The International Monetary Fund, IMF, and the World Bank have long struck a raw nationalistic nerve in Nigerians. Romantic patriotism drives the nationalistic urge to reject any perceived IMF/World Bank 'interference'.
Several years ago, as a magazine publisher, I interviewed Dr Kalu Idika Kalu, then finance minister under General Ibrahim Babangida's regime, when he stopped over in London on his way to the IMF/World Bank meeting in Washington. I asked him why Nigerians detested the multilaterals. "I think in Nigeria we've tended to be isolationist," he said. Nigerians, he implied, loathed foreign institutions telling them what to do, even in the face of a self-inflicted crisis.
Now, I brought Dr Kalu into this discussion because the no-love-lost relationship between Nigerians and the IMF/World Bank duo can be traced back to his time as finance minister under the Babangida regime, which introduced the Structural Adjustment Programme, SAP, in 1986. To date, many Nigerians have not forgiven the IMF and the World Bank for "imposing" SAP on Nigeria and "destroying" its economy. But the story is more nuanced and worth retelling.
As those familiar with the era will recall, General Muhammadu Buhari, head of state between 1984 and 1985, refused to touch an IMF loan and the attendant conditionalities with a barge pole even though Nigeria faced acute fiscal crisis caused by the drastic fall in world oil price and Buhari's own misguided autarkic economic policy. As result, Nigeria lacked access to international credit and the economy was starved for foreign exchange. When General Babangida took over in August 1985, his instinct was to take an IMF loan and accept the conditionalities. But in line with his professed governing principle of dialogue and consultation, he initiated a national debate, coordinated by a committee, on the question of whether Nigeria should take an IMF loan and agree to its conditionalities. Nigerians overwhelmingly rejected the propositions. As one scholar put it, "the groundswell of unanimity was unprecedented in Nigerian politics."
General Babangida accepted the popular wishes of Nigerians and refused to take the IMF loan. However, he interpreted the outcome of the national dialogue to mean that while Nigerians rejected an IMF loan and its conditionalities, they were not opposed to the government introducing necessary reforms to tackle the economic crisis. In other words, the reforms would be designed at home, not imposed from the outside. But it was a sleight of hand because the measures his government introduced were not significantly different from what the multilaterals proposed: devaluation of the naira, trade liberalisation, reduction of the petroleum subsidy, reduction of overspending and budget deficits, and privatisation and commercialisation of public enterprises. Those were the kernels of SAP. For most Nigerians, it was the voice of Jacob but the hands of Esau, the latter being the IMF and the World Bank. Since then, most Nigerians have never stopped viewing both institutions with deep suspicion!
But those measures are the hallmarks of every liberal economy; and any economy that has been so badly mismanaged, as Nigeria's has, needs those self-correcting measures. However, Nigerians rarely hold their government to account for mismanaging the economy through misguided policies and industrial-scale corruption. Rather, they can smell IMF/World Bank 'interference' from a distance. Interestingly, while many Nigerians still blame IMF and World Bank for SAP, few credit those institutions for supporting debt relief for Nigeria, which led to a 60 per cent write-off on Nigeria's official government (Paris Club) debt, as a result of which, by 2006, Nigeria's external debt burden fell from $35 billion to approximately $5 billion. Needless to say, subsequent governments squandered the debt relief by amassing stupendous foreign debt that now stands at nearly $50 billion. Yet, Nigerians reserve their most vitriolic attacks for the IMF and the World Bank, not their malfunctioning government.
In 2016, the then managing director of the IMF, Christine Lagarde, paid a four-day visit to Nigeria, from January 4 to 7. Judging by most media comments, one would think that an enemy force had invaded Nigeria. One commentator described the IMF boss as "Hurricane Lagarde"; another reckoned she was in Nigeria to institute some form of "deviltry". I was compelled to write a piece titled: "Love it or hate it, the IMF is a force for good" (BusinessDay, January 18, 2016). It was not a fulsome defence of the IMF, but my point was that the institution, established in 1944, after the Second World War, exists to: 1) monitor national economic policies through the Article IV Consultations and caution countries, including developed countries, against bad policies; and 2) provide financing support, including access to international credit, to countries in crisis, albeit contingent on reforms.
Although a "clean bill of health" from the IMF would earn a country economic credibility and investor confidence, no country is forced to take IMF advice or accept its loan and conditionalities. After all, throughout his eight years in power, President Buhari resisted IMF/World Bank pressure to float the naira, remove the fuel subsidy and withdraw the CBN list of 43 products deemed ineligible for foreign exchange. However, because Buhari's successor, Bola Tinubu, chose to implement those same policies, many are blaming the IMF and the World Bank as if they are the instigators. But given that Tinubu introduced those measures on his first day or first week in office, it's doubtful that he did so under pressure from the IMF and the World Bank unless he was having secret discussions with them before he came to power. In my view, Tinubu, who did not believe in those policies in opposition, introduced them to woo the international community, given the negative reactions to his deeply flawed election as evidenced by unfavourable editorials in Western newspapers.
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True, the IMF and the World Bank support Tinubu's economic reforms, but they didn't force them on him. That said, Indermit Gill, the World Bank's Chief Economist, was utterly insensitive for saying the reforms would take "at least another ten to fifteen years" to transform Nigeria's economy. Even so, the media attacks on the IMF and the World Bank were misplaced. In an editorial titled "World's Bank's deadly agenda", The Punch newspaper referred to the bank's "deadly stance on Nigeria's precarious life". The academic and Tribune columnist Farooq Kperogi wrote a column titled: "World Bank's 15-year death sentence on Nigeria", describing the institution as "the soulless, blood-sucking economic vampire."
But who is holding Tinubu to account? Yes, IMF favoured fuel subsidy removal but called for "adequate compensatory measures for the poor and efficient and transparent use of the saved money." Has that happened? No. Tinubu floated the naira, but where are the non-oil exports to compensate for the devaluation? Few and far between! The fault, dear Nigerians, is not in IMF or World Bank, but in Nigeria!
