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From Prebendalism to Predation: the Political Economy of Decline in Nigeria

  • Peter Lewis

Upon taking power in August 1985, General Ibrahim Babangida promised a decisive course of economic and political change for Nigeria. Alongside a phased transition to democratic rule, the new President outlined far-reaching reforms intended to alleviate major distortions in the economy, to resolve a lingering impasse with external creditors, and to reduce a mounting burden of debt. Within a year, a comprehensive structural adjustment programme (SAP) was launched, incorporating key policies advocated by the World Bank and the International Monetary Fund (IMF), and yielding significant early results in stabilising the economy and arresting decline.

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1 See Lewis, Peter M., ‘Endgame in Nigeria? The Politics of a Failed Democratic Transition’, in African Affairs (London), 93, 372, 07 1994, p. 336.

2 A note on terminology: I have eschewed the word ‘sultanism’, used by Weber, Max in Economy and Society (Berkeley, 1978), vol. 1, pp. 231–2, to characterise the personalised and predatory from of patrimonial rule, because in the Nigerian context this raises the particular connotation of northern ‘sultans’ or emirs. Predatory rule, in the sense used in this article, denotes a personalistic régime ruling through coercion and material inducement. This type of régime tends to degrade the institutional foundations of the state, as well as the economy. Since predatory rule as an analytic category is not associated with any particular region, ethnic group, or religion, Weber's original usage would be misleading.

3 On the oil boom era, see Williams, Gavin and Turner, Terisa, ‘Nigeria’, in Dunn, John (ed.), West African States: failure and promise. A Study in Comparative Politics (Cambridge, 1978), pp. 132–72, and Rimmer, Douglas, ‘Development in Nigeria: an overview’, in Bienen, Henry and Diejomaoh, V. P. (eds.), The Political Economy of Income Distribution in Nigeria (New York, 1981), pp. 1987.

4 Schatz, Sayre P., ‘Pirate Capitalism and the Inert Economy of Nigeria’, in The Journal of Modern African Studies (Cambridge), 22, 1, 03 1984, pp. 4557. See also, Bienen, Henry, ‘Oil Revenues and Policy Choice in Nigeria’, in Political Conflict and Economic Change in Nigeria (London, 1985).

5 On the ‘Dutch disease’ syndrome, see Gelb, Alan, ‘Adjustment to Windfall Gains: a comparative analysis of oil exporting countries’, in Neary, J. P. and Wijnbergen, S. van (eds.), Natural Resources and the Macroeconomy (Oxford, 1986), and Nyetepe-Coo, Akorlie, ‘Dutch Disease, Government Policy and Import Demand in Nigeria’, in Applied Economics (London), 26, 1994, pp. 327–36.

6 Bevan, David, Collier, Paul, and Gunning, Jan Willem, ‘Nigerian Economic Policy and Performance: 1981–92’, Centre for the Study of African Economies, Oxford University, 05 1992, p. 4.

7 Economic policy under the Second Republic is discussed by Dudley, Billy, An Introduction to Nigerian Government and Politics (Bloomington, 1982), and by Forrest, Tom, Politics and Economic Development in Nigeria (Boulder, 1995 edn.).

8 See Olukoshi, Adebayo and Abdulraheem, Tajudeen, ‘Nigeria: crisis management under the Buhari regime’, in Review of African Political Economy (Sheffield), 34, 12 1985, pp. 96–7.

9 The nation wide ‘IMF debate’ is discussed by Biersteker, Thomas J., ‘Structural Adjustment and the Political Transition in Nigeria’, Conference on Democratic Transition and Structural Adjustment in Nigeria, Stanford University, 08 1990.

10 See Mosley, Paul, ‘Policy-Making Without Facts: a note on the assessment of structural adjustment policies in Nigeria, 1985–1990’, in African Affairs, 91, 363, 04 1992, p. 230.

