Okonjo-Iweala Shuns House Deadline

Is the economy healthy? There seems to be no answer to this knotty question, with Minister of Finance Ngozi Okonjo-Iweala’s seeming refusal to clear the air.

The House of Representatives Finance Committee gave the minister 50 questions on the state of the economy. She was to answer in two weeks. The Minister was yet to respond yesterday.

The Committee, on December 19, last year listed the 50 questions for the Minister at an interactive session where she told the lawmakers that she was “sick due to lack of sleep”.

The meeting ended on a sour note when the Minister insisted that she could continue with the session, with the assistance of her two subordinates.

The Committee refused to grant Mrs. Okonjo-Iweala’s request, saying her health could not be compromised.

Committee Chairman Jibrin Abdulmumin said the backlash could only be imagined if she collapses during the session.

Though the Chairman could not be reached for comments, it was learnt that the Committee is not opposed to giving the minister more time for her response.

A source told The Nation: “You see, the minister almost succeeded in making us look like we were inconsiderate whereas we were not aware of the reaction that would follow if we insisted on questioning a sick minister.

“I am sure the Committee will give her enough time; we won’t leave any room for anyone to put the blame on us by the time we wield the big stick. Nobody is bigger than the country.

“We are not here on our own and we are constitutionally empowered to do what we are doing. The issue is about the country and not about an individual and this is not a party matter.

“My guess is by the time we resume from the break, more than enough time would have been given and by then, whatever we decide to do would not be seen as vindictive.”

The Committee’s concern on the economy is premised on the fact that the government has been celebrating a single-digit Gross domestic Product (GDP) growth, but facts do not support the claims.

The Committee noted that while speaking recently at a breakfast dialogue with some members of the organised private sector in Lagos – a forum organised by the Nigerian Economic Summit Group (NESG), the Minister was quoted as saying: “We are growing, but not creating enough jobs. That is a very big challenge…We need to grow faster. I think it needs to grow at least 9 to 10 per cent to drive job growth the way we want.”

The Committee asked: “Don’t you agree that a good finance minister managing an economy like ours should be celebrating a GDP growth as high as 20 per cent annually?

“Why is it that our economy cannot grow beyond a single digit? How many jobs are being created as a result of these said growths? In which sectors of the economy are these jobs created? If in private sector, what contribution is government making to further assist these private sector firms?

“In the presence of Nigeria’s huge infrastructure deficit, why is it that the country’s debt-to-GDP at about 19 percent in 2012 remains one of the lowest in the world when compared to nations already with world-class infrastructure and industrial economies, such as America’s 105 per cent, Brazil’s 65.49 per cent, India’s 67.60 per cent and South Africa’s 40.9 per cent?

“Since facts don’t lie, have you any disagreements with the September 4, 2013 Global Competitiveness Report of the World Economic Forum for 2013-2014, which ranked Nigeria 120th out of 148 countries ranked in the Global Competitiveness Index, including being ranked far behind some African countries, such as Mauritius 45th, South Africa 53rd, and Kenya 96th?

‘’For the first time in Nigeria’s 53-year history, we have successfully privatised the electric power industry,’’ so said the President at a recent meeting in London with some foreign investors.

“As minister of finance, should you agree that the recent privatisation of the country’s power infrastructure is worth celebrating as a major economic achievement in 2013, when in reality there is little or nothing to show as an improvement in the country power supply? Also, why our rush to wholesale privatisation of the power sector when countries like South Africa, generating as high as 42,000MW, still have their power sector mostly in public hands?”

The Committee was also cognisant of the fact that Nigerian leaders are always quick to compare the nation’s economic growth or otherwise with other countries.

However, the Committee was of the opinion that while it was easy to compare, but economic indices in the two environments were conveniently ignored by the leaders.

Looking at the essence of the Excess Crude Account and the Sovereign Wealth Fund to internal economic growth, It was pointed out to the minister that “Your references to the country’s economic growth profile have always been based on Fitch, Standard and Poor’s, and Moody’s ratings.

“Are you aware that these same rating agencies are being sued in New York (with case # 652410/2013) by two Bear Stearns hedge funds for fraudulently assigning inflated ratings to securities in the run-up to the 2008 financial crisis? If you do, why do you insist on accepting the rating as reliable.

“How much exactly has been the amount of money lost in government revenue as a result of import duty waivers in 2011, 2012 and 2013? Provide the names and beneficiaries and justification for same.

“In your opinion as the minister of finance who oversees the economy, what are the implications to the country’s economy? What efforts have you made to stop this waiver policy, which is distorting the economy?

“Our non oil income has dropped in 2013. A case where increased tariffs on various items effectively reduced importation to zero in some sectors. However, those items now find their way into Nigeria through our borders.

“Does it make any sense to increase these tariffs when we have such porous borders? As an example, officially, Togo imported more rice this year than Nigeria.

“Do you really believe that Nigeria needs a ‘Sovereign Wealth Fund’ at this critical juncture of budgetary deficits, and having to be borrowing extensively in an effort to address government revenue gaps?

“Shouldn’t the presence of Nigerian Sovereign Investment Authority (NSIA) simply mean spreading government’s scarce resources thinly? Why will you insist that no matter what, we still need to operate a sovereign wealth fund?

“Sincerely speaking, how sustainable are the objectives of Nigeria’s Sovereign Wealth Fund, particularly in the long-term? You should agree that a lot of Nigerians are interested in the link between NSIA and the government.

“Since there is no doubt that Nigerian Sovereign Investment Authority is an agent of government — or is it not? The question is: How should we think about the management structure in so far as major decisions are concerned?

“Where is the line between NSIA, as a commercially minded entity, and the government, especially given government’s policy of having no business doing business? If, for example, government does not get involved in specific investments, then, who appoints the external managers involved in managing some parts of the NSIA funds?

“Who determines the investment objective and who establishes the risk parameter for the NSIA’s portfolio? In providing answer to this question, it is also important to understand and explain why NSIA recently hired a Swiss national as its chief portfolio investor?

“Answering this question is important since it should help us to know who determines the maximum draw-down that the government would be comfortable with in extremely negative market environments.

“Do you agree that the Excess Crude Account (ECA) as being operated by government is illegal and unconstitutional, especially given how it has been managed?

“Can you explain with clarity how the ECA is being operated? Also, provide a statement of account of the ECA from 2011 to 2013? Also, how much have we made in excess of the benchmark price from January 2013 till date?

“If there is nothing like Excess Crude Account, would you have been demanding lower oil price benchmark for the budget, especially when the executive arm of government around the world is known for demanding more money from lawmakers in order to be able to meet government spending obligations, particularly capital spending?

“Why is the reverse the case in Nigeria only, notably since 2011? With respect to the Excess crude account and our Sovereign Wealth Fund again, there have been allegations and counter allegations on its legality.

“Assuming, for the sake of the committee’s enlightenment, the FGN alone saved its own excess in its ECA/SWF (which is about 52% of the Federation Account) and the states and local governments get their funds in full compliance with the constitution, what would be the effect on the economy?”
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