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AfricaSeptember 3 2006

National needs again usurped by political diktat

The departure of a leading reformer has left question marks over further good governance progress and is adding uncertainty to the chaotic preparations for Nigeria’s presidential elections next year. James Eedes writes.
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Local response in Nigeria to the resignation of one of the country’s highest profile reformers last month was ambiguous. News that Ngozi Okonjo-Iweala, Nigeria’s influential former finance minister and then foreign minister, had left office was greeted with a mixture of wary surprise and weary resignation. Widely perceived to have been forced out, suspicions were aroused about why one of Nigeria’s most hard-working and effective reformers had been sidelined. But there was resignation too that, not for the first time, the interests of the country appeared to have come second to a political agenda.

The first outward sign that Ms Okonjo-Iweala was out of favour was a cabinet reshuffle on June 21. The shake-up saw the addition of new ministers to the cabinet, some dropped to pursue personal political ambitions, one axed and others shuffled around. Most conspicuous was the redeployment of Ms Okonjo-Iweala out of the finance ministry to foreign affairs, a move that caught almost everyone on the hop, not least Ms Okonjo-Iweala herself.

Officially, according to the office of President Olusegun Obasanjo, Ms Okonjo-Iweala would continue to head the economic management team and would still lead on-going negotiations with international creditors, in addition to assuming responsibility for Nigeria’s international relations. On paper it was not an insignificant role, particularly in light of the country’s growing regional and international status, especially as an important oil producer. It was not lost on many, however, that in the past the role had carried littleinfluence, with Mr Obasanjo assuming the bulk of responsibilities.

Typical of the president’s governing style, little public explanation was given for the move. Analysts trying to discern the motive noted Mr Obasanjo’s busy international agenda and were quick to point out the logic of easing this load ahead of time-sapping presidential elections next year.

It made sense, some said, to place such duties in the hands of a trusted lieutenant who was already Nigeria’s best known name and face on the international scene. Ms Okonjo-Iweala, Harvard-educated and a former World Bank vice-president, had been a consummate and articulate voice of Nigeria’s reform plan, convincing veteran African sceptics that this time it would be different. Indeed, the urbane Ms Okonjo-Iweala was instrumental in securing an $18bn debt cancellation from international creditors, by far the largest write-off on the continent.

Ulterior motives

But there was an odour of something not quite right. Foreign analysts were quick to ask whether her removal from the finance ministry was a ploy to get access to public funds for a spending spree ahead of the upcoming presidential elections, scheduled for April next year. Ms Okonjo-Iweala has been hailed for restoring order to Nigeria’s notoriously chaotic public finances, resolutely saving windfall revenues from high oil prices and imposing unprecedented transparency on the allocation on funds to the various tiers of government.

With the excess crude account swelling, the formidable Ms Okonjo-Iweala stood firm against demands for increased disbursements. Such an unshakable position did not win her many friends among Nigeria’s political elite, especially at the corruption-riddled state level, but it was starting to earn acknowledgement from ordinary Nigerians and admiration from foreign stakeholders.

It was this growing profile that many now think was her undoing – she was starting to be seen as the lynchpin of reform, usurping even the president. In short, she was getting too big for her boots.

The Economist magazine, one of a handful of international publications keenly monitored in Nigeria as a barometer of international opinion, wrote in the July 8 edition that “most diplomats and bankers see [her redeployment] as a threat to Nigeria’s economic reform, despite the president’s assurances that she will still head his economic team”. The article went on to add that “pessimists… fear she has been moved to clear the way, ahead of next year’s elections, for the plunder of public coffers, now stuffed with billions of dollars thanks to her careful budgeting and high oil prices.”

Various government officials claim that such sentiments, echoed elsewhere, incensed Mr Obasanjo. Ironically, Ms Okonjo-Iweala studiously avoided any inference that she was the sole driving force behind reforms; indeed she was loath to accept too much credit and would frequently point out the hard work of others.

In previous interviews with this correspondent, she would insist she not be the focus; on reading a glowing article about her in the UK’s Independent newspaper she was bashful – even ill at ease – with the praise heaped on her.

Her error, if it can be described as such, was to be single-mindedly focused on implementation and delivery, never mind the consequences. As far as possible she kept herself above the political fray, always justifying her actions in terms of the interests of the country. But staying clear of Nigeria’s political maelstrom is easier said than done; the country is a very immature democracy where political process is a complex machination of deal-making and patronage between political insiders and various factions. It appears Ms Okonjo-Iweala had ceased serving Mr Obasanjo’s political ends.

Unceremonious exit

She did not last long in foreign affairs. On August 1, she was unexpectedly and unceremoniously axed from the economic management team, hearing of the decision while abroad and locked in negotiations with Nigeria’s foreign creditors. Those close to Ms Okonjo-Iweala say she had no other option but to resign from government, an outcome Mr Obasanjo surely hoped for.

As before, Mr Obasanjo gave no reason for her removal from the economic management team, although it is rumoured the last straw was confusion over who would represent Nigeria at the Annual Meetings of the International Monetary Fund (IMF) and World Bank in Singapore this month: Ms Okonjo-Iweala’s successor Nenadi Usman had apparently not yet been invited, sparking allegations that the former was clinging onto a role that was no longer hers.

Despite Mr Obasanjo’s apparent indignation, it is fair to question the significance of Ms Okonjo-Iweala’s removal from the finance ministry and latterly her departure from government. Nigeria’s post-independence history is pockmarked with numerous instances and periods of misrule and corruption. Notwithstanding an energetic reform agenda since being returned to office in 2003, Mr Obasanjo won that election amid allegations – made by US and EU monitors – of voting irregularities and fraud.

