By Othuke Evroh
”We believe that removing fossil fuel subsidies is the right way to go”. ”If that was to happen, then there would be more public spending available to build hospitals, to build roads, to build schools and to support education and health for the people”.
The above-mentioned popular maxim is attributed to the former Managing Director of the International Monetary Fund(IMF), Christine Lagarde, on how best to enhance the economic development of Nigeria.
This quote, as stated above, represents a microcosm of the plethora of quotes attributed to the IMF and World Bank on how best to ensure the economic prosperity of the African continent.
Following their creation in July, 1944 in the United States, with the core mandate to enhance economic cooperation by creating a more prosperous and stable global economy, these Bretton Woods Institutions seem rather on a mission to perpetually tie Africa on the apron strings of their hitherto colonial masters of the West.
Since brokering a relationship with the IMF and the World Bank, many African countries have not known peace, let alone, prosperity. Factly speaking, the economies of many African countries have stagnated or have been experiencing stunted growth after the execution of economic reform measures forced down their throats by the IMF and the World Bank when availing such countries financial loans and other technical aid.
Such loans and aid, besides being very stringent, are tied to a lot of conditionalies that are implied. Some of the conditionalities include; devaluation of the local currency, trade liberalization as against protectionism, very high interest rates because such loans are not concessionary, the importation of technologies and other facilities or equipments from countries chosen by IMF and the World Bank, unfettered interference in the political, religious and cultural affairs of the benefiting countries, among others.
It was the late Chief Obafemi Awolowo of blessed memories that warned Nigeria that its economic ship was about to hit the rocks and indeed, it did hit the rock since 1986 after Nigeria heeded the economic programme proposed by the IMF.
Through their relentless but yet audacious infamous economic reform measures, Nigeria and indeed countries in the African continent have been derailed from the path of economic prosperity.
As it is today, the IMF and the World Bank have refused to let the African continent be. These institutions have continued to derail Nigeria and many other African countries through their unnecessary negative interference in their socio-political, economic and religious affairs.
For instance, at independence, the West through the IMF and the World Bank sold the idea of the ”Comparative Cost Advantage”, an economic theory developed by David Ricardo a British Classical Economist in the 19th century to Nigeria.
This theory states that countries should focus on producing goods or rendering of services that they possess the highest comparative advantage or the least of disadvantage while buying the things they cannot produce from other countries.
This theory has made Nigeria a perpetual exporter of a primary product called ”Crude Oil” and an importer of virtually everything. As such, a country like Nigeria that is blessed with numerous natural resources cannot manufacture or produce the smallest of items like toothpicks. It is also the reason why the nation is finding it almost impossible to diversify. This is also applicable to many African countries.
Surprisingly enough, the developed countries of the world, particularly the managers or owners of IMF and the World Bank do not apply this theory as they are heavily engaged in the serious business of manufacturing different products.
”Education is Strength”, so goes a popular aphorism. But as far back as the 1980s, the World Bank had started dissuading many African countries from developing tertiary education. In Nigeria, through the ”Eligibility Criteria For Federal Universities, that it signed with the Babangida administration, the World Bank save for the timely interventions of the media, professional associations, academia and protest from students and these bodies, the World Bank in consonance with that regime, would have completely destroyed the educational sector.
Another case in point is the economic programme given to the Ibrahim Badamasi Babangida led administration by the IMF when Nigerians protested against a loan from the IMF in 1986. Many scholars and experts in Nigeria have argued that the infamous programme called the Structural Adjustment Programme(SAP), has remained the bedrock of Nigeria’s current economic impasse.
Since 2023, Nigerians have toiled in the limbo of several hardships occasioned by the removal of fuel subsidy by President Bola Tinubu and yet, the IMF is still insisting that the Tinubu led administration must remove subsidies from Electricity/Power in Nigeria and borrow more from the IMF. How funny.
While it is sufficient to state that financial allocations from the Federation Account Allocation Committee(FAAC), has increased since the removal of fuel subsidy, the truth is that the value of the Nigerian currency has depreciated drastically and whatever increase in FAAC disbursements to the states and the federal government at large, have been eaten by the current stag inflation that the country is experiencing.
Suffice it to state that in February 2024, Nigeria’s inflation rate rose to 31.70%, up from 29.90% in January 2024, making an increase of 1.80%, according to the National Bureau of Statistics(NBS). Food and transportation inflation have also risen to over 30%.
It is on record that most developed countries of the world invest and subsidise Power/Energy heavily. France, Germany, Russia, Saudi Arabia, the United States, and the United Kingdom, just to mention a few, pay subsidies on Power and Energy so as to keep the price low for common citizens to afford both at home and in the pursuit of their economic ventures.
For instance, in 2022, Russia was the biggest single provider of fossil fuel subsidy payments. According to Reuters in 2023, the United States doubled renewable subsidies to $15.6 billion in the last seven years while the United Kingdom says it spent almost 40 billion pounds on Power subsidies. In 2022, the German Economy and Climate Protection Minister, Robert Habeck stated that the German government plans to earmark 4 billion euros annually for Power subsidy.
To the developed countries, subsidies are part of the energy policy of the state. Yet the IMF and World Bank have not deemed it imperative to compel these countries to abandon subsidies so as to remain on the path of economic development.
The question therefore remains, why force the policy for the removal of subsidies from Electricity and Power on Nigeria? What is it with the African continent that the IMF and the World Bank want? Your guesses are as good as mine.
