Nigerian Capitalism Since 1980: Failures of the Free-Market

- By: Chad Faldt

The direction of Nigerian capitalism since 1980 has lead to a further reduction in living standards for people in the already-impoverished country. Since gaining independence in 1960, Nigeria has pursued positive relations with its former colonial overlords, and extended its ties with neo-colonial states, particularly the United States. After the Biafran war of secession the Nigerian government began to pursue the attainment of limited autonomy in its diplomatic relations and control of the domestic economy. The 1970's saw the oil boom, and partial 'nationalizations' of foreign oil companies operating in the country.

Without western support for the Biafran secession it was probably unlikely that Nigeria would have adopted a more hostile, and independent policy in its relations with the leading capitalist states. The late 1970's saw Nigeria slowly being placed in a more subordinate position to international capital. Increasing food imports, and the decline in the world oil market increased Nigerian dependency on foreign capitalist nations. The 1970's had been Nigeria's best chance for development to date, but this was not to be. Large revenues created by oil wealth gave the government the ability to engage in a plethora of activities to promote itself as a regional and global power. Unfortunately many of the regional or African events which the Nigerian government spent lavishly on failed to produce any significant results or moves toward integration, and served more to chip away at the government's oil wealth, which was soon diminished. Nigeria's government ministers, however, went so far as to say that acquiring money was no longer a problem, but that the main problem was how to spend the oil wealth. The debilitating effects of having an irresponsible and comprador elite left Nigeria with a host of problems heading into the country's second attempt at democratic governance.

Olusegun Obasanjo led Nigeria into the Second Republic with no major political party or organization holding a leftwing, progressive, or populist stance. The Second Republic is a glaring example of the failure of capitalist democracy to be developed in Nigeria. Since the state had long been pursuing policies that assisted elite aggrandizement, despite occasional high-minded rhetoric about fighting corruption and pursuing the economic betterment of the general population, state patronage and exploitative social relations were no less a characteristic of that regime than any before it. The political situation surrounding the creation of the Second Republic was largely composed of efforts by the political class to gain support through ethnic and religious appeals.

The People's Redemption Party was the only party that was dedicated to pursuing its explicit progressive message. Many other parties had progressive statements in their platforms, but these usually were quite vague, and were not of major concern to the leaders of the party. The P.R.P. was the only party that was willing to wage class conflict on behalf of the lower classes in Nigeria; unfortunately it did not have significant national support. However the P.R.P. was able to gain control, democratically, of two state governments. Its governor of the Kaduna state, Balarube Musa, was the only governor to be expelled from his position during the Second Republic because of opposition against him by the other Northern elites.

Many scholars on Nigeria have noted around the period of 1970's oil boom Nigeria became a 'rentier' state, nearly entirely dependent on its oil revenues for the maintenance of the economy and itself. The massive oil revenues were supposed to allow the Nigerian state a more egalitarian hand in dealing with the various social classes in the country, but since the bureaucratic and state elite in the Second Republic were often also the capitalist elite, it is foolish to expect the state to have been anything like a neutral arbiter in the class struggles of the period. This rentier status exacerbated many of the problems that would later increase in importance in the 1980's, when the oil market declined, and Nigeria had to depend on Western nations for many crucial imports, including food. The development plans of the Second Republic, although designed to benefit the people, often failed to do so. The allocation of resources for development was largely decided on by wealthy elites; in the Fourth Plan education and housing received only 4.5 billion Naira, while other sectors received significantly more. Nigeria's dependence on oil wealth at the expense of development of other sectors of the economy left the country with numerous problems when the oil glut occurred.[1]

The position and condition of agriculture within the Second Republic provides a prime example of how the abundance of oil wealth, while potentially positive, has indirectly caused many serious problems. Before the discovery and exploitation of Nigeria's oil supplies, the country was an exporter of various agricultural products, and had several thriving cash-crop industries. The large peasant majority of the population was neglected in the nation's plans. Far too many African nations have neglected this sector of their population when pursuing changes, unfortunately. The peasants are rarely seen as a sector of the economy that help the country attain development, and thus are often neglected in the nation's development plans. President Shagari, of the Second Republic, following the failed legacy of Obasanjo's "Operation Feed the Nation," had a "Green Revolution" program, but little was actually done in the way of helping small farmers increase production.

