Structural Adjustment Programs: the Impact on Nigerians

Only available on StudyMode
  • Topic: Economics, International trade, Structural adjustment
  • Pages : 30 (8992 words )
  • Download(s) : 167
  • Published : July 23, 2012
Open Document
Text Preview

Structural Adjustment Programs: The Impact on Nigerians

Abstract
Word Count: 8,590

Nigeria’s economy for many decades thrived under agricultural exports until the government shifted its focus to crude oil exports. The repercussion of abandoning this sector was later felt in the early 1980s when the world crude oil prices fell and the production quota of Nigeria to the Organization of the Petroleum Exporting Countries (OPEC) dipped. This made the government incur debts which led to balance of payment crisis in the global market that could only be offset with immediate economic reforms. The fiscal burden led the Babangida Administration in 1986 to acquire the International Monetary Fund (IMF) Loan which came with conditional economic policies known as Structural Adjustment Programs (SAPs), targeted at resuscitating ailing economies. The conditions required the state to privatize its enterprises, liberalize its economy and devalue its currency. The implementation of these economic policies made a significant impact on citizens. SAPs have been widely controversial especially among developing states but this research will seek to examine its impact on Nigerians. The resources for this research will be collected from books, journals and other relevant publications.

Chapter One

1. Introduction

1.1 Statement of Research Problem

Despite the ambitious objectives of Structural Adjustment Programs to provide relief, the stringent economic policies made a significant impact on the livelihood of Nigerians. For instance, the removal of oil subsidies discouraged local production because the local industries could not afford to sustain production due to the rise in prices of lubricants, diesel, heavy duty oil and fuel; this also affected the cost of transportation, which translated to the rise in food prices. The commercialization of Schools produced a lot of drop – outs because they cannot afford fees, the commercialization of hospitals increased death rate because they cannot afford medical expenses. From his point of view, Carmody expresses his thoughts:

Structural Adjustment represents an attempt by the imperial powers to re-colonize Africa through informal channels. In particular, the harsh conditionalities that are imposed on African governments by IFIs, and the fact that structural adjustment leads to a complete reintegration of African economies into the global markets along colonial lines by destroying local manufacturing industries and promoting exports of primary commodities (Onimode quoted in Padraig, 1998, p. 27).

These Programs were derived from the neo-classical principles implemented between the period of 1700 – 1850 during the industrialization of Britain and the United States which was a failure due to its broad liberalization approach that led to independent growth of the trade and financial sectors, to the disadvantage of production (Padraig, 1998).

Nigeria’s adoption of the programs were targeted at restructuring and diversifying the productive base of the economy, reducing dependency on oil, achieving fiscal and balance of payments viability over the medium term and promoting non-inflationary economic growth (Ezeala-Harrison, 1993).These were short economic programs that were designed to benefit the populace on the long run but instead brought a lot of suffering to them. Ozoemenam mentioned that “you cannot make an omelet without breaking eggs” therefore SAPs must come with sacrifices and tears (Ozoemenam, 1991, p. 435). He quoted President Babangida as saying:

Under SAP we are continuing our drive for local sourcing of raw materials, food self-sufficiency and encouraging investment in growth-inducing productive sectors and in industries which will transform locally-produced raw materials into higher value-added produces, to substitute for imports as well as provide new and additional earnings of foreign exchange from exports and promote...
tracking img