‘Yes We Can’ woman controls Nigerian finances

By Stephan Richter

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Reuters

Nigerian Finance and Economy Minister Ngozi Okonjo-Iweala feels this is the time to deliver fundamental change to her country's economy. Photo: Reuters

On a day last month when the US government was still shut down and the streets of Washington were emptier than usual, it was a refreshing contrast to meet Nigeria’s Finance and Economy Minister, Ngozi Okonjo-Iweala.

Okonjo-Iweala is clearly a woman on a mission. She is also a realist. She knows that on a range of critical issues, the stakes are very high for her and her fellow reformers in Nigeria.

From ongoing corruption to explosive population growth, much can go wrong with her country’s future. But the minister is clearly guided by a strong sense of being present at the creation of a new Nigeria.

Africa’s most populous nation faces big challenges, none bigger than youth unemployment, which is at levels close to the Spanish and Greek numbers.

But unlike in those two countries, staggeringly large numbers of entrants to the jobs market will need to find employment in Nigeria every year.

Nigeria may become the third-largest country in terms of population by the end of the 21st century.

To deal with that enormous challenge, the government has initiated a multitude of initiatives, such as promoting youth skills and entrepreneurship. Okonjo-Iweala, in particular, has seen to it that more of Nigeria’s oil money is swept into the government’s coffers.

The reason is simple: the oil wealth that Nigeria has must be used well. The country has large investment needs, not just in infrastructure, but also in education and the economy.

At a time when many in the West tend to pooh-pooh the virtues of prudent macroeconomic management, Okonjo-Iweala (almost) comes across as a fan of the Washington Consensus. And why not? Africa, long considered the world’s “sick man”, may be finding its way, even independently of the recent boom in commodities, says the minister.

A key part of the equation, she argues, is that in many African countries a healthy crop of technically competent and politically adept policymakers has taken the reins in the economic and financial sectors.

Nigeria’s President Goodluck Jonathan surprised his countrymen when he removed all fuel subsidies on January 1, 2012. Although a large oil producer, Nigeria imports about 85 percent of its petrol because of the frail state of its own refineries. The subsidies were thus a huge strain on the country’s budget.

As in many other countries where such support has been removed, such as Indonesia, strikes and demonstrations followed. But while reformers in such countries caved in, Jonathan compromised. He reinstated some subsidies, but is committed to their complete removal.

In order to get ahead on the long to-do list, Okonjo-Iweala is more than aware that this is a time when her country and others in Africa must put the pedal to the metal as regards economic growth. “Let’s not become complacent,” she says.

Nigeria’s 6 percent growth rate seems remarkable in comparison with global rates. However, when rapid population growth is factored in, it is not at all that impressive. Making real headway in positioning the country for a prosperous future would require Chinese-sized growth rates in the low double-digits, she says.

Her government is also relying more on the market and the private sector to help deal with some of Nigeria’s most vexing challenges, such as providing its energy sector with more capacity.

For all the progress, big issues remain. According to international statistics, Nigeria has the most school-age children who are not attending any school.

Nigeria accounts for 10 million of the 53 million such children globally, although the minister has data-related doubts about whether that dubious honour and the overall number reflect reality.

Even so, there is no doubt in her mind that education is the key to Nigeria’s future. Education also plays the key role in reducing the fertility rate. There is no better path to managing future population growth than keeping girls in school.

While Nigeria benefits handsomely from being well endowed with oil riches, the sector is coming under new forms of pressure. Corruption has long been a big problem in the oil sector, but now production is declining.

Increased domestic consumption may even endanger the country’s ability to export much oil in the future. That would seriously dent export earnings and the national budget.

That is not a prospect any finance minister could welcome. At the same time, Okonjo-Iweala is fully aware that relying on oil revenues is a big fallacy.

While it can provide crucial resources, “oil doesn’t really create any jobs”. It is mostly a capital-intensive industry and, given recent trends in the sector, bound to become ever more so.

The centenary celebration of the unification of northern and southern Nigeria in January 1914 is just around the corner.

Despite the deep-seated economic and political problems in the country’s north – especially related to Boko Haram, which has just been listed as a terrorist group by the US – Nigeria’s reformist government is trying to preserve its momentum. A key to success will be whether the country’s middle class keeps growing.

Income inequality continues to be a challenge, even though Okonjo-Iweala is quick to highlight that, on this key issue of moving gradually towards democratic equity, her country is performing better than Brazil and South Africa.

As economy and finance minister, she cautions against the simplistic enthusiasm of Western firms entering the Nigerian market. Many of them have a habit of just extrapolating population growth into (assumed) revenue growth and profits. It seems as if she perceives a certain amount of Western naiveté in this regard, a kind of replay of the once sky-high hopes Westerners had for penetrating China’s market.

Even if the day of the interview had not been one on which the US government was largely shut down, talking with Nigeria’s economy and finance minister gives one a distinct feeling of a person driven by a very clear-eyed can-do spirit.

Where others would just throw up their hands in view of the tremendous challenges, she is keen to persevere.

“If I hadn’t felt that this was really the time to bring fundamental change to my home country, I wouldn’t have taken the job when our president asked me to join his team,” she says.

* Stephan Richter is the publisher and editor-in-chief of theglobalist.com. Follow the Globalist on Twitter: @theGlobalist.