Influence of external forces on Nigeria's economic security


Scientific Essay, 2008
18 Pages

Excerpt

ABSTRACT

After about five decades of political independence, all efforts towards prosperous Nigeria were devastated by corruption, fraud, poverty, insecurity and primitive wealth accumulation. A lot is being said on the actual causes of the Nigeria’s socio-political and economic predicaments especially in the wake of the present century. This paper explores and analyses the roles of the so-called ‘United Nation Development partners’ (the World Bank, the International Monetary Fund and the World Trade Organization) in making Nigeria one of the poorest and corrupt countries on earth. The paper also sheds more light on how the activities of these institutions pushed Nigeria into the “poverty-trap” which makes it difficult for the country to harness the vast human and material resources available for a common goal.

INTRODUCTION

The Federal Republic of Nigeria is highly endowed with human and material resources more than any other Sub-Saharan African country. The country is blessed with vast agricultural land. During colonial period, and its immediate aftermath, agriculture played a crucial role, as the major source of revenue to the colonial economy in the country. The period witnessed massive production and exportation of commodities such as Cocoa, Rubber, Groundnut, Cotton, Hides and Skins etc. thus; almost all colonial infrastructure and institutions in the country were established to facilitate these processes.

In the 1970s, Nigerian economy changed with a momentous departure from agriculture-based economy to oil-blessed economy. Presently, Nigeria is the 13th largest petroleum producer in the world, with a reserve in excess of 30billion barrels deposit. (Isiah, 2005).

However, despite the combination of people, land and abundant mineral resources, the standard of living of Nigerians remains low. Nigerians have been suffering from extreme poverty despite abundance of natural endowment

EXTERNAL FORCES

The term ‘External Forces’ in this paper refers to the ‘United Nations Development Partners’; the International Monetary Fund (I.M.F), the International Bank for Reconstruction and Development (I.B.R.D) and the World Trade Organization (W.T.O). These three institutions are among the numerous institutions that constitute the Economic and Social Council (ECOSOC); a body of the United Nations responsible for the coordination of the entire social and economic works of the U.N.

International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) or simply World Bank are two organizations established at Bretton wood, after World War II to help avoid Great Depression - like economic disasters. They were sometimes called Keynes's twins because they were the brain-children of John Maynard Keynes; one of Franklin Roosevelt's closest advisors, and Harry Dexter White; a British economist. The World Bank and the IMF are the world's largest public lenders, with the Bank managing a total portfolio of $200 billion and the Fund supplying member governments with money to overcome short-term credit problems (George, 1999). Today, some are seeing the IMF and the World Bank as progressive institutions because of their dominant role in the economic activities of many countries of the world. At the time of their foundations their main preoccupation was the stabilization of Foreign exchange rates (in case of the IMF) and the reconstruction of the war devastated areas of Western Europe and the long term development of emergent developing countries (Alkali, 1997).

Unlike the previous two, the World Trade Organization (WTO) is an international organization designed to supervise and liberalize international trade. The WTO came into being on January 1, 1995, and is the successor to the General Agreement on Tariffs and Trade (GATT), which was created in 1947, and continued to operate for almost five decades as a de facto international organization.

Since inception, WTO has been relentlessly promoting the "free trade" agenda of multinational corporations. The common denominator of these institutions is their lack of transparency and democratic accountability. It claims that the economy should dictate its rules to society, not the other way around.

It is within the roles of these organizations that this paper intends to look into the nature and the level of underdevelopment of various sectors of the Nigerian society.

POVERTY

According Wilkipedia online dictionary, "Poverty" can be defined as an economic condition of lacking both money and basic necessities needed to successfully live, such as food, water, education, healthcare, and shelter. But Longman Dictionary of Contemporary English defnes ‘poverty’ as ‘the situation or experience of being poor’.

Poverty may therefore be seen as the economic condition of lacking stable means of meeting basic life needs. Job insecurity, economic instability and the uncertainty in meeting the basic needs all serve as indicators of poverty.

The World Bank defines extreme poverty as living on less than US$1 per day, and moderate poverty as less than $2 a day. In essence, any person who is earning US$1 per day may not be able to sustain himself or satisfy his basic needs.

In broader sense, ‘Poverty’, represents; deprivation of common necessities that determine the quality of life, including food, clothing, shelter and safe drinking water, and may also include the deprivation of opportunities to learn, to obtain better employment.

THE ACTIVITIES OF EXTERNAL FORCES IN NIGERIA

The role of IMF, World Bank and WTO in distorting the fabric of the Nigerian economy cannot be overemphasized. The World Bank started involving itself in Nigeria as early as 1955 when it shouldered the responsibility for a critical study on the future of Nigerian economy titled the “Economic Development of Nigeria” (Alkali, 1997). This study unveiled the structure and the prospects of the Nigerian economy in the future. In 1958, the Bank extended its first credit facility to the tune of $28.0million to Nigeria to complete the railway line from Gombe; where this congress is taking place, to Maiduguri; the capital of Borno state. This marked the beginning of the World Bank interference in the Nigerian political economy. Most of the projects financed by the Bank were in the areas of highways, transport, seaports, telecommunications and electricity energy. From 1958 to 1970, a total of twelve projects were financed by the World Bank in Nigeria totaling some $284.3 million. Out of this amount, the sum of $242.6million, accounting to 87 per cent of the Bank’s total loan was spent on provision of urban highways and electricity. Other sectors affected here were the education and business finance where $43.7million amounting to 13 per cent of the total facility. (Alkali, 1997).

In 1971, with the rise of ‘Green Revolution technology’ and politics of food, the World Bank started funding agricultural projects. Thus, throughout 1970s, the prominent areas to World Bank finances were financing agriculture and Rural Development. The first agricultural loan by the World Bank was provided in 1971 for the financing of Cocoa production in Western region. From 1974 to 1977, World Bank sponsored five Agricultural Development Projects (ADPs) in Funtua, Gombe, Gusau, Lafia and Ayagba. Out of the total loan of $808.1million in the 1970s, $364.3million equivalent to 45 per cent went to agriculture. In fact, from 1958 to 1987, the World Bank approved 66 projects loans for Nigeria out of which 29 projects valued $1,591.8million equivalent to 44 per cent were for agriculture. (Alkali, 1997).

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Excerpt out of 18 pages

Details

Title
Influence of external forces on Nigeria's economic security
College
Ahmadu Bello University
Author
Year
2008
Pages
18
Catalog Number
V189399
ISBN (eBook)
9783656138150
ISBN (Book)
9783656138365
File size
484 KB
Language
English
Tags
influence, nigeria
Quote paper
Dahiru Rabe (Author), 2008, Influence of external forces on Nigeria's economic security, Munich, GRIN Verlag, https://www.grin.com/document/189399

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