Without the incorporation of peasant producers agriculture is bound to decline, considering they are the most important producers. Peasant farmers could not afford to purchase farming technology, and had little infra-structural development in, or leading to their communities. Peasant producers generally had less access to state patronage than any other economic group in Nigeria, except perhaps the urban unemployed. The failure to improve the agricultural situation in Nigeria has lead to the country increasingly importing food, instead of working towards self-sufficiency. Many rural residents have left their homes to go to the cities, not all voluntarily. The Land Use Decree in 1978 made it easier for large-scale landowners to accumulate more property and for oil companies to acquire land for the exploitation of oil resources in the areas. The displaced residents are supposed to be offered compensation, but often do not receive it. They head to the cities, in the hopes of finding an opportunity to survive. In some ways the rural to urban migration is positive; it leads to the modernization of more parts of the populace, and provides a workforce for any burgeoning industries located in the cities. Unfortunately many of these people cannot find employment, and do not receive the benefits that industrial capitalism brings to wealthy Nigerians. The crowding of urban areas has increased the social tension already present in the country. Overcrowding in the cities, caused by the influx of rural migrants leaves a large, superfluous population susceptible to the manipulation of demagogues with promises of improvement. The Maitatsine riots in Northern Nigeria demonstrate how the impoverishment of new urban residents can contribute to social unrest.

Toyin Falola and Julius Ihonvbere, in their book The Rise and Fall of the Second Republic continually stress that the goal of the politicians and nearly all of the parties who participated in the Second Republic was to provide access for themselves to the wealth of the state. Unlike in South Korea, or some of the other more successful modernizing "third world" regimes the Nigerian elite were either incapable of, or not seriously interested in, turning the Nigerian state into a regional power. Their actions relating to African initiatives often promoted regional cooperation and moves toward joint development initiatives, but upon closer examination, the festivals, economic and political agreements between West African states sponsored by Nigeria did not go very far in changing the internal dynamics of Nigerian capitalism.

Nigeria's increased importation of food, along with the significant external debts it was accumulating, were increasing its dependence on the Western states. As the Reagan administration was using food aid for political means, Nigeria was having to turn to the United States for increased aid. [2] Had the Second Republic focused on small-scale agricultural producers, it could have been the first Nigerian government to begin seriously addressing the agricultural problem. Bade Onimode notes that the "fundamental flaw in the Operation Feed the Nation, and the Green Revolution schemes is that they tried to mobilize everybody but the peasant producers themselves."[3] Professors Falola and Ihonvbere point out that this corruption was so endemic to the politics of the Second Republic that a significant percentage of the funds allocated for agricultural development went to "ghost farmers, contractors, bureaucrats, and foreign bank accounts."[4]

Nigeria's external relations reflect that internally the dominant classes have decided to take a subordinate position within the international capitalist economic order. Without an autonomous domestic state Nigeria could not develop its resources towards challenging more powerful foes, nor did it have the resources and skills for a successful intervention in Chad.

Already in the early 1980's the state governments had large external debts, and the national government was beginning to accumulate its own debt, and had already made agreements with the International Monetary Fund and Western lenders for several billion in credit. Ibrahim Babanginda, the military dictator of Nigeria from 1985-1993 decided to implement a structural adjustment program, against the wishes of the majority of the Nigerian people. The period of 'structural adjustment' and liberalization of the Nigerian economy were accompanied by increasing poverty and political repression. The national debt had gone from $1.28 billion in 1978 to $12.8 billion in 1983, and all the way up to $30 billion in 1989. [5] Crucial to the structural adjustment program was a devaluation of the Nigeria Naira, and the liberalization of trade. The Naira was said to have far too high an artificial exchange rate, and that this limited the Nigerian economy. The analysis that prescribes structural adjustment for national development ignores the exploitative nature of the international capitalist economy. Nigeria is expected to develop while conceding any national direction of the economy. The deregulation of the Naira did not solve Nigeria's economic problems, as it was not the cause of them. The opposition to Babanginda's policies has been so widespread that the regime has had to rely extensively on coercive measures, and the further curtailment of democratic rights to go forward unchecked. The regime has had to restrict academic freedom, and has largely given free reign to the oil industries operating in the Delta/Niger region. Whatever victories have been won against Shell or other oil companies in these communities have been wrested away by the people themselves, and not awarded to them by executive fiat.

