Government: Between private demand and business investment, By Uddin Ifeanyi

23 years ago, I lost my kid brother. He was in his early twenties. Full of life. An undergraduate, parties occurred around him. The runt of our litter. Understandably, therefore, his death was traumatic. I was old enough to have known him all his life — to have cared for and been worried about various aspects of him. Alas, his life was full of more trauma than my experience of his death was. For he suffered from sickle cell anaemia — and eventually died from complications associated with the disease. Because of this, while he was alive, there were those “crisis” moments when all that even the most optimistic of us could do was (despite the doctors’ best ministrations) await the announcement of his death. But he was a fighter, too. That is how awful it was. At such times, we could explain how it came to be that he was a “Sickler” — two parents with the wrong gene had gotten married. But there were never words nor combinations thereof that made sense of all that pain — it was always cruel and unusual.

Fast forward to a few months ago, when news broke of a revolutionary breakthrough treatment for sickle cell anaemia. Someone had let magic in on the light! Based on the CRISPR-Cas9 gene-editing technology, the treatment promised the cessation of the succession of the sickle cell disease sufferer’s crises and offered the bounties to cured sufferers of a normal life. My thought on first acquaintance with the news, was that I would have given everything for my brother to be alive in these times. However, at about US$2 million a pop for the treatment, my “everything” would have come well short of the desired goal several times over. Reflecting on the nuances involved here (a real and present medical need, effective but unaffordable cure provided by the private sector, and government’s responsibility for its citizen’s welfare — especially the poor and vulnerable), I could only come up with three related dilemmas.

I can imagine the conflicting emotions with which those currently living with this condition (and their kith and kin) would have processed the news of the new therapy. I sympathise, too, with the sense of a moral wrong that arises from the tension between a life and death need for something (food, drugs, care, etc.) on one hand, and the financial hurdles that impede access by the needy to readily available solutions on the other hand. In trying to solve this contradiction, we cannot ignore another source of tension: that between the price of a product or service on the one hand, and the way it affects the demand for and supply of the product or service. This dynamic means that were society to set the price of a product/service below the cost to providers of making this available, we would be disincentivising investment in the product/service concerned. In other words, if entrepreneurs cannot see a way to covering their costs through the prices they charge for their products and services, they will not invest in the research and development effort without which innovation atrophies.

Given these scenarios, what ought a responsible government to do? This is the third dilemma. One that Nigerian governments have faced perennially in the economy’s downstream oil and gas sector. And which since the incumbent federal government came into office, last year, it has struggled so shamefully with. There are apparently, three all-inclusive options. Governments could pursue programmes that reduce costs to help producers bring prices down. Long-term, this could include reforms of a structural nature: cutting down the number of steps needed to set businesses up, for instance, or consolidating government agencies that approve such steps into a single one-stop shop. Short-term, positive measures include tax reductions and rebates, and lower or zero tariffs for critical inputs. Negative, short-term, measures include the erection of tariff and non-tariff barriers to imports that threaten local products/services.

The problem is that for economies to grow and develop, these freebies cannot be at the cost of domestic efficiency. In other words, their exercise must result in a more competitive domestic business environment, or they would not be worth the cost to the public purse.

Unfortunately, there are no quick fixes to these dilemmas. On the path to their solutions, costs will pile up. In the case of the healthcare sector and new drugs for old ailments, these costs (especially the non-financial bits) could be terrible.

Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.