University of Nigeria Research Publications
NWAFOR, Ikenna Douglas
Aut
hor
PG/M.Sc/05/40192
Title
The Politics of Nigeria’s Economic Reform of
President Obasanjo and the international Financial Institutions (1999-2006)
Facu
lty
Social Sciences
Dep
artm
ent
Political Science
Dat
e
March, 2008
Sign
atur
e
THE POLITICS OF NIGERIA'S ECONOMIC REFORM OF
PRESIDENT OBASANJO AND THE INTERNATIONAL
FINANCIAL INSTITUTIONS (1999 - 2006)
NWAFOR, IKENNA DOUGLAS
A RESEARCH PROJECT PRESENTED TO THE DEPARTMENT
OF POLITICAL SCIENCE, IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE
(M.SC) DEGREE IN POLITICAL SCIENCE
UNIVERSITY OF NIGERIA, NSUKKA I
MARCH, 2008
TITLE PAGE 1
THE POLITICS OF NIGERIA'S ECONOMIC REFORM OF
PRESIDENT OBASANJO AND THE INTERNATIONAL
FINANCIAL INSTITUTIONS (1999 - 2006)
NWAFOR, IKENNA DOUGLAS
PG/M.SC/05/40192
A RESEARCH PROJECT PRESENTED TO THE DEPARTMENT
OF POLITICAL SCIENCES IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE
(M.SC) DEGREE IN POLITICAL SCIENCE
UNIVERSITY OF NIGERIA, NSUKKA
SUPERVISOR: PROF. M.I.O. IKEJIANI - CLARK
MARCH, 2008
APPROVAL PAGE
This research project has been certified for theDepartment of Political
Science, University of Nigeria, Nsukka.
- Prof. E.O. Ezeani
(Project Supervisor) (Head of Department)
~ h e k a l Examiner
DEDICATION
This research work is dedicated to His Royal Majesty Prince David
Chukwuka Ogbudo, the new born Prince of Atuma Igah Kingdom, Oshimili
North Local Government Area, Delta State. (6th March 2008).
ACKNOWLEDGEMENTS
My profound gratitude goes to God for being my keeper. I am gratefbl
to my Parents and my siblings. I recognize the efforts of my academic
guidance, Prof. M.I.0 Ikejiani-Clark who patiently guided me not
withstanding her tight schedule. My appreciation goes to all the lecturers of
the Department of Political Science, all student of both the Graduate school
and the undergraduate school and to all my friends all over the world.
Finally, I remain gratefbl to mankind.
Nwafor, Ikenna Douglas Political Science Department UNN
ABSTRACT
This research is conducted against the backdrop of evaluating the policy goals and objectives of President Obasanjo. In this light, the study is presented in five chapters. Chapter one is the general introduction of the study. It comprises such elements as the literature review, statement of problem, objective of study and significance of the study, theoretical framework propositions and method of Data collection/ analysis. Chapter two discusses the Historical Background1 the nature of international financial institutions imposed Nigeria's Economic Reforms: A Brief Historical Background, the emergence of structural Adjustment programme and economic crisis in Nigeria with the imposition of economic reforms by international financial institutions and the nature of the international financial institutions imposed economic reforms in Nigeria. Chapter three discusses the contradictions between the international financial institutions economic reforms and the Growth and popular welfare in Nigeria: President Obasanjo's Economic reforms and Popular Welfare in Nigeria, Nigeria's population, Health and education as the Bane of Human development indicator. Chapter four analyses Nigeria's Economic Capacity under president Obasanjo 1999 to 2006: Evaluation of President Obasanjo's economic capacity in Africa vis-A-vis West Africa between 1999 and 2006. Chapter five comprises of the summary and conclusion of the entire work
, and its futuristic recommendations. Based on the two propositions in the work, we theorized that Nigeria is largely influenced negatively activities with the international financial institution by the economic interests of both the imperialists and the . dominant class within the polity.
1.8 Method of Data Collection and Analysis ............................ 21
CHAPTER TWO: HISTORICAL BACKGROUNDITHE NATURE OF INTERNATIONAL FINANCIAL INSTITUTIONS IMPOSED NIGERIA'S ECONOMIC REFORMS
2.2 The Emergence of Structural Adjustment Programme and economic crisis in Nigeria with the Imposition of Economic refoms by International Financial Institutions ------- 33
vii
CHAPTER THREE: THE CONTRADICTIONS BETWEEN THE INTERNATIONAL FINANCIAL INSTITUTIONS ECONOMIC REFORMS AND THE GROWTH AND POPULAR WELFARE IN NIGERIA
3.2 Population as Human Development Indicator ....................... 49
3.3 Health as Human Development Indicator ............................ 5 1
3.4 Education as Human Development Indicator ....................... 52
CHAPTER FOUR: NIGERIA'S ECONOMIC CAPACITY UNDER PRESIDENT OBASANJO FROM 1999 TO 2006
4.1 Evaluation of President Obasanjo' s Economic Capacity in A h c a vis-a-vis West Africa Between 1999 and 2006------------ 59
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
. . . V l l l
LIST OF ABBREVIATIONS
BWI - Bretton Woods Institution
CDF - Collaborative Planning Framework
DEEDS - Democratic Economic Empowerment and Development
Strategy: Ibeanu, Okechukwu's Alternative to NEEDS
EU - European Union
FDI - Foreign Direct Investment
GDP - Gross Domestic Product
GNI - Gross National Income
GNP - Gross National Product
IF1 - International Financial Institution
IMF - International Monetary Fund
IPR - Intellectual Property Rights
IS1 - Import Substitution Industrialization
LDCs - Less Developed Countries
NAPEP - National Poverty Eradication Programme
NADECO - National Democratic Coalition
NEEDS - National Economic Empowerment Development Strategy
NEPAD - New Partnershp for African Development
OPEC - Organization of Petroleum Exporting Countries
PPP$ - Purchasing Power Parity in United States Dollar
PRSP - Poverty Reduction Strategy Paper
DECD - Organization of Economic Cooperation and Development
ODA - Official Development Assistance
R&D - Research and Development
S&D - Special Differential Treatment
SAP - Structural Adjustment Programme
SSA - Sub- Saharan Africa
TNCs - Transnational Institution
DRP - Debt Relief Package
UNDO - United Nations Development programme
CBN - Central Bank of Nigeria.
FOS - Federal Office of Statistics
WB - World Bank
LIST OF FIGURES
Fig 1.0: The Mechanism of Petro Dollar Recycling ------------------- 28
LIST OF TABLES
Table 2.1: Rate of Growth of Nigeria's Debts----------------------------- 29
Table 2.2: Nigeria's Foreign Debt Burden between 1999 and 2003 --- 3 1
Table 2.3: Nigeria's external Debt OutstandinglDebt Service Payment-3 1
Table 2.4: Nigeria's External Debt as at March 3 1'' 2006 -------------- 32
Table 2.5: Nigeria's Gross Domestic Product (GDP) ($), Population and Inflation Rate Compared From 1970 to 2006------------ 36
Table 3.3: Countries with the Highest Per Capita Income as at 1999 -- 44
Table 3.4: Countries with the Lowest Per Capita Income as at 1999--- 45
Table 3.5: The Gross Domestic Product (GDP) of Seven Industrialized Countries Compared with Nigeria and South Africa in & Millions as at 2005--------------------- 47
Table 3.6: The Gross Domestic Product (GDP) of 17 Poorest African Countries Compared with Nigeria as at 200512006- 48
Table 3.7: Population as Indicator of Developments ..................... 50
Table 3.8: Health as Indicator of Development .......................... 5 1
Table 3.9: Education as Indicator of Development ...................... 52
Table 4.1 : Selected Statistics of Basic Indicators of Nigeria's Development (The Obasanjo Democratic Experience) ------ 57
xii
Table 4.3: Nigeria's Total Gross Domestic Product (GDP) and Non-Oil GDP Compared Between 1999 and 2002 ----------- 60
CHAPTER ONE
1.1 Introduction
Preamble
Nigeria's economic reforms of President Olusegun Obasanjo and the
international financial Institution was seen to be dictated by the mood of the
international community and the general state of African economies. In 1999, Nigeria
domestic and external policies smack of offensive and obstinate nature of national
.conduct. Nigeria was more or less a parish nation with negative and offensive
international media attention. President Obasanjo's programmes have the nuances of
structural Adjustment programme (SAP) which is evident from the economic path
and Nigeria's image laundering all over the world.
In the 1980's, there emerged an intensive integration into the global market,
democratization process and economic reform which were presented as the key to
growth, and by extension for human welfare. This emphasis on the market economy
as a global economic doctrine was championed through the World Bank IIMF
programmes. The policy options were complementary of each other, mutually
reinforcing one another while on the other hand; there were promises of promoting '
the welfare of the people basically in the emerging nations of the world. The
international financial institutions .assumes that Nigeria was a product of structural
distortions in the economy based on the huge public (government) expenditure, high
wage structure, overvalued exchange rate, import regulation, over extended inefficient
and unproductive public enterprise and the discriminatory credit policies against the
private sector due to undue protection by the government. (Ikpeze, 2004)
The International Financial Institution attracted Nigerian government to the
adoption of economic stabilization policies embodied in SAP in July 1986 by Gen.
Ibrahim Babangida. As the military regime of Babangida brought the SAP, it was
developed to become democratic. While this was the underlying assumption of the
International financial institutions, the result of these policy prescription suggest that
both political liberalization and economic reform were separate processes that should
not be pursued simultaneously but the international financial institution had insisted
that they cannot be separated either in a concurrent manner.
Nigeria as a nation expects a profound leadership and policy or policies to
transform the enormous resources entrenched on and beneath its soil to achieve a
meaningful life for its citizens and befitting status in the comity of nations. It was part
of president Obasanjo's foreign policy strategy to attract foreign inflow of capital
intensified the privatization programme by divesting government interests in various
state establishments and deregulating the economy (Ikpeze, 2004). In fact, the
reasoning was that the struggle for the promotion of the living conditions of Nigerians
is also a struggle for the promotion of the implementation of economic reforms
policies or policy. The implication of this struggle is that Nigeria as an African state,
responding to economic reforms were made an internal and domestic socio-economic
and political conditionality for being poorer by their own ruling classes.
Nigeria under President Olusegun Obasanjo on such policies as privatization,
deregulation and cutting of public expenditure, foreign direct investment and debt
relied package was claimed to have done all in the interest of the poor citizens of I
Nigeria (Ikpeze, 2004). The question is how do such policy or public policy sustain
$he interest of the Nigerian masses. In spite of such open door policies and austerity
measures by the international community, their liberal incentives as regards with
Nigeria's growth and development proved abortive. In 1999, Nigeria was rated 98 out
of 99 nations surveyed in its corruption perception index
(www.trans~arenc~International.org). This further demonstrated Nigeria's
unprecedented level of poverty where Nigeria was ranked 145'~ in the United Nations
Human Development Index Ranking.
Nigeria's purchasing power parity or other wise known as per capita income is still
less than $(dollar)l per day.
The policy implementation of Nigeria's economic reforms of president
Obasanjo since 1999 to 2006 have engulfed the living standard of Nigerians. The
argument is whether the economic reform policies in collaboration of the international
financial institutions policy prescriptions are of human welfare or well being.
1
1.2 Statement of the Problem
The policy prescriptions of the International financial Institutions and the
implementation of Nigeria's economic reform programme of president Obasanjo from
all indications is aimed at addressing the reservations of the West as well as
reassuring them of Nigeria's preparedness to continuously chart the course of their
democratic government towards the development of Afr-ica and especially in Nigeria.
In other words, development of democratic process towards economic agenda was not
really in the platform of president Obasanjo's government. It appears that the more
nations such as Nigeria act under their own leadership capability or supported
development umbrella by1 the international community, the more the under
development condition was deeping. In other words, disdevelopment or
underdevelopment is a situation where the modest development of the past are
actually eroded in the effort to development.
Tracing the constraints of Nigeria's ineffectiveness and influence on issues of
policy prescription and implementation, the limitation could equally be perceived as
the central problem where the super-structural perspective, is a states relative
capability or capabilities. Consequently, the study of the input (internal) the process
and output (external) has confirmed the effect of Nigeria's economic standard and the
relative development issues on policy statement on all forms of economic
engagements such as bilateralism, multilateralism etc.
In particular, the study shall be premised on understudying the phenomenon or
institution and its consequences. Hence, the following research questions are
articulated and equally investigated.
1. Does the implementation of Nigeria's economic reform policies prove a
supportive structure for the welfare of the Nigeria people and their
economic growth and development?
2. What is the relationship between the activities of International financial
institution, Nigeria's economic integration with the capitalist global
economy and Nigeria's economic reforms?
1.3 Objectives of the Study
Every study has some set objectives which it tends to accomplish. Primarily,
the purpose of every research work is the identification of problem and proffering
solutions to it. The purpose of this research work is to examine critically the
implementation Nigeria's economic reforms programmes of president Obasanjo as
well as its consequences on economic growth and the role of International financial
institution. This places premium on the dynastic of Nigerians relation with the
international financial institutions and the politics of economic reforms between 1999
and 2006.
The study is set to examine the influence of globalization, resource
dependence and its conditionalities. It will equally specify the implication of poverty
on both democratization and development.
Consequently, the s l d y evaluates whether the policy goals and objectives
upon which implementation of these policies were based have achieved between 1999
and 2006 and finally, the study proposes strategies that Nigerian can adopt in other to
give Nigerians the dividends of democracy with regards to president Obasanjo's
economic reforms.
1.4 Significance of the Study
This research has both academic and social or policy significance. This work
serves as a source reference to student and scholars working on a similar topic.
Therefore, this study provides a theoretical framework or propositions with practical
impact is to analyze the politics of economic reform and democratization in the light I
of its policy manifestations such as privatization, deregulation National Economic
Empowerment Development Strategy (NEEDS) and National Poverty Eradication
Programme (NAPEP).
