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Nig. economic crisis is internal, says Fasan

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By Samuel Abimbola

Despite economic challenges, Nigeria’s government is avoiding foreign loans.

In his recent evaluation, Olu Fasan argues that Nigeria’s economic challenges are largely self-inflicted, resulting from years of internal mismanagement rather than any imposed directives from international organisations such as the International Monetary Fund (IMF) or the World Bank. According to Fasan, the real problem lies with the government’s decisions and how the country is run, not with these foreign organisations. Moreover, many Nigerians don’t trust international organisations and blame them for the country’s economic problems, especially after the Structural Adjustment Program (SAP) in the 1980s, implemented under General Ibrahim Babangida’s military rule.

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Drawing from his conversation with Dr. Kalu Idika Kalu, who served as Finance minister during Babangida’s administration, Fasan contemplates the region’s inclination to dismiss foreign intervention in its economic matters. He remembers a time in the mid-1980s when confronted with a severe financial crisis, Nigeria turned down proposals for an IMF Loan while General Muhammadu Buhari was in power before Babangida. Buhari, advocating for a self-reliant strategy, avoided acquiring international loans, even as the country’s Economy suffered due to falling oil prices and restrictive regulations that expanded its access to foreign currency.

The importance of IMF and World Bank guidance for struggling economies.

After Babangida took over from Buhari, he initiated a nationwide discussion about the possibility of securing a loan from the IMF and implementing its suggested economic measures. Nigerians’ response was predominantly negative, showcasing a widespread distrust of external influence. Despite this resistance, Babangida proceeded with reforms aligned with IMF recommendations, including Naira devaluation, subsidy removal, and strict budgetary policies, which later characterised the era of SAP. Even though these policies were presented as locally developed, Nigerians viewed them as a surrender to external pressures, and this perception has influenced the country’s cautious stance towards international organisations ever since.

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Fasan recognises that the advice from the IMF and World Bank might not always resonate with the general opinion, but it is primarily aimed at promoting economic recovery in struggling countries. Strategies such as currency devaluation, reduction of subsidies, and fiscal discipline are typical solutions for nations facing debt and deficit crises. He points out that many people often neglect these essential principles, choosing instead to blame foreign organisations while failing to examine the actions of their government officials. He contends that this tendency to shift blame undermines genuine responsibility regarding the region’s mismanagement and widespread corruption.

IMF supported the Tinubu administration’s economic reform initiatives.

Looking back, in 2005, Nigeria received notable debt relief from the IMF and World Bank, slashing its external obligations from $35 billion to about $5 billion. However, later governments undid much of this progress, resulting in debt levels that surpassed what they had previously been. Fasan expresses regret that Nigerians tend to direct their frustrations towards the IMF and World Bank instead of demanding accountability from local leaders for this decline. He also addresses current issues, pointing out that the mistrust of foreign influence resurfaces under President Bola Tinubu’s administration. Tinubu’s initial reforms, including subsidy removal and the floating of the naira, have drawn criticism from people who suspect that the IMF and World Bank pressured these changes.

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He argues that this criticism lacks merit, emphasising that Tinubu’s administration implemented these measures rapidly after assuming power, probably to gain global favour instead of reacting to outside pressure. Although the IMF backed these reforms, the government was not compelled to adopt them; instead, they were calculated steps taken by Tinubu to draw in international Investors amid doubts regarding his leadership after a disputed election. Although both the IMF and World Bank endorse Tinubu’s initiatives, they stress the necessity of protecting vulnerable groups through sufficient compensation systems, a requirement that Fasan contends the government has not yet addressed. He points out shortcomings in these reforms, noting the absence of additional measures to assist the poor and stimulate Export activities.

Related Article: IMF expects Nigeria’s debt burden to decline

As a result, many individuals face increasing living expenses with minimal assistance. According to him, the primary problem is the nation’s inability to implement reforms honestly and openly. His argument revolves around the idea that a nation’s economic recovery can only be found internally, not externally. He claims that even though IMF suggestions may influence policy decisions, it is the responsibility of the country’s leadership to implement reforms that serve its citizens. Lastly, he contends that the citizens should prioritise their expectations toward local administrators and oversight instead of blaming outside entities.

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