The public debate on the issue of implementing a structural adjustment program and receiving an IMF loan was clearly won by the anti-liberalization side. Babanginda's regime had no popular legitimacy with which to implement his sweeping SAP. Ibrahim Babanginda went against this opposition to the SAP, and yet decided to still not accept the IMF loan offer, even though he was implementing the changes recommended by the institution, because the public was to taking the loan. The liberalization policies do little to help the population; the privatization of public enterprises does little to change their performance, Julius Ihonvbere notes that their inefficiency and failure beforehand had more to do with the corrupt political class that controls these institutions. The opening of the economy benefits foreign investors more than domestic enterprises, who must compete with large, transnational firms. Several domestic business associations in Nigeria were opposed the IMF plan being implemented, such as the Manufacturing Association of Nigeria. The Manufacturing Association of Nigeria saw that many small and medium sized Nigerian businesses would have to shut down because of the fierce competition with foreign firms.[6] Increasing crime and large-scale corruption have marred Nigeria since independence, but from 1980 on it has gotten much worse. The health of the people has deteriorated rapidly, social indicators have become more dismal under the SAP, and Nigeria is now, with all its resources, a state with one of the worst "quality-of-life" statistics. Liberalization has translated these negative trends into police officers that participate in armed robberies, and increasing malnutrition levels among the population.

The implementation of the Structural Adjustment Program in Nigeria represents something more significant than just domestic economic and political policy. SAP's have become big especially since the late 1970's, and I believe their adoption or rejection can reflect the position of a state in the international economic order, and the dedication, or lack thereof, of a particular regime to an independent national development policy.

The Reagan administration and following presidential administrations in the United States have opposed many regimes that attempt to pursue independent development lines, or national economic policy. Regimes that attempt to increase their regional influence are opposed by the United States as challenges that cannot be tolerated. The present administration leading American foreign policy has made clear its goals to limit the emergence of regional hegemons, and has even stated its intentions to limit the foreign policy independence pursued by its European allies. Julius Ihonvbere notes that the Buhari military administration, which preceded Babanginda, refused to implement a structural adjustment program, and that his rejection may be why Babanginda was leading the country into the 1990's, as he was more pliable to the demands of international capital.[7]

The United States' invasions of Panama, Yugoslavia, and Iraq show that U.S. leaders will not tolerate any potential challengers to the established order. Some of the potential challengers to U.S. domination cannot simply be crushed militarily, U.S. global domination is more in the service of transnational corporate interests than purely national business interests. (Although perhaps the release of a recent movie "Tears of the Sun" which is supposed to be about a U.S. military mission to Nigeria to rescue an American citizen, could be seen as a sort of Nigerian "Black Hawk Down"). Nationalist regimes as in Panama under Manuel Noriega, or the right-wing nationalist regime of Saddam Hussein, or Islamic governments like those in Libya and Iran are opposed because they do not subordinate themselves entirely to U.S. interests, not so much because of their lack of democracy or suspected ties to terrorist organizations.

