THE I.M.F. AND DEVELOPING ECONOMIES: A CASE STUDY OF THE SAP ON THE NIGERIAN ECONOMY
A GENERAL OVERVIEW
1.1 BACKGROUND OF THE STUDY
Nigerian Economic Crisis started with the integration of the economy into world capitalism. This engendered poverty, dependency, corruption and instability, which are all elements of underdevelopment. These problems are traced majorly to massive exploitation meted on the country by the west through colonialism and neo-colonialism. These militated against the progress of the country in all its ramifications.
According to Fashina Oladipo:
“The integration of Nigeria into world capitalism and colonial imperialism, the control of Nigerian resources by foreign firms, the presence of local exploiting class whose members aid foreign firms to steal Nigeria’s wealth” (Oladipo, 2002:9).
Integration did not succeed single handedly. It was aided by the leadership of the country. The local privileged class appeared nationalist in outlook, but were they sole agents that concluded integration. This warranted Akpan to state that “the root cause of the crises in Nigerians the contradiction of primitive capitalist accumulation within the country which includes the dependency elements” (Ekpo 1991).
Besides, these culminated into mass poverty, chronic shortage of essential goods and services, severe paralysis of industrial production, collapse infrastructure, corruption, stealing, mass unemployment and retirement of workers, inflation, paucity capital, hunger etc. all these vices culminated to the mismanagement of the countries economy by both civilian and military oligarchies of their era.
Another problem that trapped Nigeria in the culture of poverty is lack of good planning. The problem of poor planning militated much against the development of the country. Planning in the economy does not cater for everybody in the society. The poor are not taken into consideration while planning the economy.
Similarly, corruption also took its tool against progress in the country. This has been identified as one of the greatest problems in Nigeria. It is widely believed that when the level of corruption is so high in the country, it stagnates development and engenders poverty to the less privileged.
Furthermore, dependency is also identified as one of the major causes of poverty. It is noted that the integration of the Nigerian Economy into Western Capitalism on an unequal basis caused Nigeria the fate that she is suffering today. The manner of integration into the world capitalist economy made it look as if the economy of Nigeria cannot stand on its own. Nigeria found herself in the international division of labour which is popularly called, “comparative cost advantage” that allocated to Nigeria the duty of producing raw materials only. But it is not as if she controls the prices of these raw materials. The prices of these raw materials are fixed by the advanced countries of the world to the detriment of Nigeria and other Third world Countries.
Besides, dependency did not only hamper the Third World’ raw materials pricing systems alone, it touched all aspect of the economy including the valuation of the local currency of the Third World Countries including Nigeria to the extent that, the value of the local currencies must be determined by the developed capitalist nations.
This is what dependency caused Nigeria and other Third World Countries that even when they know the panacea to their economic crises, they cannot implement it because the policy must be approved by their neo-colonial masters who have no interest at all for the development of these peripheral nations that are just meant to produce for the upkeep of the advanced economies of North America, Western Europe and Japan.
With the above problems, coupled with the depression that set in the late 1970s and the early 1980s, nothing could be done by the leadership to save the country from economic decadence. The gross mismanagement coupled with the depression became the crux of the Nigerian economy, resulting in near collapse. In order to find solution to this critical circumstances, the International Monetary Fund’s (IMF) Structural Adjustment Programme (SAP) was envisaged as a panacea by the then ruling military government in Nigeria.
1.2 STATEMENT OF THE PROBLEM
The Structural Adjustment Programme (SAP) as an instrument for economic recovery was introduced by General I. B. Babangida’s administration in 1986. It was rejected by prominent, eminent and well meaning economists and Nigerians from all works of life. The mass rejection was unconnected with the experiences or the negative effects of SAP in other Third World Countries, before 1980. For instance, the crises that befell countries like Argentina, Brazil, Egypt, Ghana, etc during their implementation of the Structural Adjustment Programme of the IMF loan facilities, will make every rational economist to reject it. Instead of putting an end to economic woes, it made the Nigerian Economy to be in a worse situation. The Structural Adjustment Programme (SAP) has made the Nigerian Economy to be “a debt trapped economy” and a debt trapped economy is an enslaved economy and for any people, such is worse that colonialism” (Oladipo, 2002).
1.3 OBJECTIVE OF THE STUDY
The objective of the study is to contribute to the many literature on the Structural Adjustment Programme and expose its consequences on developing economies.
1.4 HYPOTHESIS OF THE STUDY
A research topic on “The IMF and Developing Economies: A Case Study of SAP on the Nigerian Economy” has this objective: to find out the effects of SAP on the developing economies.
The hypothesis, therefore is:
Ho: The Structural Adjustment Programme (SAP) has no positive effect on the economic recovery of Nigeria.
Hi: The Structural Adjustment Programme (SAP) had positive effect on the economic recovery of Nigeria.
Ho: The developing economies did not benefit from the Structural Adjustment Programme (SAP).
Hi: The developing economies benefited from the Structural Adjustment Programme (SAP).
1.5 SIGNIFICANCE OF THE STUDY
The importance of this study is to know the causes of poverty in Nigeria in particular and the Third world Countries in general. This study would be useful to all those who are interested in the economic revolution and development of the “giant of Africa”.
1.6 SCOPE OF THE STUDY
The scope of this study can cover 1985-1994, the pre-SAP and SAP period.
1.7 DEFINITION OF TERMS
Capitalism: This is an economic system that is based on private ownership of the means of production.
Imperialism: This is the process of asserting a sustained domination and control over markets and raw materials sources in other countries.
Colonialism: This is the practice by which a powerful country controls another country or other countries.