The demands of those who organised the #EndBadGovernance protests, which commenced on August 1, 2024, should make any tough cookie politician pause and review his strategies on the economy of Nigeria.
The “Ebi npa wa” cry by Nigerians should compel anyone to begin searching for alternatives to handling the drifting Nigerian economy, caused by the incompetence and carelessness of those who ran the economy, even before President Bola Tinubu.
The removal of fuel subsidy by the government of former President Muhammudu Buhari, and its endorsement, and the merging of the foreign exchange rate, by Tinubu, have had the same effect as the Structural Adjustment Programme that was adopted by the regime of military President Ibrahim Babangida to qualify for the $1.3 billion loan from the International Monetary Fund.
The two policies, decades apart, caused spiralling inflation, with prices of nearly every imported strategic consumer good, like petroleum products and foodstuffs, shooting right into the stratosphere, causing Nigerians to moan about the dire economic straits they’ve gotten into.
Even Senator Adams Oshiomhole dusted up his labour credentials, to declare that the “neo-liberal economic policies (another word for SAP) have failed Nigeria.” SAP, with this new nomenclature, encourages a free reign of market forces to determine the prices of goods and services, even in an import-oriented economy that comes with imported inflation.
An import-oriented economy is almost completely dependent on the economy, or economies, of countries from where it imports its consumer goods, manufacturing machinery, industrial spare parts and raw materials.
As long as this situation persists, the dependent economies, sometimes referred to as peripheral economies by international relations scholars, will never have independent control over the costs and prices of their goods and services.
Have you ever wondered why the west-centric international petroleum cartel, using the Organisation of Petroleum Exporting Countries as a front, styled petroleum as an “international product,” to be sold for the American dollar, even if a Dangote refinery is within the same country, and is less than 40 minutes air flight, from the Nigerian oil fields?
The intention of that international monopoly capital booby-trap is to tie the economies of petroleum-producing countries to the American economy, by adopting the American dollar as the currency of trade in the international petroleum market.
In 2016, America introduced its shale petroleum into the international market at a near rock-bottom price, to corral 10 independent petroleum-producing countries, including rival Russia, which produces 13 per cent of the world’s petroleum, into Saudi Arabia-led OPEC cartel, to form OPEC+.
Yet, America, whose currency is used for the international petroleum trade, did not join OPEC or OPEC+. America, one of the world’s biggest producers of petroleum, is content with staying in the shadows as the master puppeteer.
Some of the requirements that SAP imposed on Nigeria were: Devaluation of the naira; weekly auction of hard currencies in order to reduce the balance of payment deficits; reduction of public sector employment and big government; removal of subsidy to reduce budget deficits.
Other requirements were free repatriation of funds by foreign companies; privatisation or commercialisation of government-owned enterprises; deregulation of state-controlled industries; and adoption of a market-oriented economy.
To cushion the effects of SAP, the government introduced some elaborate interventionist programmes, including the Directorate of Food, Roads and Rural Infrastructure, to enhance food production and improve the rural areas; Nigerian Directorate of Employment; SAP relief package; mass transit programmes; and the establishment of People’s Bank and community banks.
But the negative effects of SAP overwhelmed the initiatives: The devaluation of the currency led to inflation and a decline in the real income and purchasing power of Nigerians. It led to a fall in the standard of living of Nigerians, who could no longer buy personal automobiles, air travel, medicare and three-square meals a day.
It led to the crippling of Nigeria’s industrial sector and the near collapse of the export produce market. And the loan taken, after the adoption of the stiff conditionalities, ended up in purchasing consumer goods from the Western countries that (indirectly) gave the loan in the first place.
What Nigerians are experiencing now, after the recent removal of fuel and electricity subsidies and merger of the foreign exchange regime, is a deja vu, an uncanny reenactment of the funk and blues of the 1980s, and it is not comfortable at all.
In simple terms, what Nigerians are going through today is an exceedingly depreciated naira, leading to the high cost of foodstuffs, expensive land and air travel, loss of homes due to inability to pay rents, coupled with a deluge of demands from family and friends for financial assistance.
When Buhari bungled the economy and security of the country, and neglected to rein in the “pandemic” farmers-herders clashes and kidnappings, Nigerians thought they had seen the worst. Until now…
Some now blow a raspberry at the perceived absence of the “folklore” competence of Tinubu, and ask if he should not return Nigeria to the Buhari days, the way Israelites wondered if Moses shouldn’t return them to Egypt, where they had suffered humiliation, degradation and oppression.
Maybe not. But maybe now is the time to revisit the grace notes of Prof. Adebayo Adedeji, Nigeria’s post-Civil War Minister of Economic Development and Reconstruction, who later became the Executive Secretary of the United Nations Economic Commission for Africa.
The ECA, under Prof. Adedeji, observed that “during 1980-1987, the performance of sub-Saharan African countries with strong SAP was the worst of any group; a negative annual average growth rate of -0.53 per cent, contrasted with a positive 2.00 per cent for countries with weak SAP programmes and a relatively strong positive rate of 3.50 per cent for non-adjusting countries in sub-Saharan Africa.”
ECA rejected the recommended drastic cuts in subsidies and social services, indiscriminate promotion of export of primary commodities instead of processed goods, credit squeezes, high interest rates, excessive import liberalisation, overdependence on market forces and doctrinaire, or almost a religious promotion of privatisation.
Prof. Adedeji offered the African Alternative Framework to SAP: An African Recovery Thought, as an alternative to the bitter SAP pill forced down the throats of Nigerians by General Babangida and his “SAP Apostle,” Olu Falae, his finance minister, who also served as secretary to his regime.
The most redeeming economic policy of Tinubu is to sell petroleum for government-owned refineries to private-sector refineries in naira. That bullseye, with a direct effect on transportation, should drive down the price of foodstuffs.
Apart from (hopefully) making petroleum products readily available, at prices sans landing and foreign exchange costs, it should eliminate the 40 per cent of forex needed to import petroleum products, and significantly reduce the pressure on the naira.
If the Nigerian National Petroleum Company Limited can up petroleum production to the promised two million barrels per day, government revenue should significantly improve to be able to finance infrastructure for Nigeria’s industrial revival, if the President can also find a competent economic revival czar.
And, ahem, maybe the 1999 Constitution stumbling block to the political and economic growth of Nigeria should give way for a second look at the document prepared by Justice Idris Kutigi-led National Conference Committee set up by former President Goodluck Jonathan, whose nerves couldn’t implement its recommendations on restructuring.
Or maybe Tinubu should consider Prof. Adedeji’s alternative to SAP recommendation for gradual economic reforms, though he’s on the right path.
