The 1980s were a turbulent time for Nigeria, marked by significant economic downturns, falling oil prices, and mounting debt. In response, Nigeria, like many other developing countries, implemented the Structural Adjustment Program (SAP), a set of economic policies introduced under the guidance of the International Monetary Fund (IMF) and the World Bank. While these policies were designed to restore economic stability and growth, they also led to significant social and economic challenges that continue to reverberate in the country today.
Now, more than 30 years later, it might be time for Nigeria to revisit those policies, assess where things went wrong, and explore how to amend them in the context of the country’s current economic realities. This reflection could be critical to crafting policies that foster sustainable economic development and alleviate poverty.
What Was the Structural Adjustment Program (SAP)? Implemented in 1986 by the military government of General Ibrahim Babangida, the SAP aimed to address the severe economic crisis Nigeria was facing at the time. Some key measures of the SAP included:
- Devaluation of the Naira: To promote exports and reduce trade imbalances.
- Trade Liberalization: Opening up the Nigerian economy to foreign competition by reducing import tariffs and restrictions.
- Deregulation and Privatization: Reducing the role of the government in business by privatizing state-owned enterprises.
- Austerity Measures: Cutting public spending, particularly in social sectors such as education, health, and infrastructure.
- Removal of Subsidies: Reducing or eliminating subsidies, especially on essential commodities like fuel and agriculture.
Where Did Nigeria Go Wrong? While the SAP was intended to reverse economic decline, several key aspects of its implementation and consequences may have contributed to deeper economic challenges. Understanding these missteps can provide valuable insights into what could be amended today:
- Excessive Naira Devaluation: While devaluation was intended to make Nigerian exports more competitive, it led to a dramatic fall in the value of the naira, which in turn caused a spike in inflation. This hurt the purchasing power of ordinary Nigerians and deepened poverty.
- Over-Reliance on Oil: SAP policies did not adequately address Nigeria’s over-dependence on oil exports. The sharp devaluation and trade liberalization were implemented without the necessary support for diversifying the economy, leaving Nigeria vulnerable to global oil price shocks.
- Social Impact: The austerity measures, including cuts to social spending, exacerbated inequalities. As subsidies were removed and public services were reduced, access to education, healthcare, and other social services declined for large sections of the population.
- Weak Institutions: While privatization aimed to improve efficiency, it was often poorly managed, with many state assets sold off without adequate regulatory frameworks. This resulted in monopolistic practices and further weakened sectors that should have driven economic growth.
- Lack of Accountability and Corruption: The era of SAP coincided with a high level of corruption in government. The gains from the privatization and liberalization processes were often siphoned off, leading to widespread public distrust in the economic reforms.
Why Revisiting SAP Policies Is Relevant Today Nigeria’s economy still struggles with many of the same issues that the SAP was meant to address: over-reliance on oil, high inflation, unemployment, and a weak currency. While the global economy has evolved, Nigeria can benefit from revisiting the SAP policies to understand what can be corrected and adapted for today’s circumstances. Here are some areas that warrant re-examination:
- Exchange Rate Management: Instead of the extreme devaluation policies of the 1980s, a more managed exchange rate system could be explored today to strike a balance between maintaining competitiveness and protecting the purchasing power of the population. Collaborative efforts between the Central Bank of Nigeria and global financial institutions could help craft a more sustainable currency management policy.
- Economic Diversification: Unlike in the 1980s, when the SAP failed to diversify the economy, current policies could focus more on encouraging sectors like agriculture, manufacturing, and technology. Special attention could be given to industries that have shown growth potential, such as fintech, agro-processing, and renewable energy.
- Social Protection Programs: Rather than cutting social spending as was done during the SAP era, the government today should invest in building a robust social safety net. Subsidies may be restructured to target the most vulnerable populations, ensuring that basic goods and services are affordable, while also prioritizing education, healthcare, and infrastructure.
- Transparency and Accountability: SAP’s implementation was marred by corruption and a lack of transparency. Today, government reforms should ensure that economic policies are implemented with strong oversight mechanisms to reduce the likelihood of mismanagement. Digital tools and independent auditing bodies can ensure that the benefits of reforms reach the intended population.
- Privatization Reforms: Nigeria can revisit the lessons of past privatization efforts and focus on strategic sectors where government involvement is still needed. Where privatization is necessary, there must be robust frameworks to ensure that public assets are fairly valued and that competition is promoted to prevent monopolies from forming.
Collaboration with Current Policies Amending the SAP policies should not be a return to the same playbook of the 1980s. Instead, it must involve an integration of current global best practices, Nigeria’s unique economic landscape, and the country’s broader development goals. For instance:
- The African Continental Free Trade Area (AfCFTA) offers an opportunity to boost Nigeria’s manufacturing and export sectors. By aligning trade liberalization with regional cooperation, Nigeria could harness the benefits of a larger market while protecting its industries. • Climate Action and Green Economy: Nigeria could integrate lessons from the past into the growing global movement towards a green economy. The transition to renewable energy and sustainable agricultural practices could become a cornerstone of Nigeria’s diversification agenda. • Youth Engagement and Innovation: Current policies need to focus on equipping Nigeria’s burgeoning youth population with the skills and opportunities to participate in the modern, digital economy. Policies that support entrepreneurship, technology, and innovation will help to ensure that economic reforms create meaningful employment opportunities.
The Structural Adjustment Program of the 1980s undoubtedly played a crucial role in shaping Nigeria’s economic trajectory. However, many of its policies were either poorly implemented or failed to address the underlying structural challenges that continue to hold back Nigeria’s development today. Revisiting those policies—not with the intent of re-adopting them wholesale but rather to learn from their successes and mistakes—could offer valuable insights for Nigeria’s current economic challenges.
By focusing on currency management, economic diversification, social protection, transparency, and privatization reforms, Nigeria can amend its past mistakes and chart a path forward that promotes inclusive growth. With collaboration between government, international partners, and civil society, Nigeria can leverage the lessons of the past to build a more resilient and equitable economy for the future.
Ibrahim writes in from Abuja
