The World Bank and International Monetary Fund (IMF) are considered two of the popular and most influential global financial lending institutions globally. They are the primary sources of international loans and grants for Nigeria. The two institutions often use the loan as a leverage to prescribe strict policies and dictate major economic, political and social transformation in the country. The World Bank is the leading international economic growth institution in the world. In the year 2007, the World Bank issued over $24 billion of which approximately $5 billion were sent to Africa (Williamson, 2008). The World Bank and IMF are both established and directed by developed and wealthy countries like the U S, who are the key stockholder in these two institutions. In the last decades, developing nations such as Nigeria have turned to the World Bank and IMF more and more for financial assistance. Nigeria is the Africa’s most populated state and the largest oil producer, however, the country has remained one of the poorest economies. The country has plenty of oil that could earn them foreign exchange revenue to enhance the development of their domestic infrastructure, but the government policy deliberately allowed domestic oil refining capacity to get ruined. President Jonathan's 'Transformation Agenda' for deregulation " was promising and IMF-supported it through availing financial aid (Akinlo, 2004). It has however been argued that if IMF and World Bank cared about the national Nigerian economy and health, they would have offered support to rebuild and expand the country’s oil processing industry that has long been left to rot. This paper is going to look at the impact of the World Bank and the IMF lending to Nigeria’s social, economic, or governmental advancement, the contribution of a healthy population grow Nigeria’s economy and lastly government’s use of grants and donations from developed countries to improve its health care system.
World Bank and the IMF impact on social, economic, or political development of Nigeria
According to Williamson (2008), the World Bank and IMF have been offering financial aid to Nigeria, but these aids are often attached with strict conditions giving them great control over Nigerian government. The country is subjected to about 67 compliance requirements for every World Bank loan. African nations, Nigeria in particular, have to play by these requirements. The World Bank and IMF specifically required the Nigerian government to put in place and oversee “structural adjustment programs” (SAP) together with other conditions that were aimed at cutting back government spending on basic services. For instance, Nigerian government has been required to reduce trade barriers and at the same time open their markets for global economies. The country has further been subjected to a massive debt crisis where the country is left dependent than ever on new loans from these international financial bodies (Woods, 2006).
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Socially, it is clear that World Bank and IMF policies have reduced the average incomes and the country’s poverty has increased. According to Dalgaard, Hansen & Tarp, (2004), there has been a forced cutback spending particularly on health care in addition to the privatization of basic services which has left the majority of the Nigerians highly vulnerable to HIV and AIDS in addition to other poverty-related diseases (Hopkins, 2000). Rather than benefiting the ordinary Nigerians as claimed by IMF, the removal of subsidies has increasingly impoverished the 90 % people living on an expenditure of not more than $ 2 in a day, as confirmed by Mallam Sanusi Lamido Sanusi, the Nigerian Central Bank governor. Further, about 40 million Nigerians are currently jobless and unable to significantly contribute to the growth of the economy of the country. World Bank and IMF have been influencing the political affairs of Nigeria as one of the conditions to access the funds. For instance, the country has been directed by these financial donors to eliminate corruption from the government to be funded (Woods, 2006).
Substantive ways in which a healthy population strengthens the economy of Nigeria
Econometrics evidence has established a clear two-way linkage between a healthy population and economic growth of Nigeria. It has been established that an improvement in the health of the country enhances labor productivity and this result into massive gains in the economic growth. Studies have pointed out that the health services coverage in Nigeria has continued to be very poor particularly in most of the rural areas and some parts of the cities’ slums and this have affected the growth of these regions negatively (Woods, 2006). Clearly, there exists a two-way causation between the health status of Nigerians and economic growth where the overall impact of health as measured by life expectancy is positive and highly significant in the growth of the economy. Life expectancy within the country’s specification is considered an indication that increasing levels of per capita income can easily be attained through improving the country’s stock of healthy human capital. A one percent change in life expectancy rate in the country was associated with increasing economic growth level of 0.876 percent. Studies have shown a promising relationship between the per-capita income and the citizen’s life expectancy (Hopkins, 2000).
With a healthy population, it implies that the workforce will be available and ready to participate actively towards economic development since the driving force of any economy is the workforce, and this strengthens the economy. In addition to this, the healthy population in Nigeria has created a ready market for both goods and services provided in the country. With a ready market, the producers will increase their production to meet the high demand in the market which contributes towards the economic growth of Nigeria. Similarly, a healthy population would be engaged in day to day activities in the country, for instance, a healthy population working in the oil field generating income which will then be taxed by the government and the revenues collected is channeled into various public development services (Dalgaard, Hansen & Tarp, 2004).
Government’s Use of Foreign Aid to Improve Health Care System.
Foreign aid is the financial assistance that is provided to the developing countries such as Nigeria with the aim of supporting their socioeconomic development. Studies have pointed out that the financial support extended to the West African country has lacked consistency where it had declined before the re-establishment of democratic governance in the year 1999. Foreign aid from 1999 to 2007 was approximated at US$ 2.335 and US$4.674 per capita, respectively (Hopkins, 2000). The development financial assistance to health care budget in Nigeria was approximated to N27.87 billion for example, in the year 2003.
Despite the fact that foreign assistance to the Nigerian health sector has been increasing especially the return to democratic government, it has been established to account for a small proportion of public health expenditures. The main challenge associated with Nigerian foreign healthcare aid is effective funds coordination and also tracking the donor resource flow. Numerous innovative public health techniques in Nigeria have been developed and adopted, and all have had a greater improvement in healthcare. The National Planning Commission is answerable for harmonizing the use of all financial assistance in Nigeria. The State Planning Commission and the State Ministry of Finance are also charged with directing the use of financial assistance towards health care system development. The leadership of Nigeria has successfully used the foreign aid to improve healthcare in the country in various ways. First, there are massive campaigns that have been carried out against malaria, AIDS, and TB. The country has also experienced an increasing scaling up of the safe childbirth and vaccine coverage such as near eradication of polio (Woods, 2006).
Conclusion
It has been established that Nigeria is rich with natural resources and natural beauty, however; there are various issues that are blocking the country from its socio-economic growth and development including poor health care systems and unemployment. Nigeria has been receiving funding aid from the World Bank and IMF to finance their infrastructural and healthcare development. However, from the above analysis, it is clear that this foreign aid has had both negative and positive consequences in the country.
References
Akinlo, A. E. (2004). Foreign direct investment and growth in Nigeria: An empirical investigation. Journal of Policy modeling , 26 (5), 627-639.
Dalgaard, C. J., Hansen, H., & Tarp, F. (2004). On the empirics of foreign aid and growth. The Economic Journal , 114 (496), F191-F216.
Hopkins, R. F. (2000). The political economy of foreign aid. Foreign aid and development: Lessons learned and directions for the future , 423-49.
Williamson, C. R. (2008). Foreign aid and human development: The impact of foreign aid to the health sector. Southern Economic Journal , 188-207.
Woods, N. (2006). The globalizers: The IMF, the World Bank, and their borrowers . Cornell University Press.
