This article was first published by BBrief (pages 54-55) in October/November 2025 Issue
When I read about South Africa’s challenges, I see Nigeria’s reflection. Stadiums that stay empty, power cuts despite endless spending, and promises that more money will finally fix it.
As a Nigerian, I know too well the frustration of power cuts, failing infrastructure, and wasteful projects that begin with loud promises but end up half-finished or abandoned. Though I have never lived in South Africa, these woes make the struggle of the average South African strangely familiar. The details may differ – different names, different companies, different politics – but the disappointing outcomes of heavy government spending feel painfully close to home.
It’s such a tragedy that Nigeria, South Africa, and other countries keep facing these unpleasant results, when Ludwig von Mises described the cause and even pointed towards the cure about a century ago. Reading about Eskom, the stadiums left empty after the 2010 World Cup, and stimulus packages that promised jobs but fell short, I couldn’t help but see echoes of what we experience in Nigeria too.
From what I’ve gathered, South Africa’s power company Eskom has received enormous state bailouts, yet blackouts remain common, and households and businesses still live with load‑shedding. Then there are the stadiums built for the 2010 World Cup which, are used much less than one would’ve expected, given the money spent building them.
In Nigeria we see the same pattern. The Ajaokuta Steel Complex, started in the late 1970s, has consumed billions without ever producing commercial steel, as the “project that never ends.” The National Stadium in Abuja was built to the tune of hundreds of millions of dollars but now mostly sits unused and neglected.
When I first tried to understand why governments in Nigeria – and in recent times, South Africa – keep spending so much yet achieve so little, it was Mises’ economic calculation problem that made sense of it. Mises argued that real, voluntary market prices are essential for knowing what to produce, how much, and for whom. In a free market, prices emerge when people willingly buy and sell. These prices act as signals; they reveal what people truly want, what resources are scarce, and where effort should go.
A private investor risks his own money. If he guesses wrongly about what people need, he takes the loss. That risk keeps him cautious, constantly looking at price signals to guide decisions, but when governments spend taxpayer money, borrowed or printed money, those price signals don’t guide choices in the same way. The people deciding where to build, what to fix, and what to ignore don’t feel the same risk. They don’t see the same real-time feedback that private owners do.
In South Africa, this shows up in examples like the train carriages ordered by Prasa that turned out too tall for existing tracks. In Nigeria, it shows up in power plants that were funded but never connected to the grid.
The public sees what was built – the stadium, the big plant, the shiny office block, but what isn’t seen is everything that never happened because those same billions were used elsewhere: fixing older plants, improving schools, funding small businesses – all which would have been done voluntarily by individuals and businesses. Bastiat called this the problem of the unseen. Mises’s explanation for why it happens is that without real prices, planners can’t properly compare alternatives and opportunity costs. They’re effectively guessing, and on a national scale, guessing is very expensive.
Even stimulus packages follow this pattern. South Africa announced ambitious plans to create jobs after COVID‑19, but fewer jobs were created than promised. Nigeria had similar disappointments, with funds often captured by politically connected contractors rather than reaching people who needed them most.
Mises’ point was simple, real economic calculation requires real market prices, which only come from voluntary exchange. Without those prices, even the best‑intentioned governments cannot know where resources would do the most good. The result is often white‑elephant projects, wasted resources, and deep public frustration.
It is not only about corruption, although corruption makes things worse. Even if every official were perfectly honest, they would still face the economic calculation problem. Prices created by voluntary trade carry information that planners simply cannot replace with reports or expert opinion.
Yet the missing piece is always the same: spending guided by real prices that reflect real demand. Without that, spending decisions rest on paperwork and political bargaining, not on what consumers silently signal through their willingness to pay.
In both Nigeria and South Africa, the instinct to “do something” by spending more is understandable, but unless those choices are grounded in real, voluntary market prices, the spending often leads to disappointment. The economic calculation problem explains why money alone isn’t enough: it isn’t money itself that tells planners what society truly needs most.
As a Nigerian, it saddens me to see this cycle repeat, not just at home but in a country like South Africa too. Different histories and politics, but unfortunately, the same economic truth. Real prices, born of voluntary trade, are not just numbers on paper. They are the language that tells us where resources can actually change lives.
The same Mises who exposed the cause also pointed to the cure: step back and let competitive markets set the course. Cut subsidies, dismantle political monopolies, and hand sectors like power to owners who bear the risk of failure. When survival depends on profit and loss – not political orders – capital flows to where people genuinely spend their money. That’s when white elephants vanish, projects meet real needs, and nations break the cycle of throwing good money after bad.
