By Ike Okonta
I am happy that Dr Kalu Idika Kalu, General Ibrahim Babangida’s Finance Minister in the 1980s, is alive and well. Dr Kalu, working closely with the then Country Representative of the World Bank, avidly promoted the Structural Adjustment Programme and ensured that General Babangida imposed it on the Nigerian populace. Kalu argued that the government had no role in the economy, that the Naira should be drastically devalued and that subsidies in the education and health sectors should be removed or drastically curtailed. He also called for the privatization of all public enterprises and the removal of tariffs on imports which the Federal Government had put in place to protect the local manufacturing sector.
Following the introduction of SAP in 1986, the value of the Naira crashed in the foreign exchange market. Local factories that were producing such products as automobiles, textiles and vehicle batteries closed shop. Privatised enterprises did not fare any better. They were subjected to asset-stripping and then abandoned while employees were left to fend for themselves. By the time General Babangida was forced by pro-democracy forces to leave office in August 1993, it was clear to suffering Nigerians that Dr Kalu and the World Bank and International Monetary Fund had sold them a dummy. Nigeria had been forced back into the orbit of the international capitalist system as a marginal satellite that imported everything from toothpicks to automobiles from the Western countries while the fledgling steps she had taken on the path to industrialization in the 1960s and 1970s was abandoned.
Three decades later the government of President Muhammadu Buhari is still making common cause with the discredited World Bank. The government has served notice that it will remove subsidies on petrol and electricity in 2022. It claimed that the burden of subsidizing these two sectors is now too much for the government to bear and that in any case petrol subsidies was benefiting only the well-off. Then the government committed a blunder. It assured Nigerians that the sum of 5 thousand Naira would be paid to 40 million poor Nigerians for one year to cushion the effects of the petrol subsidy removal. Alert public-interest economics did a quick calculation and found out that the amount of money that would ostensibly be expended in the payment to poor Nigerians would far exceed the yearly subsidy! Who is trying to fool who?
The core argument of President Buhari and the World Bank Country Representative in Nigeria is that the government has no business subsidizing utilities and that such sectors as electricity and petrol should be left to the vagaries of market forces. This is indeed the central position of Neoliberalism, the extreme right wing regimen that late President Ronald Reagan and Prime Minister Margareth Thatcher began to push soon after they were both elected into office in the early 1980s. Neoliberalism, it must be noted, is not about economics. Not at all. Stripped bare, it is a political strategy whose aim is to strengthen the grip of harsh capitalism on the world system and remove socialism as a contending political alternative. This was why Prime Minister Thatcher attacked trade unions in Britain in the 1980s and also sought to cripple the Labour Party. For his part, President Reagan drew up a strategy paper that was later christened ‘The Washington Consensus’ and pushed it to the International Monetary Fund and the World Bank to implement around the world. The collapse of the Soviet Union a few years later only strengthened the grip of this noxious extreme right political regimen globally.
It is interesting to note that the coming of President Joe Biden in January 2021 has served notice to Neoliberalism that its end has come. Within eleven months, President Biden has steered two key bills through the US Congress – one designed to revamp public infrastructure and the other to give subsidies to such vital sectors as healthcare, childcare, and the environment. In short President Biden and the Democrats are arguing that Big Government is back; that the old practice of cosseting the rich at the expense of the poor and public welfare has come to an end. President Biden made it clear that he meant every word when, faced with rising inflation, especially the cost of petrol, he released strategic oil reserves in the US in a bid to force down the price of the product. He did not pay the slightest attention to right wing economists who wanted so-called market forces to continue to determine the cost of petrol in the US – to the detriment of the ordinary consumer.
I have always argued that President Buhari does not have a clear and definable economic strategy. His policies are made on the hoof; not properly thought-out and with the cares of the ordinary Nigerian as their primary focus. Unemployment is currently about 40 percent. Food inflation has further forced those lucky enough to have jobs to cut corners as they struggle every month with their meager salaries. Removing subsidies on petrol and electricity will only jerk up inflation even higher and worsen the plight of poor Nigerians who even now are hardly able to eat three meals a day. The key to prosperity in Nigeria are diversification of the economy through rapid industrialization and expansion and modernization of the agricultural sector. This will entail establishing a vigorous steel-manufacturing sector and ramping up electricity production beyond the current paltry 4000 megawatts.
The Buhari Presidency has not been able to take these steps. Instead it wants to further impoverish the Nigerian poor by removing the few subsidies they still enjoy. I urge the government to rethink this policy. In any case it is now a lame-duck government as fresh elections are already around the corner. The decision whether to remove subsidies should be left for the in-coming government in 2023. President Buhari has given his best and it is simply not good enough.
*Dr Okonta was, until recently, a Leverhulme Early Career Fellow in the Department of Politics, University of Oxford. The Abuja based researcher is the same Okonta who wrote the cover story “Babangida’s Methods and Tactics” in the late 1980s which made ‘them’ pursue him outside the country from where he earned a PhD from an Ivy League university before making it back to fatherland.