Governments cannot grow economies alone and they don't have to
Governments today do not have easy jobs. They are now responsible for more than they have ever been. Beyond the usual expectation of providing access to critical services such as healthcare, education and security, we expect our elected officials to develop efficient bureaucracies and build infrastructure. It’s a tall order, and keeping pace is not easy, especially in light of external and unforeseen shocks like a pandemic.
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A government trying to develop its economy by itself will find it hard to succeed. Economic superpowers from America to China heavily signalled the private sector who helped these countries achieve wealth. But Nigeria's private sector signalling is poor.
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Nigeria recently recorded its lowest foreign investment figures since records began in 2010. Only $2.8 billion worth of foreign investment came in for this year’s first and second quarters. For context, over the same period last year, we had already received $7.1 billion.
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Throughout history, private sector businesses have proven to be important engines of growth and development, but always with the help of state actors. For example, the parts of the smartphone that make it smart—the GPS locator that tells Google where you are using the internet from—were advanced by the US Defense Department.
More than likely, the governments that would struggle lead developing countries like Nigeria. For them, funding the activities above is a challenge given low government resources. Looking at the Nigerian budget, you find that the government spends an average of $120-$150 per citizen every year. This includes paying salaries to civil servants, building schools to teach skills or roads that can serve as an avenue to distribute goods. By contrast, the American government spends $12,000-$15,000 to power its economy every year. There just isn’t enough.
Simply put, real economic development will not come from the government trying to do it all alone.
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