The activities of IMF and the World Bank remind me of the quote of a popular Russian Scientist, Leo Tolstoy, ”I sit on a man’s back choking him and making him carry me, and yet assure myself and others that I am sorry for him and wish to lighten his load by all means possible….except by getting off his back”.
A former minister of Agriculture and Rural Development, Audu Innocent Ogbeh during the budget defense session at the National Assembly in 2019 state that;
”The tragedy of Nigeria began in 1986 when we did the Structural Adjustment Programme(SAP). When we were persuaded by the IMF to devalue our currency every week for thirty two years. When I and many of you here went to school, the naira was one dollar fifty cents, the naira was almost one pound sterling”.
”They (IMF and World Bank) came here, persuaded some brilliant men from Harvard and the World Bank that weekly devaluation was wonderful. Thirty two years of devaluing your currency?”
”Until we hit N527 and they were still telling us that the naira was still overvalued. That brought poverty, misery upon us. Then interest rates went to 30%”.
”So, nobody could build a factory, start a farm, produce anything or create jobs. For everytime you bring in a ship load of rice, you also bring a ship load of unemployment because you are transferring your wealth to sustain other economies. Somehow Nigerians did not notice it. So we became a nation of importers”.
”Toothpicks, importing toothpicks each year cost us 18 million dollars, importing tomato paste cost us 400 million dollars each year. One basket of tomatoes in town now is less than N2,000. The farmers are losing money because the processors do not have enough funds to set up factories. If you are going to do tomato paste, it is food grade stainless steel. You can not just use any steel because you will be putting poison in people’s stomach”.
”When you ask the importers of tomato paste to stop because you can now produce locally, you make enemies. Even the rice we are trying to reduce, we have enemies, heavy enemies. People who can kill if they have a chance because you are spoiling their business. Let nobody take it lightly. These guys have seized this country’s economy, they have taken us hostage and they have no intention of giving up because this is a huge market, a very sweet market and they have taken control”.
”I am saying it because I have been in this business for forty one years and I can tell you some history. Abdullahi Adamu is here. Import, import. Import milk, sugar, toothpicks, toothpaste, handkerchiefs, pencils, we do not make”.
”To cure Nigerians of that malady will take a while. It will take a strong government, that is the truth. And they are not happy that we are cutting down. When we cut down, they lose money there. So you see all sorts of publications, we are telling lies, we are not growing rice, trying to demoralize the local farmers and make sure that the economy fails. That is the story of imports”.
Yoweri Museveni, the President of Uganda, in a letter last year, told the World Bank to stop it arrogant posture towards Uganda over anti-gay laws. The President stated that;
”Further to my message of August 9, 2023, I would like to reiterate that foreign aid and loans are welcome and can be of some use if designed and executed by patriots(not neo-colonial agents), but are neither decisive nor indispensable elements for our desired socio-economic transformation”.
”On the contrary, those loans and aid packages can be a source of distortion and stunted growth as you can see across Africa. If foreign aid and loans are a source of social economic transformation, why the present growing crisis of even security and stability in Africa?”
”Look at Guinea Conakry, Mali, Burkina-Faso, Niger, Central African Republic, DR Congo, Boko Haram in Nigeria, Somalia, Mozambique, etc. Most of these countries have been getting those grants and loans”.
”Many of the loans and aid packages are either of no value addition to the country or are even anti-growth, all together”.
In a similar vein this year, President Yoweri Museveni, asked the IMF and the World Bank to confess their sins and repent before it is too late. In his closing address at the 19th summit of the Non-Aligned Movement(NAM) in Kampala, Uganda, the President declared that;
”If the Bretton Woods Institutions(World Bank and IMF), can confess their sins and repent, we can forgive them and they have a chance because we are Christians and Christians believe in repentance and forgiveness”.
”I gave them some options that please, it is time to repent. You repent before it is too late, otherwise, we are going to continue exploring new ways of financing and we can do it. A country like Uganda, lacks very little”.
”His Excellency Antonio Gueterres, has talked about financing. We are going to intensify our discussions with the BRICS and all these other groups about affordable financing”.
Currently in Ghana, President Nana Akufo-Addo is caught in controversy over anti-LGBTQ bill because of the fear of the IMF and the World Bank.
Owei Lakemfa, Journalist, author, human right activist, former Secretary General, Organization of African Trade Union Unity(OATUU), in his article titled ”World Bank and IMF:In the shadow of their talons”, published in the Premium Times edition of February 16, stated that;
”The IMF and the World Bank have become more active and quite audacious since President Bola Ahmed Tinubu came to power on 29 May, 2023. They are like predators ready for the kill”.
”While Nigerians are hungry and their anger is beginning to boil over to street protest due to the stifling economic policies of the Tinubu administration, these organisations are praising Tinubu to the high heavens and telling him to tighten the noose round the necks of the people”.
”So, why are the IMF and World Bank so callous and inhumane? It is simply because that is why they were set up in the first place; to exploit poor countries, degrade and destroy their production capacity, control their resources and destroy their education system so that they will be incapable of thinking”.
In rounding off this paper, I wish to state that Nigeria and indeed the leaders of the African continent must show the political will, courage, timerity and overcome the fear of pronouncing and executing economic policies so as not to antagonize the West.
They should also pursue state led alternative policies that encourage their economies to produce and find alternatives in the form of import substitutes.They should produce what they consume and consume what they produce just like the Asian countries.
Above all, African leaders should be dynamic, innovative and creative. They should curtail corruption and reduce waste in government. They should create favourable environments that will enhance economic growth in the continent by making the large market in Africa benefit the continent.
