The International Monetary Fund, IMF, and the World Bank have long struck a raw nationalistic nerve in Nigerians. Romantic patriotism drives the strong nationalistic urge to resist any perceived IMF/World Bank ‘interference’. Several years ago, as a magazine publisher, I interviewed Dr Kalu Idika Kalu, then finance minister under General Ibrahim Babangida’s regime, when he stopped over in London on his way to the annual IMF/World Bank meeting in Washington. I asked him why Nigerians detested the multilaterals. “I think in Nigeria we’ve tended to be isolationist,” he said. Nigerians, he implied, were self-referential and insular and loathed foreign nations or institutions telling them what to do, even in the face of a self-inflicted crisis.
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Now, I brought Dr Kalu into this discussion because the no-love-lost relationship between Nigerians and the IMF/World Bank duo can be traced back to his time as finance minister under the Babangida regime, which introduced the Structural Adjustment Programme, SAP, in 1986. To date, many Nigerians have not forgiven the IMF and the World Bank for “imposing” SAP on Nigeria, thereby “destroying” the country’s economy. But the story is more nuanced, and it is worth retelling.
As those familiar with the events of that era will recall, General Muhammadu Buhari, head of state between 1984 and 1985, refused to touch an IMF loan and the attendant conditionalities with a barge pole even though Nigeria faced acute fiscal crisis caused by the drastic fall in world oil prices and Buhari’s own misguided autarkic economic policy. As a result, Nigeria lacked access to international credit and the economy was starved for foreign exchange.
When General Babangida took over in August 1985, his instinct was to take an IMF loan and accept the conditionalities. But in line with his professed governing principle of dialogue and consultation, he initiated a national debate, coordinated by a committee, on the question of whether Nigeria should take an IMF loan and agree to its conditionalities. Nigerians overwhelmingly rejected the propositions. As one scholar later put it in the book Voting for Reform, “this groundswell of unanimity was unprecedented in Nigerian politics.”
General Babangida accepted the popular wishes of Nigerians and refused to take the IMF loan. However, he interpreted the outcome of the national dialogue to mean that while Nigerians rejected an IMF loan and its conditionalities, they were not opposed to the government introducing necessary reforms to tackle the economic crisis. In other words, the reforms would be designed at home, not imposed from the outside. But it was a sleight of hand because the measures his government introduced were almost the same as what the multilaterals had prescribed: exchange rate flexibility, trade liberalisation, reduction of the petroleum subsidy, reduction of overspending and budget deficits, and privatisation and commercialisation of public enterprises. Those were the kernels of SAP. For most Nigerians, it was the voice of Jacob but the hands of Esau, the latter being the IMF and the World Bank. Since then, most Nigerians have never stopped viewing both institutions with deep suspicion!
“For most Nigerians, it was the voice of Jacob but the hands of Esau, the latter being the IMF and the World Bank. Since then, most Nigerians have never stopped viewing both institutions with deep suspicion!”
But those measures are the hallmarks of every open and competitive liberal economy; and any economy that has been so badly mismanaged, as Nigeria’s has, needs those self-correcting measures. However, Nigerians rarely hold their government to account for mismanaging the economy through misguided policies and industrial-scale corruption. Rather, they can smell IMF/World Bank ‘interference’ from a distance. Interestingly, while many Nigerians still blame IMF and World Bank for SAP, few credit them for supporting Nigeria’s debt relief, which led to a 60 per cent write-off on Nigeria’s official government (Paris Club) debt, as a result of which, by 2006, Nigeria’s external debt burden fell from $35billion to approximately $5billion. Needless to say, subsequent governments squandered the debt relief by amassing stupendous foreign debt that now stands at nearly $50billion. Yet, Nigerians reserve their most vitriolic attacks for the IMF and the World Bank, not their own malfunctioning government.
In 2016, the then managing director of the IMF, Christine Lagarde, paid a four-day visit to Nigeria, from January 4 to 7. Judging by most media comments, one would think that an enemy force had invaded Nigeria. One commentator described the IMF boss as “Hurricane Lagarde”; another reckoned she was in Nigeria to institute some form of “deviltry”. I was compelled to write a piece in this column, titled “Love it or hate it, the IMF is a force for good” (BusinessDay, January 18, 2016). It was not a fulsome defence of the IMF, but my point was that the institution, established in 1944, after the Second World War, exists to 1) monitor national economic policies through the Article IV Consultations and caution countries, including developed nations, against bad policies, and 2) provide financing, including access to international credit, to countries in crisis, albeit contingent on reforms.
Although a “clean bill of health” from the IMF would earn a country economic credibility and investor confidence, as the international markets take a cue from IMF assessments, no country is forced to take IMF advice or accept its loan and conditionalities. After all, throughout his eight years in power, President Buhari resisted IMF/World Bank pressure to float the naira, remove the fuel subsidy and withdraw the infamous CBN list of 43 products deemed ineligible for foreign exchange. However, because Buhari’s successor, Bola Tinubu, chose to implement those same policies, many are now blaming the IMF and the World Bank as if they instigated and imposed the policies on Nigeria.
But think about it. Given that Tinubu introduced those measures on his first day or first week in office, it’s doubtful that he did so under pressure from the IMF and the World Bank unless he was having secret discussions with them before he came to power. Lest we forget, Tinubu did not believe in those measures in opposition; in fact, he strongly opposed the removal of the fuel subsidy and tacitly condoned the pegged currency and the CBN forex-ban list during Buhari’s presidency. Truth be told, Tinubu hastily introduced those “reform” measures to woo the international community, which reacted negatively to his deeply flawed election as evidenced by unfavourable editorials in many prominent Western newspapers.
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Which brings me to the controversial remarks of Dr Indermit Gill, the World Bank’s Chief Economist, at the 30th meeting of the Nigeria Economic Summit in October. He said the government should “stay the course” on the “reforms”, adding that they would take “at least another ten to fifteen years” to yield dividends. That was certainly insensitive, considering the acute pains that ordinary Nigerians are going through. However, Dr Gill also said: “The government must do everything in its power to protect the most vulnerable citizens against hardship.” Thus, the remarks were balanced.
Yet, the media attacks were ferocious. In an editorial titled “World’s Bank’s deadly agenda”, The Punch newspaper referred to the bank’s “deadly stance on Nigeria’s precarious life.” The academic and Tribune columnist Farooq Kperogi wrote a column titled “World Bank’s 15-year death sentence on Nigeria”, describing the institution as “the soulless, blood-sucking economic vampire.”
But who is holding Tinubu to account? Yes, the IMF favoured fuel subsidy removal but also called for “adequate compensatory measures for the poor and efficient and transparent use of the saved money.” Has anyone asked about the savings and how they are being spent? No. Tinubu floated the naira, but high inflation, high interest rates and forex scarcity are harming exporters and stopping non-oil exports from compensating for the naira’s steep devaluation. The fault, dear Nigerians, is not in the IMF or World Bank, but in Nigeria!
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