In the early 1980s, as Nigeria faced mounting economic pressures from falling oil prices and a rapidly devaluing currency, the country turned to international financial institutions for help. The Bretton Woods Institutions—the International Monetary Fund (IMF) and the World Bank—stepped in, offering much-needed funds but with significant strings attached. These institutions, established to promote global economic stability, became central figures in Nigeria’s economy, imposing reforms designed to shift Nigeria away from reliance on oil exports and reduce its debt burden.
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However, these policy prescriptions, particularly the Structural Adjustment Program (SAP) introduced in 1986, often sparked public resistance. Nigerians faced soaring prices, reduced government subsidies, and rapid currency devaluation, leading to lasting scepticism toward the IMF and World Bank. The IMF and the World Bank have long provoked strong nationalist sentiments among Nigerians. A sense of fervent patriotism fuels the instinct amongst Nigerians to resist any perceived suggestions from these sister agencies as “interference” or “meddlesome interloper” in the economic direction of the nation—the nationalist chord pushing Nigerians to believe that their policy recommendations are nothing but chaliced poison!
In January 2016, when then-IMF Managing Director Christine Lagarde visited Nigeria for four days, media responses made it seem as though the country had been invaded by a hostile force. Some commentators labelled her “Hurricane Lagarde,” while others speculated she came with plans for deviltry.” Leaping to their defence, Mr Olu Fasan wrote a piece titled “Love it or hate it, the IMF is a force for good” (BusinessDay, January 18, 2016) detailing the laudable policies and programmes of the IMF and its transformative effect.
“However, their influence remains controversial, as many Nigerians view BWIs’ policy recommendations as constraining national sovereignty and contributing to persistent economic struggles.”
Now, decades later, the question remains: To what extent are Nigeria’s economic struggles a product of these foreign influences, or are they, in fact, symptoms of deeper, homegrown challenges?
Background of Bretton Woods Institution in Nigeria
The global economic depression that impacted countries worldwide, coupled with the major powers’ inability to effectively address these economic crises, created a strong demand for multilateral institutions to provide stability and support, especially for the postcolonial economies of the Global South, including Nigeria. With this objective in mind, a pivotal conference was held in Bretton Woods, New Hampshire, in July 1944. Led by the United States and the United Kingdom, this meeting established key institutions, including the International Monetary Fund (IMF), the World Bank, and the International Trade Organisation (ITO)—now WTO—aimed at creating a structured economic framework for global recovery and support. These institutions, now known collectively as the Bretton Woods Institutions, have played a significant role in fostering economic development in postcolonial nations. However, debate persists about whether these institutions truly advance or hinder the economic potential of these states.
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These collectives, known as the BWIs, have significantly influenced Nigeria’s economic landscape since the 1980s. Their involvement began most notably with the Structural Adjustment Program (SAP) in 1986, introduced to address Nigeria’s economic challenges, including debt crises, inflation, and trade imbalances. SAP’s policies emphasised economic liberalisation, currency devaluation, reduced government spending, and increased privatization. While initially aimed at stabilising the economy and promoting growth, SAP led to mixed outcomes, with many Nigerians criticising its impact on local industries, employment, and poverty levels. Needless to point out that one of the BWIs-IMF, founded in 1944 post-World War II, serves two key purposes. First, Article IV Consultations of the Fund stated that it is to monitor national economic policies and cautions against harmful practices, even among developed nations. Second, it offers financial support, including credit access to struggling countries, though often contingent on reforms.
Since then, the IMF and World Bank have provided loans, technical assistance, and policy recommendations, particularly during periods of economic distress. The IMF’s standby arrangements and the World Bank’s targeted interventions in critical areas like healthcare, education, and infrastructure reflect ongoing efforts to stabilise and modernise Nigeria’s economy. However, their influence remains controversial, as many Nigerians view BWIs’ policy recommendations as constraining national sovereignty and contributing to persistent economic struggles. Today, the relationship with BWIs is both one of dependency for financial assistance and of public scepticism regarding their impact on Nigeria’s long-term economic health.
