These have left most SSA countries with acute balance of payments (BOP) disequilibria and an inability to service their debts to foreign bodies. In an effort to tackle the economic crises and to stimulate economic recovery, most African countries had to adjust and re-structure their economies. According to Dasgupta (1998), structural adjustment was seen as a fact of life. Thus in the 1980s, most African countries initiated economic policies which were sponsored by the World Bank and supplemented by the International Monetary Fund(IMF) in the form of stabilisation and structural adjustment programmes (SAP).
Between June 1986 and July 1987 alone twenty one SSA countries went through World Bank/IMF SAP. Generally, SAPs entail policies designed by the world Bank/IMF aimed at improving the socioeconomic conditions of implementing nations by restoring economic stability and achieving long term growth through addressing structural weakness, and disequilibria in among others government budgets and external sector. More precisely, they involve the adoption and implementation of policies such as currency devaluation, trade liberalization, privatization, and removal of subsidies etc. hich are perceived as means of reversing the pervasive social and economic problems of developing nations. There has been a considerable amount of literature on the effects of SAP measures on less developed countries (LDCs) with no apparent consensus. On the one hand, international financial institutions (IFIs) maintain that SAPs are vital tools for economic recovery and sustainable economic growth. On the other hand, many economists and social scientists argue that SAP measures have led to recessions and poor standards of living in developing countries (Jauch 1999).
Thus, the impacts of SAPs remain highly controversial. Even though there are disparities as to the exact effects of SAPs, it is generally accepted that they have far reaching implications for not only the macroeconomic environment of the countries concerned but society at large (Mosley and Weeks, 1993, Riddle, 1992, Stein, 1992, El-Tom, 1994, World Bank, 1994). It is against this background that this dissertation attempts to study and analyse the effects of SAP on the Nigerian economy.
The choice of Nigeria as a case study is due to the fact that it has implemented one of the most radical structural adjustment programmes in Africa. Thus the question which posed is, what impact if any has SAP had on the Nigerian economy. Before we proceed, it should be emphasised that this dissertation subsumes IMF stabilisation programmes under World Bank structural adjustment programmes. The reason for this is that the two programmes are intertwined and this is done also for simplicity. . 2 Aims and Objectives This paper aims to explore the role SAP has played in the Nigerian economy. The major objective of the project is to offer a better understanding as to why, what and how structural adjustment program in Nigeria evolved. The primary focal point is to inspect the basis for and causes of the reforms, formulation and implementation processes, and the reform outcomes. The precise objectives of the dissertation are as follows: First, to provide a better understanding of the background to the economic crises in Nigeria that led to SAP * Second, to outline the objectives of SAP and the reforms implemented by the Nigerian government * Third, to analyse the macroeconomic and social consequences of implementing SAP in Nigeria 1. 3 Methodology and data To evaluate the effects of SAP on the Nigerian economy, the dissertation applies so-called ‘before-after approach’ which in its essence compares the values of selected variables in the period before a program is implemented to those of post-implementation.
This approach has been one of the most widely used when evaluating SAP. One of the main advantages of the approach is that it can give an insight into whether structural adjustment improved key economic indicators. The major shortcoming of the methodology employed in this paper is that it assumes that all outcomes are the result of the programme itself and thus does not take into account the impacts of others factors. Another limitation is that it does not reveal the causes of variable changes.
However, in spite of the fact that the before-after approach may have some degree of bias as an estimation procedure, it nevertheless, has inherent objectivity and is relatively easy to employ. The dissertation relies on secondary data – mainly World Development Indicators. In addition, various government publications are utilised. In the case of Nigeria, the lack of data and the quality of data available had a major constraint on the study. The data were often found to be unavailable and there were discrepancies in the different data sources.