The policies adopted in the past 20 years in Nigeria reflect the "limits" placed on their development. Less-developed countries can experience growth in their economies but the United States does not want them to pursue independent, nationalist foreign policies, or a comprehensive move towards a state-directed economy. A state-directed economy need not necessarily be along the lines of a socialist model; either way it presents a dent in the global access of multinational corporations to favorable markets. The United States opposes the emergence of competing capital formations, as they present a similar threat the socialist nations did. Countries that pull out of the global economic system successfully direct their own development provide a strong counter-example to the free-market route for other nations to follow. As of now Nigerian elites seem content to work towards development through the model of the "free-market." As Silvia Federici says "development here is at once underdevelopment."[8] The free-market model imposed on third world societies, is much more liberalized than anything the advanced, capitalist societies would subject themselves to. Nigeria, under the implementation of SAP, has received a 19th century form of capitalism that has very little room for workers' rights or community betterment. Without control of the companies operating in their communities it seems that many indigenous groups, and the traditional lifestyles and customs that some of them have been able to retain will go the way of the North American Indians.

The negative consequences of the structural adjustment program have been felt in a multitude of ways in Nigeria. The liberalization has been bad for domestic entrepreneurs, and has increased the number of unemployed. As mentioned above, with the markets opened up, smaller firms could not compete with larger transnational businesses. The liberalization policies also raised the costs of raw materials, which is part of the increased costs small businesses could not handle. The cocoa market experienced a severe crash, and subsequently a dramatic drop in exports in mid-1989. Other agricultural exports from Nigeria have also declined dramatically. Prices of basic consumer goods have gone up in multiples, and without corresponding wage increases for the employed population. The structural adjustment program has also involved many public sector employees losing their jobs, in what is called "retrenchment." Those who cannot afford healthcare under the liberalized environment often will not receive any. Perhaps the most obvious sign of continuing problems of development of Nigerian capitalism is the increased inter-religious violence in the country. The riots have been severer and more frequent under Babanginda's regime than any previous. The riots, although often sparked by more immediate reasons than poverty and general social malaise, have characteristics of a fascist appeal to the Nigerian lumpen proletariat. Many of Muhammadu Marwa's followers in the Maitatsine riots were unemployed, uneducated, fairly recent rural migrants, many of whom supported his anti-materialist message.

Fortunately, since 1980, Nigerian labor resistance against capital's ever more repressive domination has continued. Up until very recently, with the re-institution of civil government, the last 20 years in Nigerian politics have been some of the most repressive in the post-independence era. Nigerian labor was largely suppressed by the Babanginda government, and Sanni Abacha was a particularly harsh and unpopular dictator. However, the Ogoni community, and others within the Niger region of Nigeria continue to press for environmental protection, indigenous rights, and the return of oil profits to the local community. Despite the execution of Ken Saro-Wiwa the local Ogoni community has continued to resist Shell Oil's exploitation of their environment.

Julius Ihonvbere has looked at how many oil workers are able to keep up resistance through covert forms of it. In situations where the oil company has far superior resources at its disposal, and the state inflicts serious damage on those who protest its presence, opposition members are wise to not always make their opposition overt. Ihonvbere goes into detail on how oil workers devise a multitude of ways to cheat their employer, avoid work, and make extra money. [10] The oil extraction industry in Nigeria is not labor intensive, and is thoroughly supervised. However, employees are still able to sabotage machines, work at a leisurely pace, and perform in a generally unsatisfactory manner without directly confronting management and incurring its wrath. The various means of covert resistance give the oil workers some measure of leverage vis-a-vis their employer, if not an ability to express their grievances informally, so they can avoid reprisals. Nigerian labor struggles have had to adapt to state repression and power. Ihonvbere notes that the covert resistance can be a prelude to official actions by labor unions in disputes with management.

