NIGERIAN FOREIGN POLICY IN THE 21ST CENTURY: AN ANALYSIS OF THE OBASANJO CIVILIAN ADMINISTRATION
The economic diplomacy of President Obasanjo between 1999 and 2003 was dictated by the mood of the international community and the general state of African economies. President Obasanjo’s economic programmes are hinged on the neo-liberal theoretical framework. This is evident from the economic path he has been traveling on since he took over. All his programmes have the nuances of Structural Adjustment Programme (SAP). When Obasanjo took over from the military junta of General Abdulsalami Abubakar on May 29 1999, Nigeria was more or less a pariah nation with negative and offensive international media attention. Transparency International consistently rated Nigeria as most corrupt nation on earth. In 1998, out of 85 nations surveyed in its corruption perception index, Nigeria was rated 81. This deteriorated in 1999 when out of 99 nations surveyed, Nigeria was rated 98 (www.transparencyinternational.org). This negative rating affected the influx of Foreign Direct Investment (FDI) as most foreigners were wary and indeed reluctant to invest in such insecure environment. The response of President Obasanjo, which was aimed at reassuring the international community, was the signing into law of an anti-corruption law in 2000. This law gave the President the impetus to go round the world and preach to perspective foreign investors to come to Nigeria and invest. Events after four years of promulgating this law have shown that is a toothless bulldog and tool of witch hunting the enemies of the president. Between 2000 and 2003 the rating of Nigeria by Transparency International has nit got better.
Nigeria is a goldmine waiting for the right combination of the necessary ingredients of leadership and policies to transform the vast and breath-taking resources entrenched on its soil to achieve a better life for its citizens and befitting position in the comity of nations. It is regrettable that in spite of the country’s huge natural resources, 70 percent of its over 130 million people live below poverty level, that is, less than a dollar per day. Nigeria’s seemingly intractable developmental conditions are confounding. The data of Nigeria’s resources are intimidating and impressive. In 1991, the estimated proven reserves of crude oil in sub Sahara Africa were 21.7 billion barrels or 2.2% of world reserves. About 79% is located in Nigeria. By 1992, Nigeria had seven sedimentary basins, 880 oil fields already discovered, whereas only 180 had been developed. In addition, there are several underdeveloped marginal fields and large tar sands (bitumen) deposits, estimated at over two billion barrels (This Day, 20/10/2004:48).
Also in the gas sector, natural gas deposits outweigh oil by far. Nigeria has an estimated 120 trillion cubic feet of gas; about three times the size of oil reserves.
Other areas like the solid mineral sub-sector and agriculture have already been unexplored. In the face of this plenty, Nigerians wallow in the most obscene and scandalous poverty. According to United Nations Development Programme (UNDP) Report of 2003 about 70% of Nigerians live in abject poverty (www.undp.orgng/docs/POVERTY-PSI.doc). Regrettably, this state of affairs was superintended and sustained by the nation’s successive leaders who were part and parcel of the United Nations conventions on development.
Presidents Obasanjo, as part of his strategies to attract foreign inflow of capital intensified the privatization programme by divesting government interest in various state enterprises and deregulating the economy. The deregulation policy impacted positively on the economy in the area of the telecommunication. The dismantling of the monopoly of NITEL (Nigeria Telecommunication Plc) brought in its heels other operators and new technologies into the telecommunication sector. Prior to deregulation, NITEL had about 700,000 lines with a tele-density that was far below the International Telecommunication Union (ITU) level but after deregulation in 2001, the combined telephone line from all operators including the GSM operators jumped to over five million in three years. The Minister of Communication Chief Cornelius Adebayo said that the worth of foreign direct investment in the Telecommunication sector as at 2004 was in the neighborhood 0f $4.1 billion (Vanguard 11/10/2004:34).
The Achilles heel of the deregulation policy of Obasanjo’s regime is the downstream sector if the oil industry. While the government has withdrawn all the subsides, if any, in this sector, it has failed to put the necessary structure in place. The current deregulation in the oil sector has merely dismantled the monopoly of oil importation by the Nigerian Petroleum Corporation (NNPC). Importation of refined petroleum products is an open sesame as any person or company with the wherewithal can engage in it. The aspect of opening up the area of domestic refining has been in abeyance. The three refineries in Warri, Port Harcourt and Kaduna, which are in various stages of moribund, have not been able to meet any significant percentage of local petroleum products demand. The result is the dependence of the economy on imported fuel. This would not have been much of a problem but that the domestic market now responds to the vagaries of the international oil prices. The effect on the economy has been spiral inflation and pauperization of the masses.
