Nigeria Has Been Stagnant for 30 Years - World Bank

By Etim Imisim, This Day (Lagos), 27 March 2001

Lagos—The World Bank has said that almost nothing positive has happened in Nigeria in the past three decades, noting that its judgement of the country, though harsh, was not inaccurate.

The bank said though Nigeria reaped bountifully from oil resources, its performance in the economic sector had been startlingly poor. It also said that the country's per capita income witnessed a major erosion since its peak in the early 1980s.

The bank's views are contained in a new report, to be released today. The report is based on investigation into how development aid has influenced economic policy in Africa. The 10 countries studied are: Cote d'Ivoire, Democratic Republic of Congo (formerly Zaire), Ethiopia, Ghana, Kenya, Mali, Nigeria, Tanzania, Uganda, and Zambia. The section on Nigeria was co-authored by Jeffrey Herbst of Princeton University, Princeton, New Jersey, USA, and Charles C. Soludo of the University of Nigeria, Nsukka.

The country has not been able to escape dependence on petroleum exports, the bank said.

The report said Nigeria was important in the study for several reasons. The first is that the country has received the greatest amount of aid on a per capita basis in world region, noting that the country's 118 million people account for roughly 20 per cent of Sub-Saharan Africa's total population. Nigeria presents a special case in the effectiveness of foreign aid in Africa because its policy reforms have been found to be the weakest. This means that Nigerian political leaders have not been committed to even the reforms they initiated while the capacity of the civil service has not risen to meet the challenges.

The decision to adopt the bank-fund type of adjustment was not made because the Nigerians thought it was superior to other models. Rather, it was because the country could exercise the leverage exercised by the International Finance Institutions (IFIs). That leverage stems from their ability to provide a basis for debt rescheduling, and therefore to provide the government with the direly needed fiscal space to operate, said the report.

The report noted wryly that the fund and bank assumed that debt rescheduling and oil revenue were essentially interchangeable, noting that this is a realistic provision given the need of Nigerian rulers for maximum revenue in the short term.

The report said the reforms attempted by the General Babangida government (1985-93) was the most ambitious ever attempted by any Nigerian administration.

It said the reform of this period will be useful to the present and future government in Nigeria, as the country still suffers from the same policy distortions and needed to lessen its dependence on petroleum exports.

But the report noted that even in the Babangida years, which embraced reforms Nigerians refused an IMF loan. The government could not take the IMF loan principally because Nigerians had, in a national debate, rejected the loan and its conditionalities.

The report said Babangida was forced to embark on the reforms because of the debt overhang, under which the country operated. It said the government had weighed the options carefully and realised that its survival rested on the availability of revenues. And this in turn depended upon its ability to negotiate a rescheduling of debt service payments.

But Babangida, the report stated, first had to sell the reform package to Nigerians, noting that it had to employ a strategy that made the programme one that was made in Nigeria and not externally driven.

In a clever manoeuvre to prepare Nigerians for the painful adjustment to come, Babangida orchestrated a national debate that was somewhat deceitfully couched in terms of whether or not Nigeria should take the IMF loan and the accompanying conditionalities. When the outcome of the debate was announced in early 1986, it was predictable. Nigerians, it was said, had rejected the IMF loan and conditionality, but instead agreed to embark on their own home-grown adjustment measures designed to ensure economic reconstruction, social justice, and self-reliance.

Babangida, the report further stated, then went ahead to declare a 15-month national economic emergency. It noted that Babangida told Nigerians in his December 1985 budget speech that this action was dictated by the serious economic problems facing us: huge foreign and domestic debts, a rapidly declining per capita income, a high rate of unemployment, severe shortages of raw materials and spare parts for our industries, and a high rate of inflation.