Theoretically, the study provides a framework for understanding liberalization
generally, liberal democracy, capitalist accumulation as well as the influence of the
political on the economic v is -h is the economic on the political or rather political
economy. Nigeria's economic reforms and the international financial institutions as a
subject matrix have been given scholarly discourse. The task of this study is to
conceptualize those activities of the International financial institutions in Nigeria
between 1999 - 2006. In light of programmes and policies implemented, their
inspiration is drawn from the policies of the International Financial Institutions. By
doing so, the study contributes to the existing debate and literature on the need for
internal support on the contcadictions of liberal development prescription. Therefore,
the work has both theoretical importance and analytical contribution as it serves as a
source of tracing the background study on Nigeria's economic reforms programme of
President Obasanjo.
The study provides empirical evidence in the form of figures, and statistical
data on the contradictions of economic reforms in Nigeria between 1999 and 2006.
Also, for heuristic reasons, the study tends to enhance the welfare of poor citizens of
Nigeria. It equally provides an alternative to the International Financial Institutions -
Poverty Reduction Strategy Paper - National Economic Empowerment Development
Strategy.
1.5 Literature Review
Every research work is essentially built on pre-existing accumulated 4
knowledge. Thus, quite a number of scholars have contributed to the debate on the
politics of Nigeria's economic reforms of president Obasanjo and the International
Financial Institutions. As a result, discussions among scholars on their examination of
the link between economic reforms and economic growth have diverged on a number
of key issues. Some scholars have argued in favour of economic reforms while others
argued on the contrary.
Economic reforms is an independent variable and Economic growth is a
dependent variable opposing their articulated views have reinforced the validity of the
relationship between these variables. Scholars have tries to expose the origin and
interest which economic reforms serve.
Amadi, Sam (2004: .8-18) contextualizing economic reforms from the view
point of politics of economic development, argues that the ideology behind the neo-
liberal economic reform is a structured ideological response of an organized corporate
and technocratic class whose interest are well served by the asymmetrical
opportunities outcomes of global capitalism, and a set of policy preference based on a
normative and prescriptive view of social reality: Amadi added that a times, the
imposition of new policies and institution occurs because international technocrats
invade domestic policy making area as, directly or through domestic acolytes who
share their world view and language and introduce powerful ideologies and
conditionalities in support of change. From domestic policy making, the international
actors also find domestic allies among international-oriented economic elites who
seek to talk advantage of new opportunities in international trade, financial
intermediation and technological innovations and advancements.
Okpokpo (1999) acknowledged that the President Obasanjo's administration
inherited a distorted foreign policy against the domestic policies, where Nigeria's
image abroad and its foreign policy in particular were given lethal blows by the
Babangida military administration. Okpokpo identified such blows as financial waste,
human right abuses and the recalling of all ambassadors and designated ones that
were vacant under Gen. Sani Abacha's regime. On that note, President Obasanjo
ppened the doors of Nigeria when addressing the session of the United Nations
General Assembly on 23rd $eptember, 1999. He stated that his regime had put in
place.
Policies aimed at revitalizing the economy in order to create an enabling environment for investment and growth.. .Also put in place appropriate legal framework for the protection of foreign legitimate profits.
(Olusegun Obasanjo: Nigeria, Africa and World in the Next Millennium of the
~ 4 ' ~ session of the UN-General Assembly. Thursday 23/9/1999, New York). By 2000,
President Obasanjo has authorized the preparation of a new trade policy under the
aegis of the Federal Ministry of Commerce.
Amadi, Sam added that National economic empowerment Development
Strategy (NEEDS) could pass as a World Bank reform programme for two reasons.
First, the content and language suggests it drew inspiration mainly or substantially,
from World Bank's development policies, especially as they relate to the market and
the role of the state. The second reason was that actors who worked out the
programme are affiliated with the International Financial Institutions. Hence, the
ideology that comes out from a critical reading of the NEEDS documents is neo-
liberalism which preaches a belief in "free market", the promotion of competitive
market capitalism, private ownership, free trade, exported growth, strict controls on
balance of payments and deficits and drastic reductions in government social
spendings.
In conclusion, Amadi remarked that NEEDS does not explicitly and positively
articulate any ideology because, ever though it is described as a Nigeria's home-
growth poverty reduction strategy. It build from the earlier two-year effort to produce
the interim PRSP (1-PRSP) strategy. Hence it does not espouse a particular ideology I
of economic development.
Ibeanu, 0. (2004: 17-27) argues in a similar line when he advanced reason
why poverty reduction is an ideology and Poverty Reduction Strategy Papers (PRSP)
the continuation of Structural Adjustment Programme (SAP) by other means. Ibeanu
posits that poverty reduction is anchored on a number of myths designed to create
, among its supplicants hope of a feature in which life will be better than the present, it
advanced the interest of dominant groups and bears little reflection of the realities of
the underprivileged, even as it proclaims the common good. Hence all these make it
to conceal the true class interest behind poverty reduction, which he defines as the
interest of global capital. Ibeanu argues that the NEEDS document is a very poor
reflection of the realities of many segments of the Nigerian society because there was
no debate in the formation and finalizing as well as noting that the ongoing
consultations is only an after thought because NEEDS does not seem to have well
thought through in terms of how the goals it espoused relate to each other, the
connection between the four strategies and how the above observation, he noted that
the acronym NEEDS has a ring of neediness and servility about it which gives the
impression that Nigerians are still articulating their needs more than four decades
after independence.
In conclusion, Ibeanu recommended an alternative to NEEDS given its draw
back. In otherwords, the democratic economic empowerment and development
strategy built on three organic related planks. He defines economic autonomy as a
constitution of a truly national production/accumulation process. Secondly, the
popular ownership of that process through the deepening of that process through the
deepening of democratic structure and culture and thirdly, the making of the Nigerian
masses to be prime beneficences of the outcome of national production in the process
by addressing their most pressing welfare needs.
As Raphael Mcculloch and Malcholm McPherson (2001:ll) divided the
liberalization process into four components such as:
Firstly, the design of a policy package. Secondly, its acceptance and endorsement by
top policy makers and later by the public, thirdly, its implementation is specific policy
measures and their administration and finally, the economy's response to change
incentives. Some scholars view. Economic reform as a major component of the
globalization process, and thus treated it as such in their analysis. And their opinion
on the role of the International Financial Institutions seem to converge. Scholars like
Wert, Robert (2000) observed that the term globalization is abused in at least three
. ways. First, is its use of by the international organization such as (IMF, World Bank
and G7) to control and restrict the policy making abilities of governments especially
in developing countries and imposing their own agenda symbolized by the Structural
Adjustment programme (SAP). Second, the use of the concept of the justification of
unpopular policies in developing countries. Third, in the employment of globalization
for justifying. the increasing acquisition of power by international political and
economic organization such as the United Nations (UN), the World Trade
Organization (WTO) and the European Union (EU). Neo-liberal globalization serves
as an evidence in the spread of IMF austerity programme across the globe and this
creates both chronic shruggish aggregate demand growth and chronic excess supply
and these tendencies reinforce another in a vicious circle. Thus, the unesitical
interrogation of these economies into the global economy, the neo-liberal model has
consequently made them more dependent on and hence vulnerable to global economic
In conclusion, Ibeanu recommended an alternative to NEEDS given its draw
back. In otherwords, the democratic economic empowerment and development
strategy built on three organic related planks. He defines economic autonomy as a
constitution of a truly national production/accumulation process. Secondly, the
popular ownership of that process through the deepening of that process through the
deepening of democratic structure and culture and thirdly, the making of the Nigerian
masses to be prime beneficences of the outcome of national production in the process
by addressing their most pressing welfare needs.
As Raphael Mcculloch and Malcholm McPherson (2001:ll) divided the
liberalization process into four components such as:
Firstly, the design of a policy package. Secondly, its acceptance and endorsement by
top policy makers and later by the public, thirdly, its implementation is specific policy
measures and their administration and finally, the economy's response to change
incentives. Some scholars view. Economic reform as a major component of the
globalization process, and thus treated it as such in their analysis. And their opinion
on the role of the International Financial Institutions seem to converge. Scholars like
Wert, Robert (2000) observed that the term globalization is abused in at least three
, ways. First, is its use of by the international organization such as (IMF, World Bank
and G7) to control and restrict the policy making abilities of governments especially
in developing countries and imposing their own agenda symbolized by the Structural
Adjustment programme (SAP). Second, the use of the concept of the justification of
unpopular policies in developing countries. Third, in the employment of globalization
for justifying. the increasing acquisition of power by international political and
economic organization such as the United Nations (UN), the World Trade
Organization (WTO) and the European Union (EU). Neo-liberal globalization serves
as an evidence in the spread of IMF austerity programme across the globe and this
creates both chronic shruggish aggregate demand growth and chronic excess supply
and these tendencies reinforce another in a vicious circle. Thus, the unesitical
interrogation of these economies into the global economy, the neo-liberal model has
consequently made them more dependent on and hence vulnerable to global economic
shifts with adverse consequences in unemployment rates real minimum wage, welfare
of the poor, and the urban informal sector.
Ikpeze (2004) has observed the context warranting the review as poor national
record on non-oil sector, especially manufactured exports, uncoordinated structure of
protection among the ECOWAS member states, dumping of substandard
goods/services, protectionism abroad and new international rules of evolving global
financial architecture and pressure for regional harmonization of trade, investment
and industrial policies. He believed the President Obasanjo's government identified
full integration with the global economy as path to economy or economic growth and
development and thus adopted the philosophy of trade liberalization.
Aina (1999: 68) stated that globalization in terms of deregulation and
liberalization of African economies has been achieved not through the powers and
compulsion and pressure available to international creditors and financial institutions.
He maintained that the economic restricting project was therefore, a major component
of the globalization process introduced to Africa in the form of structural economic
reform programmes or structural adjustment programme all of which are
interdependent and mutually reinforce.
NEEDS according to Soludo, C. (2004) observed that NEEDS has provided
the missing trick in all previous development plans that is workability. He Wher
argued the NEEDS was different from previous plans in four keys or key ways which
he identified as the participating nature of the planning process, the collaborative
planning framework (which recognizes that Nigeria is a federation consisting of the
content as well as implement ability. Soludo equally argues that NEEDS rested on
four strategic pillars namely reforming the way government and its institution work,
growing the private sector, implementing a social character for the people and
reorientation of the people with enduring African value system. He conclusively
maintained that NEEDS is anchored on the fact that Nigerians or Nigeria has all it
takes to be one of the leading economies of the world.
Ibeanu, 0 . (2004) disagrees with Soludo, C. (2004) by providing a counter '
institutive as he argues that structural Adjustment programme (SAP) and Poverty
Reduction Strategy Paper (PRSP) pose a development process that is economically
and politically stable, all of, which give rise to demands for the dranial of the state.
Ibeanu believed that these principles are regurgitated in PRSP, he argues given the
fact that while participatory development addresses the question of ownership of the
development process, PRSP dwells on the need for the poor to make an input into the
process for formulating PRSP, not because the poor have to control the process, but
because they (poor) understand poverty. On the same contradictions, Ibeanu, 0.
(2004: 21-24) further argued that by observing that PRSP do not consider the long
term poverty reduction goals and long term development strategies. It is factual that
the widening income different between the rich and poor, workers and employees of
labour, and different regions of the country to be a characteristic of the Nigeria even
when it speaks expansively about poverty reduction and wealth creation. Ibeanu
concluded by prescribing that the National Economic Empowerment Strategy
(NEEDS)-Democratic Economic Empowerment and Development Strategy (DEEDS)
as an alternative to NEEDS, which he says has a ring of neediness and servility in its
acronym.
On the second note, Amadi, Sam (2004) observes that the good press enjoyed
by the NEEDS is traceable more to the personality of those behind the policy, than the 4
good faith and merits of the programme. Amadi argues that the emphasis on the
private driven economy might be misplaced in view of enormous investment in
human capital development. Also he added further that role of the state in terms of a
state that intervenes in the market process to align incentives to produce desirable t
outcomes and to achieve publicly determined economic development which NEEDS
pursues, even though such role is inevitable for the transition from underdevelopment
to developed economy. He added that some of the programmes of the reform are well
meaning and desirable but that the overriding direction and philosophy of the reform
unduly constraints the administrative apparatuses of the state as a business participant
in ensuring real and enduring economic development. In conclusion, Amadi
advocated for the empowerment of people to engage in service delivery. But
questions then incentives to good governance in the face of massive electoral fraud,
while he predicted the failure of policies in the past on governments inability to
mobilize civil society participation.
Similarly, in 2003, Amadi, Sam used on the economic reform programmes in
terms of privatizing without reform. He argues that because privatizing itself is not
accompanied or proceeded by an aiticulated and properly phased public sector reform
would not result in more efficient production of public goods nor make significant
positive impact to fiscal balance. He further traced the origin of privatization by
arguing that privatization made its entry into the political lexicon of governance in
Nigeria as a component of the structural adjustment programmes recommended by
the International Monetary Fund (IMF) as policy panacea for economic crises of most
third world countries, especially sub-Sahara Africa, during the global fiscal crisis of
the 1980s.And was conceived and executed as an emergency measure to deal with
fiscal and monetary crisis and tied together to conditions for loans from international
financial institutions especially the IMF and the World Bank
Contrasting Nigeria's economic reform programme with the industrial I
countries where reform was aimed at overcoming inefficiencies in service delivery,
and to cut back expenditure by getting more dollar return but emphasizing more on
innovation creativity and efficiency in public good provisioning, he argues that
Nigeria's and some other African countries started public sector return under IMF
pressures and dilemmas of fiscal crisis and declining standard of living is starkly
different.