11 The background to the 1986 SAP is covered by Callaghy, Thomas M., ‘Lost Between State and Market: the politics of economic adjustment in Ghana, Zambia and Nigeria’, in Nelson, Joan (ed.), Economic Crisis and Policy Choice: the politics of adjustment in the Third World (Princeton, 1990), pp. 305–16.

12 World Bank, Nigeria's Structural Adjustment Program: policies, implementation, and impact (Washington, DC, 1994), p. 10. The value of the naira had dropped incrementally from about $1.50 in the early 1980s to become roughly par with the dollar on the eve of the second-tier foreign-exchange market in September 1986. After the Central Bank of Nigeria's initial currency auction, the naira became worth less than 30 US cents.

13 Mosley, loc. cit. p. 232.

14 Central Bank of Nigeria, Economic Policy Reforms in Nigeria: a study report (Lagos, 1993), p. 19.

15 See Lubeck, Paul, ‘Restructuring Nigeria's Urban-Industrial Sector Within the West African Region: the interplay of crisis, linkages and popular resistance’, in International Journal of Urban and Regional Research (London), 16, 1, 1992, pp. 623.

16 Bevan, Collier, and Gunning, op. cit. p. 33.

17 Biersteker, op. cit. p. 18.

18 In 1989, a two-tiered pricing structure was introduced as a means of phasing-in a price increase on fuels.

19 Lewis, Peter M., ‘Economic Statism, Private Capital, and the Dilemmas of Accumulation in Nigeria’, in World Development (Oxford), 22, 3, 03 1994, p. 445.

20 Central Bank of Nigeria, op. cit. p. 8.

21 Ibrahim, Jibrin, ‘The Transition to Civilian Rule: sapping democracy’, in Olukoshi, Adebayo O. (ed.), The Politics of Structural Adjustment in Nigeria (London, 1993), p. 133.

22 This is emphasised by Waterbury, John, ‘The Political Management of Economic Adjustment and Reform’, in Nelson, Joan (ed.), Fragile Coalitions: the politics of adjustment (New Brunswick, 1989), pp. 3956.

23 Forrest, op. cit. pp. 209–10.

24 Analyses in this vein can be found in Putnam, Robert D., ‘Diplomacy and Domestic Politics: the logic of two-level games’, in International Organization (Cambridge, MA), 42, 3, Summer 1988, pp. 426–60; Callaghy, loc. cit.; and Lehman, Howard P., Indebted Development: strategic bargaining and economic adjustment in the Third World (Basingstoke and New York, 1993).

25 This is evident from several case-studies in Nelson (ed.), op. cit.

26 Callaghy, loc. cit. pp. 306–7.

27 Ihonvbere, Julius O., ‘Economic Crisis, Structural Adjustment and Social Crisis in Nigeria’, in World Development, 21, 1, 1993, p. 146.

28 See Yusuf Bangura and Bjorn Beckman, ‘African Workers and Structural Adjustment: a Nigerian case-study’, and Attahiru Jega, ‘Professional Associations and Structural Adjustment’, in Olukoshi (ed.), op. cit. pp. 75–96 and 97–111, respectively.

29 See Jega, loc. cit.

30 Lewis, ‘Economic Statism’, p. 445.

31 Abdul Raufu Mustapha, ‘Structural Adjustment and Agrarian Change in Nigeria’, in Olukoshi (ed.), op. cit. pp. 121–2.

32 Ojo, M. O., ‘A Review and Appraisal of Nigeria's Experience with Financial Sector Reform’, Central Bank of Nigeria, Research Department Occasional Paper No. 8, 1993, p. 10.

33 Financial Times (London), 16 03 1992.

34 World Bank, op. cit. p. 57.

35 Personal interview, Western diplomat, Lagos, 06 1993.

36 See Julius, O. Ihonvbere, ‘A Critical Evaluation of the Failed 1990 Coup in Nigeria’, in The Journal of Modern African Studies, 29, 4, 12 1991, pp. 601–26.