Despite efforts to crush resistance with violence an anti-military opposition still existed under Abacha. Perhaps Abacha's own cruelty helped to engender the opposition. The military element in Nigerian politics is perhaps one of most important influences on the character of capitalism in Nigeria, the direction of the class struggle, and on which side is the organized force of the state. For all of its post-independence existence the military in Nigeria has taken the side of the ruling classes whenever significant industrial or other conflicts have occurred. Generally the military is left to choose between various ruling groups, as there have not been many revolutionary situations in Nigeria. Bade Onimode makes the point that the military "cannot claim the cultural victory of being unaffected by the values of society at large."[11]

The military regimes were eminent representations of one class' domination of another in Nigerian society. The Nigerian military regimes since 1980 have not only continued with a conservative governance, but have gone even farther with the unpopular implementation of a SAP. It is obvious that the state in Nigeria has little, to no 'autonomy' from the social classes which dominate other sectors of Nigerian society. This is no surprise as Obasanjo and other former military leaders are themselves members of the ruling class in Nigeria. It appears however that Nigeria will be able to emerge out of its most recent elections successfully, with Olusegun Obasanjo reelected as president.

Most observers of Nigeria have pointed out that the success of these elections is a major test of Nigerian democracy. Whether or not the military will intervene in politics again is the main issue of concern. Unfortunately Nigerian politics already exhibit a militaristic form. Obasanjo is a former military leader of the country, and his most serious opponent Buhari is also a former military leader of the country. I fully agree with the statement of Ademola Babalola on this subject,

"The nascent democratic transition in Nigeria is currently under threat. The threat is from advocates of liberalism championed by the Western governments of Europe and America, the United Nations, the International Monetary Fund, and the World Bank."

Nigerian capitalism since 1980 has several defining characteristics. First, the formation of a democratic second republic in 1979 - a dismal failure - and the firmly entrenched the idea among citizens and members of the political class that the state was to be used for patronage and the accumulation of wealth. Second, the implementation of a structural adjustment program under the auspices of a military government, which led to a decline in the standard of living and an entrenchment of foreign capital interests. Third, the continuation of the class struggle in Nigeria being played out in the military competitions for power. This characteristic has been highly influential on all the others. Fourth, the continuation of the class struggle from the bottom up. Resistance in Nigeria to undemocratic military rule and exploitative class relations, has had to take covert forms sometime, often for the safety of those who challenge the exploitative class relations. The escape from 'militics' is a gain for Nigerians, even if it means the president is a former military leader.

Chad Falt is a senior and History major at the University of Texas of Austin who interned with the International Action Center in NYC. He can be reached here:


1. Falola, Toyin and Julius Ihonvbere The Rise and Fall of the Second Republic 1979-1983 (London: Zed Publishing, 1985) p. 103 2. Ibid. p. 138

3. Onimode, Bade Imperialism and Underdevelopment in Nigeria The Dialectics of Mass Poverty (London: Zed Press, 1982) p. 174

4. Falola, Toyin and Julius Ihonvbere The Rise and Fall of the Second Republic 1979-1983 (London: Zed Publishing, 1985) p. 130

5. Dibua, J. I. "Devaluation and Economic Crisis: A Political Economy Analysis" in The Transformation of Nigeria Essays in Honor of Toyin Falola (Trenton: Africa World Press, Inc; 2002) p. 261

6. Ihonvbere, Julius Nigeria The Politics of Adjustment and Democracy (New Brunswick: Transaction Publishers, 1994) p. 112

7. Ibid. p. 119 8. Federici, Silvia "Development and Underdevelopment in Nigeria" in Midnight Notes, Midnight Oil: Work, Energy, War 1973-1992 (Boston: Autonomedia, 1992)

9. Dibua, J.I. "Devaluation and Economic Crisis" in The Transformation of Nigeria Essays in Honor of Toyin Falola (Trenton: Afrian World Press, 2002) p. 277-278

10. Ihonvbere, Julius "Resistance and Hidden Forms of Protest Amongst the Petroleum Proletariat in Nigeria" in Midnight Notes, Midnight Oil: Work, Energy, War 1973-1992 (Boston: Autonomedia, 1992)

11. 11. Onimode, Bade Imperialism and Underdevelopment in Nigeria The Dialectics of Mass Poverty (London: Zed Press, 1982) p. 198

12. Babalola, Ademola "Democracy and National Development" in Nigeria in the Twentieth Century (Durham: Carolina Academic Press, 2002) p. 886

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