Nigerian economy plumbs new depths: Living standards plummet as military government faces growing debt and falling oil prices, reports Karl Maier in Lagos

NIGERIA'S latest experiment with military rule comes at a time when its economy, facing sharply falling oil revenues and mounting foreign debt, is gripped by its worst crisis yet.

General Sani Abacha's 33-member cabinet includes several people, such as the Petroleum Minister, Don Itiebet, the Finance Minister, Kalu Idika Kalu and the Agriculture Minister, Adamu Ciroma, who command respect among Western creditors; but its room for manoeuvre depends entirely on the military. Only a radical effort to clean up graft, slash the budget deficit, and reach a new agreement with the International Monetary Fund (IMF) could begin to halt the slide.

The challenge is daunting. World prices for Nigeria's main export, oil, have fallen to 10-year lows. That means Nigeria's 1.8 million barrels per day in petroleum exports will earn dollars 1.3bn ( pounds 870m) less per year than was budgeted for. Arrears on the dollars 30bn foreign debt have reached dollars 5.9bn, or about one-fifth of the country's economic output.

'The Western creditors cannot do anything,' said one economist. 'They are not getting paid now, and they cannot reschedule the debt unless there is a deal with the IMF. So all they can do is wait.'

Living standards have plummeted. Last year alone a 100 per cent inflation rate halved Nigerians' purchasing power. Civil servants, police and soldiers, including the contingent to the international force in Somalia, have not been paid for at least two months.

Prospects for a quick economic turnaround in Africa's biggest oil- producing nation are bleak. When Ibrahim Babangida took power in 1985, he promised a get-tough economic programme to foster foreign investment, reschedule foreign debt, and eventually create jobs. By 1991, an agreement with the IMF was collapsing as government budget deficits exploded.

A 60-page report on the budget commissioned by the Ernest Shonekan administration, which General Abacha overthrew last month, found that in the first half of 1993 alone, General Babangida's government deposited dollars 1.5bn from oil exports into secret 'dedicated accounts' for special projects.

The study also said the military had run up large debts for arms purchases that the government could not meet. The British Vickers company is delivering 150 tanks in a sale that Western military analysts have described as irrelevant to the country's defence needs. A contract was signed this year with the German manufacturer, Dornier, for 100 Air Beetle training aircraft, beating a bid by the British Slingsby firm.

Investigating past financial misdeeds has been ruled out. 'Probing individuals is to probe millions of Nigerians in the business class, in the civil service, in the judiciary, in the military, in the police,' said Lieutenant-General Odalipo Diya, vice-chairman of the Provisional Ruling Council.

Ten years ago, when General Abacha announced a coup d'etat against the elected government of Shehu Shagari, he lambasted the civilian administration. 'You are all living witnesses to the grave economic predicament and uncertainty which an inept and corrupt leadership has imposed on our beloved nation,' General Abacha said then. 'Our economy has been hopelessly mismanaged. We have become a debtor and beggar nation.'

Since then, the situation has worsened dramatically under a military government in which General Abacha held the number-two position.

During that time massive budget deficits and political instability have driven down the value of the currency, the naira, from about pounds 1 to less than two pence.

News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
tv

New UK station Russia Today gives a very bizarre view of Britain

Voices
Left: An illustration of the original Jim Crowe, played by TD Rice Right: A Couple dressed as Ray and Janay Rice
voices

By performing as African Americans or Indians, white people get to play act a kind of 'imaginary liberation', writes Michael Mark Cohen

News
John Moore inspired this Coca Cola Christmas advert
people

News
people

Top Gear presenter is no stranger to foot-in-mouth controversy

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Jamie Oliver’s version of Jollof rice led thousands of people to post angry comments on his website
food + drink
Arts and Entertainment
Vividly drawn: Timothy Spall in Mike Leigh’s ‘Mr Turner’
film

Review: Mike Leigh's biopic is a rambling, rich character study

Arts and Entertainment
glastonbury
Arts and Entertainment
Shelley Duvall stars in Stanley Kubrick's The Shining
film
Arts and Entertainment
Shock of the news: Jake Gyllenhaal in ‘Nightcrawler’
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

English Teacher Thetford Secondary

£110 - £150 per day: Randstad Education Cambridge: An Academy based in Thetfor...

Secondary Teacher Great Yarmouth

£115 - £140 per day: Randstad Education Cambridge: Randstad are currently work...

Teaching Assistant to work with Autistic students

£60 - £65 per day: Randstad Education Leicester: Randstad Education Leicester ...

Special Needs Learning Support Assistant

£60 - £65 per day: Randstad Education Leicester: Randstad Education Leicester ...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes