FINANCIAL MATTERS: Spending for development
Unease over the
outlook for the country after the April general election is due to a
variety of reasons. One source of worry is the fact that the political
class is not acting differently – albeit it was always something of a
stretch to have imagined that without incentives to the contrary, they
would have gone through a damascene experience.
The elections’
arbiter – the Independent National Electoral Commission (INEC) – after
having raised so much hope in the possibility of free and fair
elections, through its single-minded commitment to using direct data
capture machines for the voter registration exercise, is no less
confused. Indeed, if the differing announcements on the composition of
party slates offer any clue, INEC itself may be part of the general
confusion.
However, more
worrying have been the party platforms themselves. In spite of the
common grounds that these cover, they do not offer a roadmap to
anywhere. Where the right questions are asked, there’s much agreement
on the cheerless state of the domestic economy. Agriculture alone
contributes close to half of the 7% output growth that the economy has
notched up in the last three years. A fifth part of annual output
growth is again the result of hydrocarbon exploration.
So all you need to
grow this economy faster than the current global norm is for the rains
and the rigs to hold steady. Is it surprising, therefore, that this
“stellar growth” has produced few jobs? Still, on the evidence of
stronger currents in the rural-urban drift, there are those who would
challenge the putative performance of the agric sector, and hence of
its contribution to domestic output growth.
Recovery in other
sectors of the economy is therefore necessary, if growth is to generate
the employment levels needed to absorb most school leavers. Efficient
investment in infrastructure is essential to this task. This is as much
about roads, rails, and power from the mains, as it is about social
infrastructure.
Our schools must
work, not because students go through them, but because the competences
learnt in those hallowed places have use in the real economy.
Similarly, the healthcare system must conduce to a healthy population,
not because we then site a hospital in every neighbourhood, but because
every healthcare facility offers cost-effective interventions.
These latter points
are missed by all the party policy documents that I have seen so far.
In all, there is a premium on government provision of everything,
especially in the health and education sectors. Now, in our present
circumstance, this is an understandable reaction. An unconscionable
governance failure over the years has led to massive underinvestment in
these sectors; and there is thus a crying need if we must correct the
lapses of the past for an increase in public investment in these
sectors.
Still, going
forward, it would be a sin worse than the under-investment in the past
to ignore the extent of private sector provision in these sectors
today. In most cases, including crime prevention, private sector
operatives have stepped into the breach created by governance failure.
Instead, then, of
seeking to restore the public sector’s old role as prime provider in
these sectors, appropriations for the sectors should aim to develop the
public sector as regulator, rather than as service provider. Standards
development, monitoring, and enforcement then become the critical
competences that the civil service should grow.
Although the
regulatory function places a premium on the allocative efficiency of
competitive markets, it requires in addition that a competent regulator
should look out for collusive, price-fixing amongst private sector
service providers.
There would, of
course, be plenty of people who would not be able to afford the prices
in a market for social services. This is where the appropriations for
these sectors come into their own: as means-tested augmentation for
families who cannot afford to send their children/wards to these
schools, and/or use the private health facilities.
On this reasoning,
it is hard to contemplate the use of government’s spend to set up
publicly-funded facilities in direct competition with private service
providers.
