Former military president General Ibrahim Babangida has defended his administration’s handling of the $12.4 billion Gulf War oil windfall, saying the funds were used for critical national projects. He argued that Nigeria’s economic struggles stemmed from years of “profligacy” and “conspicuous consumption” rather than mismanagement of oil revenue during his tenure.
Babangida made these claims in his autobiography, A Journey of Service, launched on February 20, 2025. In the book, he reflected on Nigeria’s oil wealth and economic policies, asserting that his government made tough decisions to restructure the economy despite allegations of corruption and financial mismanagement.
“What I Did Was Not Unusual”
Addressing long-standing accusations that his government mismanaged the Gulf War windfall, Babangida justified his administration’s spending.
“What I have done is not unusual in this country. Somebody did it before me, but I won’t mention names,” he stated. “We did undertake the construction of various ports and other projects, including bridges. That money could have gone into the Federation Account, yes, but whatever foreign exchange we earned, we monetised it, and those we monetised were what the state and local governments were getting.”
He further defended the expenditure, saying, “If all we could spend between 1988 and 1994 was $12.4 billion, that is very good.”
Economic Challenges and Structural Imbalances
In the book’s seventh chapter, Reforming the Economy: Privatisation, IMF, SAP, and Other Matters, Babangida traced Nigeria’s economic problems to previous administrations. He criticized the Indigenisation Decree of 1972, which he claimed enriched a few individuals while leaving non-oil sectors underdeveloped.
He also accused the Second Republic government of reckless spending and deepening Nigeria’s import dependency. “The profligacy of the Second Republic is now common knowledge,” he wrote. “Outside the oil sector, real production was falling, while trading and the pursuit of easy surplus were rising. Import dependency intensified, and domestic food security eroded.”
According to him, by the mid-1980s, Nigeria was suffering from a severe balance of payment crisis, an overvalued naira, and a decaying agricultural sector. “Public sector expenditures expanded rapidly without adequate attention to the sustainability of the government revenue base,” he added.
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“The Economy Was in Crisis”
Babangida maintained that when he took power in 1985, Nigeria’s economy was in a dire state. He cited factors such as a bloated public service, rising food import bills, and a culture of excessive consumption as key problems.
“This perilous state of the economy was not unrelated to its historically based dependent, undeveloped, unintegrated, and asymmetrical urban-rural character,” he wrote.
In response, Babangida declared a 15-month National Economic Emergency on October 1, 1985, aimed at restructuring the economy. He rejected an International Monetary Fund (IMF) loan due to public opposition and instead introduced the Structural Adjustment Programme (SAP) to devalue the naira, reduce subsidies, and privatise failing government enterprises.
“Reducing subsidies, adjusting exchange rates, and reining in public spending were the only ways to tackle the structural imbalances forged by decades of easy oil money without accountability,” he asserted.
Addressing the Okigbo Report
The Okigbo Panel, which investigated Nigeria’s oil windfall earnings, found that $12.4 billion passed through a special Dedicated Account under Babangida’s government. The report alleged that $12.2 billion was spent on projects that were not beneficial to the economy.
However, Babangida dismissed claims of corruption. In a 1995 interview with TELL Magazine, which he included in his book, he stated, “People believed that we shared some kind of booty. I didn’t start Ajaokuta, for example, but by the time I took over, $4 billion had been sunk in. Having invested so much in it, I thought it would be unfair to allow the whole thing to waste away.”
He also justified his government’s spending priorities. “Once you run a government, you don’t put money in the bank. Pius (Okigbo), I’m happy, did not say somebody stole that money,” he said, referring to the chairman of the Okigbo Panel.
“It Was Normal Practice”
Babangida argued that using oil earnings for major projects outside the Federation Account was not unique to his administration. “In determining priorities, the government decides what its priority is,” he said. “It may not be the same as what he (Okigbo) believes should be the priority. It may not also be the same as what other people in the society consider to be priority.”
He maintained that past governments had also used oil proceeds for large state-owned enterprises, which later became inefficient and riddled with corruption. This, he said, justified his push for privatisation.
A Controversial Legacy
Despite his explanations, Babangida’s economic policies, particularly SAP, remain controversial. While he insisted that his decisions were necessary to restore Nigeria’s productive capacity, many Nigerians still blame his government for worsening inflation and economic hardship.
With the release of A Journey of Service, Babangida has reignited debates over his leadership and the handling of Nigeria’s oil wealth. His justifications may offer insights into his administration’s decisions, but they are unlikely to erase the lingering controversies surrounding the Gulf War oil windfall.