Lubricating the engine of the economy

An Engine without a Lubricant:

Ever imagined…

• What the engine of a car would sound like when it runs out of engine oil and still in use for some 2 – 4 days?

• What would make of the same engine when the lubricant (engine oil) isn’t still applied some more days?

Should you have no experience nor imagination of that, then…

• At the initial stage, the engine sound would be unimaginably reverberating, adversely affecting the smooth movement of the motor vehicle

• And if the lubricant isn’t still used for more days, in no time would the engine wear out

With the SMEs being the engine of the economy and in line with the aforementioned, it is paramount for every nation to promote its economic lubricant, as this would drive a smooth, increased and efficient maintenance of the economic engine, whilst ensuring that the economy is not brought to a standstill.

This in mind, the Economic Lubricants are the various policies, concerns and activities of government that drive the smooth achievement of Economic optimisation.

The Economic Lubricants:

Critical to promoting the Small and Medium Enterprises (SMEs) is identifying the Lubricants that would drive its successes and optimal contribution to the National Economy. 

With the government being the underlining instrument towards National prosperity, the Economic Refereeing functionality of government is to primarily ensure that equitable policies are made, thereby promoting the achievement of a level playing ground for business survival, continuity and growth.

The Economy Lubricating Functions of the government, as illustrated below, is integral in driving Economic optimisation

Economy Lubricating Functionality of Government:

Ever heard anyone blame the private sector for economic failures and perhaps pitfalls in a country?

I am sure your answer is NO! All fingers are pointed at the government due to the underlining and central role it plays as the referee of National activities beyond the economic climate.

As noted in the illustration above, there are critical responsibilities and concerns of the government in driving the smooth operation of the engine of the economy.

These responsibilities and concerns is a tripartite relationship.

At the primary stage are Corruption levels, Investment Climate and Education.

At the secondary are Brain gain, Global perception, SMEs/Employment generation and Foreign Direct Investment and lastly, at the tertiary is Tourism.

If these are efficiently managed and well synchronized, economy optimisation, successes and boom would be achieved.

Economy Lubricating Functionality of the Government: The Tripartite Concerns and duties of government

Primary Concern:

a. Corruption levels: Corruption levels in a country goes a long way in driving Global Perception and also the SMEs. Corruption adversely impacts the survival of SMEs. A notable example in this vein is the Power sector in Nigeria. In 2013, the Vanguard newspaper reported that with $31.45 billion expended on power generation from 1999 – 2013 in Nigeria, only 2,500MW additional megawatt was achieved. On the other hand, Brazil which now generates 100,000MW had between 1994 – 2008, $58 billion expended on the Power Sector. A food for thought from these comparisons is that if the said sum was appropriately spent on the Power sector in Nigeria, Nigeria would have achieved a significant turnaround in its power generation capacity and then its economic endeavours.

Many small businesses rely heavily on power generators to carry out their businesses but the big questions are, how many of these can afford and regularly fuel their generators to do business as usual?

For many blue chip companies to leave Nigeria due to the high cost of doing business in the country, then the impact on the SMEs would be more dismal

If financial accountability of government is achieved, monies being used appropriately would promote a smooth operation of all sectors of the economy, especially the multifaceted SMEs subsector.

b. Investment Climate. According to Investopedia, Investment Climate are “the economic and financial conditions in a country that affects whether individuals and businesses are willing to lend money and acquire a stake in the businesses operating there. Investment climate is affected by many factors, including: poverty, crime, infrastructure, workforce, national security, political instability, regime uncertainty, taxes, rule of law, property rights, government regulations, government transparency and accountability.” From these, I opine that orderliness in governance is key to promoting a fair investment level playing ground.

c. Education: Knowledge is power. The United Nations Educational, Scientific and Cultural Organisation (UNESCO) recommends that every nation in the world should allocate 26% of its budget to education. Underachieving this expectation would promote brain drain, thus education tourism of schools abroad by nationals of the country.

The quality of education in any country is a reflection of the government meeting the recommendation or not.

Secondary concern:

a.       Brain gain: Brain gain is achieved when education is optimally managed, with the best and internationally competitive standards provided in any given country. Once the aforementioned is achieved rather than have people leave the country for better education experience abroad, immigration on the basis of education would be achieved. This would in the long run drive the Tourism potential of the country.

On the flip side, the inability of a country to meet the widespread education yearnings of its people would drive brain drain.

b.      Global Perception: The global perception of a given country could make or mar its development potentials. The stronger the image of a country is in the global space, the stronger the impact of the image would be on foreign industries to do business abroad and vice versa.

c.       SMEs/Employment generation: In the middle of the concerns is the SMEs which is critical to driving employment generation. With the investment climate being equitable and favourable for business and the required skills, expertise and knowledge gained, employment generation vis-à-vis the SMEs would be easily attained.

d.      Foreign Direct Investment (FDI): Though briefly discussed earlier, the FDI is achieved through the promotional activities of government at encouraging foreign businesses and government to do business. These promotional activities are evidenced by the readily available and favourable investment climate within the country.

These said the World Bank ease of doing business report which is a global comparative analysis surrounding “starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency” says it all as these areas of discuss are pivotal to driving the required growth and development that would foster economic successes.

Tertiary Concern:

Tourism: Having put forward the earlier pointers in ensuring that the engine of any economy is appropriately lubricated, it is pivotal to note that one easy way to drive increased immigration numbers, as against emigration – thus brain drain – is through a productive investment on all concerns earlier discussed. This is in view of these making or marring the Tourism drive.

The Tourism concern is one that serves as a reminder to nations to regularly ensure that it is ready for business.

Tourism drive has positive effects on security, healthcare system and the availability of infrastructural facilities.