IBB Defends $12.4bn Gulf Oil Windfall Mismanagement Despite Okigbo Report

“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 governments and local governments were getting… And if all we could spend between 1988 and 1994 was $12.4bn, that is very good,” he stated.

In excerpts from his autobiography, ‘A Journey of Service,’ launched on February 20, 2025, Babangida argued that while the “meteoric” revenue from crude oil under then-Head of State, Gen. Yakubu Gowon, funded massive infrastructure expansions, policies such as the Indigenisation Decree of 1972 inadvertently “provided windfall gains” for a handful of influential individuals at the expense of non-oil sectors.

Babangida’s 400-page account said exuberant oil wealth shaped government spending, fuelled public corruption and generated economic twists that still haunt the country today.

In chapter seven, titled ‘Reforming the Economy: Privatisation, IMF, SAP, and Other Matters,’ he argued that “the heady days of our nation’s oil boom” were overshadowed by “accusations of corruption”.

As the 1970s waned, he writes, corruption touched even high-ranking figures, fuelling dissatisfaction among junior military officers.

He suggested that this dovetailed with the government’s sudden change of date for returning Nigeria to civilian rule – ultimately spurring another coup.

According to Babangida, the trend persisted into the Second Republic, which he denounced as “a period of lavish spending, falling real production outside the oil sector and deepening import dependency.”

Instead of using oil gains to diversify the economy, “funds were borrowed heavily from outside and expended, not substantially on profitable ventures, but more on conspicuous consumption and prestigious projects, or sometimes just siphoned out of the country,” he narrated.

He noted, “The profligacy of the Second Republic is now common knowledge. Outside the oil sector, real production was falling, and pre-occupation with trading and the pursuit of easy surplus rising import dependency intensified, and domestic food security eroded as the internal terms of trade turned against agriculture and rural activities.

“Exportable commodities outside petroleum products became progressively undermined. Domestic consumption patterns became anchored on foreign-acquired tastes, and the narrowing domestic investment was erected on a consumer-oriented import substitution strategy that depended not on domestic natural resources but on imported raw materials.

“Public sector expenditures expanded rapidly without adequate attention to the sustainability of the government revenue base.”

In the book, the former head of state detailed how, by the mid-1980s, the situation had deteriorated to an outright chronic balance of payment crisis, an over-valued naira exchange rate and decaying agriculture.

It read, “By the mid-1980s, that imagined gloomy picture was compounded by the chronic balance of payment crisis and an over-valued naira exchange rate by an inequitable system of import licensing, rapidly rising food import bills, failure to pay wholly or promptly public service wages and salaries despite persistent fiscal deficits, the debilitating and unproductive culture of consumption, low productivity, import-dependency, production process, decaying agriculture and bloated public service personnel.

“This perilous state of the economy was not unrelated to its historically based dependent, undeveloped, unintegrated and asymmetrical urban-rural character.”

By his account, previous administrations “lacked the political will, courage, and vision” to address Nigeria’s deep-seated underdevelopment, effectively leaving his government to grapple with a “perilous state of the economy.”

Part of the alleged mismanagement stemmed from the government’s dominance of “commanding heights” industries, which he called “pipelines of waste and corruption.”

He maintained that previous administrations had used the oil boom proceeds to establish massive state-owned enterprises—from refineries to newsprint factories—and that many of these became perennial money losers under political interference rather than commercial discipline.

This, he noted, led to his declaration of a 15-month National Economic Emergency on October 1, 1985, hoping to restructure the economy along more productive and self-reliant lines.

When the option of an International Monetary Fund loan sparked public uproar, Babangida said his government opted for a home-grown Structural Adjustment Programme instead.

The plan, he explained, aimed to “correct the naira’s embedded overvaluation” and shift focus toward agriculture, local raw materials, and privatising or commercialising failing government enterprises.

Despite controversies over the SAP’s social impact, Babangida remained unapologetic about confronting what he branded as “the legacy of easy oil money without accountability.”

He further argued that reducing subsidies, adjusting exchange rates and reining in public spending were the only ways to tackle the structural imbalances forged by decades of “import-substitution strategy that depended not on domestic natural resources but on imported raw materials.”

Babangida also addressed criticisms of his own government’s alleged extra-budgetary spending of oil revenues.

In a 1995 interview with TELL Magazine, appended in the book, the former military president resolutely defended his government’s creation and management of a Dedicated Account through which, according to the Okigbo Panel, roughly $12.4bn in oil windfall revenues were handled during his tenure.

His remarks followed the 1995 budget announcement by then-Head of State, General Sani Abacha, which abolished the Dedicated Account.

The Okigbo Panel report revealed that $12.4bn passed through the account, with $12.2bn allegedly spent on non-regenerative projects deemed non-beneficial to the Nigerian economy.

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, $4bn had been sunk in. Having invested so much in it, I thought it would be unfair to allow the whole thing to waste away. So, I invested money to keep the outfit going, and the records show how much was spent.

“You go back to history, about 18 years back, when we went into many ventures with some countries. Until today, Nigeria has not gained anything from all those investments in the 1970s. I’m talking about regenerative investments. 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.

“In determining priorities, the government decides what its priority is. It may not be the same as what he believes should be the priority. It may not also be the same as what other people in the society consider to be priority. If you recall, we had many problems with Abuja, and Ajaokuta, about whatever you wanted to say.”

Babangida also drew parallels to previous administrations, contending that it was normal practice to dedicate foreign exchange earnings directly to major national projects, bypassing the federation account.

He noted that the economic choices he made during his eight years in office, though painful, were necessary to restore “productive capacity.”