Based on the foregoing observation, Amadi criticized the Nigerian government
justification for privatization programmes on the basis of the anticipated gains or
efficiency in gains it will record. He equally removed the fact that privatization was
not preceded by a completion law nor a serious plan to ensure that privatization
companies do not become monopolies. Thus, he argues that privatization sometimes
work against democratic practice. Hence, the urgency to conclude privatization
programmes as quickly as possible so as to begin to reap whatever benefits there are
often work to encourage short cuttings democratic processes that can still the process.
Moreover, he added that the process of privatization in Nigeria is not
connected to an articulated programme of public sector reform. And that its
justificatory rhetoric points to efficiency gains which proceeds from the assumption
that the main cause of efficiency in state owned enterprise is the fact of public
ownership. He concluded by noting that the standard critique of development
programme and policies is that they owner simplify the political process and mystify
the role of power and domination in the construction of social institutions. And
reinforced his conclusion by asserting the deregulation is politics, because if involves I
the strategic calculation of power winners and losers to impose costs or provide
benefits to technocrats and bureaucratic or bureau carts in power.
President Obasanjo endeared himself and the entire country to the IMF, World
Bank and various international cornmunitiesl organization. His policies both
economic and political also cover the trends of New Partnership for African
Development (NEPAD). Asobie, H.A (2006) in his lecturers criticized NEPAD as
obtaining its very essence from the neo-liberal orientation. He argues that NEPAD's
basic assumptions as a result of its theoretical foundation are long and unlikely to lead
Africans especially president Obasanjo's programmes to development.
He consequently advocated.for the application of democracy and its principles I
in issues of economic diplomacy rather than good governance that does not allow the
principles of participatory diplomacy in development.
In spite of the divergence of opinion and views among scholars, they all seem
to agree to the fact that there is a positive relationship between, the globalization
process, the sole and activities of the international financial institution, ideological
shift, on the one hand and the structural adjustment programmes which entail the
introduction of rapid structural changes in the Nigerian economy in favour of market
relations supported by an organized corporate and technocratic class whose interests
are well served by the economic reforms. To an arguably state, starting from
Nigeria's image laundering in 1999, president Obasanjo played that role based on the
changingness of the decision-making system or actors who only define their situation
to be built around the protected action as well as the reason for their action.
Obaseki, Peter (1999), writing on globalization and the Nigerian economy, is
of the view that Nigeria loses nothing by engaging in a multilateral trade system.
Though, his main thesis is on globalization, it is relevant to this work to the extent
that he defines it as "the integration of national economies through trade and financial
interaction". He goes further to state that trade and investment integration is one of
the two main categories of globalization. These are no less what the WTO seeks out
to achieve. While countering the arguments of the radical theorists and early
proponents of development economics who believed that growth can be internalized,
Obaseki argues that recent developments in the world economy have shown that it is
futile for countries to isolate themselves in a rapidly integrating world which is
mostly brought about by international trade.
Obaseki also believes that trade liberalization enhances economic growth and
development; that the extent to which a country liberalizes its trade goes a long way
in determining the level of its economic growth. In order to operate within the frame
work of the multilateral trading system, countries have to embark on the policy of
removal of barriers to international trade. The author is equally of the view that there
is a corelationship between international trade and Foreign Direct Investment (FDI).
According to him, the "integration in trade was followed and facilitated by FDI flows
between countries that were involved in trade relations,. .. it was, therefore, not
surprising that the countries that traded more among themselves also recorded
substantial FDI flows across their borders". Still on the benefits countries like Nigeria
can.derive from being part ahd parcel of the multilateral trade system, Obaseki writes
that the increase in world trade and output ensures that consumers derive the best
satisfaction since the best standards of quality are maintained through specialization
and competition. Moreover, the volume of goods and services increase with the
welfare of individuals enhanced across countries. The author goes further to state that
trade and investment can aid efforts at restqucturing an economy to make it more
competitive. All these things, according to the author, "help to increase global wealth,
enhance living standards, ensure poverty reduction and improved welfare for the
individual".
In as much as countries cannot isolate themselves entirely from the rapidly
integrating world as Obaseki has pointed out, the problem still remains as full
integration into the world economy, especially through international trade, has not
equally demonstrated rapid growth and development for the developing countries as
promised. Moreover, in a system that is characterized by inequality and imbalances,
the interest of the weaker countries can hardly be protected. The increased
competitiveness which international trade brings about only tends to favour the
countries which export manufactured goods more than it favours countries like
Nigeria which exports primary products.
Also, the idea that consumers derive maximum satisfaction as a result of high
standards of goods brought about by specialization and competition can be faulted.
No available study has shown that Nigeria's involvement in the multilateral trading
system has increased the quality of products imported from, or exported to, other
countries. Taken the fact that Nigeria strives to improve on the quality of its exports
in order to, at least command some acceptability into the markets of the developed
countries, the goods coming from abroad into the country have shown the contrary
most of the time. Most importantly, Obaseki has not shown adequately how Nigeria's
full integration into the global economy through a total involvement and participation t
in the multilateral trading system can impact on national development.
Kamal Saggi, writing on "International Technology Transfer and Economic
Development", sees the importance or relevance of the tradition system (especially to
the developing countries and the LDCs) from the perspective of technology transfer.
He starts by stating that developing countries lag behind the technology frontier and
as a result of this, they face the problem of how best to bridge the technology gap. He
expressly gave two suggestions as regards how to solve this problem. The first is that
the developing countries need to rely on the inflows of foreign technology, while the
second is that they have to equally rely on indigenous research and development
(R&D).He then asked if it would not be better for the developing countries to simply
import technology from those who have a comparative advantage to produce them,
instead of relyng on the domestic R&D.
He however gave two reasons why it is not all that feasible to purchase
technology. While the first reason has to do with the fact that technologies are rarely
produced now on the principle of specialization based on comparative advantage, the
second is that technological acquisition is not a one-time decision but an on-going
process. Therefore, it is not simple to transfer technology, it requires a complex
process.
Moreover, the exchange of technology is costly especially on the part of the
country receiving it, and that an important aspect of a country's economic
development is the reduction of such costs which will enable it to update its
technological know-how continuously. Saggi's contention is that since the developing
countries cannot always meet up with these costs, foreign technology acquisition "can
be facilitated by increasing the local stock of human capital", but more importantly,
by "removing the regulatory and institutional constraints faced by entrepreneurs.".
The removal of these restrictions improves the inflow of technology. Of all the
channels through which technology can be transferred, the author states that Foreign
Direct Investment (FDI) is 'more beneficial to the developing countries more than
other channels which include licensing or joint ventures.
Keith Maskus (2002)ladds another dimension to this debate. This dimension is
that the protection of intellectual property can enhance technology transfer and
therefore, close the technology gap between the developing countries and the
industrialized countries provided the developing countries have "appropriate
complementary endowments and policies". Maskus agrees with Saggi that technology
can be transferred through international trade in goods, FDI, and licensing of
technologies and trademarks to firms, subsidiaries, and joint ventures. He states that
the transfer of technology (by any of these channels) depend in part on local
protection of Intellectual Property rights (IPRs).
In a reference to his earlier work (Maskus, 2000)., he write that "evidence
shows that international trade in high-technology goods depends positively on the
strength of patent regimes in large developing countries". The point being made by
Maskus is that there is a strong correlation between the level of IPRs protection or
ability to enforce contracts and the transfer of technology. He goes on to state that
"intellectual property rights not only promote R&D and product innovation", but that
they equally "encourage the development of interregional and international
distribution and marketing networks that are important for achieving firm-level scale
economies".
Eskor Toyo (2002:6 - 17) enumerated & discussed seven basic problems that
characterize capitalism, especially those at the periphery. Using Nigeria as a case
study, Toyo analyzed the fate that befalls capitalist countries at the periphery in the
world market constructed by capitalism.
The first major problem brought about by capitalism is dependence. By this,
the author means the "dependence of an economy on the desires and activities of
trans-nationals as well as its dependence on an international division of labour and
would exchange system which is neocolonial". It entails the subordination of one
country to the needs and motions of another. The economy that is subordinated is to
that extent a satellite of the one to which it is subordinated. In other words, the
international capitalist system is predatory and unequal. The main decisions are taken
in the centre and force down on the periphery. In the words of the author, "the
relationships in the capitalist determined international environment are structured '
with a bias against developing countries". Taking this further, Toyo stated that in the
present international economic relations, the major manufacturing countries have a
much stronger bargaining power than those that mainly on the raw material exporters
for markets for their goods, the raw material exporters depend almost entirely on the
industrial countries for markets for their products.
The second problem rooted in capitalism is parasitism which the author stated
is derived from the capitalist character of the economy as well as from the neocolonial
form in which this capitalism exists. In this neo colonial situation, the national
capitalist class enters into alliance with metropolitan capital for the joint exploitation
of the working people of the neocolonial country. This joint exploitation enables if
accumulate wealth faster than it would otherwise have done.
The third problem is disunity. According to Toyo, the colonialists were
interested in tampering with traditional society only to the extent that this would
permit the effectiveness of their rule and the creation of a dependent market and a
cheap raw material source. He wrote that according to the directions of capitalist (in
competition); capitalist against worker; monopolist against non-monopolist; landlord
against tenant; money lender against borrower; seller against buyer; metropolitan
country against colonial country; centre against periphery. According to him,
exploitative competition, competitive accumulation and power grabbing make the
capitalist society always a bitterly divided and unequal society.
The fourth problem is that of instability. A capitalist economy, the author
states, is inherently a very unstable system. It produces inflationary tendencies,
depressions, balance of payments disequilibria, stock market booms and crashes,
strikes and contradictory changes of governmental policy by its very nature. The fifth
problem capitalism throws up is backwardness and stagnation. The sixth and seventh
are inhumanity and inefficiency.
In this description of capitalism, Toyo observes that under it, the basic
economic law is the production of competitive or more than competitive surplus
values, it will not be undertaken under capitalism. In other words, if it does not yield 4
at least competitive surplus value it will be abandoned. In his definition of capitalist
economy, he opines that bourgeois writers reference to capitalist economy as simply a
market economy, or a private enterprise, or money economy is deliberately meant to
mislead and divert attention from the predatory character capitalist production
relations.
The Gap
From the foregoing, it is evident that these works have addressed the problem
under study in positive and negative terms. There is still a gap in the literature in spite
of the volumes that have been written on this subject. The gap is that majority of these
authors whose works were reviewed actually wrote on the deteriorating or rather
debased Nigeria's economic reforms and their relationship with the international
financial institution during president Obasanjo's civilian government. This research
work, therefore, intends to fill their gap by concentrating specifically on Nigeria with
a view to finding out how her economic reforms policies and implementation as
regards with the international financial institutions programme in Nigerian economy.
1.6 Theoretical Framework
The idea of positing a theory in a study of this magnitude cannot be
overemphasized. This is ddamental because theoretical framework constitute the
foundation or basis fortof analysis.
For the purpose of this study, the theoretical basis shall be narrowed to the
analysis and propositions of the "Marxist Political Economy Paradigm" which was
propounded and developed by Karl Marx and Frederick Engels and later fiuthered by
V.I. Lenin and other contemporary Marxist Scholars and faithful.
Marxist conception of political Economy is basically pinned down to his
original conception of capitalism. According to Gilpin (1987: 35) "Marxism
characterizes capitalism as the private ownership of the means of production and the
existence of wage labour". It furthered by saying that capitalism is driven by
capitalists striving for profit and capital accumulation in a competitive market
' economy. Labour has been dispossessed and has become a commodity that is subject
to price mechanism. In Marx's view, these two key characteristics of capitalism are
responsible for its dynamic nature and make it the most productive mechanism yet.
This fimdamental attribute of capitalism is in accordance to the Marxist school
of thought is the basis for the inherent contradiction in the capitalist society. The
irreconcilability of class antagonism is responsible for the persistent conflict between
the bourgeoisie that is the class that owns and controls the means of production and
distribution and the proletariat which constitute the class that depend on the sale of
their labour depend on the sale of their labour power as a means of livelihood.
Besides, this contradiction that has rendered so many people powerless and
alienated from the means of production and distribution causes so many people to be
frustrated and hence accounting for the proliferation of the inequality between the
national bourgeoisie and the proletariat as classes, and the technological end of
globalization, which it describes as the manipulation of the global society for the
pursuit of narrow individual and enlist interest. In the contest of this work, this
manipulation is done through the institutional framework of the international financial
institutions in collaboration with the ruling classes.
The global society is seen as one huge market, in which the logic of
commodity production and exchange derived at the economic level (globalization,
liberalization, deregulation) economic reforms derives both at the political and
ideological level (democracy and governance). Two classes are discernable in such
society. These classes are as follows: The national bourgeoisie in collaboration with
International Financial Institutions which manipulate and control the national
economy by setting the rules and terms of the national economies and the global
proletariat which are manipulated, and thus the losers of the manipulation which take
the form of privatization, deregulation, cutting of public expenditure, etc.
The object of labour and the means of labour constitutes the means of
production. The means of production is very important to man's existence. Without
the means of production, man cannot produce its needs a person deprived of the
means of production becomes helpless because his labour power cannot be of use to
, him. There is always conflict between the bourgeoisie and the proletariat in any
society as it is exemplified in the .Nigerian economic reforms and the perception in
terms of the ability of the iiternational financial institutions to influence the national
bourgeoisie, represented by the Nigeria state to accept certain economic policies,
which impoverishes the poor but makes the rich richer through policies which
promise the poor that the future would be better than the present, even though could
be short term pains but long term gains.
