Question 6: Write an essay on political economy of Nigeria in the Neo-liberal era.

The overall purpose of development is to promote social progress. In the specific case of Africa, it is to reduce poverty, unemployment, diseases, and other social ills. These problems are closely linked to human development dilemmas which ultimately limit people’s ability to live a long and healthy life. As such, it is the provision of basic social needs of life such as food, housing, clothing, healthcare, education, infrastructure and the capacity of persons to access them that invariably determine the level of development in various societies. It is these views, therefore, that provide the groundwork for evaluating how a government socioeconomic policy has met these objectives. Nigeria since the early 1980s has been experiencing socioeconomic crises which have manifested in persistent internal and external macroeconomic imbalances (Sanusi, 1986:52). The internal disequilibrium became evident following the drop in world market price for crude oil that created an instant revenue shortfall for the state which immediately triggered off a major crisis in the economy (Olukoshi, 1991b:30-31). Arising from the external front is the structural imbalance associated with the modes of production (allowing the dominance of foreign capital) upon which the Nigerian economy was organized from colonial times, thus making the country a producer and exporter of primary products (see Onyeonoru, 2005:93; Umoren, 2001:30). This process has not only affected the social structure of the nation, but also the social relations of production which have consistently exposed the weakened state of the domestic economy and the country’s development (Olukoshi, 1993:4-5).

Due to cases of managerial ineptitude, indiscipline, corruption and inappropriate policy formulation and implementation the government was unable to adequately manage the crises (Yesufu, 1996:89). Also, the state failed to finance the social sectors and maintain infrastructure, with the result that the quality of life and welfare of the citizenry began to deteriorate (see Olukoshi, 1993: 4). The nation started to run huge budget deficits whilst at the same time embarking on imprudent foreign borrowing from private and official international sources such as the World Bank/IMF, the Paris and London Clubs. This borrowing spree was to lay the foundation for the country’s debt crisis which has served to compound the problems afflicting the wider economy (Adepoju, 1993:2; Olukoshi, 1990). At the level of industry, many firms either suspended production or scaled down capacity utilization drastically because of inability of the national government to continue to meet its foreign exchange needs given the import-dependent nature of their production (Bangura, 1982:1). For instance, while industrial capacity utilization in Nigeria before the advent of SAP was around 70 percent in 1980, it dropped to 34.6 percent in 1999, increased to 55.70 percent in 2004 and dropped again to 53.3 percent in 2006 (CBN, 2007). In order to cope with the socioeconomic situation, many workers employed in the public and private sectors were laid off. In tandem with these happenings, social services provision, including the health and educational sectors suffered severe neglect and decline. Consumer goods and imported food items like rice, vegetable oil, sugar and milk were in acute shortage as well. The living and working conditions of many Nigerians deteriorated sharply as the crisis deepened. To redress these socioeconomic crises, various austerity and stabilization measures geared toward tackling the rapid economic decline were pursued by successive governments between 1982 and 1985 without any positive improvement. By 1986, the Babangida regime adopted the World Bank/IMF inspired Structural Adjustment Programme (SAP) based on neo-liberal approach which was viewed as been in line with economic globalization which professes free market ideology. The SAP measures were to give greater weight to growth strategy than to income distribution objectives, which is reminiscent of the neoclassical economic models of the 1950s and 1960s. Consequently, SAP’s principal  

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