President Goodluck Jonathan’s Economic Management Team takes off with broad plans on how to turn around the economy, but there are daunting challenges
Nigerians have always desired collectively a massive revamping of the country’s economy. But the question has always been, who will bring about this desired economic miracle? That nagging question seems to have been answered with last week’s inauguration of the Economic Management Team, EMT, co-ordinated by Ngozi Okonjo-Iweala, finance minister and former managing director of World Bank. President Goodluck Jonathan’s drive to reposition Nigeria’s ailing economy also anchors on the economic team. Nigerians are unanimous that if anybody can fix the Nigerian economy, it is Okonjo-Iweala, rated only last week by Forbes magazine as the 87th most powerful woman in the world. But the concerns as to whether she can deliver have refused to disappear due to the myriad of challenges dogging the economy.
By last week, Okonjo-Iweala moved swiftly to unfold an economic blueprint and expectedly the former World Bank chief said the economic team would direct its attention on security, infrastructure, agriculture and manufacturing. Other areas of focus would be housing and construction as well as education and health. Attention will also be focused on reducing inflation and cutting down government’s recurrent spending.
For Okonjo-Iweala, the task may not be that easy. Prior to her assumption of office, it was widely rumoured that she had turned down the offer to serve in Jonathan’s government. But that was simply identified as a distraction by those who did not want her in government. During the Obasanjo regime, she constituted a stumbling block to many political office holders, as she never allowed the culture of sleaze to thrive under the agencies she supervised. And that put her on collision course with some government officials at the time and finally led to her exit as she was said to have blocked the channels through which money was funnelled to politicians. With an expanded EMT, many opinion leaders believe Okonjo-Iweala may face even greater challenges. The widening of the team has raised questions as to whether the President needs such a large number to realise his vision for the country.
In view of the numerous challenges facing the economy the President had shortly after his swearing-in declared that the country’s decade of development had begun. Expectedly, he identified the power sector reform as a critical component of the nation’s industrialisation drive. Part of his projection was that transformation would be achieved in all critical sectors of the economy. This, perhaps, accounts for why the President has so widened the membership of his economic team. “We must grow the economy, create jobs and generate happiness for our people,” the President assured. That is in tandem with Okonjo-Iweala’s work plan.
She has made job creation her priority despite concerns over how this would be achieved as job losses have continued in critical sectors of the economy. In the last two years the financial sector has had more than its fair share of job losses. Collapsing infrastructures on many fronts and credit squeeze have similarly forced many companies in the industrial sector to sack workers in large numbers. However, the President had, during his inauguration, pledged to evolve appropriate support for the real sector so that small and medium enterprises, SMEs will thrive. The President also promised to form technical and financial partnership with global businesses and organisations in its drive to turn around the economy. The President and his EMT are likely to face difficulties in this regard. In the last few years, policy inconsistency and reversal as well as fragrant violation of agreements between the federal government and private investors seem to have become the norm. This is part of what many foreign investors will use as a yardstick for gauging the investment climate in Nigeria.
As part of Jonathan’s strategies to turn around the economy, the Nigerian Sovereign Investment Authority, NSIA, is expected to contribute to strengthening the country’s fiscal framework by institutionalising savings of the country’s commodity related revenue. When the idea was initiated, it was greeted with commendation by stakeholders in the nation’s economy but only last week, governors of the 36 states of the federation raised an objection to the establishment of a sovereign wealth fund, SWF, insisting that the revenue be shared as usual. On May 27 Jonathan assented to the NSIA Bill, which was established to replace the Excess Crude Account. The SWF was set up to save the difference between the budget benchmark and the actual price of crude oil export. That is based on the fact that Nigeria has in recent years been earning more than its projection from crude oil sales at the international market even when the level of production falls below projection. How the Okonjo-Iweala team will manage the demands of the governors will be yet another challenge.
As daunting as the challenges are, the team appears to be equal to the task. With professionals who have distinguished themselves in their various areas of specialisation now part of the team, there may be no reason for failure. One of the spectacular things about the team is the inclusion of Lamido Sanusi, governor, Central Bank of Nigeria, CBN. Until the constitution of the team, he was seen as the one-man squad running the economy. By bringing him into the team, President Jonathan has driven home the message that the economy is not at the mercy of Sanusi. In the Obasanjo administration for instance, Chukwuma Soludo, the then governor of the CBN was not part of the EMT much as the President relied heavily on his ideas to give the economy a direction. Informed sources told the magazine that Sanusi’s involvement in the economic team will result in subjecting some of his policies that are capable of destabilising the economy to further scrutiny, much as the autonomy of the CBN may not be affected in any negative way.
Apart from key ministers and heads of departments, Jonathan also assembled some of the best-known industry leaders from the private sector. The involvement of Aliko Dangote, Africa’s richest industrialist, will in no small measure add the voice of the private sector to the country’s economic policies. The same goes for the membership of Aigboje Aig-Imoukhuede, chief executive officer, CEO, Access Bank; and Atedo Peterside, pioneer chief executive of IBTC, a successful investment bank that metamorphosed into Stanbic IBTC, a member of the Standard Group of South Africa. It is believed that the inclusion of these private sector eggheads and technocrats with proven track record of good performance, men of proven credibility and integrity, in the economic team, it cannot but perform. Similarly, the inclusion of Mansur Ahmed, director-general, Infrastructure Concession Regulatory Commission, ICRC, and Mike Onolememen, works minister is expected to give a direction to efforts to improve on physical infrastructure in the country.
