An interactive session with Dr (Mrs)Ngozi Okonjo-Iweala, Minister of Finance and coordinator of the Economy in Washington. This is not exclusive, the Nation and Sun may use it for tomorrow thanks
By Omoh Gabriel
How we are proposing to really work in the short term? What are the priorities and what Nigeria is going to do about the micro and macroeconomics as well as challenges that we have. We have robust economic team from the Chief Economic Adviser, Budget, Executive Director representing Nigeria on the board of World Bank and former Minister of Finance Dr Mansur Murkhtar. We have been able to come out and share the vision and objectives that we have. At the same time, we have been very focus that we have to get the kind of financial support to achieve the short and medium term objectives. I think that we have been very successful. As chair in the African development committee, we have also been able to put forward the views of African countries about current global challenges and how we will like international institutions, the developed countries and emergent markets to support us in getting through this challenging time. I think those objectives representing Nigeria specifically and other African countries, we have done very well in achieving that.
Thirdly, we are also negotiating some financing to support our programmes from the World Bank and I have even spoken with the African Development bank and other organisations to support us.
What is the government doing about job creation and financing?
We have an ambitious programme to create jobs. One of the several priorities is agriculture. We have very detailed plan for investment in agriculture sector and developed by the minister. One of the things we did here in Washington was to start negotiating for extra financing from the World Bank. And we are in discussion with them to see if they can advance about $500 million to support the sector. And also environment because we see agriculture and environmental issues and the Minister of Environment is also desirous of having support. So, also we enter into discussion of $50million to support the work of the environment and $500 million for agriculture. It is not concluded but it is quite looking positive and we are very happy with what is happening. We will conclude it when we get to Nigeria and the new country director arrives.
Second, we just had an interesting meeting with the both IFC financial operation private sector arm of the World Bank treasury and with the representatives of group of investors who are interested in public private partnership project in Nigeria. Specifically, they are interested in financing and investing in the second Niger Bridge. This is very promising and we had discussions with them about the next step and IFC, a presitigious private sector arm of the World Bank will be coming to manage this operation. It could turn out as one of the best private sector partnership ventures that Nigeria would do and it will set an example that Nigeria is capable of delivering a clean approach to PPP. And this will unlock investment in other PPP. We tend to get into discussion with the Minister of Trade and Investment and colleagues in the economic management team. And of course present it to Mr President what we have done and then take it from there. We had discussions with the Minister of Works before coming to Washington and we plan to reconvene and share what we have done.
What is the government doing about encouraging investors about security of investment in Nigeria with rising cases of bomb explosion and fear of non-patronage expressed by some of the CEOs at the Africa investor?
The experiences we have been having are quite different. Those who have been talking have been talking informally about a great number of Pension Funds in the US to Canada and New Zealand about who are interested in allocating assets. If we can come up with a nice clean project, these are institutions with billions of dollars of assets. If we can structure something that is interesting, these will unlock new investment. Also I found an interesting positive attitude on the part of many of these investors. Although they express certain concern about insecurity but they also understood that the government is acting vigorously to take care of those problems but as far as I know I don’t know of any of my colleagues that is aware of an overwhelming negative reaction from investors that we had discussions with them. So, the government is concern about security and we should build on whatever the government is doing.
How is the government going to make fund available for joint fund proposed by the African Finance Ministers to help failed economies?
Ans: There is broad discussion on the challenges facing the global economy. As you can see, the situation is such that there could be possible spill over effect to our own economy. What is important now is that the developed countries and the emerging markets should act together to contain the possible risks to the global economy and to contain the uncertainties. So, that it doesn’t rebound on an economy like our own and I made a presentation on that which was well received with applause Even the IMF MD also look at the issue on the need to protect low income countries. The key issue is about what they are going to do to contain any damage from event in the global economy on our country. And what you saw in the communiqué of the IMF and Development Committee meetings is the agreement that there has to be connected and cooperative action by the developed countries, emerging markets and low income countries to try and make sure that we support Europe and that the IFC together. And IMF has been making profit from growth sales and profit from those growth sales should be put into resources that would be made available for other countries and developing countries in the event they need access for further support.
What strategy is the government adopting to generate employment?
