Okonjo-Iweala Underpins Nigeria’s Progress on Economic, Political Consensus

Okonjo Iweala

•   Says pressure from state governments contributed to little oil revenue savings

Chineme Okafor in Abuja

For Nigeria to continue to move forward in her overall development trajectory, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, has said it will have to fashion out and embrace both an economic and a political consensus on her development going forward.

Okonjo-Iweala, who spoke recently at the Council on Foreign Relations (CFR), a United States-based independent, non-partisan membership organisation, explained that it was important for the country to immediately articulate an economic and a political consensus, the kind that could put the federating units and actors on the same page.

Obviously speaking from the federal government’s experience with managing excess revenues from the sale of crude oil when the market price per barrel was high, Okonjo-Iweala counselled the incoming government of Muhammadu Buhari to strive to develop the political will to save excess money from sale of crude oil when the price climbs slightly higher than expected.

In a transcript of her discussion at the CFR which THISDAY obtained in Abuja, she said for example that the present government of President Goodluck Jonathan could not extract from the state governments a buy-in on its rationale for saving excess crude oil revenues, hence the constant clamour for monies saved in the Excess Crude Account (ECA) to be shared.

The minister posited that such pressure from the state governments ensured that too little was saved from crude oil sales when the price was high and favourable to Nigeria.

“It’s very interesting when I hear people, you know, sort of talk about the lack of savings. There’s a very clear reason. The political will from the decentralised units, the states, to save this money was completely absent.

I mean every time we had the National Economic Council, chaired by the vice-president, the issue was let us divide the money, because the constitution, Section 162, they used to cite, says that all monies that come to the federation account must be shared. Some of them were lawyers, some were other professions, and they were very clear,” Okonjo-Iweala said.

She further noted: “But Section 16 of our constitution says that the federal government shall manage the economy to the benefit of the country. So, under Section 16 we tried to say the benefit of the country is to save this money so we can use it, but under 162 it said all the monies, so this is something that Nigeria needs to resolve, this seeming contradiction of which a section overrides the other.”
The minister added that regardless of the administration’s capacity to save up to $9 billion in 2013, there was still a sustained pressure from state governments to have the money shared amongst the federating units.

“We did manage against all odds to save up to $9 billion by the end of 2013. But because of this pressure, most of the monies were shared and the balance was used to pay for the oil subsidies.

Now the last point I want to make on this, because people need to understand why is it that oil prices were high and Nigeria did not save? Was this a mark of irresponsibility? What happened? This is the true story of what happened. So that is why we do not have savings now,” she explained.

Speaking on the need for a broader approach to sustaining Nigeria’s progress, she said: “Going forward, it’s very important for the new government to build up political will, that if oil prices even climb slightly higher, the country has to save.”

“We made that point six, seven, eight, nine times. In fact, it got so bad I stopped going to the meetings of the National Economic Council, because each time I appeared, the first thing is, what is the statement of the Excess Crude Account? Why haven’t, what are you doing with the money? Let’s share it. You understand? So I stopped going, so they wouldn’t even see me. The vice-president used to joke that this is not a strategy that is sustainable.

We need a consensus for the country, an economic consensus, a political consensus going forward. We didn’t have it, and we were not able to do that. We need it now moving forward,” the minister said.

In response to a question on whether it is an opportunity or a burden at this point for Nigeria to discontinue with petrol subsidy, Okonjo-Iweala said: “This is a golden opportunity to do that. It is a highly political issue.

I think under the first time I was finance minister it would’ve been easier. The second time, it became a huge issue. So I do hope that the new government will tackle this head-on, because I think they’ve got the ambience or they can generate it with which to use, take advantage of this opportunity.”