Sustainable Democracy And Free Market Economy: Soludo’s Take On Nigeria’s Recovery

By Christian ABURIME

On Democracy Day 2024 celebrating Nigeria’s 25 years of uninterrupted democracy in the 4th Republic, Anambra State Governor Charles Soludo as a guest speaker at The Platform event in Lagos reflected on the nation’s progress with democracy and a free market economy.

Revisiting a lecture he gave in 2005 on sustainable democracy, Soludo noted that many of the same issues remain urgent challenges today, despite efforts over the past two decades. He argued that while Nigeria has professed to practise democracy and free market economy for decades, the country has made little meaningful progress, often taking steps forward only to stand still.

In his thought-provoking speech, Soludo argued that true democracy and free market economics are integrally linked as vehicles for maximizing liberty, security, prosperity and happiness for citizens. However, he warned that Nigeria’s democracy faces an existential threat from an unsustainable economy that all Nigerians must confront. As a member of the governing elite, Soludo stated that while public officials are trying to fix issues within their means, the challenges are too great to be left to politicians and governments alone.

In discussing the symbiotic relationship between democracy and free market economic principles, Soludo referenced Milton and Rose Friedman’s book “Free to Choose,” arguing that democracy and market economies, despite imperfections, remain the best frameworks for organising human societies, especially diverse, multi-ethnic ones like Nigeria.

However, both democracy and free markets are said to be works in progress, requiring constant effort and reform. The degree of free market policies depends on a society’s ideology around wealth distribution and the role of the state versus markets. While acknowledging an elite consensus in Nigeria favouring democracy and market economics broadly, optimising these systems for citizen welfare becomes imperative.

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Governor Soludo also emphasized that the economic strength of a nation is a key determinant of enduring democracy. Citing empirical research, he suggested that with Nigeria’s current low per capita income of around $1,200, sustaining democracy will require extraordinary effort, as poorer nations tend to have less durable democracies.

According to the former CBN governor, Nigeria is a very poor country with broken public finances, despite being considered the “largest economy in Africa” a few years ago due to GDP re-basing. For over 50 years, Nigeria’s economic trajectory has been defined by booms and busts in the oil sector. The last administration engaged in populist policies like illegally printing over N22 trillion to fund subsidies and expenditures.

Today, Nigeria’s fiscal situation is dire – the 2024 federal budget revenue of N18.3 trillion is only about $20 billion or 7% of GDP for a country of 230 million people. Even this projected revenue may not be realised. Debt servicing costs are high at N8.25 trillion, while total recurrent expenditure is N18.1 trillion, likely requiring more borrowing to fund it.

Our capital expenditure is just 2% of GDP, far below the 10-15% needed to address Nigeria’s infrastructure deficit. State governments are also struggling, with real purchasing power declining severely compared to a decade ago due to inflation and currency depreciation. Thus, Nigeria faces a stringent fiscal quagmire, with low tax revenues, high debt levels, and increasing needs of citizens amidst rising costs. Difficult choices lie ahead to address the long-standing fiscal and structural crisis.

Soludo contended that Nigeria faces an existential threat to its democracy due to an unsustainable economy and broken public finances. The country is very poor, with dwindling revenues, escalating debt, rising inflation and poverty. The new Tinubu administration inherited a crisis situation akin to “a dead horse but standing.”

To fix the crumbling foundations of our nationhood, Soludo called for bold, systemic disruptions through mobilising working groups to tackle insecurity, the economy, the oil and gas sector, food security, and building a true federal system of government with devolution of powers to states. He advocated reinventing citizen engagement initiatives like MAMSER, implementing an inclusive “Big Tent” social agenda to give everyone a stake, and enforcing a strict code of conduct for public officials to cut wasteful spending.

As a leader who lives by example, Governor Soludo is known to be extremely frugal with state resources. He does not take salaries from Anambra State government. Anambra State under Soludo leadership has no office of the First Lady that would attract extraneous expenses in governance. The governor wears local fabrics and rides in Nigerian-made vehicles as official cars. And the Soludo government adheres strictly to the avoidance of borrowing by doing more with less.

Overall, Soludo urged Nigerians to join in the solution rather than complaining and leaving it all to politicians alone. He expressed confidence in President Tinubu’s ability to lead the difficult reforms needed, given the president’s past record, but emphasized the reforms will require extraordinary efforts and sacrifices from all Nigerians.

As his speech drew to a close, Governor Soludo expressed cautious optimism about Nigeria’s future despite the nation’s economic challenges that threaten its democracy and free market system. He echoed the famous words of President Clinton that “it’s the economy, stupid,” underscoring the critical importance of economic revival to sustain democracy, especially with Nigeria’s population projected to reach 440 million in the next 26 years.

Yet, the Anambra State governor remains incredibly optimistic about Nigeria’s greatness and potential, driven by his persistent belief in public service and the infinite possibilities the country offers. He envisions Nigeria’s youthful population as an unstoppable force that can conquer the world, heralding the 22nd century as Nigeria’s century.

Building this formidable future, however, demands a strong, collective effort from all Nigerians. Mere complaints are insufficient; positive action to transform challenges into opportunities is imperative. Recalling the late Sonny Okosun’s poignant 1984 song “Which Way Nigeria?”, Soludo recognised that while its lamentations ring truer than ever four decades later, its call for united action may provide the impetus required to harness Nigeria’s immense potential and forge an extraordinary destiny.