No gainsaying that the Structural Adjustment Program SAP draw negative emotions amongst Nigerians. As written a fortnight ago this is a misplaced sentiment. Chief Audu Ogbeh having brought it up in a video that has gone viral this year, I believe we would be doing ourselves a great disservice if not properly addressed. This is pertinent considering other countries China and India undertook structural changes to their economies around the same time as Nigeria did and have had great outcomes from the exercise.
China seized the opportunity to restructure its economy with the passing of Chairman Mao Zedong in 1976 and the coming to power of a formerly discredited Deng Xiaoping. Deng it was who encouraged a change to a market economy rather than continue with a communist planned economy, the rest is history as the saying goes. India ran a socialist economy after independence in 1947. In 1991 it encountered serious headwinds with very low reserves and balance of payment problems. India then liberalised and has since overtaken its colonial overlords to become the fifth largest economy currently growing at 7% per annum. Both economies unlike Nigeria have not looked back and continued on the path of restructuring and upgrading their economies.
Two administrations in Nigeria suspended SAP, General Abacha’s and APC. Whenever your currency is determined by fiat know that SAP is in abeyance as occurred under these two administrations. There are other reasons to return to that video, one being that SAP as executed from 1986 had its short comings. Also, how do we move ahead and deepen the restructuring of the economy from where we are. In addition Ogbeh raised other issues that should not be left hanging for the benefit of Nigerian Millennials.
By harping on rice importation Audu Ogbeh was saying the program was responsible for the nation becoming a major rice importer. Nothing can be further from the truth. It was in the first term of Shehu Shagari that Alhaji Umaru Dilko, an influential cabinet minister,was made to oversee rice imports into the country while the government was pursuing a ‘Green Revolution’. Nigeria has not looked back and a Christmas day treat has become a staple. In reality what is going on is beyond balance of payment deficits, it involves hegemonies, cultural and culinary. Bread consumption and noodle consumption should be viewed in this light as well.
The question is how do we deal with the fall out of having to import to satiate our appetite for exotic staples? Grow our own rice or wheat to stop importation as canvassed by Audu? This is unworkable because we do not have the natural advantages in either of these crops over Asia and Europe. However, there are at least two ways this situation can be addressed.
Nigeria has crops where it has natural advantages, we need to pursue their development to their high end product before exportation. Rather than being a jack of all and master of none, Nigeria must specialise in crops where it has natural advantages. It was Adam Smith who showed the wisdom in specialisation and David Ricardo carried it over into international trade by espousing use of comparative advantage theory in international trade. Nigeria has allowed smart nations to dominate higher value ends of products where we could have specialised to our advantage. I don’t believe we have any advantages in rice or wheat.
A recent development is the emergence of sesame seed cultivation in larger quantities. A group felt Nigeria could do well with sesame seed cultivation and without much fanfare went for it. Suddenly polished sesame seed export toppled cocoa beans as the top non oil earner of dollars. Specialise and concentrate energies and resources where you have natural advantages. Nigeria is a major producer of tubers and should also engage in export of pharmaceutical grade starch. There are others, shea nut to produce shea butter for exports and processed cashew nuts. Let’s do for these what was done for Sesame Seeds. Let’s put resources in these as we have put in rice or wheat where we have less advantage thinking we can replace imported rice or imported wheat.
Nigria should execute a cultural and culinary hegemony of our own and get the world hooked on cuisines of ours. Tit for tat, need to use daily language for comprehension. Our energetic young people have set the ball rolling in music and Nollywood. How we package our cuisines from Jollof rice to versatile Garri to Kilishi should be our national goal. Palm wines, Moringa tea are some of our acclaimed drinks to showcase for world consumption. This is how nations develop healthy balance of trade and generate excess forex to pay for imports, including maintaining exotic taste developed when they were colonies.
The Structural Adjustment Program had its failures that stemmed from indiscipline. A grave one would be the debt that continued to grow during the period. Another was the failure of added value exports and no progress with export of industrial goods though this was a component of the program. Corruption and loss of fiscal discipline featured prominently in this period.
In fairness could anything have been done about the debt that accrued from short-term letters of credit defaults which attracted punitive interest that kept rising as we kept defaulting. Oil prices kept falling and remained at an all time low of around $10 per barrel until a momentary spike prior to the 1992 Gulf War. The windfall from this spike was used to complete some critical projects like Ajaokuta Steel, an Aluminium Smelter, the fertiliser plant and the move to Abuja.
We need to acknowledge that some critical infrastructure did come into service during this period including the completion of abandoned 3rd mainland bridge, Egbin power plant, the fourth and last NNPC refinery. The coming on stream of the first trains of the NLNG and laying of gas pipe lines across the south of the country. I want to submit that priority was given these dollar denominated projects over debt reduction.
In the early years of SAP the government banned the export of cocoa beans from the shores of Nigeria. This was in the true spirit of SAP to encourage export of semi finished cocoa products like cocoa butter. However the ban was reversed by the same proponents of SAP and 34 years after the reversal Nigeria remain exporter of majorly the beans of cocoa. A matter of what could have been. This is not limited to cocoa but to all crops where we hold sway in the world market. One hopes CBN RT 200BN would recover lost ground.
So much said for our agricultural sector how about the industrial sector for export? Again no traction under SAP of ’86 because Nigerian business elite refused to buy-in. Export of industrial products was a key part of the program and reason given for continued depreciation of the naira yet industrial exports never took off. To give life to this policy was the second Port Harcourt refinery built for export but it never was to be.
To the issue of corruption, and as the saying goes perception is everything. To date it is believed that corruption became institutionalised in the era. No single minister nor military governor was sanctioned in this entire period. Mr Military President, the Ministers and the Military governors could spend government monies at their whim and caprices.
Where do we go from here? We follow through on SAP as China and India have done in the past. The Naira keeps losing value not because we are a nation of importers, all nations are, Naira loses value because we are a single product exporter more precisely a non exporting nation without an export culture. This is the urgent structural change the country’s economy needs.
Nigerians loathe the program because they believe it was imposed by the IMF under what is termed the Washington Concensus. Albeit only sick’ economies go to IMF and like physicians to patients, countries are advised to ‘change lifestyle’ so as to get healthier. In real life the patient has the choice to ignore the doctor’s advice but the consequences are there to be seen, so it is in national life. Under the life style change recommended for Nigeria was privatisation of refineries and withdrawal of petrol subsidies, indeed the chicken is home to roost..
Olugbenga Jaiyesimi jerry3jaiye@gmail.com