The Obasanjo regime has also channeled its energies towards the reduction of the debt profile of Nigeria. President Obasanjo in championing this cause has combined his presidency with other African leaders like Thabo Mbeki of South Africa, Abdulazeez Bouteflika of Algeria and Abdoulaye Wade of Senegal to form the New Partnership of African Development (NEPAD).
Although Obasanjo has traveled the industrial world times, he has not succeeded in convincing the creditor-nations to reduce the volume of Nigeria’s debt either bilaterally or multilaterally through Nigeria’s inclusion in the Heavily Indebted Poor Countries (HIPC) Initiatives. As Obasanjo himself acknowledged, “in three years, I went round the countries in Europe twice over, I went to Japan, to America, to Canada and got good words….but no action at all (Gani Fawehimni, “The Absentee President of Nigeria”, quoted in Financial Times, 2002).
Obasanjo’s economic diplomacy especially as encapsulated in his global leadership of G77 is enshrined in timidity and good boy disposition. Rice (2000) reports that G77 Chairman President Obasanjo “ruled out a joint decision by poor countries to suspend debt payment, saying that it would interfere with aid transfers that some nations depend upon for part of their domestic budgets”. The implication of this is that Obasanjo does not contemplate a radical solution to debt burden of Nigeria. Indeed, he preaches subservience as a tool to obtaining debt relief and this underscores his economic diplomacy on this major determinant of the economic trajectory of the Nigerian state.
As part of his effort to tackle corruption and other economic and financial crimes necessary to attract foreign investors, Obasanjo has taken certain domestic steps. He strengthened existing agencies and promulgated laws establishing new ones, of which the Economic and Financial Crimes Commission (EFCC) is one.
This work is thus, divided into five chapters which look into the various aspects of the economic diplomacy of Obasanjo’s regime in his first four years (1999-2003) in office.
1.2 STATEMENT OF PROBLEM
Nigeria became independent on October 1, 1960 on a high note of great expectations of living in prosperity ever after. The first Prime Minister of Nigeria, Sir Abubakar Tafawa Belewa in an address to the United Nations General Assembly on the occasion of Nigeria’s first independence celebration on October 1, 1960 set the tone of Nigeria’s foreign policy. Although there was no clear-cut guideline on economic diplomacy, it was stated that Nigeria would use its abundant human and material resources in its interaction with the world especially in the context of creating “the necessary economic, political, social and cultural conditions to ensure the independence of Nigeria…” (Epelle 1964:63).
The reality of Nigeria’s economy is a testimony that successive regimes after the Balewa government were hypocritical about creating the economic conditions to ensure the entrenchment of Nigeria’s independence.
In 1973/74, there was a massive increase in the global price of crude oil. Overnight Nigeria became a “mega-buck” earner. Rather than consolidation, Nigerian government from Gowon upwards pursued the hedonistic option of dissipation. The end result was in no time Nigeria “prodigalistacally” frittered away this rare opportunity to kick-start the nation on the path of genuine industrialization.
By the 1980s when the cyclical depression of the cyclical depression of the capitalist system reared its head, Nigeria could not sustain the artificial life style mindless importation it cultivated in the hey days of high-level income from crude oil sales. It tethered on the brink of collapse and only sustained itself by borrowing from European market in 1977 and 1978 (Aluko-Olokun 1989: 198-199). The bad run for Nigeria persisted attracting such economic measures as the Stabilization Act (1982), Austerity Measures and finally Structural Adjustment Programme (SAP) in 1986. All these measures did not pull Nigeria out of the woods. In fact, by a combination of lack of commitment, ineptitude, corruption, and economic mismanagement, Nigeria was mired deeply into the mud of economic hopelessness.
By the time Obasanjo took over on May 29, 1999 Nigeria was practically on its knees, rejected by friends and cajoled by foes. Over sixteen years of unbroken military dictatorship had put the Nigerian economy at the precipice of total collapse. Nigeria was a pariah nation, suspended from the Commonwealth and sanctioned by the United Nations. Its debt burden was excruciating and multilateral institutions of the International Monetary Fund (IMF) and the World Bank were less disposed to evolving a debt relief package to enable it meet debt service obligations. Also the incentives for foreign investment were lacking. Indeed such factors as political instability, civil unrest, unstable economic programmes, policy somersault and decaying infrastructure made some companies to close shops and effectively dissuaded prospective investors from investing in Nigeria.
