This letter was initially written in response to the rapprochement between Nigeria and the IMF. It was a response that criticized the tendency to be uncritical and ahistorical in our approach to the analysis of political economy.

Hi,
I'm not in the habit of responding to the emails. However, I just had to comment on this one. In what way does what Camdessus said in his March address essentially different from what the IMF had always recommended? Notice that one of the important elements of the Camdessus recommendations reiterate old IMF dogma, e.g. the need to attract foreign investment. There is nothing wrong with this per se. However, if you are operating within the framework of an untrammelled market economy, the owners of capital can run rough shod on labor. As a matter of fact, part of what attracts foreign investors is a well-trained docile work force. Therefore, when Camdessus says the following:

The confidence of investors on whom Nigeria will need to rely in the years ahead has been undermined: globally, by the crisis in emerging markets; in Africa by the spread of armed conflict; and in Nigeria by cumulative concerns based on many years of weak policy and governance. The domestic economic situation is extremely difficult. The external environment is not promising. But should we be pessimistic about Nigeria's prospects? I believe not. I perceive at least four reasons for hope
I immediately think that an owner of capital that is moving into such a market had immense advantage and power vis a vis the impoverished country. It is incumbent on such a country's government not to have an unregulated market, and to ensure that people are paid a fair living wage.

When Camdessus goes on and quotes Abdusalami Abubakar, there is a reason for having that quote

"... we are painfully aware of the sacrifices all Nigerians have been making these past years. This is why we are anxious to put in place policy measures designed to bring long-lasting relief to our citizens. Unfortunately, however, as in treating malignant diseases, curative measures bring pain first before the desired relief. Our economy has long been in a malignant state.... We are confident that before long, our remedial policy actions would bring relief to our homes." This is the language of realism.

Proponents of SAP lead us to believe that there will be initial pain, and then eventual gain for the people in an adjusting economy. If this is a matter of treating a malignant disease, what Abubakar and Camdessus need to know is that if the treatment is too drastic, the patient dies. If SAP is too harsh, the social fabric is rent asunder. We have gone through these processes over the past 15 years. We definitely do not need any more of the same.

Also note that when Camdessus tells us the following:

"What specifically should be done to establish sustainable, high-quality growth? Above all, the full participation of all the citizens to the historic task of laying the basis on which the Nigeria of the new century will grow and prosper for the benefit of all and, particularly, of the too long neglected poorest in society. From this effort, in the framework of a vibrant democracy, no one should be absent: all political forces, the private sector, the NGOs, the churches, the trade unions, etc. should participate. Truly, this is the moment for all to contribute to their country. And the international support will be in proportion to the full involvement of all segments of Nigerian society."
we should think seriously about the extent to which high levels of public involvement in politics in the past yielded meaningful and considerable international support. What did the international community do that resolved any of the problems that Nigeria faced when things were hot and heavy? As I see it, neither democracy nor economic growth can be imported from the outside, or can be determined by the magnanimous statements of benevolent multilateral officials (if Camdessus is magnanimous or benevolent, that is). Nigerians should right now be at the drawing board to fashion an independent, autonomous program that suits its economy. It took numerous casualties before the IMF and World Bank conceded to its critics that the fate of the poorest of the poor ought to be taken into consideration.

The next quote from your text is more of the same old IMF stuff

"More broadly, a strategy is needed to create an environment in which Nigerians can be confident in their own country, and where they feel secure in saving and investing in their own economy. Such an economy will also be one where foreigners will feel comfortable in investing once again. Within this strategy, I see a few core elements: good governance; liberalizing the economy and integrating it with the rest of the world; and indeed macroeconomic stabilization."
When people speak of liberalizing economies, integration into the global economy and macroeconomic stabilization, they are not prescribing consideration to the poorest, or anything else but SAP. The concession that good governance is democracy is new. It used to just involve transparency and accountability. Lest it seem that I am just being a naysayer, let me observe that Mr. Camdessus' statement that

  • a.. "democratically-elected government, which has the support of the public to begin to restructure social and economic institutions. This "first principle" will be fully realized within the next two months. We are there!"
is not necessarily an indicator that the government would consider the entire populace "the public". The definition of the "public" to which the government is accountable is elitist, even in today's advanced democracies. If most of the public is critical of the government's commitment to SAP and decides to voice their discontent publicly, what would happen? Would the IMF conclude that since the public has spoken, they should be listened to?

