Nigeria THE rough and rundown Lagos suburb of Badiya-Ijora had an illustrious visitor last week. Michel Camdessus, head of the IMF , had decided to see for himself a drainage project that has already soaked up hundreds of thousands of World Bank dollars. Besuited officials mingled with hundreds of gawpers from the surrounding shanty-towns. These are the people who, if the project is ever completed, will at last find their sewage removed instead of lying in open drains along their streets. So would the IMF help?
A day later, Mr Camdessus met Olusegun Obasanjo, Nigeria’s president-elect, in a plush hotel in the country’s newly built and affluent capital city, Abuja. Mr Obasanjo, a retired general whose election last month is being contested in the courts, is not due to take power until May 29th. He wants an answer to the same question, on a much bigger scale.
Mr Camdessus’s answer was a guarded one. The man who rules Nigeria at the moment, General Abdulsalam Abubakar, has been pushing the cause of economic reform. He has opened up government a little to outside inspection, scrapped the damaging dual exchange rate, cut some red tape, and ordered the privatisation of several loss-making state-run companies. In January he quietly agreed to set economic and political targets, monitored by the IMF , to show that Nigeria was serious about reform. If enough of these targets are met—and so far several have not been—the IMF may in June decide to approve the next step, the ratification of a formal Medium-Term Economic Strategy for Nigeria.
If Nigeria and the IMF get that far, Nigeria’s multitude of international creditors will take it as a sign that the country, potentially Africa’s first real economic giant, is back on a navigable course. The Nigerians hope that the creditor countries will then reschedule the country’s $30 billion debt. Not so fast, said Mr Camdessus. Nigeria still has a long way to go. “The IMF is ready to work with Nigeria once Nigeria has begun to set its house in order,” he explained.
The house is indeed a mess. Nigeria, with more people than any other country in Africa (over 120m, according to the UN ), is also the continent’s biggest source of oil. Yet its people remain some of Africa’s poorest because a succession of corrupt military governments have stolen or squandered the money. The government is top-heavy; roads, bridges, sewers are crumbling; the social services have all but collapsed.
Mr Camdessus told Nigeria that, if it wants debt relief and new loans, its government must show that it is prepared to do a lot more privatisation, bring in more openness and accountability, ensure the independence of the judiciary—and honour its existing commitments. It is a glumly long list. Mr Camdessus added that debt relief should not be seen as a panacea. Nigeria, in short, must start to earn its own living. This week the authorities devalued Nigeria’s currency, the naira, by 4.2%. More devaluations are expected.
By no means everything is going right. Already there are worries about Mr Obasanjo’s attitude to the IMF programme. He appears less than enthusiastic about privatisation, and insists that Nigerians should continue to control the country’s main economic assets. Most creditor countries still feel cautious about Mr Obasanjo. They want him to announce a clear economic plan, and appoint a team of people capable of implementing it.
And the current government can still do odd things. On March 8th it awarded, without tender, 11 oil exploration blocks in Nigerian waters to a bunch of companies of which all but one were previously unknown. Some of them are not even registered. Many suspect that these oil concessions have more to do with golden pensions for some of the country’s top military men than getting the best deal for Nigeria. Was Mr Obasanjo consulted? No, he said—and is said to be fuming that such potentially lucrative assets should have been given away before he has taken over.