Nigerian Finance Minister Ngozi Okonjo-Iweala’s Interview with Foreign Affairs

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Below are some excerpts from Minister Okonjo-Iweala’s Interview with the Council on Foreign Relations:

In 2012, you became a candidate for president of the World Bank. Yet the position ultimately went to Washington’s pick, Jim Yong Kim. Is it time to end the gentleman’s agreement whereby the United States gets to pick the head of the World Bank and Europe gets to pick the head of the International Monetary Fund? 

Absolutely. The boards of these institutions had said previously that it should all be done on merit. I think people took them at their word. When the position came open at the fund, obviously that wasn’t quite followed. There was a contest, but I think the Europeans jumped by selecting and pre-anointing a candidate — who is actually a great friend, great woman, fantastic mind — Christine Lagarde.

When it came to the World Bank, I had just been in office as finance minister for eight months, so it was not in my mind. But the other African presidents all called President Jonathan to tell him that they had come to a meeting of minds and that Africa wanted to put forward a candidate and they wanted it to be me. My president thought about it quite a bit. He told me, “Look, it’s been almost a week, and they’ve been calling me and saying I must allow you.” Of course, he was reluctant, because it had taken quite a bit of persuasion for me to come here. But he agreed to it. The long and short is I feel very honored that Africa could produce a candidate, could think that we have something to give the world. I think things will never be the same again, because it was a credible contest.

Should developing countries have more influence in these institutions? 

I think they should. The world has changed since Bretton Woods. Fifty percent of the world’s growth and trade at some point was being provided through the emerging markets. During the height of this economic crisis, the emerging markets were the engines of growth for the world. No matter how you look at it, the dynamics have changed. The low-income countries in Africa and elsewhere are some of the most rapidly growing economies in the world. These countries ought to be given more of a voice. If the whole idea of Bretton Woods is to assist developing countries, those being assisted also ought to have more of a voice in how that assistance should work, don’t you think? That kind of paternalistic relationship can’t obtain.

Back to Nigeria: How can you diversify the economy away from oil to prepare for a world of lower energy prices?

 Nigeria has always talked about diversification, but we actually have to deliver it, and that is what this administration is doing. We’ve completely revamped the agricultural sector. Young people are now all trying to be in agriculture. There’s a program called Nagropreneurs — not a very pretty name — for young agricultural entrepreneurs, who are being supported. We are almost the largest rice importer in the world, and we mean to be self-sufficient by 2015.

Housing: we’ve never seen housing as a source of growth in this economy, as it is in the United States. The housing sector has never really been unleashed and unfettered, and we are going to do it. We will announce in January a program for a Nigerian mortgage refinance facility that will put more liquidity into the economy. We have only 50,000 mortgages in this country of 170 million. Everybody tries to save over their lifetime to buy a house. There are no affordable mortgage rates. That’s not acceptable.

Manufacturing: Nigeria is the largest recipient of FDI [foreign direct investment] on the continent. A lot of companies are coming in to invest. Procter & Gamble invested $250 million in baby products in the southwest of the country, and they’re adding another $50 million. Indorama invested $1.2 billion in fertilizer and petrochemicals plants. [Aliko] Dangote, the richest man in Africa, who is Nigerian, is putting $9 billion into a series of refineries and petrochemical plants. These are just a few examples.

We privatized the power sector, and investment has come in — over $2 billion — to purchase our power plants. Power is the single largest constraint on investment. A survey done by the World Bank shows that power and access to financing — it’s not even corruption, that’s a little bit lower down — are the top two constraints that businesses cite. Government has not been able to manage the power sector. And to diversify the economy, we must have power.

When it comes to fighting corruption, how do you pick and choose your battles, given how deeply corruption has infected the political system?

The second time around, the political atmosphere is so poisonous. It was not like that the first time. Everything has become politicized, even corruption. People throw out corruption charges, numbers of missing income, that are untrue. So much energy is spent debunking that the actual energy devoted to the problems that exist is dissipated. We have oil theft leading to production losses. We are losing income. We need to focus all energies on fighting that, not on spurious battles.

But corruption is still a real problem. You must be frustrated. 

