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Hopes, expectations as Okonjo-Iweala returns to Finance

By Emma Ujah
As Dr. Ngozi Okonjo-Iweala prepares to return to her former office as Nigeria’s Minister of Finance, there are several issues and challenges that she must prepare her mind to tackle head-on if she is to make any meaningful difference on the Nigerian economic scene that is riddle with various distortions and deliberate policy summersaults that make progress extremely difficult over the years.

She must be prepared to lead President Jonathan to take some very hard decisions especially on the issue s about the privatization of the power sector, the downstream sector of the petroleum industry, breaking what has become, effectively, monopoly in the cement industry cement and building rails across the nation; arrest the crashing foreign reserve; check the building public debt, making the textile and agriculture funds accessible to targeted beneficiaries and strengthen transparency in revenue allocation.

As the Coordinating Minister of Economy and Minister of Finance, all eyes would be on Dr. Okonjo-Iweala to see the change she can bring to bear on the nation’s struggle to pull out of extreme poverty of well over 60 per cent of the population. She must not flatter herself into believing that she is welcome by all Nigerians. Of course there were efforts by vested interests to block her nomination and even after her name was forwarded to the Senate by President Goodluck Jonathan, the forces of darkness still tried to stop her clearance. The opposition was an organized efforts by those who benefit from the rot in government; those who are opposed to due process; those who do not want transparency in government revenue, generation, allocation and procurement.

Senator Danjuma Goje, left with Dr. Okonjo-Iweala after the screening on Wednesday.

As shameful as it is that a nation of Nigeria’s standing, giving her potentials, generates a mere 3, 000- 4, 000 megawatts, the forces of darkness fought with all the arsenal at their disposal to stop the president from appointing Prof. Barth Nnaji as minister. Those that tried to resist the appointment knew that the natural place for Prof. Nnaji was the Power Ministry. On several occasions, members of staff of the Power Holding Company of Nigeria, PHCN, held protests and prayer sessions to block the man whom most Nigerians see at critical to solving the nation’s power problem. Each time I watched them pray, if indeed it was prayer, I asked myself whom these people took God for.

The PHCN workers, as it was learnt were only acting the scripts of their bosses who live in comfort at the expense of Nigerians who have to live without power supply. The PHCN bosses work in collaboration with generator merchants who smile to the banks daily as the people are forced to buy generators for their power supply needs at home and businesses. The cabal as learnt have very strong tentacles close the Aso Rock and so will put up a fight against the sale of the various companies of PHCN now in the market.

Dr. Okonjo-Iweala’s employment boosting policies, as mentioned at the Senate hearing won’t fly without power supply for Small and Medium Enterprises to blossom.

Former President Olusegun Obasanjo had sold two of the refineries to private investors in the last days of his administration in 2007. But one of the first decisions of the late Umaru Yar’Adua was to rescind that decision. The late president listened to a Nigerian National Petroleum Corporation, NNPC, which Nigerians could no longer trusted, when the organization told him that its engineers could fix the refineries within eight months.

Those eight months passed without any improvement in the refineries output. Today, Nigeria unfortunately depends on imports of fuel to keep the economy running. We produce crude oil, sell to other nations and then go to those nations to buy refined products. Thus the cost of fuel in Nigeria includes not just refining but two-way transport fare.

As the Minister rightly told the senate the issue of subsidy cannot be faulted. There should be subsidy but the subsidy in Nigerian is going to the rich who can afford their bills. Subsidy is sensitive issue anywhere in the world but the minister must work with her colleagues in the economic team and the organized labour to work out a compromise that would save Nigerians from the hands of the cartel that imports fuel and wants the nation’s refineries to continue to either remain shut or perform at minimum capacity. It is only when private refineries commence operation in the country that Nigerians will reap the full benefits of been in an oil producing nation.

Special Funds

A constant power supply holds the ace to a genuine economic transformation in the country. As far back as the days of the Chief Olusegun Obasanjo administration which terminated on November 29, 2007, a Special Fund of N200 billion had been set aside for the textile industry to enable the sector return to life. Today, after about five years, the textile industries remain largely shut because the is no electricity to power their machines. Those who attempted to rely on generating plants had to quickly fold up because they could not afford diesel and Low Fuel Oil.

Even the banks who were given the money by the federal government made it impossible for the target industrialists to access the fund. Similarly the N200 Billion Agriculture fund has remained largely with the banks that play various pranks to it difficult or near impossible for farmers to access.

In its 2010 report on the initiative, the Central Bank of Nigeria reported that it had to withdraw as much as N13.934 billion undisguised fund from three banks as follow namely, UBA (N11.353 billion), GTBank (N581 million) and Skye Bank (N2 billion). With her return, the minister must take interest in the special funds, not only to ensure their disbursement but also blacklist such banks from participating in future federal government initiatives.

Growing Debt Profile

One legacy the Minister left behind in 2006 was the debt deal with the nation’s external creditors in which a huge portion of the nation’s external debt, $ 18 billion was written in return for the payment of $12 billion. However, the debt profile has, once again, begins to look upward, with the latest record provided by the Debt Management Office, DMO saying the nation’s external debt has risen to another $ 4.5 billion.

The domestic debt is worse, standing at approximately N4trillion. “Let me not talk about the provisional figure for the first quarter of 2011. Finalized figure for the last figures of 2010 stood at N4.5 trillion for the domestic, while the figure for external debt was about $ 4.5 billion. when your combine these two, you would have a Debt/GDP ratio of about 18 per cent” the DMO’s Director-General, Dr. Abraham Nwankwo told journalists at a Debt Sustainability Analysis workshop in Abuja, earlier in the year.

Justifying the current borrowing, he said, “even if oil prices go higher than what they are now and you take all the revenue, thinking in terms of medium to long-term, that is not enough for you to exploit your natural resources, to produce the type of transformation you need over the next five to seven years. Si it has to be a combination of both. “The important thing is that you should make efficient, effective and prudent use of resources as well as borrowed resources.

As desirous to borrow as the DMO boss wants Nigerians to believe, Dr. Okonjo-Iweala must not forget too soon, the humiliation the nation went through to rid her of the debt burden and therefore put in place, mechanisms that would check unnecessary borrowings by both the federal and states governments.

In particular, she must watch the governors closely and make it impossible for them to raise funds from the capital market on to waste such funds on their excesses. As governor Peter Obi of Anambra told journalists recently, “no government should borrow from the capital market unless to fund a bankable project which has the capacity to generate income to repay such borrowing.

Crashing External Reserves

In spite of the high oil prices at the international market, rather than rapidly growing, the nation’s foreign reserve has been crashing. It was put at $31.88bn, as at last week. The CBN governors, Mal Sanusi Lamido Sanusi last week attributed the depleting reserve to the huge food import bill of N 630 billion, per annum, a situation even the president said is unacceptable. Beyond food which the nation has capacity to produce more than her needs, even unnecessary items including toothpicks, ear cleaners, foot mats, bicycles and the like are imported into the country without check.

The minister has to review the import prohibition list and the tariff regime with a view to discouraging the importation of items on which the nation comparative advantage.

Revenue allocation transparency

The minister must return the publishing of monthly allocations to all tiers of government. This strategy of openness which she initiated continued even after she left the ministry until some people who felt uncomfortable with the disclosure pressured for its stoppage. Consequently, all manners of excuses, especially lack of funds to pay for newspaper adverts were cited. It initially became irregular and then finally was rested.

The corruption at the two lower tiers of government is as bad as local government chairmen not able to ask governors what happened to their allocations and nobody asks local government chairmen about councils’ allocations. This makes the publication of allocations more compelling now, than ever before.


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