Ajibola Adigun, Policy Innovation Center
In the first few days of President Bola Ahmed Tinubu’s administration, he has removed subsidies on petrol, signed the Student Loan bill into law in preparation for introducing tuition fees in higher education in Nigeria and removed the peg on how much the Naira exchanges for the Dollar. Although petrol price has increased, and the Consumer Price Index (CPI) – a measure of changes in the prices paid by consumers for a basket of goods and services – has increased from 527 points in March to 537 points in April, Nigerians seem to welcome these new slates of market reforms without so much of a whimper after the last administration’s’ dubious doctrinaire of socialism which made more Nigerians poorer than ever.
Market forces is the first law of capitalism, and accountants are the priests in the church of capitalism. The President’s professional career as an accountant and his firm faith in the laws of the market is now evident for anyone who has taken any interest. The stock and capital markets have reacted positively to President Tinubu’s monetary policies, with the stock market in a two month high in May. For those who count, Nigeria seems to be heading in the right direction. However, those who count in Nigeria seem to be quantitatively challenged as numbers are mere abstractions of imaginations, rather than a representation of reality.
The laws of demand and supply are the cornerstone of market economics. According to these laws, all things being equal, prices adjust based on the equilibrium between what consumers are willing to pay and the quantity of goods or services that suppliers are willing to provide. In theory, this ensures an efficient allocation of resources and promotes overall welfare. In practice, Nigeria’s voodoo governance system with weak judicial structures is likely to favor the few and entrench multi-dimensional poverty if more care is not taken to ensure governance that is all inclusive and leaves no one behind. The phrase that “government has no business in business” seems to now mean government has no business in governance.
When a nation lacks an effective judicial system, market participants can exploit the absence of legal repercussions to engage in price manipulation and anti-competitive practices. Without proper regulations and enforcement mechanisms, companies can collude to fix prices, create artificial scarcities, or engage in predatory pricing. This not only distorts the laws of demand and supply but also harms consumers by limiting choice and driving up prices.
In the absence of robust consumer protection laws and regulatory bodies, consumers are left vulnerable to unscrupulous business practices. Companies may sell substandard or unsafe products, mislead consumers through false advertising, or engage in unfair contractual terms. The laws of demand and supply cannot function optimally when consumers are not adequately protected, as their ability to make informed choices and demand quality goods and services is compromised.
Nigeria, with its weak corporate and public governance structures, ranks 150 out of 180 countries in Transparency International’s Corruption Perception Index (CPI). Corruption has become a significant hindrance to the proper functioning of market forces. When corruption permeates both public and private sectors, it distorts competition, undermines market integrity, and erodes trust in institutions. In such an environment, the laws of demand and supply become subverted as market outcomes are influenced by bribes, kickbacks, and favoritism, rather than fair competition and merit.
Sound corporate and public governance structures are essential for attracting investment and fostering economic growth. Without adequate mechanisms to ensure transparency, accountability, and protection of property rights, investors are reluctant to commit their capital. This lack of investor confidence hampers market development, as the laws of demand and supply struggle to operate in an environment characterized by uncertainty and perceived risks. As it stands, it will take some time before discerning investors can tell if the markets are rigged or not. That will be a question for 2027 elections.
A robust judicial system is crucial for upholding the rule of law, enforcing contracts, and resolving disputes. It ensures that market participants can seek legal recourse, have their rights protected, and rely on the stability and predictability necessary for market forces to operate efficiently. Furthermore, strong corporate and public governance structures promote transparency, accountability, and ethical behavior, thereby fostering a level playing field and a healthy market environment.
Market forces and the laws of demand and supply are fundamental concepts in economics, with the constant caveat “all things being equal” chorused. In Nigeria, the all things that are not equal include a solid judicial system and a robust corporate and public governance structures. Where these frameworks are weak, market outcomes become inconsistent, distorted, and unfair. Pricing manipulation, lack of consumer protection and corruption makes winners of a few and losers of us all.
