Two inescapable truths came out of the Federal Govern-ment’s decision last week to dump the International Monetary Fund (IMF) programme which had been in place since July last year.
The first is an indirect admission by the government that its economic policy has been a failure. The second is that it has exposed the government’s insincerity for sometime that IMF was not dictating its economic programmes. Remember Malam Adamu Ciroma’s denial some weeks back that the IMF was not teleguiding the government in its economic choices.
Now that the truth has eventually prevailed, it is important to let Nigerians know all and the extent of transactions that transpired in the good name of the much-talked about transparency. This becomes necessary in view of the fact that all the negotiations were done in secrecy. Our National Assembly was not privy to such agreements even though the body is now hailing the new government moves.
However, in all this, it is the police and other labour strikes that we have to thank. Because if not for all the series of strikes, the government would perhaps still be thinking that its economic programme was on course. The strikes are some of social costs of the IMF misadventure. The Federal Government started discussing with the IMF in 1999. And the aim was to reach an understanding with the nation’s creditors through the Fund so that they would be able to reschedule or cancel some of our debts. It was the series of discussions that produced a result last year whereby the government agreed to an economic reform programme which the Fund supported with a one year “Precautionary Standby Agreement” in the sum of one billion dollars. Even though Nigeria never withdrew any part of the money, at least it gave our many creditors the confidence that the nation was on the right track in terms of ability to fulfil its obligation given the fact that the IMF was superintending the nation’s reforms. But then what manner of reform?
The first thing to note is that IMF did not come to serve Nigeria’s interest. Its role is like that of an undertaker or a receiver. Its purpose was to serve the interest of creditors and the western industrialised nations. This is why the reforms IMF claimed it was monitoring did not serve Nigerians.
The conditions the IMF gave our government include regular conformity with the due process of auditing and accountability in spending, a value for money auditing of government projects, selling of most of the publicly owned companies and parastatals including the MINT. Although these are some of what determine good governance, a responsible government does not need any foreign headmaster to know. The only time when these are externally imposed is when a company or a country is in receivership and that is the role IMF came to play.
Of course, if these were the only demands, it would have been understood and our government’s failure in this respect would have sealed the fate of the so-called anti-corruption crusade. Like a greedy receiver it was, the fund wanted a tighter control on government spending including a freeze in wages, increase in petroleum prices, creation of more external reserves (so that the western economy can continue to be oiled with our own funds), reduction in subsidy going to social sectors like education and health services. The government’s attempt to implement this is what has created an economic gridlock. Tighter control on government spending was carried to such a ridiculous extent as to delay salary payments to public sector workers and members of the security agencies for months which inevitably facilitated the recent strikes. Same goes for increase in petroleum products prices which has led to governments strained relations with the central labour union.
Our government was made to take pride in keeping 10 billion dollars in reserve at a time when unemployment in the country was averaging 50 per cent and poverty index was rising astronomically and when our local industries were dying. Capital flights became more encouraged through the so-called reforms as we continue to import anything including 89 different types of toothpastes thereby providing jobs for the people in those nations that control the IMF.
What baffles one most is not really the IMF’s imperial role in our economy since it is infamous worldwide for such dubiety. The puzzling aspect is how our own President Olusegun Obasanjo of African Ledership Forum fame who fought the military junta in the late 1980s to early 1990s to have a SAP with human face, fell for such a dubious package from those he once described as enemies of African Nations. Perhaps, political expediency in the name of getting Nigeria accepted back into the comity of civilised nations after the odious reign of Abacha dictatorship. For an highly indebted nation with a pariah political status, a new government would do business with anyone who would help ease the isolation. The IMF quickly seized the opportunity. Yet, the government did not help matters. Instead of seeking understanding from the nations through various interest groups, it was arrogance and abuse to those who sought to query such arrangement even to the point of denying any relationship with the Fund.
But we must recognise the President’s admission, albeit indirectly that the government had made a mistake in its economic direction. At least, that is better than the situation 13 years ago when some high members of the ruling junta led by our latter-day Irrua magic democrat, Admiral Aikhomu, told the nation that there was no alternative to its IMF packaged SAP. In a response to rational economic demand, the government has announced a shift in the fiscal policies, which it hopes will steer the economy towards prosperity. Thus, in line with what this column has consistently advocated in the last one year, the administration is now set to introduce measures to stimulate the productive sector through protection of local industries, provision of incentives for small and medium scale firms, strict management of foreign exchange allocation, proper auditing of government spending, value for money audit of projects and contracts, building and maintenance of essential infrastructure through public works.
Yet, we must not be deluded that these measures by themselves will lead us to the promised land. These are mere palliatives as they are yet to be situated within an holistic economic plan. Therefore, it is not enough to opt for just fiscal measures, there is need to tell the nation the new economic vision. And some of us do not think this can be done by government officials alone. There is urgent need to debate the nation’s economic future in which all stakeholders would have input. Thus, the matter at hand is not a question of quick fix as government spokesmen have been impressing on the nation in the last few days.
Nevertheless, as the government takes such fresh steps as hiking of tariffs on imported items, it needs not panic nor be intimidated by IMF and WTO’s protestations. President George Bush has shown Obasanjo the way. On the same day Nigeria dumped the IMF programme, Mr Bush imposed 30 per cent hike in tariff on imported steel to the chagrin of European and Asian producers in order to protect local American producers who have found it difficult to compete with imported ones. So why can’t we impose higher tariffs to protect our local industries. Let the WTO first challenge United States, if it can, before coming at us. That is a big lesson for the pro-IMF economists and rabid free traders in Nigeria.
Tunji Bello, This Day (Lagos), March 11, 2002