By Clement T. Ofuani
WED, AUG 05 2020-theG&BJournal– “There is no free lunch anywhere”, my friend said to me. “Not even in Freetown”, he added. It was a joke but contained enormous wisdom. In our elementary economics which another respected friend of mine often derisively refers to as O.A. Lawal economics, we learnt the concept of cost as the opportunity given up. Cost is not therefore just the price we pay for an item but what we give up to attain a particular thing. It has often been said that those who consider education expensive should try ignorance implying that ignorance is more expensive than the price we pay to earn education. Education as an economic activity involves the expenditure of resources, so it is not free. It has what accountants will describe as cost of production no matter where it is delivered. Every level of education from kindergarten to tertiary education and advanced seminars has defined cost of production and where it is commercially produced, the cost of production could include a profit element for the service providers.
The concept of free education stems from the reasoning that education should be a social service and that when citizens receive good education, invariably, society as whole benefits from the increased productivity resulting from the educated citizenry. As a social service, it is argued that the benefits of education are not restricted to the beneficiary and therefore the society as a whole should contribute to a common pool to make it accessible to everyone. In today’s world, that premise can be extended to include the fact that the whole world benefits from the investment in educating a person. For apart from the person’s contribution to global productivity, migration often means that the society that bore the cost of the investment through free education subsidizes the society that receives the immigrant. Given Nigeria’s migration pattern, it is unarguable that she has been subsidizing the US and UK economies in this regard for a while now.
The common pool to fund free education in a given society is the tax revenue of government. Free education is therefore only free to the beneficiary in monetary terms but the cost remains as a burden to the general society. Incidentally, there is a direct correlation between the cost of production of the service and the quality, all things being equal. Without going into the ideological dialectics, human beings generally desire value for money. This is often more so, when the money is coming out directly from the individual’s pockets.
Way back in the early 80s, when the exchange rate of the Naira was about 50Kobo to one US dollar, a prudent family could comfortably train their child through a four-year programme in Nigerian universities of comparable global standards with aggregate expenditure of not more than five thousand Naira which would be the equivalent of ten thousand US dollars. Arguably, there was also substantial government support to keep the cost to the individual families at that level. The only problem was that the government seemed to have been spending future revenues because by the mid-eighties, it could no longer sustain the public expenditure on social services especially with the forced liberalization of the economy and the re-pricing of the domestic currency relative to the US dollar.
As a consequence, public sector wages stagnated as did non-oil tax revenues of government. At that point, the question that confronted government was whether it was still feasible to run the free education programme. Without getting immersed in the ideological battle, the real issue for government should have been to courageously re-evaluate the funding sources in the face of declining public revenues. Unfortunately, inability to carry out the re-evaluation seemed to stem from and was exacerbated by the growing perception of misappropriation of resources in the public sector owing to corruption. It would appear that the government as a result, lacked the moral authority to face up to the reality of the issue of insufficient funds for social services including education.
Acting in denial, government pretended that free education was still available to the citizens but did not tell them at what cost. By the early nineties, it had become obvious to the elite that the cost of the free education on offer by government was declining quality and in response, they began to pull their children out of the free public schools to the rather expensive private schools. This phenomenon was at that point in time, common with primary education but it was not long before the bug caught up with the secondary education. At the tertiary level, the combined forces of the Students Unions and organized labour managed to hold the pretense for a longer period but soon, State-owned universities were charging higher fees than federal universities and they were to be overtaken by the private universities of the early 2000.
While government continued to pretend that it was still offering free education to the people, the elite soon realized that the new generation teachers of the private schools were largely products of the derided public schools that they could not send their children to. This was really the classic case of the chicken coming home to roost. The response of the elite to this discovery was to begin sending their children abroad with the United Kingdom and the United States topping the list. Soon enough, Ghana, Togo, South Africa and so on joined the league of recipients of the children of the Nigerian elite in search of good education.
Despite this massive vote of no confidence in the free education system, government and politicians continued to use it as a tool for staying in power. The masses who think that they are not paying for the foreign education of the children of the elite have only to consider that at the macroeconomic level, the outflow of the nation’s foreign exchange to pay for that foreign education is a major contributor to the declining value of our domestic currency and therefore the consequent decline in the value of their earnings. But worse is that the products of our school system are now generally regarded as unemployable.
