THE RISING PROFILE OF OKONJO IWEALA

The choice of Finance Minister and Coordinating Minister for the Economy Dr. Ngozi Okonjo Iweala as Silverbird Group’s Man of the Year is a feat earned through a cocktail of daring economic policies by the Goodluck Jonathan administration especially in 2012, reports Festus Akanbi

A few moments after the impasse on the 2013 budget was resolved, a few government functionaries who first emerged from the Presidential Villa, venue of the closed-door meeting, where the budget was signed, included the Finance Minister and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala.

According to that scene captured live by most national television stations and which was monitored in Lagos on Tuesday, the CME, who though was all smiles, declined to speak with the hordes of State House Correspondents who had kept a vigil at the villa. As it used to be the case, the journalists were not allowed to cover the budget signing ceremony.  Most of them were however not too surprised the powerful minister declined to talk on how the issues holding back the budget were resolved despite the disagreement and controversy that had preceded the budget signing between the National Assembly and Presidency. Presidential Spokesman Dr. Reuben Abati came out shortly after with a press statement to announce the signing of the budget. According to a Lagos-based economic analyst who also monitored the proceeding, the smiles on Okonjo-Iweala as she left the villa could be described as a sigh of relief and a sense of fulfillment for crossing yet another difficult hurdle.

Okonjo-Iweala has crossed hurdles too numerous to list here. Although, her reputation as a brilliant and disciplined public officer is rising, those close to the Harvard-trained former World Bank Managing Director said she is not unmindful of the mileage given to her by the support of President Goodluck Jonathan who has continued to express an unwavering confidence in her.

Expectedly, her impressive performance has continued to attract commendation and recognition from far and wide. Last year, the influential Forbes magazine listed her among world’s Most Powerful Women. And just last week in Lagos, Okonjo-Iweala was honoured as the Silverbird Man of the Year for 2012.

It is on record that in her capacity as the Coordinating Minister for the Economy, Okonjo-Iweala under the leadership of President Jonathan plays a key role coordinating priority policies and programmes of government.

Anti-Corruption Campaign
The finance ministry, which she oversees, played a critical role in realising what is possibly the most important response by the administration against corruption so far.

In January 2012, the finance ministry, in a prompt response to the nationwide protest that followed the removal of fuel subsidies, set up a probe committee to investigate subsidy payment to oil marketers. The committee was headed by the Managing Director, Access Bank Plc, Mr. Aigboje Aig-Imoukhuede.

The president had pledged in the wake of the protest that the government would take action against any proven cases of fraud in subsidy payments. The minister inaugurated the committee, which did a forensic investigation of subsidy payments. The result was an extensive series of forensic investigations targeted at the root of subsidy fraud in order to get restitution for the country and drastically reduce future occurrences. To ensure that the good work done by the committee under the Federal Ministry of Finance was consolidated, the committee was later elevated into a Presidential Committee.

Some of the key fallouts of the committee’s work included the indictment of 25 firms for various breaches of the subsidy regime; the investigation of these breaches by the Economic and Finance Crimes Commission (EFCC) and the Special Fraud Unit have led to on-going prosecutions of various indicted firms and individuals in the courts.

The ministry has also tightened procedures to ensure that the excesses that led to the breaches are drastically reduced. To encourage good behaviour and reward firms, which had done the right things, the ministry has been paying deserving firms which had complied with the procedures.

It was gathered that so far N26 billion has been retrieved from wrong payments. In all, N232 billion payments were identified as suspicious. “By the time ongoing investigation and prosecution regarding the administration of the subsidy regime are concluded, the exact amount saved will be determined,” a source said.