Indeed, Nigeria needs to develop a respect for the rule of law, therefore, Camdessus' observation is

  • b.. An uncompromising respect for the rule of law. This calls for a transparent legal framework and a strong, impartial judicial system that would give confidence to savers and investors that contracts are sacrosanct and will be enforced, that rights will be protected, and that property will be secure. I also support General Obasanjo's call for an anti-corruption agency. Such an agency should be independent and be directed by a person of high repute.

  • c.. A renewed emphasis on transparency and accountability in all aspects of economic life, both public and private. For the government, this means the prompt provision of accurate information about the economy—and of course information that it should get for itself and for all actors in the economy--and increasing transparency in its macroeconomic policy formulation. Checks and balances could be restored, for instance, by a stronger, independent office of the Auditor General. Private and state corporations would have to comply with standards and codes of good practice in areas such as accounting, auditing, and corporate governance. It will also mean complying with other legitimate demands of government such as taxation, and regulation. In return, the private sector should expect to face a level-playing field.

  • d.. A clear and unambiguous commitment to equity in society. It is essential that opportunities for education and access to health care be improved, and a social protection system should be built that supports the poor and the most vulnerable during periods of economic stress and adjustment. And of course, you are heading for a long period of adjustment and reform. One of the key aspects of a globalized world is that reform never stops. This is another reason to have social safety nets in place to assist the poor during these periods of adjustment. Among the efforts to improve the quality of public expenditure that will be needed to pursue these goals, greater scrutiny of large capital projects in the public sector is desirable. The concept of equity should also cover disparities among regions, such as those affecting the oil-producing areas. The different groups in society should not only receive fair treatment in the allocation of budgetary resources, but they should also be able to perceive that fair principles are used. Our experience around the world, especially in the past two years of crisis in many emerging markets, underscores a basic point: without good governance, countries are at greatly increased risk of economic instability and recession. Let me now turn, much more briefly, to the other essential elements. In being brief, I do not intend to diminish their importance; all three should be regarded equally.

The second key element consists of the changes in economic structure and institutions that are needed to build a competitive and efficient economy that is open to the world outside. The aim should be to allow the private sector to become the engine of growth through a diversification that also lessens Nigeria's dependence on the oil sector for foreign exchange earnings and government revenues. The agenda is extensive.

  • a.. Deregulation and privatization, have been started, but more is needed to improve the quality of essential services, to lower the costs of doing business in Nigeria, and to free the energy and entrepreneurial drive of the private sector.

  • b.. The trade system and the exchange system need to be liberalized to ensure that the private sector's decisions are not based on distorted prices.

  • c.. A sound financial sector will also be essential to Nigeria's economic revival. Domestic financial institutions should be subject to the highest standards of governance and transparency and operate within a clearly defined framework of regulation and supervision. Looking further ahead, all of these—particularly a robust financial system—are prerequisites for Nigeria's fuller integration into the global economic and financial system.

The third element is to build the foundations of rapid sustainable economic growth through a firm, credible set of macroeconomic policies designed to establish and maintain stability. This task is made both more difficult and more crucial by the current state of the oil market. Low oil prices have cut deeply into government revenues so that, even with prudent expenditure management, the fiscal deficit has increased significantly. In these circumstances, a tight monetary policy will be central in maintaining stability and avoiding a return to high inflation, even if initially it gives rise to high interest rates.

Mojubaolu Olufunke Okome
Fordham University
Department of African and African American Studies

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