After a series of local government, state assembly and presidential elections in Nigeria, the People's Democratic Party, led by General Olusegun Obasanjo, emerged as the overall victor. The following article examines the challenges that lie ahead for a new civilian government.

By Anthoni van Nieuwkerk

September 1999

To stay in power and avoid a return of the military, Olusegun Obasanjo and his People's Democratic Party (PDP) government must simultaneously and immediately address at least two pressing sets of issues: political stability and economic recovery, failing which another coup might be in the making.

Political Stability

Ethnic cleavages

It is clear from the February 1999 presidential election results that Nigeria remains burdened by ethnic cleavages. The North-South divide, which reflects tense relations between the Hausa-Fulani, Ibos and Yorubas, is very much alive. President Obasanjo will have to overcome the perception that his close ties to the North and the military mean he will not work in the interests of the entire country. The fact that he was not supported by his own people (and in the end did not win one state in the Yoruba stronghold of the Southwest) probably served to strengthen his acceptability to the northern cabal. Niger Delta

The Ijaw, Ogoni and other people living in the oil-rich Niger Delta are up in arms against misrule from Abuja and the oil companies from whom they demand a bigger share of the oil wealth. If unresolved, this brewing conflict will escalate, tying up the state's repressive apparatus and damaging its newly found credibility.

One way of providing greater resources to the Delta is to significantly change the federal revenue allocation formula so that more money goes directly to the oil-producing communities. To this end, the Presidential Committee on Development Options for the Niger Delta recently earmarked US$175 million for the development of this region and the transport and communications ministries allocated US$350 million and US$230 million respectively for a similar purpose. This, however, is unlikely to raise living standards in the Delta.

Democratic institutions of governance

Obasanjo will have to engage the small but influential pro-democracy movement regarding issues of governance. In the movement's view, no democracy is possible unless and until the military-determined civilian government agrees to a negotiation process involving all sectors of society and aimed at (re)designing most, if not all, institutions and processes of governance.

And most Nigerians will agree (some only in private) that this is a key issue on which the political future of Nigeria will turn. It is scarcely imaginable that a military decree, and not a constitution, determined the election process.

In fact, the constitutional situation in Nigeria is rather confusing: it appears the military is attempting to adopt a constitutional document, which contains elements of both the 1979 and the 1995 draft constitutions. The expectation of democratic rule in a constitutional setting is a fair one, and the Obasanjo government will not be able to ignore the pro-democracy movement's call for a National Sovereign Conference.

Demilitarisation of society

Most non-military Nigerians will agree that the army should stay out of government, oil and politics and rather focus on ways to professionalise. Yet, when pressed, very few - whether representatives of political parties, the pro-democracy movement, or the military itself - are able to suggest how this should be accomplished.

This is perhaps understandable if one keeps in mind that corruption in the military has created and sustained systemic patterns of accumulation, which has led to levels of enrichment that boggle the mind. A group of generals, for example, donated US$50 million to the PDP election campaign.

To complicate this situation, the military and the protection of its corporate interests have been aided and abetted by a parasitic and dependent political class. So far very little evidence exists to suggest that the new government will behave differently from previous ruling elites.

Economic Recovery

The World Bank classifies Nigeria today as one of the world's 20 poorest countries. GDP per capita has fallen from $1,160 in 1980 to $250 in 1997; it is estimated that one-third of the country's 100 million people are poor and 10% extremely poor. The proportion of the population with access to safe drinking water, electricity and modern health care facilities has declined from an average of 60% in the early 1980s to an average of 40% in 1997.

Enrolment in schools has also declined considerably due to the reintroduction of fees. The devaluation of the naira has weakened the purchasing power of workers and most ordinary people now spend over 70% of their total earnings on food and other basic needs.

The suffering of the population has been compounded in the 1990s by the chronic fuel shortages in Nigeria, which have necessitated the massive importation of petroleum products. The late head of state, General Sani Abacha, under whom the fuel crisis went out of control, had deliberately neglected the four state-run oil refineries to pave the way for him and his cronies to import petrol.

The industrial and manufacturing sectors, which rely heavily on imported machinery and raw materials, have also been in recession. Several manufacturing operations have closed down and those that have managed to remin in business produce at capacities as low as 20-30%.

Without addressing the problems of unemployment, food insecurity and low wages, as well as reform of the petroleum sector, democracy will not take root.

IMF 'Rescue' Plan

Western governments are urging Obasanjo to endorse an agreement with the International Monetary Fund, reached by the outgoing military junta. According to analysts in Europe and America, both political stability and economic recovery rest on this plan. Without this agreement, no rescheduling of Nigeria's external debt will be possible, and donors will not offer fresh loans.

To meet the terms of the IMF agreement, the Nigerian government will need to press ahead with the privatisation of state-owned enterprises, including the oil refineries. It will also have to improve the operations of the Nigerian National Petroleum Corporation (NNPC) and the central bank, and reduce the arrears on the external debt.

Members of the Paris Club of creditors account for 70% of Nigeria's total foreign debt of about U$35 billion. This may mean having to implement Alliance for Democracy (AD) presidential candidate Ola Falae's proposal to sell off part of the government stake in the oil sector - hitherto inconceivable for any Nigerian government, which has used the industry as a source of patronage.


The privatisation programme - a stop-and-start affair under previous military regimes - is at once very ambitious and extremely controversial.

Under Abubakar's programme, the government plans to sell 40% of its equity in the enterprises to 'strategic investors' - usually understood to mean foreign companies - which will also gain management control of the concerns. Another 20% will go to Nigerian investors through public share offers, leaving the government with a 40% stake.

The biggest companies to go on the auction block are the National Electric Power Authority (NEPA) and Nigerian Telecommunications (NITEL), respectively Nigeria's second and third largest public corporations after the giant NNPC. Also on offer are the National Fertiliser Company, hotels, steel rolling mills, paper companies, vehicle assembly firms, a cement company and a sugar plant. The government has said that it also plans to privatise the country's four oil refineries owned by the NNPC, whose dismal performance has caused perennial fuel shortages in this oil-producing country.

Many in Nigeria, particularly trade unionists and nationalistic politicians, are concerned over the potentially negative social consequences of privatisation, including job losses and increased charges for essential services. The response of foreign investors also remains to be seen.

Analysts do not expect the government to be inundated with applications to buy up 40% equity stakes in the companies earmarked for privatisation. Outside the oil sector, foreign investors have shown limited interest in Nigeria. Given the levels of corruption, inefficiency, decaying infrastructure and a generally difficult business environment, this is not surprising.


Nigeria faces two possible outcomes. It could become a country with an enclave economy, in which foreign investors run profitable oil and gas businesses, rather like Angola. However, the proceeds will be inequitably distributed, siphoned off by a civilian elite in cahoots with the military.

Or it could slowly recover from 25 years of mismanagement and corruption, during which $280 billion in oil revenues have been squandered, and instead become, as the UK trade minister recently remarked, '....a powerful, industralised nation attracting back its educated and entrepreneurial middle class'. - Third World Network Features

About the writer: Anthoni van Nieuwkerk is research director at the Foundation for Global Dialogue (FGD). This article is an extract of a report he prepared for the Institute for Futures Research based at the University of Stellenbosch.