Nigeria of the 1980s was a place of strife, hardship, despair, frustration and desperation. The era heralded and deepened social vices and moral decadence in the country. Corruption was institutionalised and fraud was normalised. Every abhorrent and repulsive act that one can think of in Nigeria today began or became pronounced in the 80s. The story of the economic woes and misfortune that befell Nigeria will not be complete without a cursory mention of how Nigeria became a country of troubled and forlorn people.
Nigeria’s unsavoury, pitiful and abysmal conditions in the 80s weren’t how the country began its nationhood. Things weren’t always like that. Things were somewhat rosy, there was belief and there was prospect. Nigerians had high hopes for their country after independence, and it appeared the nation was on the right track for a while. Beneath the elation of independence and relative economic growth and prosperity, there was simmering political tension and social upheaval. The political crisis of the Western region of yore culminated in a chain of unfortunate events that led to the civil war, during which over three million Nigerians of Igbo extraction were killed.
After the Civil War, Nigeria’s wartime military head of state, Yakubu Gowon, began the rehabilitation of the country and reconciliation and reintegration of what used to be the eastern region and the people that occupied it into the Nigerian federation. Nigeria also recorded the oil boom of the 70s under Gowon, but much of what was generated from oil receipts was mismanaged or outrightly stolen. So wasteful and unimaginative was his government that he once remarked that Nigeria’s problem is not money but how to spend it. He was eventually overthrown and ousted from power by the Murtala Mohammed junta in 1975. Murtala himself would later be shot dead less than six months after he took power. His regime was continued by his second-in-command Olusegun Obasanjo. Obasanjo began the transition to civil rule and handed over to a democratically elected president of Shehu Shagari, ushering in the second republic.
By the time Shagari took over, oil prices had crashed, falling from $40 in the 70s to $9 in 1982, and the Nigerian economy, whose mainstay was and still is crude oil, began to struggle. The situation was not helped by the widespread corruption and impunity that characterised the Shagari government. The military overthrew the Shagari government in 1983 shortly after his re-election for a second term in office. The military regime led by General Muhammadu Buhari vowed to tackle corruption and address the economic challenges that plagued the country at the time. The junta was renowned for its kick against indiscipline (KAI) through which it sought to redirect the social and moral compass of the people by instilling core principles like discipline, integrity, contentment and honesty in them.
SAP and the IMF demands.
It was during the Buhari junta that the subject of the structural adjustment programmes (SAP) was first broached. The SAP was a series of policies expected to be implemented by third-world nations to be qualified for the International Monetary Fund (IMF) loans. The Buhari regime declined the SAP terms, deeming them unfavourable to Nigeria as they would only compound Nigerian economic woes if accepted and implemented. In 1985, after about sixteen months in power, the Buhari regime was overthrown in a bloodless coup led by General Ibrahim Gbadamosi Babangida.
Before his removal from office, Buhari vehemently refused to leave the economy to the mercy of market forces as demanded by the IMF/World Bank. It refused to devaluing the currency, removing petroleum subsidy, liberalizing trade or deregulating interest rates. Instead, the Buhari/Idiagbon regime adopted policies like using about 44% of total foreign exchange revenue to service debt, drastic reduction of the country’s import profile, massive downsizing in the public sector and wage freeze imposition. He changed the colour of the currency to tighten the booze on the parallel market, encouraging domestic sourcing of raw materials and bartering the country’s crude oils for vital imports in the face of foreign exchange scarcity through its counter-trade policy.
IBB regime and contentious SAP
Upon coming to power, Babangida promised to address the country’s economic challenges and other sundry problems that plagued the nation and begin the transition to democratic rule as soon as possible. His promises imbued the citizen with confidence and a reason to dream and believe again. The problem here is that Babangida had no intention to keep his promises, especially the return to democratic rule. No sooner had he grabbed power than the IMF-backed SAP policy rejected under Buhari was reintroduced. It was eventually adopted despite opposition from many Nigerians and its adoption plunged the nation into catastrophic economic woes. Some have said the implementation of the SAP is the genesis of Nigeria’s problems.
SAP and what it achieved.
The SAP adoption saw the surrendering of the Nigerian economy to market forces, leading to the privatisation of state-owned companies. Subsidy was removed from petrol. The naira was also devalued, prompting a sharp devaluation of the naira. Buhari/Idiagbon had rejected all these demands. Needless to say, the SAP sparked galloping inflation, poverty and increased external debt.
It took at least two decades for Nigeria to completely wriggle out of the disastrous and crippling fallout of the SAP policies after the former president Olusegun Obasanjo, upon coming to power in 1999, introduced a raft of economic policies to pull Nigeria out of the economic abyss and place it on the path of development. But after the steady economic growth and relative prosperity that was recorded under Obasanjo, it was replaced by economic hardship, pain, anguish and suffering over nearly a decade later.
Just like the IMF-backed neoliberal SAP policy of IBB in the 80s, in 2023, Nigerians found themselves at the mercy of another raft of dangerous and haphazardly implemented neoliberal policies suggested by the IMF. On May 29 2023, President Bola Tinubu, during his swearing-in, announced the removal of subsidy on petrol and foreign exchange, effectively devaluing the naira. The two subsidy schemes have long been considered a drain on the nation’s lean resources, and their removal, some experts say, will free up funds to be spent on other critical areas of the economy and, in turn, herald a new era of economic prosperity.
But that is not to be. What happened instead is galloping inflation, an unprecedented cost-of-living crisis and worsening poverty. The fallout of Tinubu’s removal of subsidy on petrol is achingly akin to the devastating consequences of the structural adjustment programmes (SAP) implemented in the mid-1980s under the regime of the then military head of state, General Ibrahim Badamasi Babangida.
Analysis and impact of IBB’s SAP and Tinubu’s removal of subsidy on petrol and foreign exchange.
External debt jumped to $23bn
After the implementation of the SAP, Nigeria’s external debt rose by 51.41 per cent to $22.68 billion in 1990 from $14.98 $14.98billion in 1986. Loans from the IMF and World Bank rose by 103.17 per cent, increasing to $3.84 billion in 1990 from $1.89 billion in 1986. This indicates Nigeria’s heavy dependence on bilateral loans from developed nations. Paris club debt jumped by 69.91 percent to $17.171billion in 1990 from $10.228billion in 1986, while non-paris declined by 71.55 percent to $1.675billion in 1990 from $2.873billion in 1989
In the same vein, Nigeria’s debt also ballooned after the removal of subsidies by Tinubu. Nigeria’s public debt soared from N87.379 trillion in June 2023 (one month after Mr Buhari’s exit from power) to N121.7 trillion in the first quarter of 2024 to N142.319 trillion in September. The debt reached N144.67 trillion in December and N149.39 trillion, equivalent to about US$97 billion, in the first quarter of 2025.
The inflation rate soared
With the implementation of SAP, the headline inflation rate rose from 5.72 per cent to 59.97 per cent within seven years due to the devaluation of the naira, the removal of price control and subsidies, as well as increased money supply.
Under Tinubu, the inflation rate jumped from 21.11% to 34.19% in 2024 as the removal of subsidies on petrol triggered cost-push inflation that worsened inflation.
Weakened and undervalued naira
After IBB adopted SAP, the value of the naira depreciated significantly. Naira exchange rate to dollar moved from N2/$ to N22.05/$ between 1986 and 1993 after the government stopped pegging the naira against the dollar, which was the case before SAP, and allowed market forces to determine the exchange rate. It didn’t take time for the artificially propped currency to slide after the market was left to determine the exchange rate.
The decline in global oil prices also slashed oil revenues, the country’s biggest source of foreign exchange, further burdening the naira.
Under Tinubu, following the removal of the subsidy on petrol and floating of the naira, the value of the naira nosedived, dropping from 460 to a dollar to 860 in June 2023 and currently stands and 1500.
Though from different eras and governments, one thing that is undeniable here is that the neoliberal policies implemented under IBB and Babangida worsen Nigeria’s economic problems. As highlighted above, just like inflation soared under IBB wiping out the middle class, plunging millions into poverty and destroying the economy, the same thing is now playing out under Tinubu.
Last week, a Senior Advocate of Nigeria, Femi Falana, once again expressed his displeasure at President Bola Tinubu’s removal of the fuel subsidy.
Falana, who disclosed that it was the IMF that insisted on the removal of subsidies, stated that no country in the world has completely abolished subsidies.
“There’s no way you can remove the subsidy completely. No country in the entire world has abolished subsidies completely.
“Even leading Western countries like the United States, the United Kingdom, France and others subsidise electricity, agriculture, and many aspects of the lives of their people.”
Like Falana, Many have asserted that these neoliberal policies, whether they are called SAP under IBB or critical economic reforms under Tinubu, are designed and promulgated to sabotage the industrialisation drive of developing countries and destroy their economy. This assertion is hard to argue against seeing how countries, especially those in the global south, which have uncritically and unquestioningly adopted and implemented these policies suggested by the IMF and World Bank, are worse off than they were before implementing the policies.
The notion that subsidies and government involvement in businesses are bad and are essentially impediments to economic growth has been soundly refuted and proven false by the rise of countries like China. One of the reasons why these clearly unfavourable and destructive neoliberal policies are still seen as an economic magic wand is that the leaders of the countries where they are implemented are beholden to foreign interests and external influence and are not answerable to the people.