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Nigeria, time to try new ideas

by Business News Report

During the ideological cold war between the Western and Eastern block, Joseph Schumpeter coined the seemingly paradoxical term “creative destruction. Since then generations of economists have adopted it as a shorthand description of the FREE MARKET’s messy way of delivering progress. In Capitalism, Socialism, and Democracy (1942), the Austrian economist wrote: “The opening up of new markets, foreign or domestic, and the organisational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one”.
Looking at Nigeria’s socio economic milieu, the greatest challenge facing the nation is the fact that Nigeria leaders at all levels do not allow room for this principle to apply in the system. Creative destruction of the old calls for new ways of thinking and doing things. It is about innovation, new ideas and creativity. The Nigeria environment at the moment does not permit new ways.
Nigeria politicians are the same old stock. They evolve from the same crop beret of new ideas. They are stock with the old. Nigerians thought that the idea espoused by Schumpeter was coming into place with the APC change mantra. But as it is there is just nothing new that is about to happen. Mohammadu Buhari has told the nation he is of the old stuck, so expect nothing new.
Nigerians expectation with the new government at all level is that the idea of sharing will be shelved and a new thinking of baking a larger cake for the nation will emerge. But Governors are already at it, talking of excess crude account that is to be shared. They have dragged as usual the yet to settle down president into setting up a committee to look into what the governors know too well has been shared. If this government where ready to replace old ways of thinking with the new, the federal government should have ignored these jobless governors.
The federal government should have set up a committee to think of ways to earn more revenue at all levels of government. The revenue that accrues to the Federation Account is from mainly royalties, taxes, signature bonus or fees, VAT and revenue from duties paid on imported products. When the President told Governors to go and sort out their finances, it was based on the principle of fiscal federalism. The new idea that should come into governance now is true fiscal federalism. The federal government and the states should negotiate rights to mineral resources in the country. It should be that while states exercise right of ownership to resources in their domain, they should collect the royalties, grant operating permits to companies and pay tax at an agreed rate to the federal government. Local Government should be empowered to collects charges and dues in their area of jurisdiction.

This of course will bring about massive investment in the exploitation of natural resources across the country. States will then be forced to attract investors to exploit the resources in their domain. It will also encourage states to revive industries and put in place conducive environment for investors to play. As it is at the moment the much talked about agriculture and mineral as the center points of revival of the economy have no clear cut policy that indicate the integration of the value chains in each of the sector and their linkages to the entire economy. The lack of linkage of the oil sector to the other sectors of the economy has had adverse effect on the economic development of Nigeria.
Nigerian politicians are not creative, creative destruction is the needed essential balm for moving a society forward. The perennial gale of creative destruction has become the centerpiece for modern thinking on how economies evolve.
Schumpeter and the economists who adopt his succinct summary of the free market acknowledged the fact that lost jobs, ruined companies, and vanishing industries are inherent parts of the growth system. The saving grace comes from recognising the good that comes from the turmoil.
The greatest undoing of this nation is that every time there is a regime change the new leaders dwell much in the past by pursuing shadows. They start investigations that lead no where all because they have no new ideas to share. It is a known fact globally that over time, societies that allow creative destruction to operate grow more productive and richer; their citizens see the benefits of new and better ideas, shorter work weeks, better jobs, and higher living standards. This is not the case with Nigeria and no body has ever asked why?
As it is from economic history a society cannot reap the rewards of creative destruction without accepting that some individuals might be worse off, not just in the short term, but perhaps forever. At the same time, attempts to soften the harsher aspects of creative destruction by trying to preserve jobs or protect industries could lead to stagnation and decline, short-circuiting the march of progress.
Schumpeter’s enduring term reminds nations that capitalism’s pain and gain are inextricably linked. The process of creating new industries does not go forward without sweeping away the preexisting order. It is the same for political class. You can not make progress without doing away with the old order of political practices.
Entrepreneurs introduce new products and technologies with an eye toward making themselves better off—the profit motive. New goods and services, new firms, and new industries compete with existing ones in the marketplace, taking customers by offering lower prices, better performance, new features, catchier styling, faster service, more convenient locations, higher status, more aggressive marketing, or more attractive packaging. In the same vein Nigeria politicians should learn to evolve new ideas, political style, new political culture, tolerance and service to the people, no just to serve personal interest of allocating millions of naira as wardrobe allowance to themselves.

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