The immediate past Minister of Finance,
Dr. Ngozi Okonjo-Iweala, on Thursday said lack of political will to save
oil revenue under former President Goodluck Jonathan was responsible
for the challenges facing the country presently.
She said as a result, the World Bank and
the International Monetary Fund must seek means to embed savings in
national constitutions devoid of political manipulations.
TheCable reported that
Okonjo-Iweala spoke on the topic: ‘Inequality, growth and resilience’ at
George Washington University, United States of America.
The two-time minister recalled that
Nigeria was able to save $22bn under former President Olusegun Obasanjo,
which she noted saved the country in 2008 during the global economic
meltdown.
Citing the Chilean example, she said,
“We tried it in Nigeria, we put in an oil price-based fiscal rule in
2004 and it worked very well.
“We saved $22bn because the political
will to do it was there. And when the 2008/2009 crisis came, we were
able to draw on those savings precisely to issue about five per cent of
the Gross Domestic Product as fiscal stimulus to the economy, and we
never had to come to the bank or the fund.”
She added, “This time round, and this is
the key now, you need not only to have the instrument but you also need
the political will. In my second time as a finance minister, from 2011
to 2015, we had the instrument, we had the means, we had done it before,
but zero political will.
“So, we were not able to save when we
should have. That is why you find that Nigeria is now in the situation
it is in, along with so many other countries.”
On solving the problem of political will
and manipulations, she said, “That is the question that I ask; what do
we need to do to these countries to save over a period of long
accelerated growth?
“We need to devise mechanisms not just
that are good technically, but find a way to either embed them in the
constitution or find a way to separate them from the political
manipulation so that these countries can survive over time.
“To build resilience, African countries
need tools and mechanisms, and it is doable and we need to interrogate
ourselves why we have not done it.”
Okonjo-Iweala added that manufacturing
was critical to growth in Nigeria and the rest of Africa, quoting
manufacturing at just 11 per cent of the continent’s Gross Domestic
Product, and nine per cent in Nigeria.
“I do not believe that we can be
resilient, except if we can encourage manufacturing, even on the goods
we consume, services, entertainment industry and agriculture.
“I think these are the kind of questions
that policymakers struggle with on a daily basis, and that is what we
are going to answer to get resilience.
“If we don’t get these mechanisms, we
politicise them, find ways to transform the base of the economy and
create jobs, including in manufacturing, I believe we are going to go
into this looming deceleration that is being talked about.”
Meanwhile, the Managing Director of the
International Monetary Fund, Christine Lagarde, on Thursday urged the
Federal Government to seek help from international institutions,
including the IMF, on the Nigerian economy as the sharp drop in oil
price continued to batter Africa’s largest economy.
Speaking at the IMF in Washington DC,
United States, Lagarde said Nigeria needed to be open-minded on foreign
exchange and swiftly approve the 2016 budget.
She said, “Our recommendation is that Nigeria seeks help from the international institutions that can best help
“Second, that Nigeria is open-minded in
using flexibility of the exchange rates in order to absorb some of the
shocks. We believe that this is more efficient than to have a list of
products that are barred from being imported to the country.
“Third, we believe that it is really
important that the budget be completed, decided and approved, and we
stand ready to help Nigeria if it wants to seek our help.”
Lagarde, who was in the company with the
IMF First Deputy Managing Director, David Lipton, and spokesperson,
Gerry Rice, also called on Nigeria to diversify its economy, adding that
oil prices might be low for longer.
TheCable quoted her as
explaining, “I believe, having visited Nigeria in January, that it is
also really important that the country looks at diversifying its
economy, because it cannot rely exclusively on commodity prices only,
particularly oil, because it might very well stay low for longer.
“Nigeria is full of energy, smart
people, and can really transform some of its activities, including the
agricultural sector, where there is just too much by way of imports,
when there could be a lot of transformation in Nigeria and local
consumption.”
She also spoke on the viral revelations
by the Panama Papers, calling for international cooperation, while
assuring the world that the IMF would be “happy” to play a role in
resolving such worldwide issues.
Lagarde reiterated that countries must reinforce their commitment to durable global growth and employ a more potent policy mix.
“A three-pronged approach with monetary,
fiscal and structural actions can work as a virtuous trinity, lifting
actual and potential growth, averting recession risks, and enhancing
financial stability,” she said.
Many local and international economic
experts have called on the Central Bank of Nigeria to adopt a realistic
exchange rate by adjusting the value of the naira against the US dollar.
The Managing Director, Financial
Derivatives Company Limited, Mr. Bismarck Rewane, said Nigeria needed to
adopt an exchange rate policy, as the current approach was not
sustainable in the long run.
“Rationing the forex and refusing to
adjust the exchange rate peg is a slow but painful death approach to
currency policy. The approach we are adopting will continue to inflict
problems on our factories and companies,” the Chief Executive Officer,
Cowry Asset Management Limited, Mr. Johnson Chukwu, said.
Analysts at Afrinvest West Africa
Limited, an investment bank and research firm, said the naira started
falling drastically at the parallel market when the CBN introduced
foreign exchange restrictions.
They argued that there was a need to review the list of the items banned from the official forex market.
However, President Muhammadu Buhari has
insisted that he will not devalue the naira, saying he saw no benefit
that such an endeavour would bring to the poor.
