Let me declare my economic philosophy upfront: I am a passionate believer in the social market economy. By this I mean belief in combination of a liberal free market economy with a human conscience; an economy in which free market forces operate in conjunction with socially inclusive policies. Considering the stage we find ourselves in the history of world development — where we must learn to run while they walk — I remain sceptical about the neoliberal economics associated with neoclassical Chicago school or the Austrian free market liberalism of Frederick August von Hayek. I am of the persuasion that market fundamentals are sacrosanct, but the market must be supervened by a smart government which provides essential public goods such as infrastructures, law and order, education and health while at the same being vigilant in checking untrammelled exuberance and collusive behaviour by firms and unscrupulous individuals.

The task of macroeconomic management in Nigeria today is to stabilise the economy, get our public finances in order, pursue on agro-based industrial revolution while generating millions of jobs for our teeming unemployed youth. Neoclassical liberalism has limited application in our current stage of development. At the same time, it is my humble conviction is that a free market economy without adequate regulation is like playing Hamlet without the Prince.

It is important to make this point because it is easy to be misunderstood as being anti-business in mindset. My perspective is best exemplified by the German economic model, where large and small family firms flourish within the framework of a social market economy that is well regulated as well as inclusive. Germany operates a corporate governance structure in which workers and unions are represented at the highest echelons of the board. Taxes are moderate and fair. Banks and financial institutions are free to operate on market principles, but the government also keeps a tap on highly speculative financial activities especially by hedge funds and other unconventional financial instruments.

The system works because German constitutional law, the Grundgesetz, is simple, clear, impartial and superlatively effective against corruption, greed and cupidity. Cartels and other sharp business practices are easily brought under the hammer. Highly trained and highly professionalised civil servants operate the bureaucracy and ensure delivery of services in accordance with political guidance provided by the government of the day. The European Competition Commission is also on hand to slam its ruling on recalcitrant economic operators. The German system may not be perfect, but it has served the Germans rather well. Today, Germany is second to none in the quality of its technical engineering and manufactured products in automobiles, high tech, new technologies and precision engineering; Europe’s economic powerhouse and a civilising and moderating voice among the nations.

I am currently holidaying in Abuja. The long queues have reappeared once more in the petrol stations, where PMS is selling at prices well above the official subsidised price. Young men have lined the streets hawking petrol in plastic containers. Police were chasing them into the nearby trees with thick koboko whips. I returned home with a friend at 6.30pm, and within a few minutes of our arrival, the lights went off. We tried to get the generator up and working. It failed. The smaller backup also failed. Both had been taken for servicing only the previous week. We called the chap who services the generator. Unfortunately, he told us he had closed shop. He was also hurrying to go home because his wife just called to inform him that their infant had just fallen ill with a seizure.

My friend predicted that we would have to live in darkness until midnight, when the light will be brought back. Candles and torches. I was rather perplexed by how my friend could be sure that the lights would come back precisely around midnight. Lo and behold, as soon as it was around quarter to midnight, the lights came back. As I reflected on that experience it suddenly occurred to me that what we were witnessing was probably the classic behaviour of an economic cartel, or, indeed, cartels.

The petrol queues were building up once more, we were told, because the petrol and diesel importers claimed they were owed another backlog of payments. They have perfected highly effective ways of blackmailing the government into paying them for products not delivered.

I suspect that the oil importers are in cahoots with the so-called DISCOs that provide the bulk of our electrical energy. The petrol importers will agree with the DISCOs: We keep back on petroleum distribution; you provide electricity spasmodically during working hours. As people troop back home after a long day, you cut back on your electricity, after all, whether you supply or not you are guaranteed a flat payment. Families would have no choice but to switch on their generators. When it is midnight and it’s time for families to go to bed we would bring back electricity, given that most would have switched off their generators in any case. Only the rich can afford to keep their generators in operation until daybreak. Heads we win, tails we win!

According to my dictionary, a cartel is, “an agreement between competing firms to control prices or exclude entry of a new competitor in a market”, a formal organization of “sellers or buyers that agree to fix selling prices, purchase prices, or reduce production using a variety of tactics”, all with the aim of killing off competition and maximising profit for narrow selfish ends.

For decades the Nigerian economy has been operated by a pernicious set of cartels that have kept the Nigerian consumer under their stranglehold. These cartels have been in operation in fields as diverse as pharmaceuticals, automobile spare parts, sugar, cement, rice, fertilisers, bureaux de change, truck haulage, luxury bus services and others. Tales abound about the evil practices of these cartels. Some of them are so vicious that they have mobilised pirates to sink the ships of rivals. They also arrange armed robbers to waylay luxury buses of new entrants into the long-distance transport business. When President Shehu Shagari wanted to resuscitate our ailing railway sector in the early eighties, the truck owners prevailed on him to drop the idea. We thus ended up with over-congested highways that have the worst carnage record in the world. These same reptiles hounded and killed Chinese rail workers that had been brought in by erstwhile President Obasanjo to rebuild the railways. Today, we have ended up with sick, stupid rail lines based on technology that is two centuries behind. The pharmaceuticals that produced fake drugs have been back at work since the winsome Dora Akinyuli left the stage. The generator importing cartels, largely controlled by Lebanese jackals, would always ensure that power generation and distribution would never work in Nigeria.

Consider also the case of the Petroleum Industry Bill (PIB) which has been hijacked in the National Assembly by rapacious foreign transnational oil firms. Only in a Third World banana republic can foreigners call the ultimate shots on how we legislate the activities of the most important sector of our economy. Since I have a family to look after, I shall not bring up the sordid case of cement. Some of the people behind these cartels are so powerful that they have a veto power over who becomes a minister in the department that supervises their line of business. They can also bring down ministers that attempt to cross swords with them.

Dealing with these pernicious cartels has to be one of the most pressing tasks that the new administration must undertake. Economic wisdom requires that an entrepreneurial and highly smart government has to be friendly to business. It is business that builds national wealth and creates jobs, not government. We must look after the goose that lays the golden egg. But we must also tame the goose. We should do everything to make our country a flourishing and prosperous democracy. But government must be deft in confronting sharp practices and collusive behaviour that short-change the Nigerian people.

President Muhammadu Buhari and the new economic team must be courageous enough to clean up the economy. The corruption in the private sector is of an even higher order magnitude in monetary terms compared to what operates in the public sector. Bullying and harassing businessmen and women is therefore not the solution. What we need is a new regulatory framework based on antimonopoly and fair competition manned by the best jurists and economists we can find. They should be able to ensure a level playing field for all economic actors without fear or favour. The African political advice to “speak softly and carry a big stick” must remain our eternal watchword. We must act with courage and audacity if our country is to be saved.

Culled from businessDay

ok

D cartel was and is and is to come, so dat one na old story.

.l

rubbish.
buhari is the finance minister

We dey watch

DON'T GO AND DRINK and COME HERE to post RUBBISH

Hmmmmm

We are trapped in our own economy!

Just send all of them packing from the oil industry.
Problems half solved.