Former Head of State, General Ibrahim Badamasi Babangida (IBB) has reflected on his economic agenda, especially the privatisation programme, which largely defined his nine-year sojourn in government, saying most government-owned enterprises failed due to excessive government control.
He stated that there was excessive control of the major sectors of the economy, from retail trade, shipping, aviation, banking and even social services, declaring that, sadly, they were all loss-making.
Babangida’s administration was credited with the liberalisation of the economy, creating an open free market and allowing the private sector to come into managing some critical sectors like banking, aviation, among others.
His infamous structural adjustment programme (SAP), which was introduced in July 1986 characterised the government’s economic agenda based on the conditionalities of the International Monetary Fund (IMF).
In his newly launched autobiography, “A Journey in Service,” Babangida recalled that government-controlled enterprises were “massive drains” on the economy.
Daily Trust reports that some of the well-known government enterprises, which have gone into extinction included the national air carrier, Nigeria Airways, its equivalence in maritime, the Nigeria National Shipping Line (NNSL); the Nigerian Telecommunication Limited (NITEL); among others.
Babangida in the 10-chapter book addressed the topic of “Reforming the Economy: Privatisation, IMF, SAP, and other Matters.
He identified “Total mismatch of supply and demand” as the primary cause of the economic crisis during his time.
According to him, the shortage in the supply of essential goods “Was occasioned by uncertain access to foreign exchange.”
He stated that foreign exchange from oil earnings and other non- oil exports was mainly under government control.
“By fiat, the government determined the exchange rate of the Naira against major world currencies and fixed it at an unrealistic and subsidised level,” he wrote on page 151 of the book.
He said, “Importers, manufacturers, government goods and services, and the general public could only access foreign exchange through the red tape of a bureaucracy that needed to be more transparent. This regime was unacceptable. “
Daily Trust reports that the Babangida’s style was similar to the experience under the current government of President Bola Tinubu who removed subsidy from petroleum and floated the currency, which triggered an inflationary pressure never witnessed for decades.
The twin-policy of the Tinubu’s administration worsened the economic conditions of the people while widening the gap between the rich and the poor.
This was acknowledged by Babangida in his book who said, “We decided to deregulate the foreign exchange market by floating the exchange rate instead of fixing it at a predetermined level by government fiat.
“The Naira weakened in stages to an affordable level that was relatively higher than people were used to. However, we were satisfied that the demand and supply of foreign exchange determined the exchange rate. At least foreign exchange stopped being a deity to be worshipped by all and sundry since it could now be accessed more liberally.”
According to him, the people had to “Choose between waiting endlessly in queues for goods that needed to be more forthcoming or paying a little more for instantly available supplies of goods and services.”
He added, “The logic of the open market prevailed. For the first time since independence, we made a bold systemic choice of opting for an open market economy with government supervision.
“We needed to accept the implications of a fundamental change in our economic system. It was evident that when you suddenly migrate from a subsidised mixed-economy model to a free-market one, the forces of economic competition are bound to force some of the populace to the fringes. The rich would get richer, and the poor even poorer. The poor would feel crushed and suffocated.”
‘We demystified air travels’
Babangida further clarified that his privatisation programme led to the demystification of the air travel industry due to the surge in demand for domestic travel.
He said despite the demand there was only the defunct Nigeria Airways which fleet size “Was limited, and government interference limited its management.”
He stated that its service quality could have been more competitive, adding that the liberalisation of the industry gave birth to Okada Air owned by Chief Gabriel Igbinedion.
He disclosed that after listening to “heated and exciting” debates about liberalising the air travel, he opted for the liberalisation, adding, “Soon afterwards, the first set of private domestic airlines got Air Operating Licences (AOL) and quickly went into service.
“Okada Air was the most dramatic and spectacular, owned by Chief Gabriel Igbinedion, the Esama of Benin. The proprietor often personally stationed himself at one of the airports and supervised ticketing and accelerated boarding of passengers.
“Time was saved. The red tape was removed. Air travel was demystified, and people got to their destinations safely and on time. Okada went viral and became synonymous with a no-frills and quick transportation culture,” he added.