Ans: The government is looking at both skilled and unskilled areas to generate gainful employment in Nigeria but we need different approaches to address different categories. In budget 2011, a budget of N80 billion was put aside for this purpose and I am very happy to announced that Mr President will soon announce a programme targeted at skilled population called Youth Enterprise Programme. This would be launched within couple of weeks to try and launch business enterprise competition asking our youths creating enterprises. If they have innovative ideas about how to expand and employ more people, we would run a competition to support those ideas. We will support those ideas by either working with banks. And we are also working with the Ministry of Youths and ICT. This is going to go life on the web and use all the modern tools to encourage participation. We are in partnership with the Lagos University and the World Bank. It is really a consortium to try and launch this across all the zones and to get all these ideas. Hopefully at the end of the day, we can get like about 600 proposals which can be supported and finance and that will create the jobs. We are targeting several thousands jobs out of this. This is a very interesting programme and part of the N50 billion will go to the financiers. And we are also looking at public works programme for the unskilled and we are still working to finance that. When it is ready, we are going to launch it so that for certain days in a year, unskilled youths would participate in public works jobs that will really help in maintaining our assets in the country. We are also looking at women and will also launch for the women in various categories.
When is the government going to solve the issue of sovereign wealth fund?
We are definitely in dialogue with the governors. We have been talking to the governors and also Mr President has been talking to them. And we strongly believe that we all have one objective to Nigerian economy strong for the benefit of everybody. As a result, this dialogue is ongoing they have invited me to join them. We are meeting in a couple of days and to interact with them bit more and explain. Following that at the next Economic Council taking place on Sep 29. The vice President and the President have asked me to make presentation formally. All these dialogues is a good thing so that we can understand each other. We have been working on the implementation guideline for the sovereign wealth fund and in a working group led by Fola Adeola and some people working with the former Minister of Finance Dr Mansur Muktar and including the Ministry of Planning s well as outside experts. We have now come up with implementation guideline which we intend to launch as soon as possible but you know we want to finish dialogue with the governors.
Looking at the good programmes of the government and commitment of your ministry, have you consider the challenge of corruption to the attainment of your lofty goals?
Of course, corruption is a challenge in the country. Everybody knows that. Specifically, it is not just corruption but also transparency. Much transparency will allow people to hold public officials more accountable from being corrupt. So, we are starting with looking at transparency issues and put more public information out. I am a firm believer that the more public information you can give to the media, the civil societies and so on, the more they will be able to challenge government officials. That informed the re-launch of the publication of allocation to all tiers of government. And I know this decision is not popular in certain quarters but it is good. In that way, you can look at it and say that what is the Federal Government getting and how are we spending and that is the beginning of accountability? We are also looking at our procurement system and see how we strengthened it because it is an area for hidden behaviours. We are working with BPP and supporting the agency because it is not an easy job. As we go along, we will be looking at specific action. For instance, we will be looking at EITI for further transparency in the oil sector. We are also looking at our budget to stop leakages and make sure that our resources are efficiently used. The Attorney general of the Federation and Mr President has been very successful in recovery of some stolen assets recently. The Attorney General should be given credit for his hardwork in this direction. We are also working with the World Bank so that we can also have agreement so that they will have efficient use of the returned money.Those are actions we are trying to take. Finally, we will also look at area that impedes business in the country. I strongly believe that if we can lift some of the requirement for licenses to do one thing or the other like putting up permits and licenses at the port to clear goods, it will also help to fight corruption.
Is the government willing to continue with the Vision 20:2020?
Vision 20:2020 is inspirational. Every country supposed to have a vision because if you do not have a vision, you will not know where to start. I think it is a very good document to have and it is also good to set a vision’s target. Against that, you can now try to perform, so, we worked out for this medium term some specific priority are building on that Vision20: 2020 and on the transformation agenda, where we think we can work. The medium term programme we mapped out is looking at growth of 7 to 8 per cent because the global environment has changed. If compared it with the period when Vision 20; 2020 was conceived when, things were still a bit robust. The IMF has revised the growth forecast for the World and for developed and developing countries. Against that backdrop, we expect an impact on aggregate demand for our products and we have to be a little modest in our growth forecast. If we keep it at 7 per cent when other countries are looking at three per cent that is a good performance.
What are you doing to ensure that Nigeria achieves MDG target by 2015 even though Nigeria is not one of the countries identified as been able to achieve its MDG targets by 2015?
