-survival instinct at work in an average Nigerian, people and businesses hassle daily to do with their might whatever their hands find to do. From one-room apartments to large residential estates, Nigerians are self-organized with central funds for development of community infrastructures.
From small kiosks to large superstores, businesses, professional services and markets are self-governing with their own security structures and enforcement of rules and regulations. At both formal and informal levels, professional groups and associations, there are revenue collection structures that promote professional standards and advance the welfare of members.
Education is virtually in the hands of private schools and this is true from the kindergarten to the tertiary levels of learning. Education is one sector where the private sector has made some of the biggest investments that have considerably dwarfed government budgets. This is true also of real estate development. Most of newly developed urban areas – which are entirely by the private sector, have no presence of public schools and any infrastructures there are provided by the communities themselves.
From the small barber’s shop to a large corporation, business goes on daily with or without public electricity supply. Public water supply has been completely out of the way for a long time and how an average Nigerian gets his water is entirely his business. Alternative channels of sustaining daily activities are a critical part of every business endeavour.
The biggest religious organisations are somewhat governments of their own. They have funding capacities that have powered the development of social infrastructures such as housing, power generation, water supply, educational institutions and other skills acquisition centres.
In the aggregate, the various self-organised funds are accomplishing more in terms of impact on the people’s lives than government spending. Most community roads would be impassable if there were no communal funding for road development. Hundreds of residential estates that spring up annually across the nation would be in darkness if the developers didn’t invest in power supply infrastructures.
Amid the thinning fiscal capacity, government isn’t moving in the direction of slimming down its oversized expenditure cloak. It rather keeps borrowing to put up a semblance of wellness when in reality it continues to lose the steam as an engine of state.
The revenue capacity needed for government to find its way back to the status of a strong public sector is far-fetched for now. The drip-feeding process of fiscal smallness continues by the day, making government continually irrelevant in the affairs of the people and enthroning self-governance among the constituent parts of the nation. The problem with that is that fiscal powerlessness at the centre vis-à-vis the emergence of self-governing entities puts a strain on the might of the public sector to hold the centre together.
Despite the self-organizing effort of the private sector, it is nowhere close to what is required to make up for the deflated public sector. Nigeria’s private sector needs to grow 10 to 15 times larger than it is today over the next 10 to 15 years to be able to fill the gap of a shrinking public sector, according to Nevin.
A government devoid of the power of fiscal intervention may still be relevant in ensuring security of lives and property and enforcing law and order. This role too is now being taken over by the emerging regional security outfits.
There is a foreseeable problem in that government is not lending itself to the political responses being prompted by the emerging realities. There is a widening gap between the political structure in place and the socio-economic conditions on ground. Like the old tortoise that has slimmed down inside its shell built in better times, Nigeria is not likely to reduce the size of the shell without a crack!