Why Nigerians became disconsolate with BWIs
Nigerians’ tense relationship with the IMF and World Bank dates back to the tenure of the Babangida regime, when then-Finance Minister Dr Kalu Idika Kalu introduced the Structural Adjustment Programme (SAP) in 1986. Many still hold the IMF and World Bank responsible for “imposing” SAP on Nigeria and thereby “ruining” its economy. However, the story is more complex and warrants a closer look. Prior to Babangida, General Muhammadu Buhari, as head of state from 1984 to 1985, firmly refused any IMF loan and its conditions, despite Nigeria’s severe fiscal crisis brought on by plunging oil prices and Buhari’s own inward-focused economic policies. This left Nigeria without access to international credit, creating a dire shortage of foreign exchange. Upon assuming power in August 1985, Babangida initially favoured an IMF loan and its associated conditions but, true to his principle of consultation, launched a national debate on the matter, managed by a specially appointed committee. The response was overwhelmingly negative, marking a rare instance of unified political consensus in Nigeria, as one columnist observed.
General Babangida heeded Nigerians’ wishes and declined the IMF loan. However, he interpreted the national sentiment to mean that, while Nigerians opposed external conditions, they were open to government-led reforms to address the economic crisis. His approach was a flicker of sleight of hand because the measures his government introduced were not significantly different from what the BWIs proposed: naira devaluation, trade liberalisation, subsidy cuts, budget deficit reductions, and privatisation of public enterprises—the fulcrum of the Structural Adjustment Program. For most Nigerians, it felt like the IMF and World Bank’s influence cloaked in domestic policy, and this has since fuelled enduring distrust toward these institutions, and they have never stopped short of viewing both institutions with jaundiced eyes.
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Redirecting the expletives!
There is no gain in reiterating that those measures are standard features of any liberal economy, and an economy as poorly managed as Nigeria’s could certainly benefit from them. However, Nigerians often overlook their leader’s role in mismanaging the economy with misguided policies and large-scale corruption, instead detecting any hint of IMF or World Bank “interference” from afar. While many Nigerians continue to blame these institutions for SAP, few recognise the role they played in securing debt relief, which resulted in a 60% reduction of Nigeria’s Paris Club debt and reduced external debt from $35 billion to around $5 billion by 2006. Unfortunately, subsequent governments quickly accumulated new foreign debt, now climbing the $50 billion mark. Despite this, Nigerians still direct their strongest criticisms at the IMF and World Bank, rather than holding their own leaders and themselves accountable.
While securing a “clean bill of health” from the IMF boosts a country’s economic credibility and investor confidence, the IMF neither mandates its advice nor compels countries to accept loans or conditions. President Buhari, for example, spent eight years resisting IMF and World Bank calls to float the naira, suspend the fuel subsidy, and revise the CBN’s list of 43 foreign exchange-restricted items. Yet, when his successor, Bola Tinubu, opted to implement these same measures immediately upon taking office, the IMF and World Bank drew blame, as if they had pressured the decision. Given Tinubu’s swift actions upon assuming office, however, it’s unlikely that IMF influence was behind his choices unless there were prior, undisclosed discussions that are not open to us.
In sum, Nigeria’s relationship with Bretton Woods Institutions has been mixed! While policies recommended by these institutions have aimed to stabilise and reform Nigeria’s economy, their impact has sparked debate on whether such measures truly address the country’s unique challenges. Moving forward, it’s crucial for Nigeria to balance external advice with sustainable, homegrown solutions, focusing on reforms tailored to its socio-economic landscape. A more deliberate approach, emphasising accountability and resilience, may offer a path toward greater economic stability and prosperity.
Muhammad is a senior research and data analyst at BusinessDay Intelligence. He has over seven years of quality analytical experience on issues related to the economy, finance, and human capital development.
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