Sovereign Wealth Fund
With the inauguration of the board of the Nigerian Sovereign Investment Authority (NSIA) in October 2012 by President Jonathan and an agreement with the state governors, the SWF has become a reality. By this month, the investment of the SWF will begin. That means that the country is getting closer to reaping some benefits. The Nigerian economy will certainly become more attractive for Foreign Direct Investments (FDI); the culture of unrestricted spending of unanticipated income will be curtailed. Investments will be based on sound, clear and beneficial economic/financial parameters. It will also guarantee the availability of a pool of savings or back-up funds for future generations. Also guaranteed is the availability of a Counter-Cyclical Economic Stabilisation Fund, which analysts said would assist in smoothening budget variations in income over a period of time.

The SWF is also said to have guaranteed the availability of an Infrastructure Fund to provide intervention in critical areas of the Nigerian economy. The nation’s infrastructure deficit is a major challenge that requires massive investments in resources. This benefit will cut across different sectors due to the multi-dimensional nature of the potential/actual interventions.

Ports Reforms
The reforms introduced last year are meant to tackle inefficiency and corruption at the ports, which have led to many serious problems including costly delays, congestion, duplication in fees and loss of revenue for government. The Presidential Committee on Ports Reform, working with the Coordinating Minister for the Economy, has achieved some key milestones including the reduction of the number of agencies operating in the ports by half. The clearance time for cargoes in the ports has been reduced from 39 days to seven days. Many challenges remain such as the very bad condition of roads leading to the ports. This, along with the blocking of the Apapa-Oshodi Expressway, access roads and adjoining streets by trailers and tankers has worsened traffic problems and contributed to delays. But the Federal Government is working in partnership with the Lagos State Government to find sustainable solutions to these and other challenges. Already, Julius Berger has been ordered back to site and N2 billion has been made available for immediate work on various portions of the road. An official of the finance ministry said plans for comprehensive monitoring, traffic control and security are being finalised.

Youth Enterprise with Innovation in Nigeria (YOUWIN)
This is a flagship response of the Federal Government to the challenge of unemployment in Nigeria. YOUWIN is a business plan competition to encourage talented young entrepreneurs to set up new businesses or expand existing businesses, which will employ other young people. Winners of the competition get between N1 million and N10 million as well as low interest credit, mentoring and other forms of support. The first cycle of YOUWIN, which was successfully concluded recently, has produced 1,200 winners across the country. The projection is that between 80,000 and 100,000 jobs will ultimately be created from three initial years of YOUWIN.

Rising External Reserves
As a result of greater prudence in the management of the economy, the country’s external reserves have been on the rise. As confirmed by the CBN, the external reserves currently stand at, about $47 billion.

External Rating’s
At a time that the US and other major western economies have seen their economic ratings go down, better management of the economy by the ministry as part of the Jonathan government’s focus on repositioning the economy for better performance has led to an upgrade of the country’s economic rating by major international ratings agencies. Both Standard & Poor’s and Moody upgraded the country’s long-term and local currency sovereign credit rating to BB- from B because of improved financial stability.

Also, in a clear signal that international confidence in Nigeria’s ongoing economic reforms is growing, the globally respected rating agency, Fitch Ratings, revised the country’s outlook to stable from negative. Fitch also affirmed Nigeria’s long-term foreign currency Issuer Default Rating (IDR) at ‘BB-’ and Long-term local currency IDR at ‘BB’. The agency also affirmed the Short-term rating at ‘B’ and Country Ceiling at ‘BB’.

The upgrade was especially significant because Fitch Ratings had lowered Nigeria’s sovereign credit outlook to Negative in October 2011 from Stable, citing the depletion of its windfall oil savings and heightened political uncertainty ahead of elections at the time.

Resuscitating the Capital Market
Nigeria’s capital market had experienced a serious crisis in 2008 when over ₦8 trillion was wiped off Nigerian stock market capitalisation, following the banking crisis of 2008,with the All-Share Index falling from a peak of 66,000 points to about 22,000 by the end of 2009.

Some of the measures put in place to change the tide included the decision of the finance ministry to set-up a committee on capital market resuscitation led by Dr. Kingsley Moghalu, Deputy Governor of the Central Bank of Nigeria (CBN).

