Nigeria's Okonjo-Iweala seeks reform without the 'godfathers'
Western nations and international agencies admire the reform efforts of Nigeria's new finance minister. But Ngozi Okonjo-Iweala faces daunting challenges in cleaning up embedded corruption.
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"[Her] intent is absolutely the way for fiscal policy to go. The difficulty is likely to be in the implementation of those plans," says Razia Khan, head of Africa research at Standard Chartered. But she adds: "There is a sense that ... if it can't be done by Ngozi, then it is unlikely to be achieved by anyone."Skip to next paragraph
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Backing from President Jonathan has given Okonjo-Iweala some clout. Nevertheless, she has had to move cautiously, hoping for piecemeal rather than revolutionary change.
Analysts give as an example port reform and the Sovereign Wealth Fund (SWF), set up to manage Nigeria's oil savings, which her predecessor Olusegun Aganga designed and pushed through parliament. Okonjo-Iweala has in turn had to win over powerful state governors, who initially opposed the fund.
Okonjo-Iweala points out that the budget deficit fell from 2.95 percent of total economic output in 2011 to 2.85 percent in 2012. A further drop to 2.21 percent is projected for next year.
She is tackling the recurrent spending that makes Nigeria's government one of the world's most costly, she says. Simply running the administration – before a single road or hospital is built – is swallowing 71 percent of total spending this year.
That is down from 74 percent last year, and in 2013 it will drop to 68 percent, but it still dwarfs an equivalent figure of about 40 percent in the continent's top economy, South Africa.
Domestic borrowing is also down from 852 billion naira ($5.38 billion) in 2011 to 744 billion naira in 2012, even though GDP growth is forecast to slip to 6.5 percent this year from 7.4 percent in 2011.
"Bringing back fiscal prudence and steadying the macro-economy, that's no mean achievement," she told Reuters, wrapped in a bright green-and-pink traditional dress and head scarf.
She says port delays have been cut to one week, from three before she took office, and wants to cut them to 48 hours.
Yet some of this progress has involved returning to problems she already tackled when she was finance minister from 2003 to 2006 under former president Olusegun Obasanjo.
At that time she won acclaim for getting Nigeria's foreign debt forgiven. When she left office, recurrent expenditure was 65 percent of the budget, lower than where it is now.
Nigeria's Excess Crude Account (ECA), where the state saves oil money when prices are high, had $20 billion in 2007 shortly after she left, but raiding had cut it to $4.22 billion by the time she returned. It is now being restored to $7.35 billion.
Nigeria's patronage system, which squanders much of the revenue raised from the 2 million barrels of crude oil the country produces a day, shows no sign of weakening. An attempt to remove the wasteful fuel subsidy in January provoked strikes and protests led by unions backed by the fuel marketers, forcing the government to reinstate it partly.
Okonjo-Iweala has responded to evidence of multibillion-dollar fraud in the fuel subsidy by imposing tougher conditions on payments. Unions, backed by the marketers, are threatening to strike again and leading a campaign for her to resign.
"When you fight corruption, corruption fights you back," wrote columnist Omoade Adelani in Nigeria's Business Day daily. "Those whose means of livelihood are tied to the corrupt sources are threatened by her determination to restore accountability."