Nigeria charts path of major reform. Government sees economic progress as essential to secure democracy

Nigeria is a giant struggling to break out of its political and economic bonds. The most populous black nation in the world, Nigeria accounts for perhaps one out of every four black Africans. It is a world-class oil producer and has even larger reserves of natural gas.

``Nigeria is arguably the most important player'' in black Africa, says a ranking United States official. But a senior World Bank strategist says that it is reeling from a drop in per capita income of more than half since the early 1980s. It also suffers from high unemployment.

Indeed, Nigeria is weighed down by $23 billion in external debt, an oil income slashed by almost 80 percent, and a history of economic and political mismanagement highlighted by six military coups since independence in 1960.

Olu Falae, chief civilian adviser to the current military government, says his government has accomplished a ``major refurbishment'' of the economic system. Western investors and creditors will find that ``old negative impressions'' of a corrupt, inefficient, bureaucratic Nigeria ``should be erased,'' he says.

Mr. Falae, who serves as de facto prime minister and civilian chief of staff for the government of President Ibrahim Babangida, has two key responsibilities. He oversees what one US official calls ``an incredibly ambitious'' economic structural adjustment plan, and he helps supervise Nigeria's five-year transition back to democracy.

Falae was in Washington and New York for 10 days earlier this month, seeking support for these major economic and political programs. Nigeria is taking very difficult steps to change its ways, he told the Monitor. But it needs help if the transformation is to succeed.

Economic success, he stresses, is directly linked to Nigeria's planned return to democracy by 1992. But unless the economic austerity program yields tangible results, the pressures may be too great for any civilian government to withstand. The democratic experiment may fail for a third time in Nigeria.

``Now is the time for the friends of Nigeria and those who see a great potential to come to our assistance, not by giving us grants, but by investing in our country and by giving us realistic debt relief,'' Falae says.

Implicit in his call for international support is a concern that Nigeria's spirit could be broken by another failure.

``If the people lose their dream and they become apathetic, it can take a quarter of a century to reawaken their enthusiasm and to believe tomorrow can be better than today. We believe tomorrow can be better and to me this is the greatest asset of the country.''

Falae is surprisingly frank about Nigeria's earlier failures. Unbridled spending and corruption led to the overthrow of Nigeria's last civilian government in 1983.

When the current military regime came to power in 1986, the economic system was ``screwed up - an economy tied hand and foot, unable to move or perform,'' the Yale-educated economist says. The problems became starkly clear when the bottom fell out of the international oil market.

``We used to produce 2.4 million barrels a day. We're now down to 1.3 [million]. We used to charge up to $40 a barrel; we're down to $10.... In 1981-82 we earned $24 billion from oil. This year we are lucky if we earn $5 billion'' from oil - and $6 billion total in exports.

Against those exports, he says, Nigeria must pay out $2.2 billion in repayment of debt built up in the oil-boom years. That leaves only $3.8 billion this year to meet the needs of Nigeria's 120 million people. In better years, Nigeria imported $18 billion to $20 billion of goods annually.

The Babangida government has enacted a structural adjustment program which US officials say ranks the nation among the leading reformers in Africa. The government has eliminated the once-pervasive requirement for import licenses that put a stranglehold on the economy. It abolished corrupt and inefficient state import offices.

The new reforms eliminated commodity price boards, which had set farm prices so low that production dropped for every export crop. An artificially high exchange rate was also cut by 75 percent.

Initial results, Falae says, are good. Agricultural production has risen across the board. Cotton is up 200 percent, for example. Manufacturing has grown. Nigeria also has a number of large export-earning projects under way or proposed for petrochemicals and natural gas. If these projects can be completed, Falae forecasts added annual export earnings of $15 billion to $20 billion.

But without new capital and help on debt repayment, Falae says, it's hard to buy raw materials and spare parts for industry or build new facilities. ``I don't know of any nation that has reduced its imports by 75 percent and still managed to carry on.''

International creditors agree Nigeria's reforms are all in the right direction, but some would like to see even more rigor.

One problem in gaining more international support, US specialists say, is that Nigeria has not accepted an International Monetary Fund restructuring program. Though the country has enacted many IMF-type reforms, officials ``don't want to appear to their public to have sold out, and they worry about the political turmoil additional austerity could generate.''

Without an agreed IMF program, other lenders are hesitant to provide debt relief. Falae met with IMF officials in the US to try to resolve some of these problems.