The political and economic structure function according to the norms of
formal equality defined ability to cast vote, but inability to determine the electoral
outcome. And ability to produce for the market without enjoying the up coming
moves. Thus, at the economic level of liberalization, privatization and deregulation
are the agency at economic reform, Hence, the law of demand supply (market forces)
are the rule of the state. At the political level, the agency is the liberal democratic
state supported by experts and technocrats having connections with the international
financial institutions. I
In Nigeria's context, the political economy paradigm sees economic reform
only and the fiscal crisis upon which it was imposed on Nigeria as a condition for
getting more resources for, development as avenues for transferring Nigeria and
making them a dumping ground for foreign made goods. In Nigeria, President
Obasanjo's programme on NEEDS is seen as a policy designed by the International
Financial Institutions handed down to their agents within the governments for
implementation with a view to restructure or structure the economic in such a way
that sustains the interest of the capitalist.
In other words, as the premium on the interest of the capitalist private sector of
the economy rose higher and higher with the intensity of the policies implemented,
the more the masses get the more the International Financial Institutions and
the national bourgeoisie capitalist capitalizes on the need to fight their poverty to
mobilize with the International Financial Institutions which provide the resources. It
is shared among them, or used in projects that the entire, majority or poor would
completely do not benefit from. While President Obasanjo's NAPEP is perceived as a
Nigerian programme, the SAP and the PESP are programmes on a global scale.
Due to the inherent contradiction in the society which eventually leads to
conflict between the bourgeoisie and the proletariats, the need for a dialectical and
organic relationship between globalization, democratization process and economic
reforms and development crisis on.the development of nations such as Nigeria should
be practicalized through individual participation than an ordinary notion of good
governance. The theoretical insight provides both conceptual and analytical
framework through which Nigeria's economic reforms of President Obasanjo and the
relations with the International Financial Institutions could be understood.
1.7 Hypotheses
1. The implementation of Nigeria's economic reform policies imposed by
International Financial Institutions impact negatively on the living
conditions and welfare of Nigerians.
2. There is a positive relationship between the Nigeria's integration into the
global capitalist economic reforms; it will increase poverty level in
Nigeria.
1.8 Method of Data Collection and Analysis
By the nature of our propositions, Data for this study will be based mainly on
secondary sources. The secondary sources will be essentially information gathered
fiom library stock. The research design of this study is based on export facto (after the
facts) analysis of documentation or documentary evidence. This is based on the
examination of dependent and independent variables after the events have taken place
and the data already in evidence. In export facto designs, validation of the
propositions involves observing the dependent and independent variables at the same
time because of the effects which have already taken place before the investigation.
This requires making use of textbooks, record keeping activities of
government agencies, private institutes, the internet, journals and conference papers
and interview reports. The analysis of the topic under study shall be undertaken using
available document gotten mainly fiom statistical tables, simple percentages will be
used. The tables would enable us to arrange the quantitative information collected in
an organized manner so as to arrange the quantitative information collected in an
organized mamier. This would equally enable us to arrange the interpretations and
also make inferences on the consequence of economic reforms in a time series from
1999 to 2006.
Such interpretation would help us to compare the impact of economic reforms
on Human Development indicted inflow of foreign Direct Investment aid, Jobs
created gross domestic product, per capita income, balance of payments, educational
enrolment and all forms of Nigeria's economic capacities or capabilities in other to
ascertain whether the policy has either positive or negative impact on Nigeria's
growth and development.
1.9 Scope and Limitation of Study
In as much as this study is broad based and multifaceted, it is equally
imperative to state a clean cut scope and limitations of study. The period which the
researcher wishes to cover in this study is from 1999 to 2006. In other words, the
impact of Nigeria's economic reform as well as the role of the international financial
institutions in Nigeria's economy with specific reference to such policies as
privatization, deregulation, NEEDS and various economic capacities of President I
Obasanjo. This equally implies that reference shall be made beyond this time series
for clarification and producing the analysis within the framework of President
Obasanjo administration.
The study covers those public policies made within this period which had as it
national objective as poverty reduction, national growth and foreign investment in
Nigeria.
REFERENCE
Aina, A.G. (1997). Globalization .and Social Policy in Africa: Issues and research Directions. Dakar-CODESRIA. Pp. 68.
Amadi, Sam and Ogwo, Frances (eds) (2004). "Conceptualization NEEDS: Economic/Political Reform in Nigeria", Reports of Civil Society Policy Dialogue on the National economic Empowerment Strategy (NEEDS), Human Rights Law Services (HURILAWS) and Centre for Public Policy and Research, (CPPR) Lagos. Pp. 8 - 1 8.
Asobie, H.A. (2006). Unpublished Lecture notes. University of Nigeria, Nsukka.
Gilpin, R. (1987). The Political Economy of International Relations, New-Jersey, Princeton University Press.
e m
Ibeanu, Okechukwu (2004). "Nigerian State and the economy under President Obasanjo", Paper presented at the National Conference on Nigerian Government and Politics. An Appraisal of Performance, 1999 - 2004 held at the University of Nigeria, 20 - 22 April, 2004. Pp. 17- 27.
Ikpeze, N.I. (2004). "The Nigerian Economy: Performance in the Current Republic", Paper Presented at the National Conference on Nigerian Government and Politics: An Appraisal of ~erformance, 1999-2004 held at the University of Nigeria, 20 - 22Aprial,2004.
Maskus, K. (2002). "Benefiting from Intellectual Property Protection in Bernard Hoekrnan et a1 (eds.) (2002)
McCulloch, R. and McPherson, hi. (2001). "Promoting and Sustaining Trade", and Exchange reform in Africa: An Analytical Framework in African Economic Policy" Discussion Paper No. 59, March 2001 pp. 1 1.
Obasanjo, Olusegun, A. (1 999). "Nigeria, Africa and World in the Next Millennium". Speech delivered at' 54th Session of the United nations General Meeting Assembly. New York on Thursday 23'd September, 1999.
Okpokpo, E. (1999). "The Challenges Facing Nigerian's Foreign Policy in the Next Millennium" In African Studies Quarterly. Volume 3, Number 2:4 h~://web.africa.ufl.edu/asq/v3/~3 :3a16
Saggi, KamaP (2002). "International Technology Transfer and Economic Development " in Bernard Hoekman et, aP (eds.) Op. Cit.
SoPudo, C.C. (2004). In Ekpo, H.A. (2004). The Nigerian Economy under a New Development experience: The Charles Soludo effect, University of Nigeria, Nsukka.
Toyo, E. (2002). The Economics of Structural Adjustment: A study of the Prelude to Globalization. Lagos; First Academic Publishers.
Wert, Robert (2000). Globalization: Neo-Liberal Challenge, Radical Responses, London: Pluto Press.
CHAPTER TWO
HISTORICAL BACKGROUNDITHE NATURE OF INTERNATIONAL
FINANCIAL INSTITUTIONS IMPOSED NIGERIA'S ECONOMIC
REFORMS
Introduction
The aim of the researcher here is to highlight the emergence and obscure
character of the international financial institutions imposed economic reforms oflin
Nigeria as part of a wider problem of accumulation which resulted to the deterioration
in the average performance of the productive sector of the economy a deficit balance
of payment, a yawning gap between social services and infrastructure, an alarming
rate of inflation, a fall in standard of living and external assets.
Nigeria's historical integration into the global political economy described or
describes the imposition of its (Nigeria) economic reforms. Nigeria as part of the
peripheral states trade raw-materials or extractive goods and services to these nations
of the West and on the other way round purchase these finished (manufactured) goods
and services costly to the detriment of the individuals or citizens. Invariably, making
Nigerians or Nigeria debtors of international financial institutions and nations of the
west. Nigeria's indebtedness is ostensibly due to the relative exchange relation
between the Nigeria currency (Naira) and the United States currency (dollar). The
value of both Naira and Dollar in trade relations implies that if Nigeria values their
goods and services exported abroad and the imported goods and services are in
equilibrium, Nigeria would still source for resources abroad to finance its trade
relations in imports given the relative exchange relations between the naira, the price
of primary or extractive materials which are inelastic and the value of international
exchange rates.
Nigeria, being dependent on the world market as an exporter of extractive
materials to developed countries do not indulge in industrialization which is the major
bane for any developing nation's development rather they preach on agricultural
productivity that has a lower percentage in income earnings than that of the I
industrialized sector. To this effect, Nigeria became susceptible to external shocks of
the global economy. Having been integrated into the global capitalist economic
system with its system of false interdependence that basically served the intents and
purpose of imperialism, a system of division of labour in the international community
made Nigeria with her third World counterparts specialized in the acquisition of
extractive materials while the North undertake the manufacture of these extractive
materials at an outrageous price(s). Based on the afore web of economic imperialism,
the less developed countries, especially Nigeria fall victims of not only debt
imperialism but also impoverishing its citizens because they cannot afford the prices
of its imports. Hence, they are left with the option of borrowing from the international
community or responding to policies of "Do as I say" from the international
community to purchase such needed goods and services.
2.1 Brief Historical Background I
The history of the imposition of economic reforms on Nigeria by the
international financial organization is a history of Nigeria's integration into the
Western Structure and Monopolized world capitalist system. Therefore, the seeds of
the 1980s debt were sown in the 1974 - 1979 when there was a vital explosion in
international lending caused by the first major Organization of Petroleum Exporting
Countries (OPEC) price increase. Nigeria leaders often view reform in terms of the
minimum quid pro. quo for obtaining financial assistance rather than as an end in
itself placed in Nigeria's .context, one could understand the former President
Babangida's declaration that Nigeria economy had become a capitalist one as
opposed to the hitherto mixed economy reflected in the first National Development I
Plan (NDP) (1962 - 1968) as not only an ideological shaft but also a role in the
service of international financial institution and foreign capitalist.
For Nigeria to meet the growth and development needs, many countries began
to import heavily, especially of capital goods and services. Following high oil prices
and world recession in which the growth rates of advanced countries fell from an
average of 5.2% between 1967 - 1979 to an average of 2.7% for the rest of the 1970s
(IMF, 1988, 2001), Many developing nations, which had began expanding their
exports tied to their development strategies, sought to sustain their growth rates
through increased borrowing. While lending fiom official sources increased, it was
not enough top take care of growth needs of the middle income and newly
industrializing development countries. With the increased demand for capital and the
advise that developing nations should borrow more money because their problem was
their under borrowed nature.,
In view of the above .need for capital demanded by the developing countries,
commercials banks are hold back the OPEC supplies which rose to $7 billion in 1973
to $68 billion in 1974 and 'reached its peak at $1 15 billion in 1980 (IMF, World
Economic out look, 1988, 2001) competed in lending to developing countries on
comparatively permissive and favourable terms. An illustration of the recycling of
OPEC petroleum dollar permitted countries like Nigeria to maintain relatively high
rate of growth with little debt servicing difficulty. Source: IMF survey Vol. 28, No. 7,
April, 1999.
Fig. 1.0: The Mechanism of Petro Dollar Recycling
OPEC Nations Export Europe, Japan, and U.S send dollar to OPEC Countries to pay for imported oil
Euro dollar market
E, M Europe and U.S Banks lends OPEC's Petro Dollars to developing country borrowers, leading to debt expansion
Europe and U.S Banks lends OPEC's Petro Dollars to developing country borrowers, leading to debt expansion
OPEC Nations Deposit Dollars in U.S and European Banks
I I ,
Source: John Charles Pool, Stephen C. Stamos, and Patrice Franko Jones, the
ABC of International Finance, Lexinton Mass. Lexinton Book, 1991.
I
The above illustration in fig. 1.0 was laying the economic foundation that
Dollar(s)
reversed the economic conditions necessary for the success and achievements of the
+
international lending. Thus, the reversed .economic conditions made Nigeria's
7
economy to suffer heavily below due to the oil glut of the 1970s that lasted till the
1980s. this became possible based on Nigeria's over reliance on natural resource and
international price validity, the economic procedure in the advanced capitalist
economic led to both the decline in their demand for natural resources and
subsequently decline in price, but an increase in the exchange rate in the value of the
dollars placed Nigeria in an insolvent position such that, it had to of necessity borrow.
Moreover, the above situation resulted into two massive loan of $1.75 billion
obtained from the European dollar market in 1978 for balance of payment support
(Adebayo, 1990). As a result, Nigeria's external debt rose from N496.9 million in
19977 to Nl , 520.0 million in 1982. The year 1982 was the year it dawned on Nigeria
that its debt has rose from N17,296 million and N38,394.5 million in 1985 and 1986
respectively. This debt over hang derived from a glurt in the world market because
Nigeria dependent on its foreign earnings for development. The table below shows
Nigeria's external debt as it is growing geometrically since 1973 - 1997.
Table 2.1 Rate of Growth of Nigeria's Debts I I In cwent dollars
Year 1 Debt (US $ billion)
Inconstant dollars
Change (%) Debt constant value Change % (US $ billion)
70.0 5.12 37.7
Source: Federal Office of Statistics, Lagos 2001 in Central Bank of Nigeria
Annual report and Statement of Accounts for the year Ended 31St December,
2001
The above table 1.1 stated Nigeria's debt outstanding as of March 3 1, 2001
reached a total pf $28,869,418.
Nigeria's debt relief has not transformed our economy due to the fact that we
only got 60% cancellation in spite of the international media posturing and the
odysseys of our finance Miqister i d her team across Europe, including a hefty $10
million or N1.30 billion by senators for travel expenses. The leader of the jubilee debt
campaigns Tracie Rogers began an independent campaign to pressurize United
Kingdom creditor to return there shore of the $ 12 billion Nigeria paid the Paris club
<of creditors. The Jubilee Debt campaign (JDC) consider it immoral to take away this
money which is meant to improve the welfare of the Nigerian citizens. Nigerians may
not be awarded that their authorities have anything to do with this initiative but
president Obasanjo's recent statement at a conference in Kenya is that "debt relief to
poor countries should not fall short of 100%". This may be that Nigeria may have
been short changed in this manner or issue of debt relief; otherwise why would we
celebrate a 60% debt relief, while'Obasanjo is demanding 100% for other countries
which have a better rating than us in the poverty index of the World's poorest? While
Nigeria's domestic debt burden has Jumped by almost 100% in 2001 and 2000.
Table 2.2 Nigeria's foreign Debt Burden Between 1999 and 2003
Holder 1 1999 1 2000 1 2001
Multilateral 361,194.9
Paris club
London club
Provisionary
,2,320,269.0
223,832.6
1,885,664.8
187,627.1
Notes
Others
(a) Provisional I
Note: The figures for the different years were calculated based on the average
379,043.0
2,475,509.4
228,950.2
136,532.8
Totals
exchange rate of the years.
3 13,504.7
6,363.8
Source: Central Bank of Nigeria Annual report and Statement of Accounts for
158,486.0
2,577383.4
the year Ended 31" December 2003
144,746.2
15,753.3
Table 2.3 Nigeria's External Debt OutstandinglDebt Service Payment
13580.5
,3,097,383.8
The lSt Category for Calendar year 2000 - 2005 (In thousand of U.S, dollars)
3,176,291.0
All loans
Central Government disbursed outstanding debt Total debt service
Public corporations disbursed
Private sector disturbed outstanding debt Total debt service
Total disbursed outstanding debt
Total debt service
Source: central Bank of Nigeria Annual Report and Statement of Accounts for
the year ended 31St December
Table 2.4 Nigeria's External Debt as at March 31''' 2006 (U.S. & Thousands)
I Paris club (1 to 3) - short term Private
Sln
1.
13 I Non - previously rescheduled Bilateral ( 2,913,112 I I I
4 I Post cutt of debts due to Paris club 1 707,543 I
Description
Paris club (1 to 3) - Public
15 I Members I I
Total
13,697,131
I I
6 1 Subtotal 1 21,155,794 I I
7 I Less lump sum payment 1 (1.100.420)
18 I Non-Paris club countries-Bilateral 1 758,297
I 11 I Less Lump sum payment
9
10
1 14 I Subtotal 1 6,661,934 I
Non-Paris club countries - commercial
Subtotal
12
13
I I
15 I Grand total 1 28,869,418
1,583,629
2,32 1.926
I I I I
Source: Central Bank of Nigeria Annual Report and Statement of Accounts for
Multilateral loans
Holders of Banklprivate Note
the year Enc
3,246,399
3,415,541
.ed 31St December 2006.
Placed on this perspective, Nigeria's economic reform policies are borne out
of the frustration with the economic necession of the 1960s and 1970s as it was built
to address the frustration arising from the firstly the Organization of Petroleum
Exporting Countries (OPEC) , debt crisisldebt relied package and the repayment of
loans to international creditors by debtor nations. Loxley, J.E. (1995) proffered a
solution to the above problem which were, therefore, conceived through short term
economic stabilization programme involving a sharp restriction of domestic demand
through monetary and fiscal measures, and longer term adjustment instruments I
entailing the application of supply side policies to promote the advancement of
exports and import substitutes.
Both President Shehu Shagari's Economic Stabilization Act (ESA) of 1982
and Gen. Babangida's Structural Adjustment Programme (SAP) of July, 1986 has the
effect of deepening the integration of developing notions and Nigeria in particular
with the global economy. Therefore, Nigeria's economic restructuring and
rehabilitation programme were major component of the globalization process
introduced to African countries in form of structure economic reforms collectively
viewed as economic stabilization programme, economic adjustment policies and
economic reform programme of. Structural Adjustment Programme without the
African's self-determination'efforts of it's countries.
2.2 The Emergence of Structural Adjustment Programme and Economic
Crisis in Nigeria with the Imposition of Economic Reforms by
International Financial Institutions
The outcome of the frustration of Nigeria's economic condition between 1960
and 1970 in terms of addressing the issue of debt crisis by debtors to creditors was
mainly fore the interest of bankers, or lenders and creditors who act under the
auspices of the international financial institutions especially, the IMF and the World
Bank. In other words, these resources could be diverted to meet debt service. The
IMF believed that Nigeria's economic crisis was mainly a product of structural
distortions in the economy due to over valued exchange rates, import regulation, huge
public sector expenditure, poor investment and low returns on capital, high wage
structure and low productivity of workers, import substitution, industrialization and
its policy environment, over extended inefficiency and unproductive public enterprise
and their under protection by government, and discriminatory credit policies against
the private sector. Onimode, B. (1 989) and Aina, A.G (1 997).
Onyeonoru, I. (2003: 30 - 62) posits that the international financial institution
thought it wise to prescribe policy options that emphasizes neo-liberal (monetarist)
economic policies the role of market forces, the rolling back of the state (non-state
intervention) private enterprise economy, trade liberalization, deviation of local
currency at the political sphere, liberal plural democracy. He also maintained that the
implementation of there neo-liberal economic policies is what is known as economic
reforms, or the economic restructuring project.
However, the adoption, imposition and implementation of these policies in
Nigeria made a merchandise of the supposed policy objective which includes
evolving a self sufficient' economy's productive base for sustainable growth,
efficiency and development as well as achievement of both fiscal and balance of
payment viability. For instance, devaluation was theoretically expected to boost the
export of reality. Instead, devaluation together with other policy measures such as
privatization, commercial and removal of subsidy policy of wage restraint, not only
constrained local consumption with alternative increase in export, it led to folding-up
of industries, massive unemployment and also deteriorating the living standard of
Nigerians. 4
George, S. (1992) in the implementation of Nigeria's economic reform
programme, especially the structural Adjustment Programme (SAP) which was aimed
at reducing Nigeria's debt o\;er hang worsened it instead. The implication is that, it is
only the creditors benefited under SAP thereby Jeopardizing Nigeria's chances of
achieving real development programme. George observed that the debt crisis in 1982
trough 1990 each and every month, for 108 months, debtor countries of the south
remitted to their creditors in the North and average of 6 billion, 2 hundred million
dollars in interest payment alone. And if the payment of principal is included in the
tally, then each of the 108 months witnessed payments from debtors to creditors
deranging twelve billion four hundred and fifty million dollars.
Consequently, the ~igeria 's economic reform in terms of SAP challenges and
erodes national sovereignty, through foreign intervention in economic policies of the
country. In the 1990s and 2002 and this intervention was completely direct as the
British secretaries for overseas Development, and Foreign Affairs and the IMF
officials in separate visits to Abuja had to camping for appropriate pricing of
petroleum products and scktinizing Nigerian budget before it is publicized for
deduction in public expenditure. It is no longer in doubt that the economic reform
programmes right from SAP have really help Nigeria to be economically advancing.
To explain why the previous administration of President Obasanjo's economic
reforms and practical programmes were been criticized by the conscientious public,
there is this understanding that the Nigeria's economic reform is an extension of the
former military administration but transformed in civilian policy strategy between
1999 and 2006. The Nigerian government claims that it crafted the reform policy and
it has met public resistance but the government in its service of the international
financial institutions push through over public opposition by steam rolling reform
, measures through without' social consensus through silencing the voices of
opposition.
As the international financial institutions shift its huge amount of effect over
the last decade to ensure that the people from various localities benefit bylthrough the
ownership of outside-imposed SAP programmes, they suggest that Nigeria's
economic reform and privatization lead to poverty reduction, current events in
Nigeria. But the economic growth and development performance may suggest that
Nigeria in 2005 posted a US ~26'billion trade surplus, corresponding to almost 20
percent of gross domestic product, which led to a positive current account balance of
US $9.6 billion, yet, the standard of living or the quality of life in Nigeria supports the
earlier view. This is made clear realizing that Nigeria made revenues, of only US
$12.86 billion but had an expenditure of US $13.54 billion which resulted in budget
deficit of 5 percent.
36
Nigeria's economic :reform programme is part of the consequences of
Nigeria's over dependence on the global economy and the agenda of the North which
operates through the international financial institutions to further Nigeria's integration
processes into the global capitalist market economy. Statistically, the table below
exemplified the level at which Nigeria's Gross Domestic Product Population and the
inflation rate has portrayed its economic system since 1970 to 2006.
Table 2.5 Percentage of Nigeria's Gross Domestic Product ($), Population and
Inflation Rate Compared from 1970 to 2006
I Years I Population I GDP (Dollars) I Inflation
Source: World Bank (2006) World Development report 2006. Washington D.C.
World Bank <
From the above exposition, Nigeria's population rate increases without any
reduction since 1970. The Gross Domestic product (GDP) in dollars accelerated from
1970 till 1997 where the GDP was greater than that of 1998 and equally increased in
2004which is greater than 2005 and 2006 respectively.
2.3 The Natui-e of the International Financial Institutions Imposed Economic
Reforms in Nigeria '
Democratization or democracy and economic growth and development are
interrelated to the state of economic emancipation and advancement. Empirically,
there is this relationship between socio-economic variable such as Gross Domestic
Product (GDP) and Gross National Incomes (GNI), educational attainments and the
level of health care system, democracy (freedom in politics) and democratic
principles.
Asobie, H.A. (2006) stated the where is an interconnectedness in politics and
economics. He M h e r maintained that of democracy preaches freedom of rights and
obligations in electoral and government policies, the issue of common wealth that is
achieved through free-trade, free participation free implementation of policies and
equality in achieving of set targets..
In other words, economic development to achieved by economic reforms was
meant to possess the capacity of altering the social stratification system from a
pyramid shape to a diamond one in which majority of Nigerians are not even at the
middle class but at the lower class and relatively well off enjoying economic security
instead of the majority being lower-class and poor. Hence, this transformation - moderates the intensity of the class-struggle by reducing the proportion of the
population that is susceptible to anti-democratic parties and ideologies and by
increasing the proportion of the population that supports moderate pro-democratic
parties. Lipset, (1959: 83).
Continuously, Democratization is globalization, and economic reforms are part
, of globalization. The transformation of a global political economy in which hitherto
closed economies dictated by authoritarian administration had to be brought into a
mutual interdependence through economic and political interconnectedness by the
international financial institutions Suleman, Yusuf Balarabe R. (2004).
Grudgel (2002: 117 - 1 19) made economic reforms more easier as he
maintained that the global political-economic liberalization has link(s) with
democratization in some pertinent processes such as the developing nations through
the process that are subjected to political conditionalities. According to Grudgel,
democratization has become a process of continuous hegemonic or hegemony of
developed countries over the developing ones. Therefore, liberalization has led to
political charges and econorriic reforms. Example, between 1990 and 1992, the United
States of America suspended military aid to some of its abiding authoritarian or
dictator-friends in Africa, over political liberalization, and consequently for market
liberalization too.
Schwartzman, R. (1998) contributed to democratization by creating legitimacy
or legitimate crisis in authoritarian or dictatorial regimes and the subsequent collapse
of autocratic regimes in developing nations as such states could no longer cope with
the welfare demands of their citizens. Thus, democratization becomes a political
conditionality attached to the provision of aid, with a view to institutionalizing
political and economic reforms. Contrary to the earlier notion of democratization and
economic reforms bringing out and enhancing the welfare of Nigerians in terms of the
living and quality of life or lives and properties of Nigerians, the pressure coming
from the Bretton Woods Institutions (BWI) on Nigerian government to service the
interest(s) of the international financial institutions with its allied forces of
productions only by abandoning its role in popular welfare service delivery. In other
words, democratization and' economic reforms has become a problem for the poor
who is no longer protected by the state through subsidization. Grudgel, J. (2002).
In conclusion, Nigeria entirely have remained poor despite its negligence in
industrialization and its transition to democracy and the implementation of liberal
economic reform policies and programme. Nigeria becomes more dependent on
external resources and susceptible to the shock of the global market.
REFERENCES
Asobie, H.A. (2006). Unpublished Lecturer Notes. University of Nigeria, Nsukka.
Candeussus, M. (1999). 'Nigeria: he way forward", An Address to a Conference in Abuja, Nigeria. IMF Survey, March 18,1999, pp: 99 - 101.
Central Bank of Nigeria (2001). Annual report and statement of Accounts for the year ended 3 1" December, 2001.
Central Bank of Nigeria (2003). Annual report and Statement of Accounts for the year Ended 3 1" December, 2003.
Central Bank of Nigeria (2005).AnnuaI report and Statement of Accounts for the Year Ended 3 1" December, 2005.
Federal Office of Statistics, Lagos, 2001
George, S. (1992). The Debt Borrowing: How Third World Debt Harms US , San Francisco: West Viey press.
Grudgel, J. (2002). Democratization: A Critical Introduction, New York: Palgrave Publishers Ltd.
Loxley, J.(1995). Rural labour Market in Adjusting Mineral Economy in Voli Jamah, Structural Adjustment and rural Labour Markets in Africa. Geneva, International Labour Organization.
Onimode, B. (1 989). The IMF, The World Bank, and African Debt: The Economic Impact, Volume 1. London, Zeb Books.
Onyeonoru, I. (2003). "Globalization and Industrial Pe$ormance in Nigeria, African Development Volume XXVIII", Number 3. CODESRIA, PP. 36 - 62.
Pool, John Charles (1991). The 'ABC of International Finance, Lexinton, mass, Lexinton Books.
Schwartzman, R. (1998). "Globalization and Democracy" Annual Review of Sociology Volume 24..
CHAPTER THREE
THE CONTRADICTIONS BETWEEN THE INTERNATIONAL FINANCIAL INSTITUTIONS ECONOMIC REFo~Ms AND THE GROWTH AND
POPULAR WELFARE IN NIGERIA
Introduction
This chapter deals with the first hypothesis which states that if the
implementation of Nigeriak economic reform policies imposed by international
financial institutions impact negatively on the living conditions and welfare of
Nigerians, it is likely to resolve the contradiction in growth and development.
On the contradictions of Growth and popular welfare in Nigeria, an analysis
centres on the argument underlying the neo-liberal market economy orthodoxy and
economic reform, and democratization as ideologically promoted by the international
financial institutions was that these would promote the welfare of mankind, especially
in the developing nations like Nigeria. The skewed patterns of resource distribution
have not only impeded development and shifted the growth of political participation
but also the very policy prescription of the international financial institutions -
(economic reform) such as cutting of public expenditure vitiate the very welfare of
the people upon which the international financial institutions imposed
democratization and economic reform has been predicated.
Welfare according to Ibeanu, 2004: 27 means a lot to the common man,
therefore, no level of growth rate would impact positively on popular welfare if such
growth do not translate into appreciable and measurable quantitative improvement in
lives of a majority of the populace. In other words, Ibeanu tagged it as pro-poverty.
Secondly, popular welfare is an anchor of development and poverty
eradication which involves for provisions that guarantee basic human needs:-
production and equitable distribution of social service, increasing the purchasing
power or value of money and the real incomes of people and the redistribution of land
petroleum resources, employment and worker involvement in the management and
control of productive enterprises policies such as removal of subsidy and deregulation
as prescribed by the international financial institutions and implementation or
I
implemented by most developing nations especially by the Nigerian government do
not enhance popular welfare. (Ibid, 2004: 28).
There exist a positive relationship between globalization, growth and
unpopular welfare and economic reforms between nations and among individuals.
And this tend to increase the more nations are integrated into the global capitalist
economy. The growth that is occurring in these third world nations is at their own
expense due to the use of official exchange rates, it could be shown that the rich
industrialized Northern or Western world enjoys the non-industrialized nature of the
developing countries such as Nigeria. These developed nations dispose of per capita
material resources about 30 times is large as the developing countries of Asia, Africa
and Latin America. Mariam Radetzki and Jonesson, 2002: 1).
Apart from Crude adjustments for domestic prices, the gap still remains very
wide living a large number of people exceedingly poor and these people could survive
only under an abominable conditions such as local and international fraud (Web
scam). A highly skewed global distribution of income is apparently not threatening
the sustenance of economic development. At least not when the state has the capacity
to repress demands for popular welfare. Even though neo-liberals or neo-liberal
e;conomists have tended to depend tendencies towards income convergence, some
recent studies indicate that the gap has widened. For instance, searches and Warner in
a sample of 122 countries betweefi 1970 and 1989 suggest that the gap had remained I
unchanged. Secondly, Pritchett (1995) concludes that the ratio of GDP per capita of
richest to poorest country rose from 38.1 in 1960 to 51.6 in 1985, that is by 40
percent, while the data presented by Scheechey (1996) shows that the income gap
between the richest 11 and the poorest 10 countries in 1960, had increased by 20
percent in the subsequent 28 years.
An illustration on table 3.1, one could deduce that global GDPIcapital increase
by 53 percent over the 35-years periods, from $3, 394 in 1960 to $5,179 in 1995.
Focusing at the richest and poorest deciles of world population, however the table
shows that the per capita income of the former rose by 86 percent, or $16,500 to
$30,700. The latter group, in contrast, forced much less well. In other words, the
poorest deciles of world population experienced an extraordinary average income
reduction of almost 50 percent, from & 418 in 1960 to $214 in 1995. The gap
between the richest and poorest deciles, of about 40:l in the beginning of the period
had risen to more than 140:1, 35 years later. (Source: The European Journal of
Development 2002).
Table 3:l Average GDPffer Capita, World Richest 10% and the GAP between
Rich and Poor ,
10% poorest 1418 I214 1 -48.8
World
10% richest
Source: The European Journal of Development,2002: 248
As shown in table 3:2, and 3.4 the number of countries in the richest group
from nine (9) in 1960 to ten (10) in 1995. the per capita income range of the rich
group rose clearly, the bottom of the range rose much more than the top, evening out
1960
3394
16538'
the income disparities within the group from 3:7:1 to 1.6: 1. Also, as shown in table
3.5, Nigeria (15'~) is grouped among the countries with the lowest per capita income.
1995
5179
30665
Table 3.2: Countries with the Highest per Capita Income in 1960 (Before 1999)
Percentage change
52.6
85.5
I 1 1 Million I % of World I $ million I $
I Rank I Country
1 113 I United Kingdom 1 53.37 1 1.74 1 512,486 1 9,785
Population
112
GDP I GDPICAP
France
114
115
116
45.67
Australia
Switzerland
New Zealand
Population
1.52
10.63.
' 5.36
2.37
430,850
0.35
9,434
0.18
0.08
1 17,433 1 1,046
61,335
28,264
11,439
11,921
1 117 ( Sweden 1 7.48 1 0.25 1 100,072 1 13,379 1 I 1 I I I
118 I Canada 1 18.27 1 0.61 1 286,444 1 15,682
I I I I I
Source: The European Journal of Development, 2002
120
Table 3.3: Countries with the Highest per Capita Income as at 1999
Total
I Rank I Country I Population I GDP I GDPICAP 1
Kuwait
10.76 323.12 5,171,760
I I I I I
125 I France 1 58.1 1 1.07 1 1,536,089 1 26,4439 1
0.29
I I I I I
126 1 Belgium 1 10.1 1 0.19 1 269,081 1 26,642
Million
I I I I I
127 I Singapore 1,3.0 1 0.06 1 83,695 1 27,898
0.01
$ million % of World ~opulation
$
129 / Germany 1 81.9 1 1.54 1 2,415,764 1 29,497 /
10,060
128
34,453
I I I I I
131 I Norway 1 4.4 1 0.08 1 145,954 133,171
Australia
I I I I I
I I I I I
132 1 Japan 1 125.2 1 2.35 1 5,108,540 140,803 I I I I
133 I Switzerland 1 7.0 / 0.13 1 300,508 1 42,930
8.1
33,119 130 I Denmark
I I I I I I Total. ( 566.1 1 10.63 1 17,217,298 1
Source: European Journal of Development, 2002
0.15
' 5.2
233,427
0.10
28,818
172,220
Table 3.4: Countries with the Lowest per capita Incomes as at 1999
I I . 1 Population 1 I
Rank Country
1
I I I I I
5 I Burundi 1 6.3 1 0.12 1 1,062 1 169
. Population
Million I % of World
Mozambique
2
3 I I I I I
56.4
,, 29.6
Ethiopia
Tanzania
4 I Malawi
GDP
$ million
16.2
6
7
GDPICAP
$
1.06
0.56
9.8 1 0.56
0.30
1,465 1 149
Rwanda
Chad
8
9
10
11
14 1 Togo 14.1 1 0.08 1 981 1 239
3,287
3,602
,4.2
21.5
Sierra Leone
Nepal
12
13
1,469
94
122
6.4
6.4
Niger
Burkina Faso
9 1
Madagascar
Guinea Bissau
15
16
0.12
0.12
196
197
0.08
0.40
9.0 . I
10.4
17
18
824
4,232
13.7
: 1.1
Nigeria
Bangladesh
19
20
Source: European Journal of Development, 2002
1,128
1,138
0.17
0.20
Mali
Benin
2 1
22
176
178
0.26
0.02
11 1.3
1 19.8
Vietnam '
Cambodia
1,860
2325
9.8
.5.5
Haiti
Uganda
Total
207
224
3,198
257
2.09
2.25
73.5
10.0 '
233
234
0.18
0.10
7.2
19.2
.551.4
26,8 17
29,110
1.38
0.19
24 1
243
2,43 1
1,522
0.14
0.36
10.35
277
277
20,3 5 1
2,77 1
277
284
2,043
5,655
1 19.528
284
295
The tables demonstrate the widening of the gap, in other words, the increasing
level of inequality among nations. Reduced to the issue of welfare, it implies that the
poor have become much poorer over these period. While there is no consideration
given to welfare distribution.(income distribution) within countries, the argument still
remains that the social conditions of citizens of the poor nations are not different from
the very social conditions of the other poor states.
3.1 President Obasanjo's Economic Reforms and Popular Welfare in Nigeria
The Nigeria government from 1999 - 2006 under the leadership of President
Obsasanjo embraced the International Monetary Fund (IMF) endorsed reform
package. Obasanjo started implementing the international financial institutions
imposed programme and policies which was claimed to enhance the country's
economic development strategy along the path of recovery, rehabilitation and
reconstruction within this programme are some care elements as good governance (as
presented by the new partnership for African Development, NEPAD), liberalizing the
economy and integrating it with the rest of the world and macroeconomic
stabilization. The first element comprises of democratically elected government,
respect for the rule of law, a renewed emphasis on transparency and accountability in I
all aspects of economic life both public and private; a clear and unambiguous
commitment to social equity. (Candeussus, IMF Survey, 1999: 99).
As the former emphasizes on opportunities for quality education and access to
quality health care, the second element consists of the changes in economic structure
and institutions that are needed to build a competitive and efficient economy that is
open to the outside world. One in which the private sector should be allowed to
become the engine of grokh through a diversification that also lessens Nigeria's
dependence on the oil sector for foreign exchange earnings and development revenues
of the government. These involve the following: deregulation, and privatization;
liberalization of the trade and exchange systems, all of which are prerequisites for
Nigeria's full and sound integration into the global economic and financial system.
The third element is the macroeconomic stabilization that claims to aim at building
the foundation of rapid, sustainable economic growth through firm, credible
macroeconomic policies designed to establish and maintain stability.
The Nigeria's economic reform policies promised Nigerian citizens of a
society where they would be proud to say that they are Nigerians just as the neo-
liberal economic orthodoxy promised of a global welfare for mankind, the claim of I
the market oriented economic reforms and democratization is that both enhance
human welfare, the welfare of Nigerians therefore, becomes the yardstick for
measuring the efficiency and effectiveness of the economic reform programme. Based
on the policy prescription, poverty reduction policies was claimed to be a centralizing
strategy for enhancing and promoting popular welfare of Nigerians in Diaspora. It is
therefore, anchored or centre on the National Economic Empowerment and
Development Strategy (NEEDS) as the source of President Obasanjo's economic
capacity for development. ,
Table 3.5: A Comparison of the GDP of industrialized countries with those of
Nigeria in Millions of Dollhrs. GDP of seven Industrialized Countries compared
with Nigeria and South Africa in $millions as at 2005.
Country Eanada France Germany Italy Japan
Source: Culled from Onwualu (2006:12) as sourced from World Bank's 2005 8
world Development indicators
GDP ($ Millions) 856.523 1,757,613 2,403,160 1,468,314 3,400,858
South Africa Nigeria
The table shows that there is a remarkable difference in the GDP of
I
159,886 58,390
industrialized countries and that of Africa. While Nigeria's GDP in 2003 was 58,390
(in $ Millions), that of the United States, for instance, was 10,748,547 (in $ millions).
If other poor African countries are considered, Nigeria's case becomes even excellent.
Table:
Table 3.6: GDP of 17 Poorest African Countries Compared with Nigeria as at
2005
Country I GDP (S Millions) I
Burundi 1 591 I
African Republic 1 1,198
Chad 1 2,608 I
Congo D.R I 1 5,671
I
Ethiopia 1 6,652
Eritrea 1 751 I
Gambia 1 395 I
Guinea Bissau 1 239 I
Liberia 1 442
Madagascar
Malawi I
Mozambique 1 4,321 I
Niger 1 2,731
Rwanda ,
Sierra Leone 1 793
Uganda
Tanzania
I
Nigeria 1 58,390
10,297
Source: Culled from Onwualu (2006: 13) as sourced from World Bank's 2005
World Development indicator
When a comparison is made between tables and we can deduce that the global
capitalist economy, some countries not only develop faster than others (as measured
in the level of GDP). But that also as some capitalist countries develop, others suffer a
regression. Both tables alio show that it is African countries that suffer this
regression. While the GDP of the United States was $10,748,547 million in 2003, that
of Guinea Bissau, the lowest in Africa, was $239 million.
In summary, therefore the majority of the working population in Africa
depends on agriculture for employment. This is unlike in the developed countries
where only a small percentage of the working population makes their living from
agriculture rather than industrialization.
3.2 Population as Human Development Indicator
In this sub-section, we will consider population with regards to infant
mortality, crude birth rate (the number of births per 1,000 population in a given year),
crude death rate (the number of deaths per 1,000 population in a gwen year), and life
expectancy at birth. This will help us in understanding whether Nigeria's welfare has
been enhanced. I
In doing this, we will do a comparative analysis between Nigeria and other
countries which are ital to Nigeria in international transactions and relations. This
method will help in determihing the extent to which Nigeria has developed vis-A-vis
these countries. These countries are South Africa, Ghana, India, Japan, Canada, and
the USA. The choice of South Africa stems from the fact that it is a major opponent
of ~ i ~ e r i a in the struggle of who becomes the 'Giant of Africa'. The choice of Ghana
is because of its status as developing country in the same subs-region as Nigeria. That
of India is also informed by the fact of its sharing the same status of a developing
country ,with Nigeria, but from a different continent, Asia. The choices of Japan,
Canada, and USA are beqause, 'together with the European Union (EU), they
constitute the ' ~ u a d ' who determine virtually everything that takes place at the
international financial institution, and also by the fact that they are developed
countries which Nigeria has:gone into the business to contend within in international
development policies and implementation.
The table below shows that population statistics of these countries vis-A-vis
Nigeria as regards mortality rate, crude birth rate, crude death rate, and life
expectancy at birth.
Table 3.7: Population as Indicator of Developments
Country
Nigeria
SIAfiica
Crude birth rate
Ghana
India
39
27
Japan
Canada
Source: UNCTAD Handbook on Statistics, 2006
Crude death rate
3 7
25
USA
The table shows that' among these countries, Nigeria has the greatest number , -
of crude birth rates just as it has the greatest number of crude death rates. Column (3)
Rates per 1,000 population
(1) ' 1 (2).
