Asiwaju Bola Ahmed Tinubu (BAT), National Leader of the All Progressives Congress (APC), at the opening of the 2021 Sardauna Memorial Lecture, offered the panacea to the current state of insecurity and youth unemployment in the country to be massive spending by government.
The confusion created as to conclude that Asiwaju differed with Governor Simon Lalong of Plateau State, who advocated cut down on the high cost of governance in order to fund critical areas of development that will address the challenges of Nigerians was as a result of usage of phrases like “small government” and “cost of governance is always a key factor in the socio-economic development of any nation,” by BAT
Otherwise the duo did not differ.
There should not be a mix-up in the use of “cut down on the high cost of governance” and “government to allocate sufficient funds to projects and programmes that create and encourage enduring growth and employment.”
Whilst governments ‘cut down on the high cost of governance’ as advocated by Lalong there will be ‘sufficient funds to prosecute projects and programmes’ and ‘government must spend money but spend it on those things that bring the requisite economic returns for the nation’ as espoused by BAT.
There is a common ground. BAT agreed that “What we should be against is wasteful government spending.”
What is of interest is “Building vital infrastructure such as irrigation and water catchment systems that will help agriculture, arrest desertification and provide jobs. Only government has the power and resources to call forth such a programme,” which BAT envisaged to solve problems of insecurity and unemployment.
Lalong gave the government the pre-conditions for building vital infrastructure. He said factors such as corruption, insecurity, large number of Government appointees, high salaries, among others are among some of the factors that drive the high cost of governance in the country.
At the Colloquium to mark his birthday, BAT, probably to drive home his point at the opening of the 2021 Sardauna Memorial Lecture, reiterated the need for the government to “put stimulus package in place”. He cited the case of “America spending $1.9 Triilion and they are not looking back and still asking for three Trillion for infrastructure renewal and for creating jobs”.
It is believed that infrastructure investment provides a strong economic stimulus with a multiplier effect that can help rebalance growth in a given nation.
Economic infrastructure ensures the mobility of labour and capital within and from the economy, which in turn results in the provision of a lot of employment generation and employment opportunities.
Infrastructure plays a crucial role in poverty reduction and increases the quality of human resources and improves capital efficiency.
By infrastructure, we mean construction of highways, streets, roads and bridges; mass transit; airports and airways; water supply and resources; waste management and waste water management; power generation and transmission and telecommunications.
Whilst touting infrastructure spending as a way of stimulating the economy, its level of effectiveness is limited by specific circumstances.
Stimulus package will be most effective under the best circumstances of timeliness, right target and ‘temporariness’.
Stimulus spending must get into the economy quickly. Infrastructure spending that take months or years to complete is likely not to have a timely impact. Delays in spending might be counterproductive as in infrastructure construction projects.
The target must be those people who will spend the money quickly to multiply its impact.
Saving the money or using it to pay existing debts will defeat the purpose of stimulating new spending.
It is believed that stimulus spending must be limited to the period when it is needed to deal with a recession as consistent deficit spending tends to lead to unsustainable government debt with concomitant undesirable microeconomic distortions in the economy.
It is meeting these criteria in using infrastructure spending to stimulate the economy that may be a challenge.