Yes, absolutely. But I’m also frustrated by diversionary attention. This is not to say that corruption is not a problem. Of course it is. But it’s not good enough to just talk about a problem. The question is, what are we doing about it? We had pension fraud, and we have totally revamped the pension system. Because we didn’t have a biometric system of checking, you could get phantom people put onto the pension roll. We had different pension offices, so the police, immigration, customs, all had pension offices. We totally revamped this. Some people we arrested and prosecuted. We’re unifying all the pensions. We are working with the Bill & Melinda Gates Foundation to digitize the whole thing and put people on biometrics. It’s beautiful. And no one is talking about that.

We cleaned up the oil subsidy. When the oil subsidy phaseout happened and we had all those demonstrations [in 2012], a presidential committee was set up. They discovered that some companies had fraudulently taken subsidy money. We published the names of the 25 companies that did this. Some we arrested. We have cleaned up the system, reduced the amount of money disappearing. You have to track the big sources of leakages and corruption and then try and deal with them. Oil theft is one. Pension fraud is another.

Turning to security: in the north, there’s Boko Haram; in the south, kidnapping is a problem — a personal issue for you, as your mother was kidnapped in 2012. 

When people talk about my mother’s kidnapping, I want to be crystal clear: It was not a criminal kidnapping. It wasn’t for money. It was related to the fight against corruption. So in terms of fighting corruption, I don’t need to prove anything. I paid a personal price. My 83-year-old mother was kidnapped and kept for five days. It’s a miracle she didn’t die. She said, “Why have you taken me?” And they said, “Your daughter. It’s about the oil subsidy and about SURE-P [Subsidy Reinvestment and Empowerment Programme]. She’s not releasing money.” We have this subsidy reinvestment program, and they thought I was in charge of it (which I’m not) and I wasn’t releasing money from it. They thought I should resign publicly and leave the country.

It happened around Christmastime. You can imagine what a tense, terrible period it was. With the support of my family, I kept going and praying to God that my mother would not pay the ultimate price because I came back here. There was such an outpouring of support from every quarter. Some people hired their own private agents to look for her. There were prayer circles all over the country in mosques and in churches. The president went all out — police, secret service, military, everybody.

How worried are you about the general security situation? 

It was very worrisome about a year ago, when there were a lot of incidents in the northeast. But the president took a number of measures that are working in the sense that the problem has been isolated to Borno State and Yobe State. And there’s a three-pronged approach. There’s a counterinsurgency with the army, with the help of outsiders like the U.S., France, and the U.K. This has been coupled with a political approach. A committee has been formed to talk to these people and find out what they want. The problem is that it’s not very clear what they want. And the third angle is inclusion. We have to admit that the level of poverty in these two states is among the highest in the country. So the issue for us is, what are we doing to solve that problem?

Like many countries in the region, Nigeria suffers from something of a split between a Muslim north and a Christian south. Is that the inevitable byproduct of colonial borders? 

I’m one of those who subscribe to the view, “OK, that was in the past; let’s get on with it. We’ve had 60 years now.” People like to focus on the things that divide Nigeria, forgetting the things that hold the country together. It will not be as easy as people think for the country to be divided. Too many southerners have a stake in the north; too many northerners have a stake in the south. It’s so complex now. In church two Sundays ago, they announced that the pastor was grieving because his brother, who is Muslim, died, so he’ll be leaving for the seven-day du’a rites. His brother was a Muslim, and he’s a pastor in the Anglican Church.

What do you hope Nigeria will look like a decade from now? 

I’m very excited about Nigeria, and that’s why I’m frustrated and irritated by all these diversions. We need to focus on turning this country into the powerhouse that it can and should be. My vision is that ten years from now, Nigeria will have gotten it right on so many fronts. First of all, the economy will be growing at a very reasonable rate, anywhere from seven to ten percent. I hope it will be growing at nine to ten percent, because we would have sorted out the power-sector problem.

You see, this is an entrepreneurial country. Everybody’s hustling. In ten years’ time, the housing sector, the manufacturing sector, agriculture, creative arts, and the solid mineral sector, which we have not even started to exploit, will be leading the economy. We may not have solved all the problems of inequality and poverty, but we will have made a significant inroad. We will have built a social safety net for those at the bottom, and we’ll be creating many more jobs. My vision is that Nigeria will join the group of large emerging markets.

I also hope and think that democracy will have matured a bit more, a responsible democracy with freedom of speech, which we have now in spades — actually, there’s so much freedom of speech, it’s not funny — and with a more educated, literate, and consuming people. And an enlightened civil society that will push the government in the right direction.

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