President Obasanjo has traveled around the world especially the industrial countries in his quest to repair Nigeria’s battered image, pleading in the process for economic cooperation and assistance especially in the area of debt forgiveness, trans-border crimes and repatriation of Nigeria’s money looted by former leaders and stashed away in foreign banks. To match his preachment, Obasanjo’s regime undertook broad-based domestic economic reforms as a gesture to the international community of the regime’s preparedness to pull the country out of the economic woods.
Consistent with the tradition of Nigeria’s foreign policy of having Africa as centerpiece, Obasanjo has been active on the continent by giving impetus to both ECOWAS and OAU (Changed to African Union, AU in 2001) in the quest for Africa’s economic development. In collaboration with Presidents Thabo Mbeki of South Africa, Abdulazeez Bouteflika of Algeria and Abdoulaye Wade of Senegal, Obasanjo initiated new development agenda for Africa, which is encapsulated in the New Partnership for African Development (NEPAD).
President Obasanjo’s economic diplomacy from all indications, aim at addressing the reservations of the West and reassuring them of Nigeria’s preparedness to chart the course for its own economic development. Thus the government has committed itself to domestic economic reforms spanning deregulation, privatization, civil service, corruption and cross-border crimes.
The questions that arise then are:
- Can deregulation and foreign investment policies of the Obasanjo government transform and sustain Nigeria’s economic development?
- Did President Obasanjo’s numerous foreign trips for debt forgiveness succeed in attracting debt forgiveness?
Did President Obasanjo’s domestic legislations against internal and international economic crimes enhanced foreign direct investment in Nigeria?
1.3 OBJECTIVES OF STUDY
The Nigerian economy has been in the woods since the early 1980s. in spite of General Ibrahim Babangida’s avowed commitment to economic diplomacy since 1988, he could not influence massive foreign direct investment into the economy. Indeed he presided over the funeral pyre into which Nigeria roasted through his Structural Adjustment Programme (SAP). Exasperated at a point by the aimless vicissitudes of the economy, he wondered aloud why Nigerian economy could not collapse.
Subsequent regimes just muddled through culminating in a near prostrate economy in 1999. Obasanjo has embarked on a total of one hundred and eighty foreign trips as at May 29, 2003 when his first tenure as a democratically elected president lapsed (Sonowo, 2003.50) thus earning himself the cynical appellation of “absentee president”. As at the end of Obasanjo’s tenure there was a pot-pourri of verdicts on his achievements with particular reference to the impact of his economic diplomacy on the overall trajectory of the economy.
Therefore the broad objectives of this study are;
- To assess the general impact of Obasanjo’s economic diplomacy on the domestic economy.
- To evaluate how Nigerian economy relates with the international economy as a result of Obasanjo’s economic diplomacy.
- To x-ray the strategies that the Obasanjo’s regime has adopted to enhance foreign direct investment (FDI) in Nigeria.
The specific objectives of this study are:
- To determine whether deregulation and foreign investment as conceptualized and implemented by Obasanjo’s government can transform Nigeria and usher it into economic development.
- To examine President Obasanjo’s foreign trips and his quest for debt relief or forgiveness to ascertain whether it has succeeded in attracting debt forgiveness.
- To examine whether President Obasanjo’s domestic legislations and policies relating to trans-border economic crimes have induced international confidence and attracted foreign investors to the Nigerian economy.
1.4 SIGNIFICANCE OF STUDY
In this era of globalization every country is struggling to be carried along by the total wave of this gigantic phenomenon. The economic sanction imposed by the West on Nigeria in the heydays of the Late General Sani Abacha’s military junta worsened the already bad economic prospects of Nigeria and deepened her underdevelopment. The Obasanjo regime thus inherited the unenviable tasks of reintegrating Nigeria into the comity of nations and initiating policies necessary to propel it to economic development.
- The evaluation of the economic diplomacy of the Obasanjo’s regime and the bridging of the gap, which may exist in literature.
- It will be of immense benefit to Nigerian leaders and diplomats as it spawns ideas, which may be utilized to pull the country out of its economic doldrums.
- It will serve as secondary data to future research on the economic diplomacy of the Nigerian State.