Around the
middle of 2014, when the price of crude oil fell dramatically, Nigeria’s finances became challenged. This is not hard
to explain: We’ve historically depended on crude oil for as much as 70 per cent
of government revenues and 90 per cent of foreign exchange earnings. The
outcome—pressure on government finances—was by no means unusual. A similar fate
befell most oil-rich countries around the world.
Where Nigeria possibly stood out was in the fact that
during the preceding three years—when oil prices were in excess of $100 per
barrel—the previous administration did little in terms of saving and
investing for the future. Our sovereign wealth fund—which was established in
October 2012 with just US$1 billion—did not receive any further inflow during
the oil price boom. Instead, billions of dollars were squandered through corrupt oil and defense contracts.
It is a terrible thing for a country to fall on hard
times without a savings buffer. But there was nothing unexpected about our
downturn. It was the inevitable result of the choices we made or didn’t make during
the years of boom.
The downturn
has inspired unprecedented levels of fiscal responsibility, in line with
President Buhari’s determination to fight Nigeria’s endemic corruption.
Shortly after
taking office, he issued a presidential order mandating the immediate
implementation of the Treasury Single Account (TSA) system, consolidating
thousands of government accounts scattered across banks into a unified system
that is transparent and easy to centrally monitor and track. Under the old
system, it was common for government accounts to be converted into personal
use, but under the TSA this is impossible. Also, the proliferation of accounts
encouraged several questionable practices.
Budgetary reform has also taken a lot of our time and
attention. We are pioneering the use of software to prepare our annual budgets,
which allows greater transparency and the ability to track changes.
We have insisted on using biometric verification in the
deployment of our social investment programme, which includes a job scheme for
unemployed graduates; a school feeding scheme for primary school pupils; a
conditional cash transfer scheme targeting a million of our poorest citizens;
and a micro-credit scheme for artisans, farmers, and traders. In the past,
social investment payments would have been made as cash handouts.
A similar insistence on biometric verification for the
federal payroll has resulted in the detection of tens of thousands of bogus
beneficiaries—or “ghost workers,” as
we often refer to them in Nigeria—and savings running into billions of naira
every month. The tighter rein on public finances allowed us invest $500 million
in our sovereign wealth fund during a recession.
We are pursuing unprecedented cooperation with foreign
governments and powers, as part of our transparency and anti-corruption drive.
For the simple reason that a disproportionate amount of public funds looted in
Nigeria end up in the United Arab Emirates, Nigeria has signed bilateral agreements with the UAE government on
extradition, exchange of information, and repatriation of stolen public funds.
One strong demonstration of our political will has been a
whistleblowing scheme we launched months ago that empowers citizens to report
public corruption. The impact in terms of recoveries has exceeded our
expectations: In two high-profile examples, $43 million and $9.8 million in
looted cash were recovered from apartments in Lagos in the south and Kaduna in
the north respectively.
A lot of the work we have done since President Buhari
came to office in May 2015 has been focused on dismantling the old ways of
doing things, rebuilding them, and empowering and fortifying our institutions
with technology to block loopholes, discourage abuse, and prevent a relapse
into the destructive ways of the past.
The new Nigeria we seek will not happen without this kind
of foundational reform that imposes on us new ways of thinking and of doing
things. The early results are already being seen. A concerted focus on
agriculture has seen our rice imports from Thailand dropping by 90 per cent
between 2015 and 2016 and being replaced by locally grown variants.
As oil has let us down, we have started to do what we
should have done decades ago: Invest in agriculture and mining. Throughout the
recession, agriculture recorded healthy growth. As we emerge from the
recession, its impact is certain to multiply and position Nigeria for a
prosperous future.
The most important elements of any reform effort tend to
be the least flamboyant. We are confident that in the months and years ahead,
Nigerians and the world will see the full impact of the foundational resetting
that the Buhari administration has been focused on since 2015.
There is of course a lot of resistance to reform, by
vested interests within and outside the system. But we are not fazed. The work
of reform goes on. To borrow a phrase from the Nigerian novelist, Chinua
Achebe, it is morning yet on Creation Day. Not very long from now, Nigerians
and the world will look back on the recession we have just emerged from, and
realize that it was the turning point in Nigeria's journey to true growth and
greatness.
Kemi Adeosun is the Minister of Finance of Nigeria.
Culled from Newsweek
No comments: