Many years ago, I argued that Nigeria is a dystopian idea of free-market economics. The idea was that in a country where everything has a price, everything is for sale. Intentionally or not, corruption and culture have driven Nigerians to adopt free-market ideals beyond what even the most ardent free-market advocates would encourage.
The Nigerian government is addicted to fixing prices of key economic products—the naira, electricity and petrol. But this contradicts the view of the Nigerian economy as a free market where demand and supply ideally set market prices.
However, other governments also regulate prices. For instance, India regulates the price of essential drugs. The United States spends more than $20 billion each year subsidising its agriculture sector.
What makes Nigeria’s case different is price controls have been around for too long, are in key industries, and have an outsized effect on the Nigerian economy. This creates a weakening case for Nigeria being a market economy.
In recent years, I have been more sceptical of Nigeria’s free-market credentials. How can a country so addicted to fixing key prices in the economy retain any claim to being a market economy? This question was emphasised at a recent discussion I had with the executives of some of Nigeria’s largest companies.
The consensus after the discussion was that Nigeria’s price control trifecta—our addiction to fixing the price of petrol, electricity, and the naira—lies at the heart of many of our long-term economic woes.
The discussion also got me thinking: if you accept Nigeria’s addiction to price controls, can we still call it a market economy?