LBS EXECUTIVE BREAKFAST SESSION – JULY 2023 (Re: Social rot a cause of Nigeria’s economic decay??)

Dear Subscriber,

Democracy on trial: One man, one vote or one Naira many votes?

Whilst we are in a season of election petitions, we cannot separate economics from politics.

According to Martin Wolf’s piece in the FT:

 “The most radical notion in democratic capitalism is that it seeks to separate political power from wealth. Power rests in the hands of the people and their elected representatives, while wealth rests in the hands of those who own economic resources and their agents.  Democracy and capitalism are complementary as they rely on the rule of law.  Yet democracy and capitalism are opposites.  Capitalism is cosmopolitan, while democracy is tied to territorial jurisdiction.  Capitalism means one dollar one vote, while democracy means one citizen one vote.  One danger then is that wealth buys power in the name of order turning democracy into plutocracy. Another is that demagogues seize power in the name of the people turning democracy into autocracy.  Therein lies the risk that democracy faces today both in the advanced economies and the pseudo democracies in Sub-Saharan Africa. One thing as they say is constant i.e. change. This is where we are as we await the new world political order/disorder in nervous anticipation”

Nigeria in social rot – It is better to die on your feet than to live on your knees

The JAMB saga of Mmesoma Ejikeme is not just an aberrational event but is reflective of a dysfunctional social system in Nigeria. An average of 18% of all WAEC and NECO candidates have their results cancelled or are disqualified for exam malpractices.  This is higher than in most other counties.

The fact that Mmesoma’s result is a subject of national debate is symptomatic of a country in social failure and has put mediocrity above meritocracy. When you juxtapose the JAMB saga with the rash of the President’s economic policy announcements and investor endorsements certain questions come to mind.

Is the social rot in Nigeria a major factor in causing its current state of economic decay? Is moral bankruptcy a standalone or independent variable from its economic woes? And is Nigeria facing a double whammy of being well advanced in the economic decay curve as well as being close to the biblical end times when nations shall rise against nations and men will be lovers of themselves?

We ask these today because if the social dysfunctionality is so overwhelming, it will take more than policy pronouncements and soundbites to turn things around and achieve the desired positive economic outcomes.

Well, new policies are positive & refreshing

After an extended period of policy drifting, it was refreshing to hear a flurry of policy announcements from the Aso Rock villa and in some cases reversals (suspension of 5% VAT on data).  Investors are cautiously impressed with some of the policy changes but want to see some follow-through.  In this era of political uncertainty and election petitions, positive economic news is reinvigorating to investors.

But risks persist

In spite of the policy dynamism, there are still some risks. The Naira has been oscillating around N800/$, yet forex supply into the market is still in drips. Banks are still trying to game the market but are finally capitulating to market forces. Interest rates in the money markets are artificially depressed and we believe that the next round of adjustment will follow the appointment of a cabinet.

In this edition of the LBS Breakfast Session, Bismarck Rewane & the FDC Think Tank analyse the broad implications of the new policies on your business, customers and strategy in both the short term and in 2024.

Do enjoy your read!!!