15
12
10
12
also depicts that Nigeria has the highest number of infant mortality rate. Out of a life
birth of 1,000 infants, 81 die after. This is followed by India with 72 infant death;
Ghana 66; South Africa 59; USA 7; Canada 6; and Japan brings up the rear with 4
infant deaths out of a total of 1,000 life births.
In column (4), life expectancy at birth, Nigeria also comes last with 50 years.
Infant mortality rate per 1,000 life
births
9
9
14
It is followed by South Africa which has 55; Ghana with 60; India with 63; USA has
77 years; Canada 79; and. Japan has the highest number of year in life expectancy
with 80 years. These figures "indicate that ordinarily, Nigeria has not improved in
these aspects. The comparison with other countries goes further to showcase the
helplessness of Nigeria as it seriously lags behind them.
Life expectancy at birth
Number
(3)
8 1
59
8
7
Years
(4)
5 0
55
66
72
9
60
63
4
6
80
79
7 77
3.3 Health as Human Development Indicator
In this sub-section, the method adopted in sub-section 3.4 will also be used.
Here, we will consider the percentage of the population with access to safe water and
adequate sanitation. We will also look into the number of the population that is
attached to a physician. Table 3.7 depicts all these.
Table 3.8: Health as Indicator of Development
Country
Nigeria
Population per physician Percentage of population with access to
SIAfiica
Ghana
India
Japan
Source: UNCTAD Handbook on Statistics 2006
Safe water
Number (3) 5405
Percentage
87
32
87 .
65
Canada
USA
Columns (1) and (2) of the above table show that less than half of Nigeria's
population have access to safe water and adequate sanitation. As regards the
percentage of the population that has access to safe water; the other countries exceed
60% with Canada topping the chart with 9.9%. With regards to the percentage that
has access to adequate sanitation, Nigeria However, performs better than Ghana and
India which have 32% and 2b% respectively.
With regards to column (3), 5,405 Nigerians are attached to one physician.
This is a mark of backwardness in development, especially when compared with India
which has 2,083 per physician; South Afiica with 1,775 per physician; Japan with 5 18
per physician; Canada with 436 per physician; and the USA with 358 per physician.
However, Nigeria is better than Ghana in this regard, which has 16.129 per physician.
Adequate sanitation
(1) 49
1775
16129
8 1 I
97
(2) 4 1
99
- .
29 '
1 00
2083
518
95
- 436
358
3.4 Education as Human Development Indicator
In this sub-section, we shall be concentrating on the percentage of the
illiteracy rate of the population, school enrolment both at primary, secondary and
tertiary levels as well as the percentage of the Gross National Product (GDP)
allocated to education, in all these countries.
Table 3.9: Education as Development Indicator
Country I Illiteracy rate Enrolment Inscription I 1 Percentage
Educational expenditure
Ghana 1 30 1 57 11 1 4.2 I
- Nigeria SIAfrica
USA I - ,' I 100 I 81 I 5.4 I
J
Source: UNCTAD Handbook on Statistics 2006
Though, the illiteracy level in Nigeria is less than half of the population,
(1) 3 6 15
India Japan Canada
(36%), it is only better than that of India which is 44%. Its primary and secondary
school enrolment is also only higher than that of Ghana (68% and 57% respectively).
Its tertiary level enrolment is relatively poor (with 4%) when compared with Canada
that has 88% or even South Africa that has 19%, though it is higher than Ghana that
has 1% and close to India'that has 7%. The percentage of the GNP allocated to
education (colunk 4) in Nigeria is very appalling (0.7%).It is far lower than the next
in hierarchy which is India with 3.2%. India is followed by Japan with 3.6%. Ghana
allocates 4.2% and USA allocates 5.4%. This is followed by Canada with 6.9% and
finally South Africa which allocates 8.0%.
The higher allocation to education in these two other African countries (South
Africa and Ghana) probably explains why there is higher literacy levels in these
countries more than in Nigeria in 2001. While Nigeria's literacy rate was 69% in that
(2) 69 118
44 - -
(3) 4 19
7 4 1 8 8
72 103 103
(4) 0.7 8.0
3.2 3.6 6.9
year, those of Ghana and South Africa were 74% and 88% respectively. So far in this
chapter, we have been able to assemble a number of development indicators ranging
from the GDP, through consumption rate, official exchange rate of the Naira,
population, health, to education to determine whether Nigeria's involvement with the
international financial institutions has impacted negatively or positively on her
economy. With the available facts and figures, this chapter has been able to use these
development indices to prove empirically that Nigeria's involvement with the policies
of the international financial institution has not impacted positively on her economy,
thereby validating the hypothesis that Nigeria's involvement with these external
policies has had a littleho impact on the level of her economic growth.
REFERENCES
Candeussus, M. (1999). 'Mgeria: The way forward" An Address to a Conference in Abuja, Nigeria. IMF kurvey, March 1 8, 1 999.pp: 99 - 1 0 1.
European Journal of Development (2002) Pp: 248.
Ibeanu, 0. (2004). "Nigerisin State and the economy under President Obasanjo". A paper Presented at the National Conference on Nigerian Government and Politics: An Appraisal of Performance 1999 - 2004 held at the University of Nigeria, Nsukka, 22 - 22 April 2004 Pp: 27 - 28.
Radetzki, Marian and Jonesson (2002). 'The expanding Global Income Gap: How Reliable is the Evidence?" In the European Journal of Development research Volume 14, June 2002 Pp: 1.
WCTAD Handbook on Statistics 2006
World Bank (2002). World Bevelopment Indicators, Washington D. C. 2002.
CHAPTER FOUR
NIGERIA'S ECONOMIC CAPACITY UNDER PRESIDENT OBASANJO FROM 1999 TO 2006
Introduction
In this chapter we seek to test the second hypothesis which states that if there
is a positive relationship between Nigeria's integration into the global capitalist
economic reforms, it will increase poverty level in Nigeria.
The struggle against poverty is a socio-economic and political struggle where
by the poor Nigerians have to involve themselves, not sidelined. And this could only
be achieved their human empowerment and the impact of NEEDS in particular and
economic reforms generally can be measured by comparing the achievement, its
objectives and the capacity or capabilities with the aid of popular welfare. NEEDS,
implemented by president Obasanjo is built around four goals such as poverty
reduction, unemployment reduction; wealth creation and value reorientation, Ibeanu,
0. (20045).
Human development or individual standard of living is an irreducible indicator
of measurement in development issues. Thus, the purchasing power parity assess
' national incomes using a common set of prices. Nigeria had real GDP per capita of
1 160 (PPP$). The purchasing power parity comparisons, is US. Dollar $132.1 billion
of Nigerian Naira only while the current GDP per capita is expanded by 132% in the
1960s reaching a peak growth of 283% in the 1970s but this proved unsustainable as
it consequently shrank by 66% in the 1980s. in the 1990s, diversification initiatives
finally took effect and decadal growth restored to 10%.
Due to inflation rate, the GDP per capita today remains lower than the 1960s
when Nigeria declared independence. About 57 percent of the GDP was composed of
the following sectors: agriculture, 26.8%; industry 48.8% and services 24.49%
(http://en.wikipedia/economI/ofnigeria.).
In 2003, the unemployment of 12.3 percent which exceeded rural
unemployment of 7.4 percent. With a 15.6% inflation from a revenue of $12.86
billion and an expenditure of $13.54 billion, or a budget of large population in 2005
and 2006 when Nigeria had a labour force of more than 57.2 million. From 1999,
labour force employment by sector was as follows: 70 percent in industry. The
existing minimum wages(s) of $42.82 per month which has been whittled away by
inflation cannot sustain the livelihood of an average Nigerian.
In 2005, Nigeria exported about U.S. $52 million of goods, and imported U.S.
$26 billion of goods which led to U.S $ millions trade surplus and a positive current
account of U.S. $ 9.6 million. These growth have not translated to popular welfare.
This is demonstrated by an unprecedented level of poverty in Nigeria. The United
Nations Human Development Index ranked Nigeria 145'~ in their per capita income
adjusted to purchasing power parity (PPP$) of 75.75 is less than $1 per day, life
expectancy of 53 years for males, 56 years for female, 1.7 beds for 10, 000 Nigerian,
2 medical doctors per 10,000 Nigerians, 57" in GDP growth rating, 151'' in access to
safe water and literacy, 167'~ out of the 174 in UNDP's country assessment (World
Bank, 2003, h t t o : / / w w w . o e c d . o r a . U N ~ ~ 2 0 0 3 : 2 2 8 . ~ o r l d ~ ~ . 2 0 8 - 2 l 1).
Additionally, even with an estimated GDP (PPP$) of $132.1 billion, real
growth rate (GDP) of 7% per capita (PPP$) of $1400, population below poverty line
of 60% house hold income of 10%: 1.6% (lowest) and highest (10%: 40.8%) and
, inflation rate of 7% and unemployment rate of 2.9% Nigerians especially the poor are
alienated from the gains of growth. This could be deduced from the disparity between
sector of the Nigerian economy had grown at the expense of agriculture. This implies
that rural population was significantly poorer than those in other areas. In other
words, income inequality in Nigeria had been widened as nitrogen undergoes
economic reform.
Studying and analy&s both tables 4.1 and 4.2 below, reveal that the
performance of Nigeria's economic sectors within the period understudied is
retrogressing and grossly unsatisfactory. As shown by the growth of development
indicators, Nigeria's population grows consistently, while its human development
indicators decreased. By 2003, the average GDP growth rate is about 2.4%. The
strength of an economy could be measured by the value of its currency. With an
exchange rate (value) of 22.0 in 1997, the Naira depreciated to N135.00 for one
5 7
Dollar between 200412005 and 2006 it became N128.4. This exhibited a negative
consequence for Nigerian economy and development and it is amplified where
Nigeria paid higher for its external debts, its interests and service ration amount which
continues to increase geometrically. This clearly explains the reason why Nigeria's
external debt had to jump from $ 1'3.83 billion in 1997 to US. $37.5 billion dollars in
2005 (see table 4.1 and 4.2 below). The highest (10%: 40.8%) and the lowest (10%:
1.6%) of lor in household income or consumption by percentage share
(httl,:llen.www.wiki~edia~economyofNig:eria).
It is observed that Nigeria's real GDP per capita between Nigeria her trading
partners are compared the relative disparity in real growth of domestic product per
capita between them implies that Africans or Nigerians inclusive are absolutely
loving in penury. In other words, their chances of survival of 53 years (males) and 56
years (females) defined as life expectancy in another indicator which shows that
economic reform have not encourage popular welfare in Nigeria, especially between
1999 - 2006. As we earlier argued 'that the international financial institutions imposed I
reform programmes and policies are not meant for the benefit of common man (the
average poor Nigerian).
,Table 4.1: Selected Statistics of Basic Indicators of Nigeria's Development (the
Obasanjo Years)
population GDP per 260
Exchange rate 1 92.3
External debt 1 29128
I
Foreign 1 545.0.3 reserve I
2001 2002 2003 2004 2005 2006 Remarks 129.88 1.32.8 .
Naira per & (GDP Indicator)
$37.5b $12b Paris club would write off CIS & 18b
Current account
I inflation Life
Petroleum F Registered unemployment values in I %
I Interest rate
External Debt F manufacturing capacity
, Sources: The Central Bank of Nigeria (CBN) Annual report and statement of Account 1999 - 2006.
Table 4.2: Nigeria's Percentage growth rate of Industrial production
manufacturing, mining and electricity 1900 - 2003 in %
Period I Electricity Mining I Manufacturing I All sectors
I I I I
Source: Ekpo, H.A. The Nigerian Economy under a new Democratic experience: The Charles Solodo effect, Nsukka, UNN, 2004.
4.1 Evaluation of President Obasanjo's Economic Capacity in Africa vis-a-vis
West Africa Between 1999 and 2006
In Africa and West Africa respectively, Nigeria accounts for almost 60% of
the total Gross Domestic Product (GDP) of the sub-Saharan Africa. Consequently, a
strategic partnership towards the advancement of the process of democratic and socio-
economic transformation in Nigeria is not only important in the country internally, I
but also the other West Africa neighbours and Africa at large who look Nigeria as a
big brother. In Nigeria's economic capacity evaluation, Dosumu, A.O., Nigeria's
ambassador to the Netherlands stated that Nigeria is on record as being the highest
contributor in the ECOWASIECOMOG conflict management and Resolution.
Dosumu stated that Nigeria have spent approximately 12 billion naira on ECOMOG.
This represented an intolerably high expenditure for a country with such depressing
poverty indicators in Nigeria. He exemplified the statement through identifying the
withdrawal of about 12,000 Nigerian armed forces from Sierra Leone due to the
phenomenal cost of the operation in human and material terms (1 million dollars per
day) while (Nigeria's per capita income is less than 1 dollar per day). I
Source: (htt~:Nwww.ni~erianembassy.nVthe%2OAmbassador's%2Ospeech2.htm)
The oil rich Nigerian economy continues to be hobbed by political instability,
corruption and poor macro-economic management. The over dependence on the
capital intensive oil sector which provides 30% of Gross Domestic Product (GDP),
95% of foreign exchange earnings and about 80% of budgetary revenues. The
Nigerian government resistance to initiating greater transparency and accountability
in managing the country's multibillion dollar oil earnings continues to limit economic
growth and prevent an agreement with the IMF and bilateral creditors on a staff-
monitored programme and debt relief. The largely subsistence agricultural sector has
failed to keep up with rapid population growth, and Nigeria, once a large net exporter
of food, now must import food. Nigeria's economic growth in 1999 may become
negative of continued low oil prices and persistent inefficiencies in the system.
