- SAP Defense: Falae insists SAP wasn’t ideal, but necessary.
- Shagari’s Blame: He points finger at Shagari’s administration for the debt crisis.
- Exchange Rate: Falae highlights the exchange rate stability during his tenure.
- Tinubu Era: Comparison with current economic reforms.
Falae’s Hot Take: SAP Was a Necessary Evil
In a recent interview with ARISE NEWS, Olu Falae, a former Secretary to the Government and Minister of Finance, stood his ground on the infamous Structural Adjustment Programme (SAP). He argues it was the only way Nigeria could navigate the economic storm caused by a crushing debt crisis back in the 80s. According to Falae, Nigeria’s hands were tied. Ignoring the debt wasn’t an option, unless the country wanted to be cut off from international trade.
Falae stated, “We were in debt. We had no choice but to pay the debt back. And we could not impose our solution on the international community. So they had us by the throat. If we did not do a deal with the creditors, we would stop trading internationally… Nigeria would be in crisis. So it was not a pleasant thing. It was the least bad of all the bad options available.”
SAP: Not My Brainchild!
Falae is keen to set the record straight: he wasn’t the mastermind behind SAP. He inherited the policy when he joined the Babangida administration. In his words, “I was appointed secretary to the federal government on the 29th of January 1986. Six weeks before that, Babangida announced… that his government had adopted a domestic structural adjustment program. That policy was already government policy by the time I was appointed. I did not bring the policy, I did not recommend it, I did not make it.”
Shagari’s Legacy: A $30 Billion Debt Bomb?!
Falae drops a bombshell, blaming the Shehu Shagari administration for the economic mess. He claims Shagari’s government issued import licenses way beyond Nigeria’s earnings, leading to a staggering $30 billion in trade arrears by the time Buhari took over. This mismanagement of foreign exchange, according to Falae, set the stage for the drastic measures of SAP.
Did SAP Wreck Nigeria’s Economy? Falae Responds
Critics argue that SAP caused massive devaluation and widespread hardship. Falae defends the exchange rate during his time, stating, “By the time I left government in 1990… the exchange rate was 5.50 Naira to the Dollar after three years of SAP. It was after that we began to have 32 naira to the dollar, 48 naira to the dollar, 100 naira. For the time that I was there and were implementing the structural adjustment program, the exchange rate never exceeded 5.50 Naira to the Dollar.”
While admitting the criticisms, Falae insists that SAP also brought some good, including reforms in the marketing policy system that benefited farmers. He also pointed to the introduction of domiciliary accounts, which he estimates now hold around $35 billion.
SAP vs. Tinubu’s Reforms: Déjà Vu?
With Nigeria currently undergoing similar reforms under President Tinubu, like forex liberalization and subsidy removal, comparisons are inevitable. Falae stresses the need for balance, stating, “You see, our problem has been abuse. And, you know, we can never surrender the economy to blind market forces. At the same time, you cannot oust market forces from the determination of economic parameters. You have to have a balance between government intervention and the working of market forces. So that is the path of wisdom.”
He believes that adjusting the exchange rate to reflect economic realities is necessary, but warns against the abuses that can occur without proper oversight.
The Bottom Line: A Complex Legacy
SAP remains a controversial topic in Nigeria’s history. While Falae defends it as a necessary measure to address a dire economic situation, its long-term impacts are still debated. As Nigeria navigates new economic challenges, the lessons of SAP continue to be relevant.
Disclaimer: This article presents Olu Falae’s views on SAP and does not necessarily reflect the views of this publication.
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