Menu

Politics as the engine of economic transformation 07 Sep 2026

Politics is more important than many economists and other development professionals recognise. This is particularly true when it comes to economic reform in developing countries. As economists and allied professionals emphasise the importance of institutions for economic growth, they often forget that the form institutions take in Western societies and other developed economies is the product of politics and political struggles. 

Daren Acemoglu and James Robinson won their Nobel Prize in Economics for the insight in their book, Why Nations Fail, that the wealth and poverty of nations depend on whether the institutions that developed over time were inclusive or predatory. Because many developing (or underdeveloped) economies were colonies, colonial institutions constrained their transformation. Because institutions enable and constrain actions and influence incentives, they determine economic growth and its nature. 

However, this powerful insight has been repeatedly criticised for oversimplification. There is no doubt that institutions largely determine economic growth and transformation. But how did these institutions emerge? How did they diverge? Politics is the answer. The major shortcoming of this insight is that it seems to suggest that, as a poor country, all you need to do to become rich is to borrow the same institutions that created wealth in a rich country. You do not need to go through their history. Therefore, politics is not that important.

This is not just simplistic but also wrong. Politics is very important. It explains the nature of institutions in a society. Major works in economic history, particularly those by Joel Mokyr, highlight how the Glorious Revolution of 1688 changed English politics and created institutional checks and balances that fostered property rights, the rule of law, and economic growth. But institutional change results from politics. An important aspect of the institutional foundation of economic development is that who controls political power and for what purpose determines which institutions are created or what roles they perform. History is important. But politics is at the heart of historical change.

As Nigeria struggles to find a way out of its economic stagnation, the role of politics in the dynamics of transformation receives insufficient attention in public discourse. Many economists prescribe macroeconomic changes to lift Nigeria out of underdevelopment. But if we consider the history of economic transformation, fixing politics is the way to fix the Nigerian economy. Political power is the resource for resetting the economic trajectory through institutional revision.

In 2027, Nigeria will have another opportunity to renew hope for transformation. Politics in Nigeria, as in most of Africa, has proved incapable of redirecting society away from the economics of predation and exclusion towards high-growth, techno-industrial transformation like that of the East Asian countries. This trajectory cannot change unless society-state relations change. Who holds political power, on behalf of which social groups, and for what purpose matter for how power is used in society. Experience from where economic transformation has occurred shows that the ruling elites need sufficient interest and commitment to ‘inclusive economic growth’, as Daren Acemoglu and James Robinson would put it, for transformation to occur. The Glorious Revolution in Britain changed the power relations between the merchants and the royalty, resulting in the peaceful deposition of King James II and the establishment of the Bill of Rights. If this peaceful revolution had not happened, we may not have seen a transformed Britain.
   
In stark terms, Nigeria’s economic transformation would require a disruption of a politics that breeds exclusionary and predatory economies. In a democracy, this transformation requires electoral victory for the social forces that have both the interest and the ideological commitment to disrupt and reconstruct society on a different conception of the state and society. If peaceful disruption is not possible, there is little chance of a redirection of social and economic development. Disruption requires actors with the right interests and commitment.

Will 2027 mark a pivot from an exclusionary, predatory economy to an inclusive, productive one? That depends on whether a new politics emerges. Politics is the heart of the economy. When Nkrumah urged African nationalists to seek first the kingdom of politics, he showed great insight. Electoral politics remain the only peaceful way to disrupt a polity and create a real possibility of transformation.

The question is whether electoral democracy can deliver a David and Goliath moment. Can we, in 2027, see the working people and their champions line up to defeat the ruling class whose interests are served by the status quo? As I write, the ruling party has constituted its presidential campaign council. What is striking about the council is that it comprises political titans with a proven record of wealth, incompetence and corruption. Everybody knows that the ruling party is the party of the status quo. The question is whether the opposition will be different. Will it constitute a presidential campaign council of working-class Nigerians? Or will it recycle the same political establishment? 

In other words, will there be a David-and-Goliath moment when the establishment is electorally defeated, and the status quo is disrupted?  

Sam Amadi, PhD, a former Chairman of the Nigerian Electricity Regulatory Commission, is the Director of Abuja School of Social and Political Thoughts.