Okonjo-Iweala: Backbone of a rising economy

Written by Dimeari Von Kemedi

Every successful team is built around one great player- a Christiano Ronaldo, a Lionel Messi,  a Sunday Mba, etc. Nigeria’s Federal Executive Council no doubt is a team of prodigious talent. President Jonathan has assembled a lot of brain power in his administration.

Yet our Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala simply referred to as CME, stands out as a hyper star; beyond superlatives yet humble and could easily blend into the crowd at Wuse market in Abuja. Some champions are local, throwing their weight around, bullying the weak and vociferously proclaiming pre-eminence. CME does not belong in this category.

She is a genuine world heavy weight champion. Not literally, of course.  Her career highlights and trophy cabinet establish her as one of the three accomplished Africans of her generation and a leading citizen of the world. She was Vice President and Corporate Secretary of the World Bank and later Vice President and Managing Director, second in line, of the bank.

The honors she has received now say more about the awarding institutions than her as many are often left unmentioned in what would otherwise be an excessively lengthy citation.

The most recent have come from Forbes, Prospect Magazine and the University of Pennsylvania. Forbes Magazine has listed her, the second year running, among the 100 most powerful women in the world and Prospect Magazine has her in their 100 most important thinkers in the World this year.

University of Pennsylvania has now joined Brown University, Trinity College University of Dublin, Colby College, and Northern Caribbean University among others, in awarding her an Honorary Doctorate. United States of America Vice President Joe Biden delivered the address at what was Penn’s 257th commencement. On Penn’s website Okonjo-Iweala is credited with spearheading initiatives to assist low-income countries during the global food crisis as well as the global financial crisis.

She is also applauded for chairing the raising of $49.3 billion in grants and low interest credit for the world’s poorest nations.

Penn describes her as ‘a renowned development economist and economic reformer’. She is recognized for bringing her talent and character into managing ‘the finances of Africa’s most populous nation and one of the fastest growing economies’.

This definitely is an extraordinary woman whose force of presence forced the World Bank into elections for the first time since it was created in 1944. Though she was unsuccessful mainly as a result of the US Government’s stranglehold on the institution, New York Times, Financial Times, Economist and former World Bank managers, were among the leading lights who endorsed her for the position of World Bank President.  There was a global consensus that she was the best candidate in the race.

Nigeria is fortunate to have the best woman for the job of Finance Minister. Yet it has been very challenging. While the economy has continued to grow at consistently over 6% per annum and foreign direct investment has recorded the highest flows in the history of Nigeria the political and security environment has not been the most ideal.

She has had to function within an incredibly bitter political environment where political point scoring trumps national pride and interest. So as we march inexorably towards inclusive development, many have been programmed to live in a different Nigeria where it is believed we are not making economic progress.

According to the recent mid term report of the Goodluck Jonathan administration the Nigerian economy faces several challenges, which the transformation agenda is designed to address.

These are well known and include insufficient jobs and poverty, dependency on oil exports, High food imports/food insecurity, housing deficit, poor state of infrastructure, high inflation, falling reserves, high recurrent expenditure, and rising domestic debts. And of course the elephant in the room is insecurity in the Northeast and the enormous amount of time and resources allocated to addressing this challenge.

A review of President Jonathan’s mid-term report will show that the administration understands where it is coming from and where it is going. Under the leadership of President Goodluck Jonathan and Okonjo-Iweala’s firm and expert steer, our key economic indicators have remained stable or risen.

Our GDP according to the IMF is one of the fastest growing in the world at 7.2%, exchange rate has remained stable at between N155 and N160 to the dollar, inflation has slowed to 9.1% from 12.4% in 2011, and our external reserves have risen to $48.4 billion as of May 2013.

Excess crude account rose to $9 billion at the end of 2012. It now stands at $6 billion as it has helped to meet income shortfall as a result of difference between projected and actual production.

Under Okonjo-Iweala’s steering the Nigeria Sovereign Investment Authority has finally been established at great political cost to President Jonathan who would not be facing some of the political challenges he confronts today if he had simply agreed to carry on sharing excess crude funds and windfalls without a care to the future.

Until recently Nigeria was the only major oil producing country without a Sovereign Wealth Fund. The establishment of the Nigeria Sovereign Investment Authority finally commits Nigeria to responsible management of a portion of our oil funds to investments as has become the global practice.

According to the Sovereign Wealth Fund Institute there are three trillion and one hundred and forty seven billion, nine hundred million US Dollars ($3,147.9t) in oil and gas related funds invested in Sovereign Wealth Funds from over twenty- five countries some of which have more than one fund.

Nigeria, due largely to CME’s efforts and the firm commitment of President Jonathan has now joined this club of responsible countries as investment activities commence this quarter. The responsible and sustainable management of our economy is also reflected in reduction of the cost of governance, an issue that is of tremendous concern to most Nigerians.

Recurrent expenditure has dropped from 74.4% in 2011 to 68.7% in 2013. Government borrowing has also fallen from N862 billion in 2011 to N588 billion in 2013. Our new national debt strategy, which seeks to reduce costly domestic borrowing, will also ensure that banks have no option but to look to extending credit to the real sector as opportunities in government bonds become limited.

This means more jobs and more opportunities in the private sector. Despite concern in some quarters about our national debt, our debt to GDP ratio is actually low at 21%. Compare with South Africa at 42.7%, Sub Saharan Africa at 34.2%, United States at 106% and Japan at 225%.

Our understandable caution may actually cost us an opportunity to develop our infrastructure and economy at a faster rate and bring more people into prosperity. Further signs of prosperity are reflected in reduced imports and increase in our non-oil exports to 31% in 2012 from a mere 9% in 2008. This is nothing but a tectonic shift in our national economy.

We are moving towards a post oil economy. And we don’t seem to even notice it. One area that we all agree Nigeria has to improve on is transparency and the fight against corruption. Much of the focus has been on the anti-corruption agencies such as the Economic and Financial Crimes Commission (EFCC) and the Independent and Corrupt Practices Commission (ICPC), and of course the performance of the judiciary.

Yet a quiet revolution is being led by the Ministry of Finance in limiting the opportunities for corruption by enhancing transparency and making changes in systems and processes.

The key areas corruption has thrived in the past have been in the administration of fuel subsidy, pensions, salaries and general public accounts.

A third area of finance management reform is the recently introduced Treasury Single Window Account, which is a unified structure of government bank accounts that gives a consolidated view of government cash position across MDAs.

With this system in place cash management is more transparent and less open to abuse. According to the Presidential mid term report, as a result of this new practice government overdrawn position dropped from one hundred and two billion in 2011 to nineteen billion in 2012.

Clearly Nigeria is moving in the right economic direction under the leadership of President Jonathan and management of Okonjo-Iweala as Coordinating Minister of the Economy and Minister of Finance. The transformation train is only half way gone on the journey and many more challenges will lie ahead.

One of these challenges will be that of communication. The government cannot continue to claim the ground of the underdog in the battle for this contested space.

Okonjo Iweala will have to lead the charge to show Nigerians what they are seeing. One of the reasons government’s attempt to remove fuel subsidy was unsuccessful was because the charge was not led from the Ministry of Finance.

As Coordinating Minister for the economy she will have to take more responsibility with the inevitable attacks that come with it. Trust is one capital that this minister has and this will need to be spent on getting Nigeria onside the transformation train.12   Dig in, Madam.

•Dimeari Von Kemedi lives Abuja, Nigeria.