Tinubu’s Free Market – A Riposte
Nosa Igbinadolor I have in the recent past had a brief exchange of views on the issue of free market on X with the brilliant attorney, Abdul Mahmud. In these brief interactions, I sensed his discomfort if not hostility to the idea and practice of free market. Perhaps this suspicion comes from a background of unionism and activism which in most parts of the world have tended to find comfort in if not alliance with welfarism, socialism and even communism. I have just read his op-ed titled Tinubu’s Free Market. While I have set out to put across my views on the merits and desirability of free market, I find discomfort in doing so against the background of his situating his discourse around the Nigerian president and his recent statement where the president defined himself as a believer in a free market. I have not set forth to censure and repudiate Abdul Mahmud’s viewpoints, I will explain why I believe that a free market is a more effective mediator of economic activities and growth. Nigeria does not operate as a free market economy. While it may give the impression of doing so, its economy is largely categorised as unfree. According to the Heritage Foundation’s 2024 Index of Economic Freedom, Nigeria’s economic freedom score is 53.1, ranking it as the 125th freest globally. Within the Sub-Saharan Africa region, Nigeria is ranked 23rd out of 47 countries. Its economic freedom score falls below the global average but exceeds the regional average, leading to its classification as “mostly unfree.” The country only performs relatively in areas such as government spending and tax burdens. Systemic issues the gatekeep economic freedom persist, including a judicial system vulnerable to political influence, widespread corruption, and a weak rule of law. Regulatory processes remain cumbersome and expensive, creating challenges for entrepreneurs. Additionally, a significant portion of the formal workforce is concentrated in public or energy sector jobs. Entrepreneurship is fundamentally driven by the need to establish and nurture lasting relationships with customers. By fostering cooperation and encouraging commitments, entrepreneurs mitigate the risk of losing business to more ethical competitors. The adherence to these principles is not merely a moral choice but a practical necessity in competitive markets. Core tenets of free market systems such as private property, freedom of contract, and the rule of law act as a framework that compels individuals and businesses to consider the long-term consequences of their actions, ultimately promoting sustained cooperation and integrity. Institutions play a crucial role in this dynamic, serving as the “rules of the game” in society. These structures and mechanisms enable social order and cooperation, providing the foundation on which markets operate. Contrary to the perception of markets functioning independently, they exist within an institutional framework. Failures in market systems often reflect institutional shortcomings rather than inherent flaws in the market itself. Such failures frequently arise from institutional capture and manipulation by political interests, which manifest in poorly conceived economic policies and inconsistent policy execution. Market competition serves as a powerful mechanism for enabling widespread, mutually beneficial interactions. It relies on market-determined prices to communicate critical economic information; data that centralised government entities would find challenging, if not impossible, to aggregate and utilise effectively. When these prices accurately reflect the full spectrum of individual actions and their external impacts, market outcomes achieve efficiency. However, when prices fail to incorporate these externalities, market failures occur. In such cases, public policy interventions have the potential to correct inefficiencies and improve overall economic outcomes. By understanding the interplay between entrepreneurs, institutions, and market competition, we can appreciate the delicate balance required to sustain ethical and efficient economic systems. Ensuring robust institutions, fostering transparent market mechanisms, and addressing externalities through sound public policy are vital to achieving this equilibrium. In Nigeria, structural changes that are needed to develop a more vibrant private sector or achieve more broad growth have not emerged. The advantages of market institutions over government institutions as aptly posited by Thomas Sowell, are not so much in their particular characteristics as institutions but in the fact that people can usually make a better choice out of numerous options than by following a single prescribed process. Fredrich Von Hayek was right when he argued that, no central planner (government) could possibly aggregate, process, or act upon information as efficiently as decentralised participants respond to the information and incentives conveyed by the price system in competitive markets. Not only will a central planner allocate resources poorly, but the mere attempt to do so will impede the progress and utilisation of social knowledge. Government planning, seen in this light, is not simply inefficient but inherently arbitrary and oppressive. For the first decade and a half (1960–73), many African economies exceeded projected growth rates largely driven by natural resource export. Indeed, many development observers then were more optimistic about progress in Africa compared to Asian countries, particularly because countries such as Côte d’Ivoire, Ghana, and Zambia already had per capita incomes that exceeded those of East Asian countries, including the Republic of Korea Why did Africa fail global expectation? State planning took over, including the nationalisation of industries which itself led to the distortion of the market. From the 1960s to the 1980s, many African nations adopted policies of nationalisation, trade protectionism, and state planning to promote economic independence and industrialisation. The Democratic Republic of the Congo (formerly Zaire) exemplified the challenges of such policies. In the early 1970s, the government nationalised foreign-owned businesses, including the significant mining company Union Minière du Haut-Katanga, aiming to assert economic sovereignty. However, the redistribution of these enterprises to individuals lacking the necessary expertise led to widespread mismanagement. The new owners often liquidated assets for quick profits, resulting in the collapse of commercial infrastructures and severe economic dislocation. This period also saw excessive government regulation, price controls, and an overvalued currency, which, combined with declining commodity prices, precipitated a financial crisis by the mid-1970s. The economic decline persisted into the 1980s, highlighting the detrimental impact of poorly