“If There is Macro Economic Stability, Why Are We Still Borrowing?” – By Ademola Adigun

A much respected person said “the only thing you can give BAT credit for is macroeconomic stability” she also highlights correctly, the lack of inclusion and the rising poverty.

Both statements are correct. There is macro stability. There is poverty. But one has to occur first before you can tackle poverty.

I read comments on my explanatory note that subsidy removal did not bring poverty that poverty existed before and acknowledged that subsidy removal did deepen poverty. So for simplicity, a causative factor might not the same as an opportunistic factor.

Most said in hindsight stability interventions should have come with reforms. I can’t argue about hindsight. It is always clearer. I am not also unaware of the political economy behind the decision and actions. My Arise interview before the decision to remove subsidy testifies to that.

I can say that all palliatives interventions when fuel prices was increased yielded in prior years,little or nothing. Why? Because they were not well designed, because it was administered by only one tier of government, because they were not well funded. To undertake social protection, you need funds. Plenty of it.

UK is trapped by the cost of welfarism that has made its economy sluggish and gradually uncompetitive. All governments including aspiring ones promise to reform the cost of social welfare. They are unlikely to succeed, reforming the NHS, a challenge, reducing the numbers that are on dole, almost impossible and there is now the refugee problem. We might be back to the very divisive Thatcher year, whose actions laid the foundation of UK’s economics recovery. A lot of people love her and many loath her. But she did in my mind what gives the UK what it is losing today.

Back to my point, to build a house you start with the foundation. You can’t build an economy without stability, you can’t fund social protection without stability, you can’t tackle insecurity without macro stability and definitely you can’t borrow cheaper funds without stability.

So back to the heading, why do we still borrow despite plugging a hole? Because we only plugged a hole. We have serious revenue challenges. As I say, we are really a poor nation with enormous resources. No nation can build wealth only on natural resources. We need to invest in infrastructure. Infrastructure is an economic accelerator, the road is not the purpose of a road, it what it connects to.

Forget your vote seeking politicians. They know that bringing back the subsidy will collapse the economy. You know how a man with a hard on will promise anything to get to Jerusalem, that is all it is. As soon as the gates open. It becomes APC.

There are many things we can subsidise that bring more impact to the economy and benefit more of us. Our leaders present and aspiring should think. We can’t have “lazy” youths and lazy leaders!