Nigeria's Tangle with Neo-Liberal Economics: An International Perspective
I It has become trendy among Nigerians—whether they understand or are completely unaware of the concept—to question why the federal government and its economic policy makers opt for the harsh measures recommended by international financial organizations like the World Bank and IMF for impoverished African nations.
Some people support the concept, while others oppose it. However, for the most part, debates regarding either side of the economic theory or ideological split tend to approach the issue from the perspective of government supporters or detractors.
Neoliberalism represents the modern term for economic strategies centered around strengthening market dynamics through deregulation, eliminating controls over prices and trades, imposing fiscal discipline, reducing protective tariffs, and minimizing government intervention in business activities.
Neoliberalism encompasses privatization, or partial commercialization, of government-run businesses, downsizing big governmental structures, fostering open international trade, encouraging consumer freedom, along with various stringent economic policies that place citizens in difficult financial situations or states of scarcity.
The World Bank and its counterpart, the International Monetary Fund, claim that the purpose of these measures is to make the economies of the adopting countries more competitive, reduce their economic dependence on countries of the Economic North and devalue the currency of the “victim” countries in order to enhance their exports.
The World Bank is established to offer financing, conduct research, provide advice, and supply aid to countries that are still developing. On the other hand, the IMF aims to foster worldwide economic expansion and monetary stability, support international commerce, and decrease global poverty.
However, upon closer inspection, neoliberal economic policies are simply a repackaging of the Structural Adjustment Programmes that Nigeria's military president, Ibrahim Babangida, along with his Finance Minister, Olu Falae, enforced during the latter part of the 1980s.
SAP represents a set of economic reform measures that Third World nations are required to implement in exchange for receiving financial assistance from the World Bank and the IMF.
The debate surrounding IMF loans sparked amusing discussions across Nigerian academia, local eateries, and public transportation. Ultimately, Nigeria accepted the loan and faced the challenges of the Second-Tier Foreign Exchange Market, including auctions for U.S. dollars, the lifting of import limitations, and the elimination of price controls.
Similar to its previous occurrence, the floatation or liberalization of the Naira resulted in a devalued currency and elevated overall inflation rates. Regrettably, the IMF, which advocated for these policies leading the economy towards turmoil, did not provide any strategies to alleviate the adverse impacts on Nigeria.
Incidentally, the top-level foreign exchange market was concurrently managed by the Central Bank of Nigeria, acting under the federal government’s mandate, to facilitate the government's ability to meet its international debt obligations and honor letters of credit for public sector entities along with various "perks."
The initial-level floor facilitated currency exchanges for the government's external fiscal commitments, such as supporting Nigerian missions abroad and their staff, contributions to global organizations, participation in international sporting events, and religious pilgrimages for both Muslims and Christians.
Regrettably, this situation was exploited by Nigeria’s rentier class to amass enormous fortunes through various forms of abuse. An erstwhile CBN Governor, who subsequently assumed the role of Emir Muhammadu Sanusi II of Kano, vividly depicted how an influential Nigerians could simply request the current CBN Governor to provide them with foreign currency, which they would then exchange in the bureaux de change for substantial profits—without having invested even a single koboban.
SAPs or neoliberal economic policies pose significant challenges for economies that are already struggling, particularly when the government, along with international bodies like the World Bank and the IMF, cannot offer effective solutions to mitigate these issues. Temporary relief measures might help in the short term but do not provide lasting benefits.
When Greece was forced to implement Structural Adjustment Programs (SAP), it inherited the nickname "Poor Man of Europe" from Portugal, leading to increased joblessness, economic hardship, and civil disturbances. In 2015, Greek residents voted overwhelmingly against the stringent fiscal restrictions enforced by international lenders through a referendum.
However, the creditors ultimately got their way, even though the Greek government managed to secure some adjustments to the program. Brexit, the withdrawal of Britain from the European Union, was attributed to the country’s worries about the EU's failure to control the consequences of debt on the euro, which serves as Europe’s single market currency.
We believe Nigeria’s policymakers should swiftly reassess the neo-libERAL economic policies that appear to be taking forever to produce positive outcomes.
Provided by Syndigate Media Inc. ( Syndigate.info ).