Another measure was the forbearance granted to 84 stockbrokers whose outstanding margin loans dampened market activity. Others included elimination of stamp duties and VAT on stock exchange transaction fees to boost market activity; improving market liquidity: registration of seven venture capital funds and one private equity fund and the introduction of market making.

A regime of greater investor protection has also been put in place with the incorporation of the National Investor Protection Fund (NIPF) by the Securities and Exchange Commission (SEC) to compensate investors with a take-off of # 5 billion.
Also on the list of measures put in place are the new listing rules approved to incentivise companies in the telecommunication and oil sectors, and SMEs to participate on the market.

Impact on Market Activity
The immediate fallout of these cocktail of measures is the 35.44 percent rise in the All-Share Index (ASI) in 2012. Index opened the year at 20,730 and had risen to 28,078.8 as of December 31, 2012. Since the beginning of 2013, the market index has risen by nearly 18 percent and its value has risen to NGN 10.7 trillion (a 17.7% increase).

Sustainable Mortgage System
One of the challenges confronted by successive administrations is the issue of shelter and available statistics have shown that Nigeria still has a long way to go as a nation in search of good affordable housing for its teeming citizens. For instance, only 20,000 mortgages have been completed in Nigeria so far: a very poor track record for a country of about 170m people. Working with the Minister of Housing as well as other government agencies, the Federal Ministry of Finance under Okonjo-Iweala is focused on helping to lay a foundation for a sustainable mortgage system in the country. It will take some time but some of the main building blocks are being laid.

Experts believe that for any plan to improve the mortgage situation in Nigeria to have any chance of success, these key problems must be tackled: Mismatch of loan tenors as businesses are borrowing short-term debt to undertake long-term projects; high costs of borrowing, given the complaint that interest rates in Nigeria are also very high (lending rates between 16-22%). Experts therefore stressed the need for long-term, concessional, development finance.

Okonjo-Iweala is a globally renown economist best known for her two terms as the Nigerian Finance Minister and for her work at the World Bank where she was one of its managing directors (October 2007–July 2011). She briefly held the position of Foreign Minister of Nigeria in 2006.

In 2007, she was considered as a possible replacement for former World Bank President Paul Wolfowitz. Subsequently, in 2012, she became one of three candidates in the race to replace World Bank President Robert Zoellick at the end of his term of office in June 2012. On April 16, 2012 it was announced that she had been unsuccessful in her bid for the bank’s presidency, having lost to the US nominee, Jim Yong Kim. This outcome had been widely anticipated. However, this was the first contested election for World Bank president after the demise in 2010 of the Gentleman Agreement that the US would appoint the World Bank president and Europe would appoint the Managing Director of the International Monetary Fund.

Bio Data
Okonjo-Iweala was born on June 13, 1954 in Ogwashi-uku, Delta State. She was educated at Harvard University where she graduated in 1977, and Massachusetts Institute of Technology (MIT), where she obtained her PhD in Urban and Regional Planning. She joined the World Bank in a career that spanned 21 years as a Development Economist, Vice-president, Operations, 1989 – 91; Director of Institutional Change and Strategy, 1995 – 97; Country Director, Malaysia, Mongolia, Laos and Cambodia, 1997 – 2000; Deputy Vice-president, Middle East Region, 2000 – 2003.  In June, 2006, she was Managing Director, World Bank till July 2011.

She is a recipient of several national and international awards and a member of numerous boards and advisory groups, including the Clinton Global Initiative Data and the World Resources Institute. She serves as Financial Adviser to Several International Investment Groups.  An accomplished author, some of her works include: Chinua Achebe Teacher of Light – a biography of Nigerian Author, Chinua Achebe co-authored with Tijan Sallah and The Debt traps in Nigeria: Towards a sustainable debt strategy.  She is married to Dr. Ikemba Iweala from Umuahia, Abia State, and they have four children.