Source: (h~://www.umsl.edu/serviceslnovdocslwof-act99l23O.htm~l)
Table 4.3: Nigeria's Total Gross Domestic Product (GDP) and Non-Oil GDP
Compared Between 1999 and 2002
Years
1999
From the above table, the trend has been a restricting of some government
2002
agencies and an increased focus on service delivery in the Nigeria's economic
Total GDP
I 116,140.0
performance indicators. Below is Nigeria's economic performance indicators between
Non-oil GDP
103,670.0
Source: Central Bank of Nigeria Statistical Bulletin, Vol. 13, December 2002.
129,820.0
2001 and 2006.
1 17,220.0
Table 4.4: Nigeria's Economic Performance Indicators between 2001 and 2006
FOR THE YEAR ENDED DECEMBER
Real GDP
o i l sector
Non-Oil Sector
Oil Production
over December) I I I I I I
2001
4.7
Gross National Savings (%
of GDP)
Inflation Rate (December
I I I I I I
GDP per capita (US 1 530.7 1 539.1 1 620.7 1 673.0 1 847.1 1 114.0
5.2
4.5
2.2
dollars)
2002
4.6
5.3
16.5.
I I I I I I
Population (millions) 1 118.8 1 122.4 1 126.2 1 129.9 1 133.5 1 140.0
5.7
8.3
2.1
2003
9.6
3.5
12.2
23.9
5.2
2.3
Population Growth Rate
2004
6.6
7.2
23.8
3.3
7.8
2.5
2.8
2005
6.2
18.4
10.0
2006
5.6
0.5
8.2
2.5
2.8
4.7
8.9
2.5
19.4
11.6
20.6
8.5
2.8 2.8 2.8 2.3
I Adult Literacy Rate% 1 57.0 1 57.0 1 57.0 1 62.0 1 62.0 1 67.0 1
Life Expectancy at Birth
I I I I I I I I Source: Central Bank of Nigeria (CBN) statistical Bulletin, December 2006
From table 4.3, as Nigeria's total GDP of 1999 was gradually accelerating
from 116, 140.0 million naira, the non-oil GDP was equally accelerating till 2001
when it depreciated heavily with a speedy acceleration in 2002.
But from table 4.4, the period (from 2003) yielded good dividends. The Real
GDP growth improved, averaging 7.0 percent per-annum since 2003. Similarly,
Inflation has proved, falling from over 20 percent in 2003 to below 10 percent in
2006, while total external debt fell from 35 billion dollars in 2003, the non-oil sector,
I which provides livelihood for the majority of Nigerians have grown at 5.9 percent in
2003, accelerating to 7.4 percent in 2004 and to 8.2 percent in 2005. In 2006 the
growth rate of the non-oil sector has been largely driven by the growth in agriculture
and the global commodity boom.
54.0
Source: Central Bank of, Nigeria (CBN) Annual Report and Statement of
Accounts for the year Ended 31" December, 2006
In conclusion, at the real sector, while there have been some clear
improvements in the financial sector's performance, gains in the real sector have been
limited. Especially, through the Nigeria's manufacturing sector which has continued
to stagnate, yet, increase in manufacturing sector production and exportation is vital
54.0
frondfor the long-term development and growth of the economy. One of the principal
reasons responsible for the sluggish growth of Nigeria's manufacturing sector is the
54.0
poor state of infrastructure such as electricity and transportation system in Nigeria.
(Sonowo, B 2003).
I
54.0 54.0 55.0
I REFERENCES
Awolowo, Dosumu (2000). "The New superpowers: Nigeria and South Africa" Paper Presented At the Event Vermeer Conference "Tune in to Africa". May 13, 2000 at the Utrecht College, Hague. http://ww.nigherian embassy .nl/th%2OAmbassador's%20speech.htm.
Central Bank of Nigeria (2003). Annual Report and statement of Accounts for the year ended 3 1 December 2003.
Central Bank of Nigeria (2006). Economic and Financial Review Volume 41, Number 3.
Central Bank of Nigeria (2006). Statistical Bulletin, Volume 13, December 2006.
Ekpo, H.A. (2004). "The Nigerian Economy under a New Democratic Experience ": The Charles Soludo Effect, University of Nigeria, Nsukka, 2004.
Ibeanu, Okechukwu (2004). "The Nigerian State and the Economy under President Obasanjo", A Paper Presented at the National Conference on Nigerian Government and politics: An Appraisal of Performance 1999 - 2004 held at the University of Nigeria, Nsukka 20 - 22, April 2004 pp: 5.
Bonowo, B. (2003). "Slow shaky to Economic Recovery" in Daily Champion, 29th May 2003.
The UNCTAD Handbook on Statistics 2006.
World Bank (2002). World Development Indicators, Washington D. C, 2002 pp: 208 - 21 1.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary and Conclusion.
The study was desighed to examine and critically evaluate the roles which
Nigeria played under the leadership of president Obadanjo in the implementation of
economic reforms programmes in collaboration with the international financial
institutions. The examination and evaluation of those consequences on economic
growth and economic development. It lays more emphasis on the dynamics of
Nigeria's relations with the international financial institutions and the politics of
economic reforms. Consequently, the study examined the politics of economic
reforms in the context of globalization, resource dependence and its conditionalities.
The study, therefore evaluates whether the policy goals and objectives upon
which the implementation of Nigeria's economic reform policy was based and
achieved in the Nigerian context within President Obasanjo's administration. We
weighed and measured the policy objectives against human welfare, in other words
popular welfare and finally the Nigeria's economic capacity towards achieving a
sustainable growth and development. The study was motivated by the need to
investigate and provide valid and plausible answers to the following research
questions.
1. Does the implementation of Nigeria's economic reform policies prove a
supportive structure for the welfare of the Nigeria people and their
economic growth and development?
2. what is the relationship between the activities of international financial
institution, Nigefia's economic integration with the capitalist global
economy and Nigeria's economic reforms? And how has President
Obasanjo worked to sustain or achieved them?
In order to address the above questions; we relied on the Marxist Political
economy Paradigm as our analytical framework. Our choice of this paradigm was
based on the fact that it explains the nature of the capitalist or capitalism and the
unequal positions of national bourgeoisie and the proletariat as classes. The
relationship between classes and the world society characterized by a capitalist global
economy recognizes world politics as being dominated by the capitalist states. Each
state is embroil in class contradictions. There are also powerful state machines
working in the interest of the ruling class concretely based in, and reaching on the
basis of the imperatives of production relations.
It features world-wide patterns of market distortion and the activities of
transnational commercial and financial forces. Also the irreconcilability of class
antagonism is responsible for the persistent conflict between the bourgeoisies that is
the class that owns and controls the means of production and distribution and the
proletariat which constitutes the class that depends on their labour power as a means
of livelihood. The relationship between these two classes is described as exploitative
through manipulation. The imposition of economic reforms in Nigeria is such an
exploitative and manipulated or manipulatory relationship. The Marxist political
economy paradigm see developing nations as markets which supports the developed
nations through resources the former extract from the latter.
In answer to the above questions guided by this theoretical framework, we
, formulated the following hypotheses or propositions.
- If the implementation of Nigeria's economic reform policies imposed by
interngtional financial institutions impact negatively on the living
conditions and welfare of Nigerians, it is likely to resolve the contradiction
in growth and development.
- If there is a positive relationship between the Nigeria's integration into the
global capitalist economic reforms, it will increase poverty level in
Nigeria.
These propositions were investigated in chapters three and four respectively.
The study was divided into five chapters. Chapter one dealt with the introductory part
of the work. In chapter one, Fonvekonal research procedures such as the statement of
problem, objective and significance of the study, literature review, theoretical
framework of analysis, propositions and the method of generating data for the
research were adhered to. chapter two investigated the historical backgroundhhe
nature of international financial institutions imposed Nigeria's economic reforms. In
chapter two, Nigeria's economic reforms are a part of problem of accumulation,
expansion of capitalism and'policies made by the global/international bourgeoisie to
support capitalism. The chapter equally noted that, the recycling of petrodollar, the oil
glut of the 1970s that lasted till the 1980s and the relative exchange relations between
the dollar (United States of America) and the Nigerian currency (Naira), made
Nigeria to pay higher than it borrowed from western nations and various international
financial institutions.
Chapter two equally noted that the structural adjustment programme (SAP)
was a strategic policy used by the 'international financial institutions in collaboration
with the military government of General Babangida to get the Nigeria to open up their
economies, which democratization complemented by bringing leaders to power which
force the international finaricial institutions imposed reform policies on their own
people. The stabilization policies as implemented under SAP programme are as
follows devaluation of the domestic currency, and cutting of government expenditure
on welfare through the removal of subsidies and deregulation policies worsen the
living condition of average Nigeria.
The chapter further argues that there is an organic unity between pace of
democratization, economic development, economic reforms and globalization. It
validated the claim of a positive correlation between globalization, democratization,
and economic reforms and enhanced inequality in terms of welfare. In conclusion
Nigeria as a nation and Nigeria as citizens dwelling in the polity have remained poor
despite its transition to the democratic leadership of President Obasanjo from 1999 to
2006, and the implementation of neo-liberal economic reforms with its integration
withlor, into the entire global market.
In the analysis of the first proposition, it was evident that the qualitative and
quantitative data contradicted the ideologically promoted values being claimed by the
international bourgeoisie. . Specifically, the first proposition analyses the
contradictions between the international financial institutions economic reforms and
the growth and popular welfare in Nigeria. The third chapter argues that the skewed
patterns of resource distribution have not only impeded development, but also, stifled
the growth and development of political participation. Politically, this was measured
by the increasing cost of political or government participation and individual
participation and the decrease and fraudulent electoral turnout.
The third chapter also noted the contradictions of the type of growth which
characterize the present phase of globalization, is such that both states and individuals
are alienated from its benefits. This was measured with the Nigeria's value of Naira
or the purchasing power parity (PPP$) and other indicators and measures of
development. In addition, the rate of unemployment have increased by 189.8% i.e
from 63 192 to 121450; exchange rate increased from 22.0 in 1999 to depreciate to
N135.00 to $1 dollar. The relative exchange rate relations between Nigeria and her
trading patterns, or international finance made Nigeria to pay more than what it
borrowed from the international financial institutions. This explains the reason why
Nigeria's debt value had to increase from $13.83 billion in 1997 to US $37.5 billion
dollars in 2005/06.
In terms of exportation and importation of goods and services, the chapter
remarked that Nigeria still have deficit balance of payment even when its volume of
trade increases. Thus, Nigeria's resources have been transferred over the period to its
trading Western partners. Hence, the absence of development is ad a result of absolute
level of poverty, when the real GDP per capita between Nigeria and her trading
partners are compared. It finally noted that international financial institutions imposed
economic reform policies and programmes in Nigeria's economic system and society
have not enhanced the welfare of the poor because the poor man was not the target of
such policy. This explains 'another reason why, the rate of poverty increased in
Nigeria in spite of programmes like NAPEP, and NEEDS.
Based on the empirical analysis of these issues, the third chapter concluded by
validating the proposition that, the implementation of Nigeria's economic reforms
with its policies have not enhanced the living standard and the welfare of average
Nigerians who constitute the greater number in terms of population in Nigeria starting
from 1999.
In the analysis of the second proposition, it was evident that due to this
positive relationship between Nigeria's integration into the global capitalist economic
reforms, it increased the level of poverty in Nigeria. This is so because of the sub-
standard nature of President Obasanjo's economic capacity towards the imposed
reforms of the international financial institutions between 1999 and 2006.
The fourth chapter dealt with statistics or statistical tables from Nigeria's
financial institutions such as the Central bank of Nigeria (CBN), Federal Offices of
Statistics (FOS).
Empirically, the proposition in the third chapter were practically made to
provide selected statistical indicators of Nigeria's development apart from SAP,
NEEDS privatization, Deregulation, Democratization but the volume of GDP
performance of Obasanjo's civilian administration. And these includes the following:
- The Basic indicators of Nigeria's development between 1999 and 2006 and
a brief statement before the duration.
- The Nigeria's percentage growth rate of industrial production
manufacturing, mining and electricity before Obasanjo's administration
(1999) and his quarter of governance (2003).
- The assessment of President Obasanjo's total GDP with the effect on non-
oil GDP during h$ first tenure (1999 to 2003).
- And the Nigeria's economic performance indicators between 2001 and
2006
5.2 Recommendations
So far in this course,of this study, we have found out that Nigeria's foreign
policy under the leadership of president Obasanjo with the current economic reforms
policy and actions of government. must reject the neo-liberal framework of macro-
economic stability and moit importantly, the opening up of the economy to the
penetration of global capital through privatization, deregulation, liberalization and
provision of cheap labour, all of which compound popular welfare.
Secondly, the adoption of home grown or home-generated policy options first
and the Bretton Wood institkions (BWI's) policy options for the solving of Africa's
development problems should be reviewed so as to showcase Nigeria's initiative.
With these home grown measures or local inputs, the international financial
institutions would not be able to compound such growth and development problems
on the Nigerian economy.
Thirdly, technocrats, scholars and students of public policy should
continuously create measures for promoting national property as against individual
prosperity. This should be, established to reduce the skewed pattern of social
redistribution. It is only services, increasing the purchasing power parity (PPP$) or
value of Nigeria currency (Naira) and real incomes of people so that the gap between
the rich and the poor would be closed.
Finally, the real empowerment of Nigerians especially in a civilian
government can only be achieved by their own involvement in the process of
planning, implementation, monitoring, evaluation and delivery of reports to
checkmate the validity and effectiveness of programmes and policies designed for the
upliftment and advancement.of individual welfare.
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Awake Magazine, May 22,2002
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Sunday Vanguard, August 26,2001
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Asobie, H.A. (2002). "Globalization: A view From The South". Paper delivered at the 2dh Annual Conference of the Nigerian Society of International Affairs held at the University of Nigeria, on April 11 - 12 (2002) on the theme: Afiican Responses to Globalization: Periscoping the Twenty - first century.
(2006). Lecture Notes, Department of Political Science, University of Nigeria, Nsukka