Structural Adjustment Programme (SAP) and Its Role in Addressing The Problem of Nigeria’s Economic Crisis


The Nigerian economy has been undergoing economic crisis for some decade now. The symptoms of the crisis can best be understood by looking at the four key aspects of the economy such as the level of employment; the stability or instability of prices; external equilibrium (balance of payment position); growth and development of the economy over time.

All the above indicators show that the Nigerian economy is not in very good shape. Especially under the various military regimes with particular reference to General Sanni Abacha’s regime. The question that readily comes to mind is what the causes of the crisis are in the Nigerian economy for such a long period of time.


The economic crisis in this country became the focus of successive regime since Murtala, Obasanjo regime. The civilian administration under Alh – Aliyu Shehu Shagari introduced the economic stabilization measures in 1982. General Muhammed Buhari’s administration introduced the war against indiscipline.

Despite all the various policies introduced by governments to revamp the economy, the economy remained depressed by 1985 as foreign exchange earnings continued its downward trend leading to a worsening of the deficit in the external debt burden, devaluation of naira, serious supply shortage and gross underutilization of industrial capacity and misallocation of resources (Ochojele, cited in Bawa 1990:4). This led to the ignorant debate on the international monetary fund (IMF) loan by the General Ibrahim Badamasi Babangidas intellectuals on whether or not Nigeria should accept the loan.

To solve the problem, the government of General Ibrahim Babangida introduced an economic recovery programme supported by IMF and World Bank.

The central philosophy of SAP is that government intervention in the economy is minimal to economic growth and that a market force (demand and supply) should be allowed to operate freely to determine resource allocation.


Objectives of the SAP in Nigeria

The broad objective of SAP in Nigeria is to alter and restructure the pattern of production and consumption of the economy and also to eliminate price distortions and heavy reliance on oil and imports. However, the specific objectives are:

  1. To restructure and diversify the productive base of the economy in order to reduce dependence on the petroleum sector and on imports.

  2. To achieve fiscal and balance of payment viability.

  3. To lay the basis for a sustainable and non – inflationary growth and

  4. To lessen the dominance of unproductive investment in the public sector and improve the growth potential the private sector.

Strategies of SAP in Nigeria

The above objectives were supposed to be achieved through the following objectives:

  1. The adoption of a realistic exchange rate for the naira through the foreign exchange market.

  2. Reduction of complex administrative controls in the process of adopting appropriate pricing policy.

  3. Further rationalization and restructuring of public sector expenditures and customs tariffs.

Assessment of SAP in Nigeria

This section attempts an assessment of SAP by analyzing how far the set objectives of the programme have been achieved using the strategies of the programme.

  1. Diversification of the productive base of the economy.

It is evident that the contribution of the agricultural sector to the national economy has increased moderately since the introduction of SAP but it is also a known fact that developments in the Nigerian economy have continued to depend on the international market for crude petroleum. This objective is far from raised despite the current democratic government’s commitment towards revamping the agricultural sector, especially the rice and cassava project.

  1. Achieving a balance of payment viability.

Deficit budgeting has become seriously uncontrollable under the various military regimes for example between 1985 and 1991, budget deficit rose from 2.4% to 71% of GDP. According to the CBN report, the 1992 budget had projected a surplus of appropriately #2billion. But the same budget was already in deficit by September 1992. the fiscal and financial indiscipline of the federal government is expressed in some of its since 1986 the good intentioned policies like mass mobilization for social justice and economic recovery (MAMSER), Directorates of food, roads and rural infrastructures (DFRRI), national directorate of employment (NDE) because of avenues for personal enrichment. This has had a lot of implications on deficit budgeting since the inception of SAP.

  1. Laying the basis for a sustainable non – inflationary or minimal inflationary growth.

The problem of inflation since the inception of SAP is indeed a real one. It is needless to mention here that the level of inflation between 1986 to may 1999 adversary affected economic recovery efforts. There are essentially two reasons for the persistence of inflation in recent years.

  1. The increase in the cost of production (especially interest rate, transport etc). According to the CBN (1988), the expansionary monetary and fiscal policies pursued during the period also affected the price of most commodities.

  2. The other reason for the upward trend in the price level is the depreciation of the naira exchange rate (Agua, 1990).

iv. Attempts at reducing the participation of the public sector and making it efficient.

This is conducted through privatization and commercialization of public enterprises, however, increasing the strength of the private sector to enable it to provide economic leadership continue to elude the economy. Though under the current democratic dispensation, the privatization exercise has recorded some success story, especially in the telecommunication sector.

Why SAP has recorded minimal success story in Nigeria

  1. Lack of political will

  2. The high cost of agricultural inputs

  3. A low rate of capacity utilization in the manufacturing sector.

  4. Poor management of foreign exchange


Source of data collection

Source of data collection included secondary source, the secondary source included library research, by way of sourcing for materials through textbooks from the above data the objectives of SAP are far from being reached.



To achieve the broad objective of SAP incentives should be given to farmers to encourage them. The educational sector should be given strict attention in areas of facilities and structures, the teaching profession should be made attractive given that teachers are paid handsomely. Local producers should be given incentives to encourage them. The checks and balance mechanism should be strengthened and put into full force to ensure projects are executed up to standard focus should be laid on exportable goods.


From study so far the objectives of SAP are far from been realized. Nigeria has been a mixed economy, government should create a conducive environment with infrastructural facilities for the private sector to strive. Emphases should be laid on agricultural exportable goods for a balance of payment equilibrium.


  • Abdullahi H. (MRS.) (2008). “History and Structure of the Nigerian Economy” Publish by Department of Economics Usman Danfodiyo University, Sokoto
  • Tadaro M.P and S.C. Smith (2009) Economic Development
  • Agba, V. A (1994) Principles of Macroeconomics
  • UN Millennium Project (2005). A practical plan to Achieve the Millennium Development Goals
  • UNDP, (2010). Human Development Report in Nigeria 2008-2009, Achieving
  • Growth with Equity United Nations Development Programme
  • UNDP, (1999). Human development report, Nigeria.
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