I have met many chief executives lamenting their inability to recruit manpower in Nigeria today even as we bandy about incredible statistics of graduate unemployment. In addition, our economy is paying hefty premiums annually to attract foreigners to do jobs that we could have easily trained Nigerian youth to do. I am thoroughly flummoxed that in today’s Nigeria and global reality,free education is still being used as a campaign tool without telling the people the true cost of the free education.
POSTSCRIPT
I published the above Op-ed in the Vanguard Newspaper and Businessday in July 2012. As I discussed the current lockdown and the global pandemic with a friend on August 4, 2020, I could not help but reflect on the fact that as a nation, we paid no heed to the advice on the need to mend our economic thinking and policies for the benefit of our society over the past eight years.
While I had used Education to make the point about our jaundiced economic policies, the reality is that virtually every sector of Nigerian life has witnessed the same jaded practices resulting in continuous decline in service delivery. And in respect of each sector, the reaction of the Nigerian elite has been precisely the same. We took refuge in independent and personal alternatives to government services until COVID-19 Pandemic showed up in the world and turned our strategy upside down.
Take the electricity power sector for instance. Rather than adjust tariffs to allow for cost recovery and additional investments to meet increasing demand, we stagnated tariffs. In consequence, electricity power supply from the national grid continued a downward spiral to the current epileptic levels. The predictable elite response was the acquisition of individual power generating sets that provide electricity at much higher costs to both the owners and in the aggregate, to the economy as a whole. This is in addition, to the large scale wastes associated with it because, the typical power generated from individual generators is usually higher than the needs of the owners leading to unused power generation even as neighbours lived in darkness while suffering the pollution from the generating sets.
Our National Railway system is another example of this malady. The National Railway Corporation (NRC)was saddled with fixed tariffs that bore no relationship to cost of service delivery. Over time, the implied subsidy could not be provided for by government and the consequence was decline in service delivery and lack of investments to expand capacity and modernize technology. This continued until the NRC practically stopped offering any services at all. The consequence of this to cost of doing business in Nigeria is better imagined. All forms of haulage that could more cheaply have been routed through our rail system were diverted to our road networks at higher costs per tonne throughput. In addition, the perennial damage to our road network has been incalculable both in pure economic terms and in terms of lives lost in motor accidents. Of course, at the macro-level, it made us uncompetitive in globalcommerce.
As our road networks became increasingly deplorable, the elite sought protection for themselves through the acquisition of Sports Utility Vehicles (SUVs). This however did not save them from road accidents or the rampant army of unemployed youth that surged into kidnapping and highway robbery. The elite still had a card to play. They resorted to flying. With COVID-19 pandemic grounding air operations, everybody is suddenly grounded and limited to economic and social activities within the safety of the cities they reside in.
The same malady faced our crude oil refineries where the NNPC continued to make humongous annual losses with zero production. In fact, NNPC has been collecting crude oil for domestic consumption and exchanging it for refined petroleum products in bizarre ‘trade by barter’ transactions. Every effort to liberalize petroleum product pricing to resolve the economic quagmire has been met with severe resistance from an unholy combination of populist labour and demagogic opposition as witnessed by the now famous anti-Jonathan petroleum subsidy riots orchestrated by the opposition parties in 2012. And our nation has continued to fiscally haemorrhage ever since. It is unarguable that the continuous devaluation of the Naira against the US dollars is directly linked to our petroleum product pricing policy.
Perhaps, the one that takes the cake is our health sector. Just like the education sector, tariff for public services were unresponsive to market realities. Consequently, service delivery declined and the elite turned to private hospitals and clinics. In due course, it became a fad to carry out routine medical checkups in foreign hospitals. Poorly paid, doctors trained at huge costs by the Nigerian nation had little choice but to emigrate to where their services are economically appreciated. For the Nigerian elite, medical tourism became a badge of honour rather than a source of national shame. Then COVID-19 came calling. Nations closed their borders and finally, it has become clear that we either fix our system or die here. The life and death choice has finally been taken off our hands.
The burning question remains; have we learnt any lessons? Surely, the COVID-19 pandemic has to become one of those critical junctures in human history at which a society must change its trajectory and seek to catch up with the rest of the world or drift even more precipitously away. The answer seems to me to lie in economic policies more than the demagogic ‘anti-corruption’ mantra of the past.
Clement T. Ofuani writes from Abuja
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