By Kalu Ojah
In the wake of the Nigerian election, speculation has been growing that Finance Minister Ngozi Okonjo-Iweala will be dumped from Muhammadu Buhari’s new government. Were that to happen, Africa would lose an important voice in the global development space.
Consider the recent spring meetings of the World Bank and International Monetary Fund (IMF) in Washington. The African Consultative Group pointed out that Nigeria and other African economies faced plummeting commodity prices and would need “fiscal adjustments to reduce the pangs of downside risk”.
Crucial resistance to this gloomy prognosis came from Okonjo-Iweala, who asserted Nigeria’s “robust economic profile”.
The IMF and World Bank are the two foremost multilateral development agencies in the world. Periodically, these agencies release reports or comment on economic and development situations of a member country or a region of the world. Such comments can facilitate the development effort or they can make development more difficult to achieve.
For example, a potential international investor could be scared off by the prospect of a slowdown in the growth of commodity-rich countries. This in turn could stall investment and production.
Okonjo-Iweala’s push-back on the gloomy prognosis put forward in Washington is credible and influential because of her experience and strong record of accomplishments. She holds a PhD in development economics from MIT and has spent close to 20 years working at the World Bank in various leadership positions, including rising to the rank of managing director before she joined the Nigerian government.
Such performance has earned Okonjo-Iweala the kind of respectability that has enabled her to speak for her country as well as team up with other African countries’ finance ministers and economists to raise a credible and effective voice for Africa.
The World Bank and the IMF are both dominated by the wealthiest or founding member states which determine these institutions’ policies. Africa and particularly sub-Saharan Africa is totally vulnerable and voiceless in the important global development matters handled by these agencies.
No African country features among groups of influential countries in any of World Bank’s four key institutions. In the the IMF, only South Africa and Nigeria feature in the lowly positions of 27 and 29, respectively, in its league table of top 30 nations.
African countries are at the mercy of this unfair concentration of power should they encounter difficulty in managing imbalances in their economies or settling international trade/exchange obligations. Examples of the destructive repercussions of this voicelessness abound in the documented experiences of developing countries during the debt crisis of the 1980s, and the inhumane structural adjustments programs of the 1990s – which were imposed in response to the Asian (Thai baht) crisis.
Okonjo-Iweala has given Nigeria and Africa a voice in global economic and finance affairs. Her knowledge of the inner workings of these powerful multilateral agencies enabled her to negotiate a curiously amassed high foreign debt of US$31 billion down to US$18 billion. Among other benefits, this fetched Nigeria its first sovereign debt rating and billions of US dollars worth of foreign direct investment.
Okonjo-Iweala initiated transparent and flexible budgeting and production planning processes appropriate for a commodity-based economy. This included publishing budget appropriations and setting up an Excess Crude Oil Account and a Sovereign Wealth Fund. These encouraged saving for investment, providing protection against bad economic times, and enabling sustainable growth and development.
Okonjo-Iweala has also been instrumental in attracting to Nigeria well-scrutinised and useful technical developmental support from multilateral development organisations, including her contribution in taking the African version of the World Economic Forum to Nigeria, with that being the first time it was hosted in West Africa.
Okonjo-Iweala led the effort, alongside the National Bureau of Statistics, to rebase Nigeria’s GDP and earn it the place of Africa’s largest economy. Lastly, she has negotiated wisely structured multibillion dollar loans with the Chinese to fund badly needed economic infrastructure in Nigeria.
Should the incoming Nigerian government choose not to retain Okonjo-Iweala, it will be a significant loss for Africa. But her work will remain as a model of how Africa can create its own voice.
Ojah is Professor of Finance, Wits Business School at University of the Witwatersrand.
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