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It has been a while I have put my pen to this page (or any page for that matter) - because 2020 was a whirlwind as everyone already knows. But as you guys like to say - “we move”! 2021 has provided some reason to be hopeful (we have a vaccine now!), and here are a few other things that have caught my eyes in the last few weeks.
1. First I will like to start with a bit of self-promotion. We are holding our first live event on Saturday, February 20, and you can register here if you haven’t. We will be talking about cities, and the opportunities they present for individual and collective prosperity. African cities are poor (as I wrote here) relative to historical trends, and with rising population growth and urbanization, the situation could become very dire if we are not bold and creative with the solutions. Alpha Barry, founder of The Foundation - a company that’s rethinking ways to build new cities - and yours truly will be on the panel. Read more of my thoughts on cities here, and you don’t want to miss this event.
2. The new agriculture reform bill in India has been controversial. But this Twitter thread by economic historian Pseudoerasmus has a poignant take (based on a Bloomberg article). The bit I am most interested in is the relationship between surplus agricultural labour and income mobility. The current Nigerian government has been very bullish on the potentials of agriculture, and a lot of investment has been put in the sector. But two things to point out is that relatively poor countries that have seen a very rapid rise in income also had a sharp decline in agricultural employment, and value-added to the economy. This makes the general assumption by some people in government (and punditry) that agriculture represents a future as a large employer of Nigerians truly strange.
Secondly, climate change and insecurity are exercising a “push effect” on agricultural labour in some parts of the country. Most of the people leaving rural farming are moving into urban areas, and under different circumstances, this could be a positive trend. But as Pseudo pointed out, there is a limited economic benefit if surplus agriculture labour is simply moving to informal low-income urban jobs. In my opinion, this is where Nigeria has found itself for a while and it deserves more attention. Poor economies that rose in incomes usually have a growing manufacturing sector that “pulls in” rural labour in significant numbers. Our cities need to do better than motorcycle riders, agberos, petty retailers, etc…in employment opportunities for the low-skilled who are moving.
3. CBN recently flexed its regulatory muscle on cryptocurrencies and got a lot of negative flak. The critique was usually of two forms. Young tech entrepreneurs who are most excited to create value in the space saw the move as the latest salvo in the regulator’s war on innovation and young people. Business and econ pundits saw the move as a needless fight against the inevitable - as they believe cryptocurrencies as an asset class (and medium of exchange) will gain more mainstream acceptance. I am always curious about the motives when the government makes a move like this, and I enjoyed this essay as a short tutorial. It analyzes regulation as continuous bargaining between regulators and industry players. Perhaps the CBN is neither wicked nor retrograde - and just simply buying time till it finds a way to “tax” crypto transactions. Economists Nonso Obikili provides another useful perspective (hint - it’s always FX).
4. The National Bureau of Statistics informs us that the economy exited its second recession in four years. Given the battering the economy took from the pandemic, it is a piece of good news. But I will hold off on the champagne. Nigeria’s economy still has some deep structural weaknesses. Unemployment is very high, and so is inflation. The fiscal position of the government is also fragile, and it has limited the scope of capital investment in public goods. But perhaps the biggest drag is our approach to economic policy, which is rooted in cronyism and a disincentive for neutral private investment. Economist Walle Smith and former podcast guest peered in detail into some of the structural problems and needed reforms for the Nigerian economy in this essay. Nonso Obikili (also a former podcast guest) provided some valuable commentary - calling attention to economic inequality in Nigeria and how it should inform policy choices.