University of Nigeria...University of Nigeria Research Publications NWAFOR, Ikenna Douglas Author...

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University of Nigeria Research Publications NWAFOR, Ikenna Douglas Author PG/M.Sc/05/40192 Title The Politics of Nigeria’s Economic Reform of President Obasanjo and the international Financial Institutions (1999-2006) Faculty Social Sciences Department Political Science Date March, 2008 Signature

Transcript of University of Nigeria...University of Nigeria Research Publications NWAFOR, Ikenna Douglas Author...

Page 1: University of Nigeria...University of Nigeria Research Publications NWAFOR, Ikenna Douglas Author PG/M.Sc/05/40192 Title The Politics of Nigeria’s Economic Reform of President Obasanjo

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

Page 2: University of Nigeria...University of Nigeria Research Publications NWAFOR, Ikenna Douglas Author PG/M.Sc/05/40192 Title The Politics of Nigeria’s Economic Reform of President Obasanjo

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

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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

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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

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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).

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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

Page 7: University of Nigeria...University of Nigeria Research Publications NWAFOR, Ikenna Douglas Author PG/M.Sc/05/40192 Title The Politics of Nigeria’s Economic Reform of President Obasanjo

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.

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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

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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

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. . . 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

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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

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LIST OF FIGURES

Fig 1.0: The Mechanism of Petro Dollar Recycling ------------------- 28

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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

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xii

Table 4.3: Nigeria's Total Gross Domestic Product (GDP) and Non-Oil GDP Compared Between 1999 and 2002 ----------- 60

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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

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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.

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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?

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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

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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-

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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,

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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.

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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

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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

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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

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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,

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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.

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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.

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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".

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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.

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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

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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.

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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

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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

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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)

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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.

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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

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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.

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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

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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.

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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

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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

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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.

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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

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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

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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.

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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

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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.

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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

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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

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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.

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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

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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

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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

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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.

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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..

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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

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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

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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

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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

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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

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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

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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).

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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

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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.

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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

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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

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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

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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.

Page 69: University of Nigeria...University of Nigeria Research Publications NWAFOR, Ikenna Douglas Author PG/M.Sc/05/40192 Title The Politics of Nigeria’s Economic Reform of President Obasanjo

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.

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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

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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

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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

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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.

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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)

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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

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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

Page 77: University of Nigeria...University of Nigeria Research Publications NWAFOR, Ikenna Douglas Author PG/M.Sc/05/40192 Title The Politics of Nigeria’s Economic Reform of President Obasanjo

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.

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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

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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

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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

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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

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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

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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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