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Ngozi’s second coming!

By Les Leba

The charming African Queen at the World Bank is set to take another bite at the pie with her successful screening at the Senate last week.

In spite of the controversial nature of her exit from the federal cabinet in 2006, she has been ‘seduced’ by whatever carrots she demanded or were dangled by President Goodluck Jonathan to let bygones be bygones and come back to once again, ‘serve’ her evidently distressed fatherland.

I daresay that the national economy may not have changed in complexion in the intervening years, but the problems have only become magnified from the same template which Ngozi inherited and sustained while in office as Finance Minister.

Nigerian adherents of the sanctity of the rule of law may however be disturbed and indeed, the late legal luminary Chief Gani Fawehimi may turn in his grave at the development.

Nigerians will recall that the Court of Appeal ruled in favour of Gani’s plea that payment of foreign exchange denominated salaries to Okonjo-Iweala and Adeniji (also internationally sponsored as foreign minister) was illegal and ruled that the recipients should be made to pay back their emoluments.

There is so far no record that anyone complied with this judgment, and it seems rather odd that our present government has waved aside restitution and gone ahead cap-in-hand to invite Dr. Iweala back to her former job.

During the screening process at the Senate, Ngozi expressed her dissatisfaction at the lopsided disparity in favour of recurrent expenditure in current federal budget structure, but the truth, of course, is that recurrent expenditure hardly fell below 60% during her first coming!

She also lamented high unemployment rate estimated at 14 – 16% (against ex Finance Minister, Aganga’s estimate of about 21% the same day). Again, we do not recall any major shift in employment rate between 2003 and 2006; nor do we recall industrial revitalization with commercial lending rates well above 20% and inflation constantly in double digit.

The fuel subsidy debacle took on wings in the same period and the naira depreciated in the face of increasing dollar revenue, while government borrowed at rates as high as 14% for loans, which were incurred specifically for control of money supply and not for infrastructure enhancement!

The reality, of course, is that Dr. Iweala would again fail to make any major progress in any of the above critical areas until the CBN is stopped from capturing and hoarding our export dollar earnings, while substituting huge naira allocations at rates, which are determined in the grip of CBN’s monopoly.

Once Ngozi can see beyond this threshold and adopts dollar certificates for payment of monthly allocations of dollar-derived revenue (so that beneficiaries can exchange the certificates for naira directly from the banks), the inexplicable contradictions in our economy will be resolved.

Until that is done, there is no magic she can perform to get Nigeria up and running or for fuel subsidies to be removed without increasing hardship on the people!

In the aftermath of Ngozi’s resignation and the attendant media attention, the article “Okonjo Iweala: Facts & Fictions” (please see www.lesleba.com) was published in this column.

An admirer of the vivacious minister, one Oghonna Dominic took exception to our dispassionate evaluation of Dr. Iweala’s performance. Ogbonna’s counter observations and our response were later featured in a subsequent article titled “No! She Did Well”, published 28/08/2006.

In the light of Dr. Iweala’s return to the Finance Ministry, this article is reproduced herewith, while we pray that Ngozi will have become more objective in evaluating her own performance in the critical areas of inflation, industrially friendly interest rate, increasing employment and a market responsive rate for the naira. Please read on.

XX“OGBONNA: On Debt Relief: Okonjo Iweala got 60% debt relief for the country. Sixty percent!  From 32 billion dollars, we are now down to 5 billion! How on earth is that not a commendable thing? …. The savings from interest payments alone is a big boost to government expenditure. For this alone, some of us would remain eternally grateful to Mrs. Iweala.

LEBA: Is it true that Dr. Iweala’s efforts and her contacts at the World Bank got Nigeria 60% debt write-off? But how come other countries, whose Finance Ministers were unsung, got their countries’ 100% debt write off without having to go cap-in-hand begging all over Europe and the US, with a backup expense of another N1.2bn to take selected Nigerian senators on a debt campaign spree abroad?

Is it not true that western creditors had been pressurized by the Jubilee Debt Campaign with over one million signatories worldwide, and other enlightened groups to give 100% debt write off to the poorest countries? How come some of those countries who were better off in international poverty ratings got 100% debt write-off, when Nigeria, the third poorest nation in the world only got 60%?

OGBONNA: On the Economy: the author complains that economic reforms have not filtered down to the man on the street. This is certainly true, but does anybody expect a fix for the economy in 3 years?   …. By reducing debt and injecting some macro-economic stability into the system, the present economic team have laid some serious foundation ….

