The collapse of world oil prices and the sharp decline in petroleum output, the latter resulting from a lowering of Nigeria’s OPEC quota in the early 1980s, brought to the forefront the precarious nature of the country’s economic and financial positions. Rising and ill-directed government spending during the 1970s, neglect of the agricultural sector, and inward-looking industrial policies left Nigeria vulnerable to profound changes in the external environment in the following decade. Thus, the dramatic fall in oil export revenues entailed a sharp deterioration in the country’s public finances and balance of payments. This led to recession and economic deterioration as manifested by fiscal crisis, foreign exchange shortage, balance of payments and debt crisis, high rate of unemployment, negative economic growth, to mention a few. Indeed, beginning from 1982, and through 1984, the country had become saddled with negative trends in economic growth as indicated by the decline in the gross domestic product (GDP) .

To reverse the worsening economic fortunes in terms of declining growth, increasing unemployment, galloping inflation, high incidence of poverty, worsening balance of payment conditions, debilitating debt burden and increasing unsustainable fiscal deficits, among others, government embarked on austerity measures in 1982. Arising from the minimal impacts of these measures, an extensive “Structural Adjustment ” program was put in place in 1986 with emphasis on expenditure reducing and expenditure switching policies as well as using the private sector as the engine of growth of the economy via commercialisation and privatisation of government-owned enterprises. Though some benefits were achieved at the initial stage, such benefits could not trickle down to the poor. Rather, the incidence of poverty keeps on increasing. As such, resistance came up from many stakeholders, particularly the civil society, the labour unions and the organised private sector. Even the economic reform programs of the present democratic government were not spared from this resistance. In fact, it is increasingly becoming difficult to implement any credible economic reform programs given people’s experiences with the previous ones. The inability to achieve the goals of these reform programmes have been linked to several factors. Apart from the top down approach to initiating and implementing these programs, political and ethnic instability has been adduced as important factors. Nigeria, for instance, has been ruled by the military for 25 of its 42 years as an independent nation. The origin of political instability in Nigeria has been the inability to forge a national entity that transcends ethnic, regional, religious and economic interests. These diverging interests led to scores of political coups and counter coups. The principal ethnic groups in Nigeria are the Hausa in the north, the Yoruba in the west, and the Ibo in the east, and the principal religious groups are the Muslims in the north and the Christians in the south.