The Successes and Failures of Economic Reform in Nigeria’s Post-Military Political Settlement

Abstract

ABSTRACT There are limitations in the explanatory power of prevailing theories on the political economy of Africa’s growth without industrialization that emphasize the resource-curse, ethnicity, neopatrimonialism, and the developmental state. This article uses a political settlements approach to explain the institutional underpinnings of Nigeria’s economic transition. It shows how external constraints on ruling elites interact with the distribution of power and institutions to stimulate episodic reforms in an ‘intermediate’ Nigerian state. Rather than a ‘developmental’ state presiding over industrial upgrading or a ‘predatory’ state operating solely on neopatrimonial basis, this intermediate state presides over selective reforms and bursts of economic growth and diversification. Thus, specific constraints in Nigeria’s post-military political settlement from 1999 generated the initial impetus for successful telecoms liberalization, while inhibiting growth in the oil sector. This article contributes to advancing the political settlements framework in applying it to resource-rich countries, by outlining the four dimensions of the distribution of power and the constraints for institutional persistence or change, and their varying economic implications. It also reclaims the concept of ‘elite bargains’ as a defining feature of the horizontal distribution of power and demonstrates its centrality to the durability or fragility of institutions, especially at critical junctures of resource booms and busts.