President Jonathan introduced a new dimension to the economic team with the inclusion of Governor Peter Obi of Anambra State and Murtala Nyako, governor of Adamawa State, as honorary advisers on finance and agriculture respectively. However, the role these governors who are also members of the National Economic Council, NEC, will play in the Okonjo-Iweala team remains uncertain. The NEC, headed by the vice president is the highest economic policy-making body in the land with governors and minister of the Federal Capital Territory, FCT as members. How the governors in the EMT will balance the challenge of developing the economy and the call for the suspension of the SWF, which is another dream of President Jonathan, may also be another task.
While inaugurating the NEC last week, the President had advised the governors not to play politics with issues affecting the economy. But the governors are already neck deep into it as they pushed for the suspension of the SWF. Their demand is that revenue earned from crude oil export should be shared among the various tiers of government. This way, the governors believe they can resolve the challenge of paying the newly approved minimum wage of N18,000 to civil servants. But many Nigerians believe that the governors have over the years, developed a penchant for big spending on recurrent items and now find it difficult to block some leakages to fund other basic commitments.
Beyond the targets set by Jonathan, Nigerians still have their expectations. For Opeyemi Agbaje, CEO, Resources and Trust Company Limited, the key challenges before the team are unemployment and poverty. The team is also expected to focus on minimising continued dependence on crude oil extraction and export; food security; sub-optimal financial and capital markets; power and infrastructure deficit. Other areas that require attention, according to the economic analyst, include collapse of social services, particularly education and health, some of which have been captured in the President’s work plan.
A comparison between the Jonathan team and that of Obasanjo shows that the size of the current team may be one of its drawbacks. “The Obasanjo economic team was nimbler and likely to be more focused than this. The critical variable, however, will be whether this team will have the backing of the President. I believe the team is unduly large and may end up functioning as a national economic consultative forum. However, the President has somewhat mitigated this concern by constituting a smaller implementation sub-team,” said Agbaje. The 15-man implementation team is yet another group inaugurated by the President, also headed by the finance minister.
Obi Iwuagwu, a lecturer in Economic History, Development Studies and Public Policy at the University of Lagos, frowned at the size of the team, which he described as unwieldy, adding that it will make the process of decision-making and implementation difficult. He also observed that, “the President while trying to ensure an all-embracing representation has rather taken it too far. What we have at the moment is another federal cabinet with some representation for the private sector.” He would have rather a team made up of the likes of Dangote, leaders of the critical sectors, who would make policy decisions, obviously guided by input from their subordinates, and then to ensure that these policies are properly implemented.
However, Iwuagwu stressed the need for a harmonisation of the fiscal and monetary policies being implemented by CBN rather than work at cross purposes with other agencies of government. Also, he wants the role of the Nigeria Customs Service to be clearly defined whether as a trade facilitator or revenue agent of government, arguing that for government to achieve its objective of promoting investments, it must look beyond short-term policies. “If we are able to attract investments, we will create employment, get the economy busy and then generate revenue in the long run. This should be the direction,” he stated.
For Sola Owoeye, a Lagos-based economist, what the country needs is “an economic turnaround, which can only come when the government provides an enabling environment for the private sector to thrive and bring about increase in productivity.” The concern here is that the Nigerian economy is one that consumes more than it produces. Owoeye believes that if the issue of power can be tackled, 50 per cent of the nation’s economic problems would have been solved. That way, he explained, several dead companies would bounce back and the ailing ones would gather momentum to overcome their challenges. “I expect the economic management team to come up with ideas and ways of implementing the ideas. They need to spread production of basic things so as to break the monopolistic system operated by the few. For instance, what we are enjoying in telecommunication can be applicable in other sectors like power, building etc,” said Owoeye.
There are fears that the economic team could be weighed down by a long process of taking decisions on account of its size. There are also concerns that for some members of the team, there could be conflict of interest, especially for those that belong to the NEC and the federal cabinet. According to Iwuagwu, what may seem to be a way out of this is for the EMT to concentrate on a few deliverables if they must make any appreciable impact.
But while some Nigerians seem to be heaving a sigh of relief over the inauguration of the EMT and the unfolding of the economic blueprint, there seems to be dissatisfaction from some quarters. Ephraim Ugwuonye, a business lawyer based in Washington, United States, US, argues that in America, Obama’s economic team was only put together to advise the President on economic recovery. But the Nigerian team does not just advise the president since the president and the vice president are members of the team. Economic teams, he explained, “are usually formed in the context of well-articulated economic crisis that requires new and unconventional thinking; and the work of the team is focused on resolving the crisis within a time frame usually less than the term of office of the president.” According to Ugwuonye, members of the team are non-politicians who mostly come from economic policy analysis community. He says, for instance, that Lawrence Summer came from Harvard University to chair Obama’s economic team. He was also the director of the NEC, a policy think tank, and was not a cabinet member at the time he was appointed to the team.
To Ugwuonye and others, economic teams are supposed to be made up of mostly people outside the cabinet, who are meant to formulate ideas for economic policy of the government without the institutional constraints of politicians and bureaucrats who are to make recommendations without party biases to the president. “In crisis time, it is necessary for the president to assess the economy from the eyes of people who are free from partisan politics,” Ugwuonye explained. However, in the case of Nigeria, only few members of the economic team are not cabinet ministers. But what matters most to Nigerians is the result that will be achieved in the near future. This is a test case for the Jonathan administration.
- Additional reports by Helen Eni, Stella Sawyerr and Abiola Odutola