Though Ms Okonjo-Iweala had made impressive strides towards overhauling the country’s public finances, there was still a substantial amount of work to be done, not least to push through flagship legislation – including the Fiscal Responsibility Bill – that was designed to institutionalise reforms. As finance minister, Ms Okonjo-Iweala was also central to crucial ongoing reforms within customs, the tax authority and the broader civil service.

It begs the question: why remove a competent, proven reformer before the job is done?

Perhaps even more telling was Ms Okonjo-Iweala’s own surprise at the way in which she has been treated. Though she has refused to speak to the press since her resignation, numerous sources confirm she was caught totally unawares at her redeployment to foreign affairs and was fuming to hear she had been fired from the economic reform team. She had been specifically recruited to the finance ministry, with impeccable qualifications and experience to match. She, and many others, felt that foreign affairs did not play to her strengths.

Reform momentum

For all the intrigue of Ms Okonjo-Iweala’s departure from public office, the essential question is whether it casts doubts on the country’s reform momentum. The answer is probably not. Various government officials stressed to The Banker that the reform team is bigger than one person, and although others may not have enjoyed the international status Ms Okonjo-Iweala earned, they are in their various ways highly competent and capable.

Top of that list is Charles Soludo, governor of the Central Bank of Nigeria and former economic advisor to the president. He was the chief architect of the National Economic Empowerment and Development Strategy (NEEDS), the government’s reform blueprint that has been widely endorsed and praised by the likes of the IMF and World Bank. In fact, the strategy predates Ms Okonjo-Iweala’s appointment to the finance ministry, and proposes many of the reforms that Ms Okonjo-Iweala has since rolled out.

Mr Soludo has proven himself a brave reformer too, tackling Nigeria’s ailing banking sector. He hiked minimum capital requirements to cull 89 mostly small and weak banks down to 25, facing down vehement opposition and occasional death threats from the industry.

Others too have established impressive reform credentials: Irene Chigbue, director-general of the Bureau of Public Enterprises, has accelerated the government’s privatisation drive; Mallam Nuhu Ribadu, chairman of the Economic and Financial Crimes Commission, is proving a tireless crusader against corruption; Obi Ezekwesili cleaned up government procurement, is in the process of restructuring the high-potential solid minerals sector, and was recently deployed to sort out education; and Mallam Nasir el-Rufai is tackling civil service reform.

And the reform milestones are adding up, extending beyond Ms Okonjo-Iweala’s preserve at the finance ministry and indicating the broad-based momentum of the process. They also indicate Mr Obasanjo’s commitment to the general direction of reform, and there is little to suggest he plans to change direction now. Indeed, his thwarted flirtation with a constitution-busting third presidential term was always privately motivated by his wishes to safeguard reforms rather than coldly cling onto power.

With so many twists and turns expected before the elections next year, with few willing to predict a likely successor, most concede there is no guarantee an equally reformed-minded candidate will assume office.

What the Okonjo-Iweala saga is most indicative of is the fragility of democracy in Nigeria. When legislators clipped Mr Obasanjo’s aspirations for a third presidential term it was a small democratic victory, but the fact that he even considered amending the constitution – whatever his motives – is ominous.

More generally, the government appears to be growing ever more tense, even showing signs of paranoia. Foreign journalists supposedly now have to register on arrival; local journalists complain of government meddling. On this correspondent’s recent trip to Nigeria, usually accommodating officials were reluctant to be interviewed or demanded the questions upfront. Umbrage was occasionally taken at even the most reasonable questions.

It is tempting to think for a country brutalised by numerous coups d’état, military rule, the pernicious dictatorship of General Sani Abacha and persistent internecine conflict, any kind of democracy, imperfections not withstanding, is progress. This is true up to a point; the question is how much imperfection is permissible?

The challenge is to separate what is going in the right direction and what is going in the wrong direction.

Good intentions

Transnational Corporation (Transcorp) is a locally capitalised conglomerate, modelled on the Korean chaebol concept. It is intended to have the financial muscle to participate actively in the economic opportunities being created in Nigeria and have the scale to compete head-on with international competitors. It is motivated on the basis that a Nigerian-owned group should benefit from the reforms under way and the consequent opening up of the economy.

Good intentions, perhaps. But the list of Transcorp’s biggest shareholders is a who’s who of the president’s closest allies. Then in August, local newspaper This Day reported that Mr Obasanjo was in fact also a shareholder in Transcorp, a revelation that has triggered consternation in Nigeria’s press.

Concerns were further fuelled by the fact that Transcorp had emerged as the winning bidder for NITEL, the national fixed line provider. Not only does Transcorp have no operational and technical experience to inject into NITEL, it failed to meet the deadline for payment – reminiscent of past privatisations to poorly qualified buyers.

Do the examples of Korea’s Samsung, Hyundai and Daewoo prove Transcorp’s merit? Or does Nigeria’s long legacy of mismanagement give grounds for alarm? There is truth is both points of view. Transcorp is one small paradox that reflects the complexity of Nigeria.

Forcing Ms Okonjo-Iweala out – the reformer who was stretching the furthest to institutionalise good governance – may not imperil reforms or even signal diminished commitment to them. But more ominously than any presidential diktat before, it signals that Nigeria’s interests are secondary to Nigerian politics.

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