We are trying to implement programme. You know we have about N153 billion programme through the MDG programme trying to look at those indicators. We have been looking at our health sector and issues of infant mortality rate, polio vaccine among others. We have been working but it is true Nigeria will not be able to meet any of the MDGs by 2015 but it has been making better progress because the focus on it is much more.. The most important thing is to keep working and not relent on those programmes because sooner or later, we will meet those goals and we are really
focusing on the attainment.
What is the nature of the relationship between the Ministry of Finance the CBN based on the recent announcement by the Governor that Nigerian banks have agreed with the n48 billion sinking fund without the approval of shareholders? Also what is the situation with debt management by DMO?
On the relationship between the CBN Governor and the coordinating Minister, Governor has spoken but people are looking for contention, they are not going to have it. When I came in , I said that we have the good intention to drive the economy. We have a meeting of mind of where to drive the economy. And you can see the relationship is extremely cordial, if you have your normal monetary policy and fiscal policy tension that takes place everywhere. The Chief Economic Adviser can testify to it that it exists everywhere. However, apart from that, we have a remarkable meeting of minds in terms of the goals for the economy. He is quite focused on the real sector and we want to work with him and he has been concerned with the fiscal policy, we want to work on it. About the sinking fund, what he was trying to say is that we have AMCON that has been floating bonds in order to try and clean off non-performing loans among the banks and also recapitalise these banks. What he is trying to say is that these are contingent liabilities on the government and does not want to bear all the cost. He is cutting the cost to the government by about 500 and I think any cost after that, the banks will have to contribute and this is not new in the industry. He discussed this earlier, they agreed and this was before I came on board and when he mentioned it yesterday no bank objected. The CEos are there, they have agreed to participate and I don’t think, he will just come to the public and announce such a serious thing without having serious discussion with CEOs of banks. As far I know the industry has agreed on it and they are going forward with it. There is no lull or wind down of the Debt Management Office (DMO). It is very much alive. The DMO does not need to be in the market everyday floating bonds. The office does its activities and wait. We are anticipating that we have to do much to support the 2012 budget but we are trimming it down. I have always said that we need to decelerate the rate at which we are creating domestic debt and we need to generate more revenue in order to finance our fiscal deficit. They will be doing it but not at the level at which they are doing it before but over the medium term, we want to come down to a level of sustainable debt.
In the 2011 budget we are supposed to fund N850 billion as contained in the appropriation act and we are doing that progressively and so by the end of the year, we would completed funding component of the fiscal deificit.
As at the end of June the total debt stock is about $39 billion representing 18 per cent of our GDP. The external is about $5.3 billion and domestic is about $34.
What is the reaction of other developed economies to Nigeria ’s economic reforms?
We had a successful annual meeting. We met with the US Under-Secretaries. These are senior US officials. We made presentation to them and met with the World Bank President and expected to meet the IMF President later. We have been at the board of Governors of World Bank. We have also received the support and acknowledgement of the IMFC about what we are doing in Nigeria and listened to us. One of the things discussed at the World Bank is the new gender report. This report is quite exciting in that gender equality leads to greater development. And country with less gender equality will suffer slow development. This is a big achievement and excited about the report and it has put to bed all questions about the role of women in the economy. When you empower women, you will have a powerful tool. Women are the next emerging market. That is the new term. The growth of the world economy will come from empowering girls and women. If we focus on our girls and women, we will have greater and faster development in the country.
In terms of alternative financing, we are not only looking at ADB and IFC, we are also discussing through the diaspora bonds. We had excellent meeting with the World Bank to work with them on it and we also discussing with the US treasury because if we are going to do the Diaspora bonds, we need the support of the US and UK Treasuries and all the others. We are going to tap our Diaspora to support development in the country.
Finally we had external discussion with the Chinese. The delegation is ready to talk with us in a tripartite agreement, World Bank, China and Nigeria. This will enable them to bring manufacturing jobs from China to Nigeria. Instead of buying their products they will produce them in Nigeria. This will be a good directed programme with the involvement of the World Bank. It is something that would be done to our benefits. We are trying to ensure that we have a careful agreement so that when they come they will have power and not complain that they cannot operate.
We want to do this agreement carefully and we still in discussion and not concluded yet but positive. We will not enter into agreement with people that come and open warehouses. Mr President is fully committed to work with the Diaspora but they also need to have realistic expectation so that when they come they should be able to have discussion with relevant people because many of them coming do not have business plans. Whatever it is, we really want to support the Diaspora.