37 Ibid. and Forrest, op. cit. p. 246.

38 Business Times (Lagos), 17 10 1994.

39 Forrest, op. cit. p. 247.

40 Central Bank of Nigeria, op. cit. p. 36.

41 World Bank, op. cit. p. 36.

42 Central Bank of Nigeria, Annual Report and Statement of Accounts, 1994 (Lagos, 1995), p. 1.

43 Ntekop, T. J., ‘The Foreign Exchange Market in Nigeria’, in Bullion (Lagos), 16, 3, 0709 1992, p. 30.

44 Agusto & Co., 1993/94 Banking Industry Survey (Lagos, 1994), p. 1.

45 Central Bank of Nigeria, Annual Report and Statement of Accounts, 1992 (Lagos 1993), p. 68.

46 Economist Intelligence Unit, Nigeria Country Report (London), 1, 1993, p. 4.

47 Interestingly, the Government serviced its debt to the World Bank and its obligations to holders of par bonds. An implicit distinction was made between the ‘lenders of last resort’ and creditors regarded as dispensable.

48 Central Bank of Nigeria, Annual Report, 1992, p. 70.

49 See Lewis, , ‘Endgame in Nigeria?’, and Diamond, Larry, ‘Nigeria: the uncivic society and the descent into praetorianism’, in Diamond, Linz, Juan J., and Lipset, Seymour Martin (eds.), Politics in Developing Countries: comparing experiences with democracy (Boulder, CO, 1995 edn.), pp. 456–60.

50 Diamond, loc. cit. p. 459.

51 Central Bank of Nigeria, Annual Report, 1994, p. 70.

52 Ihonvbere, ‘Economic Crisis’, p. 148.

53 Pareto defined ‘spoilation’ as personal gain at the expense of general welfare. According to Levi, Margaret, Of Rule and Revenue (Berkeley, 1988), p. 3, fn, this represents a corrosive form of resource extraction by rulers.

54 See Clapham, Christopher, Third World Politics: an introduction (London, 1985).

55 See Jackson, Robert H. and Rosberg, Carl G., Personal Rule in Black Africa: prince, autocrat, prophet, tyrant (Berkeley, 1982).

56 Sandbrook, Richard, The Politics of Africa's Economic Stagnation (Cambridge, 1985), and van de Walle, Nicolas, ‘Neopatrimonialism and Democracy in Africa, with an Illustration from Cameroon’, in Widner, Jennifer A. (ed.), Economic Change and Political Liberalization in Sub-Saharan Africa (Baltimore and London, 1994), pp. 129–57.

57 These processes are elaborated by Boone, Catherine, ‘The Making of a Rentier Class: wealth accumulation and political control in Senegal’, in The Journal of Development Studies (London), 26, 3, 04 1990, pp. 425–9, and in Colander, David C. (ed.), Neoclassical Political Economy: an analysis of rent-seeking and DUP activities (Cambridge, MA, 1984).

58 On the political conditions for entrepreneurship in the continent, see Sandbrook, op. cit. and Kennedy, Paul, African Capitalism: the struggle for ascendancy (Cambridge, 1988).

59 See Joseph, Richard A., Democracy and Prebendal Politics in Nigeria: the rise and fall of the Second Republic (Cambridge, 1987).

60 Weber, op. cit. pp. 231–2.

61 Linz, Juan J., ‘Totalitarian and Authoritarian Regimes’, in Greenstein, Fred and Polsby, Nelson (eds.), Handbook of Political Science, Vol. 3, Macropolitical Theory (Menlo Park, 1975), p. 259. Linz adopts Weber's usage of ‘sultanism’, which I have modified.

62 Diamond, ‘Nigeria: the uncivic society’, p. 452.

63 Africa Confidential (London), 3 12 1993, p. 5.

64 Newswatch (Lagos), 2 10 1995.

65 See Rimmer, loc. cit., Joseph, op. cit., and Forrest, op. cit. passim.

* Assistant Professor, School of International Service, American University, Washington, DC, and currently Visiting Fellow, Hoover Institution, Stanford, California

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