The following was contributed by ASFL Local Coordinator Olanrewaju Elufisan
Nigeria, Africa’s largest economy and most populated country recently enthroned a new administration at the polls, with President Muhammadu Buhari at the helm of national affairs. Since the emergence of the former dictator turn democrat, Nigerians have been looking forward to the ruling party’s delivery of their promise of change. One of such promises is the monthly payment of 5000 Naira, about 30 dollars, to the unemployed. The administration seems resolved to deliver on this promise.
It is at a period of economic downturn in the nation’s history, when the APC campaigned to provide security, curb corruption, and create millions of jobs. While these changes are needed and expected in the country as soon as possible, at its best, the promise to pay unemployed graduates and poor Nigerians a monthly benefit is tilting at windmills because it does not address the real causes of unemployment and poverty. The proposal at its ugliest and truer face is to curry political gains.
The Vice President who is also the head of the National Economic Council, Prof Yemi Osinbajo at a lecture delivered at Crescent University last month said that about 66% (112 millions) of Nigerians live in extreme poverty below $1.25/day. He added that such programs needed to be established to save people from poverty. But as good as it is to want to alleviate citizens from poverty, what is questionable is this method of doing so.
The numbers just don’t add up. If a hundred million Nigerians will get five thousand naira monthly, it will require five hundred billion Naira – which is a little more than two billion dollars per month – to afford and sustain this at the current exchange rate. Eventually, the government will realize that it cost so much, then it will devise a means of determining who is or who is not qualified for this benefits in order to cut cost. This in itself will cause problems of patronage and people will find corruptible means to be qualified. Populist policies like this incurs debt and when debt rises, the government will likely take on some inflationary policies which could lead to currency devaluation, and many more interventionist strategies will be exercised to deal with the financial crisis that will emerge.
Exemplars of such institutional failure of welfarism to learn from is the US looming debt and the economical bankruptcy of Greece. The costs of such programs rise unsustainably as the years go by. David Kelly’s A life of one’s own provides the rising cost of the US Medicare programs inherent in such welfare plans. Greece’s present trouble and debt crisis is a precautionary tale of unsustainable populist programs.
The larger problem, however, is that poverty programs as such dampen the incentive to become self-supporting through work. The human consequence is becoming inured to a life of dependence.
Although the intentions are good, but their outcomes are not good enough as the unintended consequences when weighed are often negative, often leading to financial crisis. The question of affordability then arises. How will the government get so much for this purpose? Given its present financial state or even at boom? Simply, the government will use up its reserve, raise taxes, borrow a lot, or use the monstrous strategy of printing more money.
This will hinder capital accumulation and stifle innovation that is required for economic growth in a free economy. Whether Nigeria will take the tough road of individual responsibility and economic freedom to prosperity or a populist agenda to debtitude is a discussion of will. Given however the failed records of welfare statism, it is not in the best interest of unemployed and poor Nigerians to embark on such populist policies, because it is often unsustainable and causes more harm than good for those it was intended to help.