2015: More questions await Okonjo-Iweala

Nigeria’s Ngozi Okonjo-Iweala, coordinating minister for the economy (CME) and minister of finance, is predicted to face more questions in 2015. Notable Nigerian economists, including some that have played prominent research and advisory roles in government, award-winning economic and financial journalists as well as independent scholars and credible analysts are increasingly uncomfortable with the CME’s brand of economics and the policy recommendations that derive from it that inform national economic management under her watch.

Economy watchers trace this development to the national debate that ensued when in 2014 a committee of the House of Representatives issued 50 questions to the CME in a frantic search for insights into the state of the Nigerian economy. The questions touched on various aspects of the economy including foreign exchange policy, keeping inflation at bay, job creation and GDP growth rate. The questions were by no means exhaustive but notable analysts considered them sufficiently comprehensive to give an adequate insight into the state of the economy.

The debate on the state of the economy put the spotlight on the office of the CME with many wanting to know what the appellation means.
“What are the terms of reference/job description and the scope of activities?” asked Akinola Owosekun, professor of Economics at Bowen University, Iwo. “Who is to monitor the occupant of the office and assess performance?”

He also raised issues about checks and balances designed to avoid lapses, such as failure to halt extra-budgetary spending by MDAs on items not appropriated for, abuse of waivers, non-remittance of revenue collected by the Nigerian Customs Service (NCS), the Federal Inland Revenue Service (FIRS) and NNPC, to mention a few.

Owosekun is pained by what he describes as disdain for quantitative policy analysis by the Jonathan administration. He believes that this helps to explain the sub-optimal policy formulation, implementation and evaluation in the country. Owosekun, who retired from the Nigerian Institute of Social and Economic Research (NISER), Ibadan, bemoans the manifest inability of the Jonathan administration to deploy consistently robust and appropriate macro-economic and other models for management of the Nigeria economy since the coming of the CME. He recalls some level of collaboration between the CBN and NISER as well as Centre for Econometric Studies of the University of Ibadan on the subject but regrets that information on the extent of government’s reliance on quantitative estimates of policy parameters is not known. He therefore denounces the continued reliance of the CME on external validation of the fiscal and monetary policies she is foisting on Nigerians. Owosekun particularly decries the importance the CME attaches to the views of the International Monetary Fund (IMF), The World Bank and western rating agencies on the Nigerian economy.

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“I am certain that this approach of the CME to national economic management will further ruin the life of Nigerians,” he concludes.
Ode Ojowu, a University of Jos retired professor of Economics who served President Obasanjo as chief economic adviser and head of the National Planning Commission provides further insight into the neglect of local research inputs into the policy formulation process by the CME. He cites industrial policy which, according to him, presumes an understanding of the problems of the manufacturing sector. He invites the CME to dust up the UNIDO-funded research on industrialization in Nigeria over two decades ago that now lies on dusted shelves in the ministry in charge of industry today.

In addition, Ojowu “is uncomfortable with the bent of the CME towards the typical indices of international financial institutions as evidence (or lack of it) of economic development as unhelpful because the approach invariably loses sight of the real issues in the Herculean task of alleviating human suffering in Nigeria”.

Owosekun and Ojowu are not alone in holding this perspective on the work of the CME. Segun Alade, an independent scholar who authored a book From Austerity to Prosperity in 1984 is certain that Nigerians cannot prosper until the country implements foreign exchange management reforms that put an end to foreign exchange users through the medium of negotiable instruments.

“Until the Nigerian president and the CME agree to listen to this alternative view of developments in the foreign exchange markets, delinquent bankers will kill all of us with round-tripping and other disorderly behaviour that the CME’s foreign advisers do not adequately reflect in their analytical models,” Alade asserts with all the emphasis he can muster.
He also argues that one of the fundamental strategies that the CBN has implemented over the last four years is that of easing access to portfolio investment as a means of supporting Nigeria’s reserves. He considers this medicine for death if the CBN sees this policy as a means of keeping the exchange rate stable and inflation under control.

Mike Obadan, professor of Economics at the University of Benin and former director-general of the defunct National Centre for Economic Management and Administration (NCEMA), is unhappy with premature celebration of power sector privatization and the GDP growth numbers.

Ojowu also raises issues with the way the country has responded to the results of the GDP rebasing exercise by failing to act on the virtual non-existence of the manufacturing sector which worsens the pressure of import-driven large services sector (52 percent of rebased GDP of $510bn) on the exchange rate of the naira.

Another source of discontent among analysts is what Alade considers a hasty resort to devaluation as a means of coping with oil price-related external shock that has seen 30 percent drop in oil revenues in a few months. He advocates alternatives to the austerity measures recently announced by the CME.

Ayo Teriba, CEO of Economic Associates, advises paying more attention to institutions for generating data and information required by independent analysts to assess the state of the economy. He regrets the late release of CBN’s annual report since 2012, denouncing it as a bad trend.

Similarly, Obadan has drawn attention to the habitual failure of the Finance Ministry to release budget implementation reports within 30 days after the end of the quarter as stipulated by the Fiscal Responsibility Act, 2007.