LEBA: We are yet to recover from the devastating impact of over two decades of patience for the Structural Adjustment Programme (SAP) reforms to bear fruits. Fortunately, the performances of Ministers of Finance worldwide can be judged with a standard set of indices, and these include interest rate, employment, inflation and macroeconomic stability! No country can record significant development with commercial interest rates above 20%!

The interest rate is instigated by the CBN’s Minimum Rediscount Rate (MRR), which has persistently remained around 14% for the past four years of the Okonjo-Iweala/Soludo regime. With such high interest rates, industrialization of the economy will continue to be a pipe dream; and with our educational institutions’ continuous output of fresh graduates, rising unemployment and insecurity will hold sway for some time to come.

“The former Minister, in spite of her best efforts, could never resolve the dilemma of perennial excess liquidity (too much money in the system) at the same time that money was insufficient to pay pensions, civil servants’ salaries and benefits, repair roads, hospitals, schools, etc.

Indeed, if anything, the magnitude of excess liquidity is on the increase. What would you say of a Finance Minister, who is prepared to lend at 14% and borrow back at 17%? Worse still, why borrow only to closet your borrowings rather than use it to improve your infrastructure? If anything, one cannot truly say that there is macroeconomic stability in Nigeria today!

OGBONNA: On Public Service Corruption:  Again, does any realistic person expect an overnight fix for corruption in the system?  Seriously? And who says Okonjo-Iweala was in charge of fixing corruption anyway? …. The EFCC has started, and Okonjo Iweala definitely done her bit to inject some transparency into the system.

LEBA: I agree that corruption cannot be fixed overnight, but it is appropriate that we should see that an appropriate framework has been adopted to curb corruption; however, various statements made by the EFCC Director General and the FCT Minister amongst others indicate that the predator called corruption is far from being caged and that the successes of the government’s due process team is at best very modest.

How can you, in truth, curb corruption when you don’t have any firm or authenticated figures on how much we earn even as at today, four years after Dr. Iweala’s involvement in monetary policy formulation?

In any event, how can a crusader for transparency and accountability be part of a covert arrangement to make illegal revenue withdrawals, which contravene the constitution, a breach, which has attracted the attention of the National Legislature?

OGBONNA: On the value of the Naira: I’m not sure what the author might be talking about here. For the first time since the deregulation of the currency market, the official and black market rates for the naira are now merged! That’s no mean feat. And yes, the naira has actually been appreciating in value…

LEBA: Bona fide manufacturers and commercial stakeholders do not patronize the black market! Any improvement in the value of the naira in the black market only favours particularly the smugglers and treasury looters. Smugglers bring in contraband, which undermine the efforts of local industries while treasury looters take away value from our economy.

The CBN is unable to satisfactorily explain why it would want to fund each bureau de change (black market outlet) in the country with up to $400,000 a week. It would make more sense to strengthen the official value of the naira to below N100=$1, so that real sector operators can bring in their machinery and raw materials at less cost and they can also expand their activities and reduce unemployment in the labour market.

A strong naira would have no negative impact on our major export, crude oil, while it has the potential of bringing down inflation in the country! Besides, we must remember that the official rate of naira was under N100=$1 before the advent of our acclaimed economic team!

OGBONNA: On International ratings: I personally don’t place much value on these ratings, whether they be by Fitch, or the Wall Street Journal. I should point out, though, that the author chose the one and only report that was negative.  ….

LES LEBA: Well, you are free to choose to believe or not to believe the Wall Street Journal. Needless to say, major international financiers and stakeholders may not share your view! Meanwhile, the reality is that we are getting poorer and unemployment is higher than ever before!

OGBONNA: External Reserves: I notice the author was silent on the issue of external reserves. We had about 3 billion dollars in the foreign reserve back in 1999. Today, the foreign reserves is somewhere around 35 billion, thanks in part to the efforts of Okonjo Iweala. That, too, is a good thing.

LEBA: Well, I am not aware what exactly Dr. Iweala did to positively influence the international price of crude oil, which has fortuitously propelled the level of our reserves.

Furthermore, I wonder at the economics of increasing your savings at a time when you cannot spend money to send your children to good schools, hospitals or even enjoy safe and comfortable mass transit systems.

Why build up reserves when you require money to improve the level of employment in the country? Very funny economics, if you ask me.

OGBONNA: Finally, Iweala’s greatest contribution is…. the restoration of hope and confidence….

LES LEBA:

It is difficult to come to this conclusion, in view of the above analysis.…”XX

SAVE THE NAIRA, SAVE NIGERIANS!


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